Interstate Circuit, Inc. v. United States
306 U.S. 208 (1939)

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U.S. Supreme Court

Interstate Circuit, Inc. v. United States, 306 U.S. 208 (1939)

Interstate Circuit, Inc. v. United States

No. 269

Argued January 11, 1939

Decided February 13, 1939*

306 U.S. 208

Syllabus

1. Where distributors of motion picture films, owning or controlling the copyrights and engaged, interstate, in the business of supplying the films to theaters for exhibition under license contracts, join in making and carrying out an agreement with the owners of the theaters in certain cities to whom their licenses for first-run exhibitions of "feature" pictures in those cities are confined, whereby the distributors, in granting licenses to other theaters in the same places for subsequent runs of such films require of them that they observe a minimum price of admission and abstain from presenting a picture so licensed with any other feature picture at the same show -- the purpose and effect of these restrictions being to maintain the higher prices of the first-run theaters and protect them from the competition of the others -- such agreement is an unreasonable restraint of interstate commerce, and contrary to the Federal Anti-Trust Act. Pp. 306 U. S. 221, 306 U. S. 232.

2. The evidence in this case supported the inference that the distributors of the films acted in concert in making their several agreements with the first-run exhibitors and in imposing the restrictions so stipulated on the subsequent-run exhibitors. P. 306 U. S. 221.

3. Upon the production of such proof, the burden rested upon those implicated to explain away or contradict it. P. 306 U. S. 225.

4. The production of weak evidence when strong is available leads to the conclusion that the strong would have been adverse. Silence then becomes evidence of the most convincing character. P. 306 U. S. 226.

5. Acceptance by competitors, knowing that concerted action is contemplated, of an invitation to participate in a plan the necessary consequence of which, if carried out, is restraint of interstate commerce is sufficient to establish an unlawful conspiracy under the Sherman Act. P. 306 U. S. 227.

Page 306 U. S. 209

6. A contract between the copyright owner of motion picture films and the owner of motion picture theaters restraining the competitive distribution of the films in the open market in order to protect the theater owner from competition of other theaters is not protected by the opyright Act. P. 306 U. S. 227.

7. The owner of those motion picture theaters in several cities in which the first runs of copyrighted "feature" pictures were exhibted, taking advantage of its monopoly, secured from each of several copyright owners who distributed such films in interstate commerce an agreement binding the distributor when licensing subsequent runs of his films at other theaters in those cities to require the licensee to observe a certain minimum admission price and to abstain from exhibiting the picture in a double bill with any other "feature" film. The purpose of the arrangement was to protect the owner of the first-run theaters from competition of subsequent-run theaters, and its effect was to impose undue restraints upon competing theater businesses habitually exhibiting the competitive pictures of different copyright owners, and to enable the favored theater oner to dominate the business of his competitors.

Held: that the contracts were not protected by the Copyright Act, and that, aside from any agreement between the distributors themselves, they were contrary to the Anti-Trust Act. P. 306 U. S. 230.

20 F.Supp. 868 affirmed.

Appeals from a decree of the District Court awarding an injunction in a suit brought by the Government under the Sherman Anti-Trust Act.

Page 306 U. S. 213

Primary Holding
No simultaneous action or agreement by conspirators is needed to find that a conspiracy existed.
Facts
Movie theater chains Interstate Circuit, Inc. and Texas Consolidated Theatres controlled the main region in which they operated. They made agreements with eight independent distributors but were restrained from carrying them out by a federal district court on the basis that the agreements violated Section 1 of the Sherman Anti-trust Act.

Opinions

Majority

  • Harlan Fiske Stone (Author)
  • Charles Evans Hughes
  • James Clark McReynolds
  • Pierce Butler
  • Louis Dembitz Brandeis
  • Hugo Lafayette Black
  • Stanley Forman Reed

The evidence showed that the distributors had made an agreement among themselves, and they intended to engage in concerted action at the invitation of the movie theaters. They also had begun to willingly participate in carrying out the scheme, which they should have recognized would impose restraints on commerce.

Dissent

  • Owen Josephus Roberts (Author)

Recused

  • Felix Frankfurter (Author)

Case Commentary

Direct evidence of a conspiracy usually would be difficult to find, so it is practically necessary to allow courts to infer it from conduct.

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