SUPREME COURT OF THE UNITED STATES
AUTOMATIC RADIO MANUFACTURING CO., INC. v. HAZELTINE RESEARCH, INC.
339 U.S. 827
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT.
No. 455. Argued April 5, 1950. -- Decided June 5, 1950.
Petitioner, a manufacturer of radio broadcasting receivers, entered into a licensing agreement with respondent, a radio research organization, whereby, for royalties amounting to a small percentage of petitioner's selling price of complete radio broadcasting receivers, petitioner obtained permission to use in the manufacture of its "home products" any or all of 570 patents which respondent held and any others to which it might acquire rights. Respondent is not a manufacturer but derives its income from licensing its patents; and its policy is to license any and all responsible manufacturers. Under the agreement, petitioner was not obligated to use any of respondent's patents in the manufacture of its products; but it was required to pay the royalty, whether it used them or not.
1. It is not per se a misuse of patents to require the licensee to pay royalties based on a percentage of its sales, even though none of the patents is used. Pp. 830-834.
(a) On the record in this case, there was nothing to support petitioner's averment that respondent refused to grant a license under any one or more of its patents to anyone who refused to take a license under all, since the affidavit in support thereof was made upon information and belief and the relevant portion did not comply with Rule 56 (e) of the Federal Rules of Civil Procedure. P. 831.
(b) There is no indication in this case of a conspiracy to restrict production of unpatented goods, or any goods, to effectuate a monopoly. United States v. Gypsum Co., 333 U.S. 364, distinguished. P. 832.
(c) In this case, the royalty provision did not create another monopoly and created no restraint of competition beyond the legitimate grant of the patent. P. 833.
(d) The mere accumulation of patents, no matter how many, is not per se illegal. P. 834.
(e) In the circumstances of this case, there being no inherent extension of the monopoly of the patents, payment of royalties according to an agreed percentage of the licensee's sales is not unreasonable. P. 834.
(f) Having obtained by the agreement the privilege of using any or all of respondent's patents and developments, petitioner cannot complain because it must pay royalties whether it uses the patents or not. P. 834.
2. The question whether the inclusion in the licensing agreement of a provision requiring petitioner to attach restrictive notices to the apparatus manufactured by it made the agreement unenforceable is moot, because respondent had waived compliance with this requirement. Pp. 834-836.
3. There being no showing that the licensing agreement or the practices under it were a misuse of patents or contrary to public policy, petitioner may not, in this suit, challenge the validity of the licensed patents. P. 836.
176 F.2d 799, affirmed.
In a suit by the licensor of certain patents, the District Court sustained the validity of a patent licensing agreement, entered judgment for an accounting and recovery of royalties, and enjoined petitioner from failing to pay royalties, to keep records and to render reports during the life of the agreement. 77 F. Supp. 493. The Court of Appeals affirmed. 176 F.2d 799. This Court granted certiorari. 338 U.S. 942. Affirmed, p. 836.
MR. JUSTICE MINTON delivered the opinion of the Court.