Straus v. Victor Talking Machine Co. - 243 U.S. 490 (1917)
U.S. Supreme Court
Straus v. Victor Talking Machine Co., 243 U.S. 490 (1917)
Straus v. Victor Talking Machine Company
Argued January 12, 1917
Decided April 9, 1917
243 U.S. 490
The monopoly of use granted by the patent law cannot be made a means of controlling the prices of the patented articles after they have been, in reality even though not in form, sold and paid for.
An attempt by means of "license contracts" with dealers and "license notices" attached to patented. machines to retain title in the manufacturer and patent owner until the expiration of the latest patent referred to in such notice, and to limit until the expiration of such period the right of the public to a mere license to use, dependent upon observance of conditions in the "license notices," including conditions as to price, will not be regarded as a legitimate exercise of the patent owner's control over the use where, plainly, from the terms of the "license notices" and from the relations established between the patent owner and the dealers through whom the machines are distributed, the object of such reservations and restrictions is to enable the patent owner to fix and maintain the prices at which the machines may be disposed of after they have passed from its possession into the possession of the dealers and the public and after it has received from the dealers the full price which it asks or expects for the machines.
In such case, as to purchasers not in privity with the patent owner, the restrictions of the "license notices" are to be treated as void attempts to control prices after sale, and, in buying from the dealers and reselling to the public at prices lower than the notices prescribe, such purchasers do not violate the rights secured to the patent owner by the patent law.
230 F. 449 reversed.
The case is stated in the opinion.