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United Shoe Machinery Corp. v. United States, 258 U.S. 451 (1922)

United Shoe Machinery Corporation v. United States

No. 119

Argued March 7, 8, 9, 1921

Restored to docket for reargument June 6, 1921

Reargued January 17, 18, 1922

Decided April 17, 1922

258 U.S. 451


1. A presumption of correctness attends the findings of fact made by the trial judge in an equity case after reading the evidence. P. 258 U. S. 455.

2. In a suit under the Clayton Act to enjoin the use of restrictive covenants in leases of machinery, inserted for the benefit of the lessor, the lessees are held not indispensable parties. P. 258 U. S. 456.

Page 258 U. S. 452

3. The appellant corporation controlled a large part of the trade of supplying certain classes of machinery used in the United States in the manufacture of shoes, which it furnished to the manufacturer under a system of leases in which were restrictive clauses providing, (1) that leased machines performing certain operations should not be used on shoes upon which certain other operations had not been performed by machines of the lessor; (2) that as to certain kinds, if the lessor's machines were not used exclusively, the leases should be forfeitable; (3) for purchase of supplies exclusively from the lessor; (4) that leased insole machines should only be used on shoes upon which certain other operations were done by lessor's machines; (5) that failure of the lessee to take additional machines of certain kinds from the lessor would forfeit the right to retain machines already leased; (6) for payment of a royalty on shoes operated upon by competing machines; (7) for a lower royalty where the lessee agreed not to use certain machines on shoes lasted on machines not leased from the lessor, the lessor reserving the right to cancel any lease for breach of any provision in that or any other lease or license agreement between the parties, irrespective of previous breaches, unnoticed, waived or condoned. Held, that, although there was no specific agreement not to use machinery of a competitor, the practical effect of these restrictive provisions, thus tied together, was to prevent such use and necessarily to lessen competition and to tend to create monopoly, in violation of § 3 of the Clayton Act. P. 258 U. S. 456.

4. A decree is an estoppel between the same parties in a second suit only when rendered on the same cause of action or where, the causes of action being different, a point or issue determined in the first suit is sought to be relitigated in the second. P. 258 U. S. 458.

5. The effect of a former decree as an estoppel is ascertained from the issues made by the pleadings and the questions essential to the decision as shown by the record, and not from isolated expressions of the court's opinion. P. 258 U. S. 460.

6. This being a suit to enjoin the use of restrictions in leases of machinery as violating § 3 of the Clayton Act, which expressly applies to patented as well as unpatented machines and prohibits leases the effect of which "may" be substantially to lessen competition or tend to create monopoly, the government is not estopped by the adverse decree, in its former suit ( 247 U. S. 247 U.S. 32) seeking to dissolve the defendant corporation as a combination and monopoly forbidden by the Sherman Act, wherein the leases here in controversy also were attacked as contracts violating that act and were held not so

Page 258 U. S. 453

in view of the patent law, but where their validity under the Clayton Act was not and could not have been involved. P. 258 U. S. 459.

7. A patent secures the right to exclude others from making, using or vending the thing patented without the permission of the patent owner, but does not exempt him from regulations consistent with those rights, made by Congress in the public interest, forbidding agreements which may lessen competition or build up monopoly in interstate trade. P. 258 U. S. 463.

8. Section 3 of the Clayton Act is consistent with patent rights antedating the act, and does not deprive their owners of property without due process of law. P. 258 U. S. 462.

9. In a suit to enjoin use of lease provisions found violative of the Clayton Act, held not a defense that an alternative form of lease, claimed to be unobjectionable, was offered the lessees, or that the lessor, after enactment of the statute, adopted a form of temporary agreement not containing the clauses in controversy. P. 258 U. S. 464.

10. Leases of machines made in connection with and as a part of a transaction involving shipment of the machines from one state to the user in another are made in interstate commerce, and subject to the control of Congress exerted in § 3 of the Clayton Act. P. 258 U. S. 465.

264 F. 138 affirmed.

Appeal from a decree of the district court enjoining the appellants from the use of certain restrictive clauses, found violative of § 3 of the Act of October 15, 1914, c. 323, 38 Stat. 730, in leases of shoe machinery in interstate commerce, executed since the passage of that act or to be made in the future.

Page 258 U. S. 454

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