delivered the opinion of the court.
Action for the recovery of damages in the sum of $406,881.60, being the total of certain specific items mentioned in the complaint, and for all other damages sustained by plaintiffs (so designated throughout this opinion) by virtue of the facts stated, including all sums that they are entitled to under the provisions off the Sherman Antitrust Act, July 2, 1890, 26 Stat. 209, c. 647, together with an attorney’s fee. The grounds of recovery are set forth in the complaint, which, inclusive of exhibits, occupies 150 pages of the record, and seems to make impossible any attempt at brevity or condensation. The case, however, is not in wide compass and attention may be concentrated upon certain considerations. The contention of plaintiffs in its most general form is that the defendants entered into a conspiracy or combination in restraint of interstate trade and in execution of it, plaintiff’s interstate business was destroyed by defendants wrongfully prosecuting two suits against them for the infringement of patents under which the articles of their trade were manufactured and by circulating slanders and libels to the effect that such articles were infringements of defendants’ patents. A cause of action is hence asserted under § 7 of the Anti-trust Act. . The section is as follows: “Any person who shall be injured in his business or property by any other person or corporation by reason of anything forbidden or declared to be unlawful by this act, may sue therefor in any circuit court of the United States in the district in which the defendant resides or is found, without respect to the amount in controversy, and shall recover three fold the damages by him sustained, and the costs of suit, including a reasonable attorney’s fee.’’
To justify recovery, therefore, injury must result from something forbidden or made unlawful by the act, and
.The acts forbidden are made a misdemeanor.- And-by § 2 it is also made a misdemeanor for any person to “monopolize, or attempt to monopolize, or combine or conspire with;any other person or persons, to monopolize, any part of the trade or commerce among the several States, or with foreign nations.”
The question occurs, Do the. facts of the case show a breach of the law by defendants and injury resulting from it to plaintiffs? The. following facts are alleged: On the twenty-fourth of February, -1898, or just prior thereto, certain corporations, and one partnership were, engaged in making or selling creamery supplies, including combined churns and butter workers, and transporting them in state and interstate commerce. All of the corporations and the partnership were in direct competition in their lines of business and as the result of it all of the articles manufactured and sold by them were sold at no -more than a fair price and legitimate profit. The corporations controlled over 90% of . the business of manufacturing and selling creamery and dairy supplies in the States •of Michigan and Indiana and in all the States west and in some of the States east thereof, manufacturing the articles in one or more of the States and shipping by the same common carriers from the States where manufactured to'other States and distributing and selling such articles there.
On the twenty-fourth of February, 1898, the Creamery Package Manufacturing Company, one of the corporations, and its stockholders, then engaged in the manufacture and sale of dairy and creamery supplies but not of
The contract is very elaborate and verbose, but we need not give its particular covenants as no point is made upon them; it being only alleged and contended that its purpose, and effect were that the Creamery Package Manufacturing Company should acquire the property and business of the other corporations, and that while the latter should cease to exist they should be represented as continuing as separate and independent concerns and competitors in the market with the Creamery Package Manufacturing Company and with one another; while in truth and fact there would be no competition between them.
It is'alleged that in execution of the purpose of the contract traveling men from the' different houses under instructions from the Creamery Package Manufacturing Company met ■ and secretly arranged the' bid each should interpose, determining by lot and other ways who should interpose the lowest bid and who the highest.
The Owatonna Company was not a party to that contract, but it is contended that it. participated in or is brought into the scheme and purpose of the contract by certain agreements entered into by it with the Creamery Package Manufacturing Company. They are all attached to the complaint as exhibits and may.be described as transferring certain patents or the right to use certain. patents to the Creamery Package Manufactur
It is alleged that the defendants here conspired with one another to commence and prosecute the suits and that they were commenced and prosecuted maliciously and without probable cause, whereby plaintiffs were caused certain items of damages.
The other allegations of the complaint need riot be-' repeated in detail. They are to the effect that the contract of February 24, 1898, was made in violation of law to restrain state and interstate trade and commerce and that all that was done under it was in pursuance and execution of that purpose, including the suits brought against plaintiffs by the Owatonna Company, and the Creamery Package Manufacturing Company for the infringement of patents. That prior to the bringing of those suits plaintiffs had a good and established trade and market for their chums and were manufacturing and shipping them in the States of Wisconsin, Iowa and South Dakota, and knowing this and fearing that such trade would be continued in those States and be extended to other States, defendants commenced the suits for infringement, and prior thereto and since have written letters and talked to purchasers and prospective purchasers of plaintiffs’ churns, threatening lawsuits and actions for damages for infringement of the patents described in the bills and also threatened suits for injunction, and by this means destroyed plaintiffs’ state and interstate trade.
That plaintiff D. E. Virtue and one Martin Deeg were the first joint inventors of a chum and butter worker and that a patent was issued therefor, No. 634,074, under which they manufactured those articles and sold them in state and interstate commerce except as they had been prevented by the suits brought against them as hereinbe-fore stated. And by elaborate allegations the patents upon
That the Creamery Package Manufacturing Company has purchased the property and business of other competitive concerns and that it has had during the last several years contracts with many and numerous dealers in the articles sold by which it required them to purchase such goods exclusively of it at certain fixed and maintained prices and to sell only in certain designated territory, the object of which is to secure a monopoly to the Creamery Package Manufacturing Company and to restrain interstate commerce. That all of the acts detailed were done in pursuance of a common scheme and conspiracy on the part of all of the defendants during the years 1897 and 1898 and ever since maintained and carried out, limiting the production of creamery supplies, fixing and determining their prices, restraining trade in them and monopolizing over' 90% of their production and sale, of which prior to one year before the bringing of this action plaintiff had no knowledge or notice except the two suits in equity and the contract by which Virtue and Deeg transferred to the Creamery Package Manufacturing Company the exclusive right to manufacture the churn and butter worker under patent No. 634,074 for the period of three years. That they did not know that that contract was procured as part of the schemes of defendants. That they were at no time parties to acts of defendants and did not know of the wrongful contracts and combinations until after the time limited to take the testimony in the two equity suits.
The defendants answered the complaint, admitting some of its allegations and denying others. They alleged performance of the contract between the Creamery Package Manufacturing Company and the plaintiff Virtue and said Deeg and opposed to the. charges of the complaint certain affirmative matters, including two fictions brought in the gtate court,
The Circuit Court and the Circuit Court of Appeals both decided, that the damages which plaintiffs alleged they sustained were not a consequence of a violation by defendants of the provisions of the Sherman Anti-trust Act. Both courts assumed for the purpose of their decision that the contract of February 24, 1898, between the Creamery Package Manufacturing Company and the other manufacturers and sellers of churns and butter workers was a combination in restraint of trade, but both courts held that the Owatonna Company was not a party to it nor became associated subsequently in its scheme.
Of the infringement suits the Court of Appeals said they exhibited “a case where t^ro suits are brought, one by a party' to a lawful agreement, the other by a party to an unlawful agreement, for the infringement of patents owned by them respectively and where both parties were doing no more than exercising their legal rights.” And the court declared in effect that it could see no sinister significance in the suits being simultaneous, and said, further, that after a thorough examination of the record it agreed with the Circuit Court that there was no.evidence offered at the trial “‘which would warrant the jury in finding that any agreement of that kind existed.’ ”
The plaintiffs attack this conclusion in twenty-one propositions, some of which are of very broad generality and all, counsel contend, are supported by the decisions of this and other courts. It is quite impossible to consider them in detail without a review and repetition of the cases. The view we take of the case makes this unnecessary. The case is, as we have said, in narrow compass. The complaint charges a violation of the Sherman Act, and, as a. means of accomplishing its purpose, the destruction of
The Owatonna Company was a manufacturer of churns and butter workers under various patents owned by it, which articles it sold throughout the United States, and by the contract of April 19, 1897, it constituted the Creamery Package Manufacturing Company its sales agent of them, the latter company not making churns and butter workers. The contract was a perfectly legal one and preceded by some time the agreement of the twenty-fourth of February, 1898, entered into between the latter company and other corporations. There were contracts between the Creamery Package Manufacturing Company and the Owatonna Company subsequent to the latter date, but all of them were- supplemental to the first one and had no illegal taint, nor did they affect it with illegal taint.- It is true they granted rights to the Creamery Package Manufacturing Company, and exclusive rights, but this was no violation of law. The owner of a patent has exclusive rights,-'Tights of making, using and selling. He may keep them or transfer them to another — keep some of them and transfer others. This is elementary; and, keeping .it in mind, there is no trouble in estimating the , character of such rights or their transfer. Of course, patents and patent rights cannot be made a cover for a violation of law, as we said in
Standard Sanitary Manufacturing Company
v.
United States,
But it is said that the contract between the companies dated June 4, 1898, exhibits knowledge by the Owatonna Company of the Creamery Package Manufacturing Company’s purpose, and “fitted into the scheme of the two defendant corporations to get a monopoly in the United States;” and this, it is said further, “can only be when all of the doings . . . are looked at as a whole from beginning to end.” We cannot concur. We have seen that the contract of June 4, 1898 (inserted above in the margin), was but a settlement of claims growing out of reciprocal. charges of infringement and it has no other, connection with the agreement of February, 1898, than that some of the claims were against corporations which were parties to that agreement. It would be far-fetched to say that the Owatonna Company could not assert rights or protect rights- because they were asserted or sought to be protected against corporations which had become members of an illegal combination, without participating in the guilt of such combination and becoming a joint conspirator in its purposes. But it may be said that we are considering the transactions isolatedly and ignoring
But a united purpose is sought to be established between it and thg Creamery Package Manufacturing Company by the testimony of witnesses to, the effect that the contract of April 19, 1897, between the Disbrow Manufacturing Company and the Owatonna Company was urged by the president of the Creamery Package Manufacturing Company, who represented that the acceptance of royalties by'the Disbrow Company was better than a continuance of competition. It is not practicable, to give all the •testimony of what preceded and induced that contract. The part most relevant to our inquiry is that which related to the competition which existed between the companies. A witness, who was president of the Owatonna Company at the time, testified that it was suggested to him and other officers of the company by Mr. Gates, president of the Creamery Package Manufacturing Company, that a settlement ought to be brought about by letter or otherwise with the Disbrow Manufacturing Company “so as to get the two churns which were then being manufactured together,” and stated that he (Gates) had had some conferences with the Disbrow Company, and he thought that if the officers of the Owatonna Company would go to Mankato “there might be an arrangement made whereby^that business could be brought in connection with ours, and in that way eliminate the competition that at that time existed between the Owatonna Manufacturing Company and the Disbrow Manufacturing Company.” This object was expressed by the witnesses in different ways.
The president of the Disbrow Manufacturing Company testified that Gates urged that the Disbrow Company should “stop manufacturing and make a contract with '
These declarations seem to be- very arbitrary and unjustifiable when standing alone and to have had no other purpose than the ruthless crushing of a competitor in the same line of business. They take on another character, or rather the object of the negotiations and the contracts which resulted from them, take on another character, when all the testimony is considered. It will be observed from the date of those negotiations and of.the contracts that they preceded by nearly a year the contract between the Creamery Package Manufacturing. Company and its competitors and could have had no relation to it.- And, besides, they had a natural and adequate inducement They were an adjustment of disputes and litigation grow ing out of a contract between the, Disbrow Company and the Owatonna Company concerning the very same patents. In one suit the Owatonna Company was plaintifl against the Disbrow Company; in another suit the latter
It is, however, urged that the infringement suits brought by the Creamery Package Manufacturing Company and the Owatonna Company against plaintiffs were provided for by the contracts between the Owatonna Company and the Disbrow Company, and their coincidence in time is urged as proof of concerted action on the part of defendants and of a conspiracy to destroy plaintiffs’ business. The contention is that the'bringing of those suits was not a single and isolated act but was a part of the more comprehensive plan and scheme to secure a monopoly in the United States of the business of making and selling creamery supplies, or, more accurately, counsel say, to continue and maintain the monopoly already acquired. And it is contended that the attempt was successful" in that it destroyed plaintiffs’ business. That these contentions are untenable we have demonstrated. The contracts we have shown were legal conveyances of rights, and the provision for the prosecution of infringement suits was but an assurance of those rights. Patents would be of little
This is enough to dispose of the case, for the foundation of the complaint is that the defendants entered into a contract or combination in restraint of trade which caused damage to plaintiffs; and the guilt of the individual de-. fendánts and of the two corporations and of all of their officers, servants, and stockholders, is very carefully alleged. It was in this aspect that the case was tried.
But plaintiffs urge that the Creamery Package Manufacturing Company was of itself a combination offensive to the statute and that they were entitled to go to the jury as to that, company. But the contention was not made in the Circuit Court nor was it made in the Circuit Court of Appeals.^ 'The case was tried and ruled upon, as we have seen, on the ground of the cooperation of the defendants in a scheme of monopoly and restraint of trade. There was no liability asserted in the Circuit Court or in the Circuit Court of Appeals against one of the defendants separately from the others. Concert and cooperation was asserted against all and a ruling was not invoked as to the separate liability of either. One Frank LaBare was a: party defendant and as to him plaintiffs made a motiqn that “the case be dismissed and dropped.” The court denied the
There are twenty-seven errors assigned upon offers of testimony excluded or upon, other rulings of the Circuit Court. These we have examined and find that, in the view taken by the courts below of the case and that which we take, there was no error of substance committed. ■
Judgment affirmed.
Notes
The first of the agreements between the companies was made April 19,1897 (that was before the contract of February 24,■ 1898), and recited that the Owatonna Company was the owner of certain patents covering combined churns and butter workers and was manufacturing the same and that as the Creamery Package Manufacturing Company was .desirous of handling the same as sole agents, the agreement was made. It convoyed five patents issued between January, 1893, and. August, 1896, and applications for another. There were provisions as to the size, material and other details; also as to royalties to be paid to the-Disbrow Manufacturing Company. And the Owatonna Company agreed to protect the Creamery Package Manufacturing Company from all suits for infringement of the patents, or claims for damages arising out of the sales of the churns and promptly and vigorously to attack infringers and to procure patents-on all improvements made by-it or by any person in its behalf
There was an addition to the contract made June 4, 1897, in regard to the repair parts of the “Winner” churns and the repair and perfection of the same, and the rebate from the billing price.
On January 12,1898, a supplemental contract was made by the same parties as to the disposition of the royalties received under a license contract made September. 30, 1897, with the Cornish, Curtis & Greene Manufacturing Company, of Fort- Atkinson, Wisconsin.
On June 4, 1898, another agreement was made between the parties which referred to the agreement'of April, 1897, and to the pendency of litigation based on the infringement or charges of infringement of the patents with which that contract was concerned. For the purpose of adjusting all claims growing-out of such infringement and settling the litigation between the Owatonna Company and F. B. Fargo & Co., whose rights the Creamery Package Manufacturing Co. had acquired, it was agreed that one of the suits which was named,: and in which proofs had been taken, should be-brought to a speedy hearing and all other suits dismissed.
The -Creamery Package Manufacturing Company agreed not to manufacture the machine known as the “Winner” or the “Disbrow,” both referred to in the contract of April, 1897, called the “sales contract,” or any other of a described kind made by the Owatonna Company, but was at liberty to manufacture and sell churns and butter workers of any other construction. Satisfaction of all -royalties, damages and costs was agreed on.
On’ January 1, 1903, another agreement was entered into between the parties which disposed of and adjusted rights and contentions as to patents for a machine called a pasteurizer and cream ripener. By an agreement made January 1, 190.3, the prices provided for in "the sales contract were changed in certain particulars