# Opposition Brief — Agrashell, Inc. v. Hammons Products Co.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1973
- **Citation:** 414 U.S. 1022

## Text

es ree
SUPREME COURT, U. & om gout,

Se.
MICHAEL RODAK, JR.,CLERK |

IN THE

Supreme Court of the United States

OcToBER TERM, 1973

No. 73-140

AGRASHELL, INc. Petitioner
Vv.

Hammons Propucts Company, Respondent

BRIEF IN OPPOSITION

JOHN C. Scorr
WortH Row ey
STEVEN K. YABLONSKI
1730 Rhode Island Ave., N.W.
Washington, D.C. 20036
Counsel for Respondent

Of Counsel:

Morris CHERTKOV
1730 Rhode Island Ave., N.W.

Washington, D.C. 20036

Press or Byron S. ADAMS PRINTING, INC., WASHINGTON, D. C.

<>

TABLE OF CONTENTS

Page
IWEROBUOTION ccc ccccccccccccccsccecescescccccees “* 8
Reasons FoR DENYING THE WRIT .........+-+0eeee00: 2
I. As to Question 1, Fact of Damage ............ 2

A. The question submitted misstates the facts
and is not presented by the record ......... oe

B. No confusion or conflict exists in the appli-
GREED BW occcncésvecscececccvesequaesscesse 5

C. There are ample additional grounds for sus-
taining the lost-profits damage award ...... 7

II. As to Question 2, The ‘‘Commission Sales’’ Con-
UD. occcvsducdeskevdcuassedsesceneeceweenee 11

A. This question is not presented by the record 11

B. The finding below of a Section 1 Sherman Act
violation is correct for reasons quite unre-
lated to the question presented ............ 14

a ry er Ener Te Trt 16

INDEX OF CITATIONS
Case CITATIONS:

Albrecht v. Herald Company, 390 U.S. 145, 150 (1968) 9
American Tobacco Co. v. United States, 328 U.S. 781,

GD CIEE) vccccccvsescvcccceessecsesseceseses 9
Atlas Building Products Co. v. Diamond Block & Grav-

el Co., 269 F.2d 950 (10th Cir. 1959) ............ 5, 6
Bigelow v. R. K. O. Radio Pictures, 327 U.S. 251, 264

CED ncnkcencssnevecsedenvcencsteveesannvess 5, 6
Continental Ore Co. v. Union Carbide & Carbon Corp.,

ee ree 5, 7, 10, 15
Eastman Kodak Co. v. Southern Photo Materials Co.,

Se Wis GE CUED wcccsccvesececssevencessnes 5

Flintkote Co. v. Lysfjord, 246 F.2d 368 (9th Cir. 1957) 6
Hammons Products Co. v. Agrashell, Inc., No. 73-25 .. 10

EATER INI RIO ET OE

ii Table of Contents Continued

Page
Herman Schwabe, Inc. v. United Shoe Machinery Corp.,
Oe eee Oe CE GA. BOGE ccc cctenvescreceeess
Interstate Circuit v. United States, 306 U.S. 208, 277
SEs conve ee theres coddeeesuneeetvedhe+exece 9
Kobe, Inc. v. Dempsey Pump Co., 198 F.2d 416 (10th
i i Ode ueeesvce Ss veesabeenseds ae ee ane 6
Maryland & Va. Milk Pro. Ass’n. v. United States, 362
Ot CED ed ck ecexeaneuntaesetereess 10

Mayer Paving ¢ Asphalt Co. v. General Dynamics
Corp., — F.2d —, 1973 Trade Cases { 74,719 (7th

PE esti ccewd siuvveocctsuxianeteuatees 7
Perma-Life Mufflers, Inc. v. Intern. Parts Co., 392 U.S.
cuvarncayesetcevensceretarseeus 7
Richfield Oil Corp. v. Karseal Corp., 271 F.2d 709 (9th
SE Van Veaenesenoeureascensetneest 5, 6,7
Story Parchment Co. v. Paterson Paper Co., 282 U.S.
EN oa hee b4 Ger eve as bua we Reena 5
United States v. Container Corp. of America, 398 U.S.
NCES ona eas ete avers valet saueareentee 9
United States v. General Electric Co., 272 U.S. 476
ee et aed ae
F .

Indeed, we do not believe either of the ‘‘questions
presented’’ in the Petition is genuinely raised by the
facts of record in this case. Any attempt to restate the
questions in terms we consider justified by the factual
record would necessarily produce questions quite dif-
ferent from those Agrashell intended to bring here.
Therefore, we have foregone any statement here of
‘‘Questions Presented.”’

To avoid repetition, we have also dispensed with
a separate ‘‘Statement of the Case’’ since every ex-
ception we take to the Petition’s recitation of the
facts must logically be dealt with below in our reasons
for opposing issuance of the writ.

REASONS FOR DENYING THE WRIT
I. As to Question 1, Fact of Damage

A. The question submitted misstates the facts and is not
_ presented by the record.

Neither the record nor any statement, finding, or
ruling by the courts below supports the assertion in
question No. 1 that the testimony of Hammons’ dam-
age expert is ‘‘the only evidence that claimant had
been injured’’ (Petition, p. 2). Indeed, the Petition
itself recognizes the presence in the record of the
evidence that formed the basis for the damage ex-
pert’s opinions and conclusions — contractual com-
mitments by key distributors not to buy from Ham-
mons.

At page 9, the Petition recites the proven facts
that, whereas Hammons was foreclosed from making
any sales in the portion of the market covered by
Agrashell’s exclusive-dealing arrangements, its sales
in another market where those exclusive-dealing ar-

rangements were not operative exceeded Agrashell’s
sales in a ratio of 60 to 40.

In stating the first question, moreover, the Petition
draws its hyperbolic terminology — ‘an economist’s
damage theory,’ ‘many practical defects,’’ and
“* ‘serious failings’ of proof’? — from statements in
the court of appeals’ opinion relating to testimony on
the amount, not the fact of damages.’ Agrashell has
written a question designed to exploit unrelated res-
ervations of the court of appeals. Unless Agrashell is
asking this Court to reexamine the evidence and to
decide the factual question as to the sufficiency of the
evidence, the only issue here is one easily answered:
whether an appellate court’s doubts or the jury’s ver-
dict is to prevail once the court has ascertained that
there was an evidentiary basis for finding the fact of
injury.

Far from being the only evidence of “fact of dam-
age,’’ the testimony of Hammons’ damage expert was
put in evidence, first, to give the jury guidance as to
the conclusions and inferences to be drawn from the
primary evidence of the fact of Hammons’ injury

’The court of appeals’ reference to the damage expert’s testi-
mony as a mere “‘theory’’ with ‘‘many practical defects”’ appears
at page 21 of the opinion (Petition, Appendix A), where the
court is discussing the expert’s explanation of his calculation of
the amount of business Hammons lost in the foreclosed market
and the extent of its loss on each ton of material it had to divert
to a less lucrative market. Mention of the ‘serious failings’’
of the expert’s testimony is made at page 24 as a summation of
the foregoing discussion of ‘‘defects’’ in the expert’s methods of
estimating the profits lost and as a prelude to the court’s conelu-
sion that ‘‘some damage’’ had been proven within the meaning
of Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100,
114 n. 9 (1969).

a eth renee eee

tanaindiesiinn ant

PEORIA. LEMON PHAN

and, second, to establish the amount of the damage
suffered.

The two exclusive-dealing contracts found by the
court of appeals to be in unreasonable restraint of
trade were maintained between Agrashell and the two
most advantageously situated distributors in the
market. These two distributors were the leading man-
ufacturers and sellers of the blasting equipment in
which the nutshell abrasive sold by Agrashell and
Hammons is used (III App. 752T). As such, they were
relied upon by the equipment customers for supplies
of the abrasives best adapted for use in the blasting
equipment (II App. 234T-235T ; III App. 733T-734T ;
III App. 855T-856T ; V App. 14-19, 41-47). When the
leading producer of a product secures exclusive-
dealing arrangements with buyers having preferred
marketing positions, the depressing effect of those
agreements upon the business of competing producers
is obvious. Even Agrashell’s expert witness agreed
that such arrangements significantly strengthen one’s
marketing position (III App. 924T-925T).

As long as these exclusive-dealing arrangements
were observed, they necessarily denied Hammons
access to these two preferred marketing outlets. Ham-
mons’ initial advertising cempaign when it entered
the abrasives market (II App. 229T-233T; IV App.
16-20) and its subsequent sales efforts directed to the
entire trade, including Pangborn and Wheelabrator,
the two distributors tied to Agrashell through exclu-
sive-dealing contracts, are well documented (II App.
56T-57T ; II App. 229T-235T; V App. 105-108). At
all relevant times, Hammons had ample soft grit abra-
sive material to supply the market with an additional
one thousand to fifteen hundred tons annually (II App.

238T-239T )—more than enough to fill the orders its
expert projected in his damage calculations.

The record evidence of fact of damage in this case
is like that of other private antitrust cases in which
the plaintiff sought recompense for expected sales lost
by reason of the defendant’s predatory or exclusionary
business practices. Richfield Oil Corp. v. Karseal
Corp., 271 F.2d 709 (9th Cir. 1959); Atlas Building
Products Co. v. Diamond Block & Gravel Co.,' 269
F.2d 950 (10th Cir. 1959). For fact of damage, rather
than amount of damage, Hammons relied primarily,
not on the expert’s testimony, but on ‘circumstantial
evidence’”’ from which the trier of fact could “‘infer
. . . that the necessary causal relation between...
[Agrashell’s] conduct and the claimed damage ex-
isted.”” Zenith Radio Corp. v. Hazeltine Research,
Inc., supra, 395 U.S. at 125.

B. No confusion or conflict exists in the applicable law.

It is a late date indeed to be raising here questions
relating to the standard of proof in private antitrust
cases for establishing that reasonably anticipated
profits were lost and that the loss resulted from an
antitrust violation. The applicable criteria were stated
and restated in at least four decisions of this Court
preceding Zenith, supra. Continental Ore Co. v. Union
Carbide & Carbon Corp., 370 U.S. 691, 699 (1962) ;
Bigelow v. RKO Radio Pictures, 327 U.S. 251, 264
(1946); Hastman Kodak Co. v. Southern Photo
Materials Co., 273 U.S. 359 (1927) ; Story Parchment
Co. v. Paterson Paper Co., 282 U.S. 555 (1931).

Trial and appellate courts alike must also
observe the practical limits of the burden of
proof which may be demanded of a treble-damage

plaintiff who seeks recovery for injuries from a
partial or total exclusion from a market; damage
issues in these cases are rarely susceptible of the
kind of concrete, detailed proof of injury which is
available in other contexts. The Court has repeat-
edly held that in the absence of more precise
proof, the factfinder may ‘‘conclude as a matter
of just and reasonable inference from the proof
of defendants’ wrongful acts and their tendency
to injure plaintiffs’ business, and from the evi-
dence of the decline in prices, profits and values,
not shown to be attributable to other causes, that
defendants’ wrongful acts had caused damage to
the plaintiffs.”’ Zenith Radio Corp. v. Hazeltine
Research, Inc., supra, 395 U.S. at 123-4, quoting
Bigelow v. RKO Pictures, Inc., supra.

In the courts of appeals, these criteria have been
cited and applied uniform’. Richfield Owl Corp. v.
Karseal Corp., supra; Ati Building Products Co.
v. Diamond Block & Gravel Vo., supra; Flintkote Co.
v. Lysfjord, 246 F.2d 368 (9th Cir. 1957) ; Kobe, Inc.
v. Dempsey Pump Co., 198 F.2d 416 (10th Cir. 1952).
The results have varied because the facts have varied,
not because the courts are divided or confused as to
the applicable principle of law. In Herman Schwabe,
Inc. v. United Shoe Machinery Corp., 297 F.2d 906
(2nd Cir. 1962), upon which Agrashell relies (Peti-
tion, p. 16), there was no departure from the above
line of cases. That case involved the standard for
proving amount of damage, not the occurrence of an
injury or its causal connection with the antitrust
violation.

Nor is it essential, as the Petition here seems to
suggest (e.g., p. 14), that the antitrust violation be
the only possible explanation in the record for plain-
tiff’s loss of anticipated profits. ‘‘Normally it would be

I a A Ee RS

7

enough .. . if the defendant ‘materially contributed’
to plaintiff’s injury.’’ Perma-Life Mufflers, Inc. v.
Intern. Parts Co., 392 U.S. 134, 143 (1968), citing
Continental Ore Co. v. Union Carbide & Carbon Corp.,
supra. See also Zenith Radio Corp. v. Hazeltine Re-
search, Inc., supra, 395 U.S. at 114, n. 9.

‘‘Having shown the illegal restraint applied to its
product, [Hammons] had proved the causal connec-
tion between the defendant’s wrongful act and the
loss of revenue.’’ Richfield Oil Corp. v. Karseal
Corp., supra, 271 F.2d at 713.

C. There are ample additional grounds for sustaining the
lost-profits damage award.

Many of the shortcomings Agrashell assigns to
Hammons’ proof of injury are attributable directly to
the unlicensed surgery the court of appeals performed
on the Section 1 Sherman Act case Hammons had pre-
sented to the jury. The court below (1) usurped the
function of the jury when it weighed the conflicting
evidence (Opinion, p. 17) and decided Hammons had
failed to prove exclusive-dealing and resale price main-
tenance arrangements between Agrashell and
‘‘agents’’ other than Pangborn and Wheelabrator,?
(2) ignored or overlooked portions of the record when
it stated (Opinion, p. 24) that Agrashell did not use
its patent as an illegal barrier to competition prior to

2‘‘The Seventh Amendment provides that ‘no fact tried by a
jury, shall otherwise be re-examined in any Court of the United
States,’ U.S. Const. amend. VII. As I see it the verdict of this
jury should not have been ‘re-examined’ and overturned nor the
judgment set aside.’’ Mr. Justice Clark, dissenting, in Mayer
Paving & Asphalt Co. v. General Dynamics Corp., — F. 2d —,
1973 Trade Cases 74,719 (7th Cir. 1973).

the patent’s expiration and (3) erred as a matter of
law when it decided (Opinion, p. 24) that Hammons’
failure to establish an attempt to monopolize ‘‘ne-
gated’’ Agrashell’s misuse of its patent as an illegal
barrier to sales by Hammons.

1. In its weighing of the evidence on the existence
of a Section 1 Sherman Act combination between
Agrashell and its ‘‘agents’’ other than Pangborn and
Wheelabrator, the court of appeals’ opinion in and of
itself discloses the error committed. The court points
first to evidence ‘‘that Agrashell dealt with the agents
whether or not they agreed to the statement of policy”’’
(Opinion, p. 17). Since it was this statement of policy
that embodied Agrashell’s exclusive-dealing and re-
sale price maintenance terms of sale (V App. 10-13),
the court’s statement recognizes the undeniable evi-
dence in the record that at least some of the other
agents were induced to enter into unlawful agreements
(II App. 366T; III App. 683T-684T, 972T-973T; V
App. 22-23, 26, 32, 33, 37, 49, 67, 70, 79, 82, 83, 84, 93).
Apparently the court of appeals made the preposterous
assumption that Hammons had the burden or obliga-
tion of proving that agreement had been reached with
every ‘‘agent’’ before it could be found that agree-
ments had been reached with any of them and before
such agreements could be held violative of the Sherman
Act. |

If the court of appeals had been the trier of fact in
this case, it might have been justified in concluding, on
the basis of the testimony it described (Opinion, p.
17), that two of the agents had never heard of the
statement of policy. But the jury was entitled to be-
lieve Agrashell’s own statements to the trade that ‘‘all
of them follow the distribution policy that we have

a a ne ne nn ee

9

established”’ (V App. 22, 33, 40, 80). There is, in any
event, no basis in the law for the court of appeals’
insistence upon proof of ‘‘either formal or informal
contractual relationships’’ (Opinion, p. 17). A con-
tract is only one means of creating a conspiracy or
combination in restraint of trade. Much less formal
arrangements have frequently been held to have done
so. United States v. Container Corp. of America, 393
U.S. 333 (1969); United States v. Paramount Pic-
tures, Inc., 334 U.S. 131, 142 (1948) ; American Tobac-
co Co. v. ‘United States, 328 U.S. 781, 809 (1946);
Interstate Circuit v. United States, 306 U.S. 208, 227
(1939). It is enough that Agrashell encouraged — and
sometimes demanded — observance of the statement
of policy and many ‘‘agents’’ were persuaded to com-
ply with it. Albrecht v. Herald Company, 390 U.S.
145, 150 (1968); United States v. Parke, Davis and
Company, 362 U.S. 29, 43 (1960).

2. With respect to the status of Agrashell’s
patent, the court of appeals declared: ‘‘The assump-
tion that the patent was an illegal barrier prior to its
expiration was conclusively negated when the trial
judge ruled that the patent had not been fraudulently
procured’’ (Opinion, p. 24). By thus eliminating the
patent as one of the ‘‘structural supports’’ for the
expert’s damage testimony, the court ignored a basic
portion of Hammons’ case — that the patent was
used to monopolize a product market broader than the
scope of the patent grant. The Perry patent covered
‘‘pelletized nutshells . . . with the hardness of black
walnut shells” ‘‘for use in air blasts for cleaning
metal’’ (IV App. 3); the exclusive-dealing commit-
ments secured thr ugh the leverage of the patent cov-
ered all ‘‘soft grit blasting and cleaning materials’’

10

(V App. 11, 14-15, 41-42), without regard to end use
or cleaning method.’

3. As for the failure of Hammons’ attempt-to-
monopolize count, the only element the court of ap-
peals found lacking is proof of dangerous probability
of success.* That finding does not negate the proof of
the overt activities whose ‘‘dangerous probability”
had to be assessed. Nor did it bar Hammons from rely-
ing on those overt activities as some of the operating
market forces that made the illegal exclusive-dealing
arrangements more effective and hence more dam-
aging to Hammons. Even entirely lawful conduct can
sometimes be shown to be part of a scheme or course
of conduct violative of Section 1 of the Sherman Act.
Maryland & Va. Milk Pro. Ass’n. v. United States,
362 U.S. 458, 472 (1960); United States v. United
States Gypsum Co., 340 U.S. 76, 87 (1950). Surely
conduct that, if successful or likely to be suc-
cessful in achieving its purpose, would violate Section
2 of the Sherman Act can be treated as part of the
market context in which the existence and extent of
injury to a competitor is to be determined.

Hammons should have been given ‘‘the full bene-
fit of [its] proof without tightly compartmentalizing
the various factual components and wiping the slate
clean after scrutiny of each.’’ Continental Ore Co. v.
Union Carbide & Carbon Corp., supra, 370 U.S. at
699. Hammons’ antitrurt claim is based on Agrashell’s

3 Hammons’ contention that Agrashell had extended the patent
monopoly ‘‘to nutshell products not covered by the patent’’ was
specifically called to the jury’s attention by the trial court (III
App. 986T).

* This portion of the decision below has been challenged in Ham-
mons Products Co. v. Agrashell, Inc., No. 73-25.

11

single, cohesive, and protracted course of anticompeti-
tive conduct. (See Hammons’ opening statement, IT
App. 27T-28T, and closing argument, III App. 1007T-
1011T.) Hammons’ claim for lost profits is not predi-
cated on any theory that exclusive-dealing contracts
are unlawful per se but that they represent an un-
reasonable restraint of trade when considered along
with Agrashell’s regulation of price, filing and
threats of patent-infringement suits to obtain exclu-
sive-dealing contracts going beyond the scope of its
patent, and contractual reservation to itself of all busi-
ness with the government and with the dental-supply
industry.

II. As to Question 2, The “Commission Sales” Contract
A. This question is not presented by the record.

The court below contented itself with an elliptical
one-paragraph exposition of its reasons for denying
the Agrashell-Wheelabrator contract the protection
of “‘the doctrine promulgated in United States v.
General Electric Co.,’”’ 272 U.S. 476 (1926) (Opinion,
p. 17.) GE permits a manufacturer to use agency ar-
rangements to control the price charged for his
product at wholesale and retail. Seizing upon the
brevity of the court of appeals’ treatment of the mat-
ter, Agrashell understates the nature and terms of
the agreement held to have ‘‘extended the life of the
patent beyond the expiration date’’ (Opinion, p. 18).
It presents here for review, and defends, only the
price-fixing terms of the contract.

But Agrashell’s agreement with Wheelabrator is
not an agency contract ‘‘merely for the distribution of
a product warehoused and priced by the manv-
facturer’’ (Petition, p. 3). It is a contract that (1)

12
leaves the ‘‘agent,’’ Wheelabrator, ‘‘free temporarily’’
to deal elsewhere only when ‘‘ Agrashell is unable to
fulfill orders’? (V App. 15), (2) denies Wheelabrator
authority to compete with Agrashell in selling to ‘‘the
rubber industry, the dental supply industry and the
ornamental jewelry industry’ (V App. 15), (3) forbids
Agrashell to make bids or sales at prices below those
dictated to Wheelabrator (V App. 17), and (4) was
supplemented by an understanding that Wheelabra-
tor would not compete with Agrashell for government
contracts (V App. 78, 81).

Consequently, what we have here is not simply the
unilateral establishment by a manufacturer of the
price at which he will make, through an agent, the
first sale of his patented product. Rather, we have an
‘‘aggregation of trade restraints’’ (United States v.
Sealy, Inc., 388 U.S. 350, 354 (1967)) that takes this
case completely outside the scope of the General Elec-
tric doctrine, supra. Nothing in the General Electric
opinion suggests that a contract of agency can never
contain or constitute a Section 1 Sherman Act vio-
lation. When the patent-holding manufacturer and
his ‘‘agent’’ are competing or potentially competing
independent businessmen, they are not free to elimi-
nate competition between themselves by agreement.
United States v. Masonite Corp., 316 U.S. 265 (1942).
A fortiori, they are not free to make exclusive-dealing
and other contractual commitments that protect the
patent owner from competition after the expiration
of his patent.

Any possibility that the court of appeals was
relying exclusively on the pricing provisions of the
agreement between Agrashell and Wheelabrator is
negated by the court’s holding with respect to the

13

Pangborn contract. The latter contract spécifies that
‘‘Agrashell reserves no right to set selling prices’’
(V App. 45). Yet the court below, stressing the exclu-
sive-dealing feature of that agreement, found the
same illegal extension of the patent monopoly
(Opinion, pp. 18-19).

Indeed, the court of appeals did not even decide that
the Wheelabrator contract is in fact a contract of
agency. Its differentiation of the General Electrie doc-
trine is prefaced with the phrase: ‘‘ Assuming that the
Wheelabrator contract was a contract of agency, see
RESTATEMENT (2d) or AGENCY §14J (1958)”’ ( Opinion,
p. 18). This reference to the section of the Restatement
that deals with the distinction between an agent and a
buyer is a clear manifestation that the lower court
stopped short of accepting Agrashell’s contention
that it had made an agency contract. Since §14J of the
Restatement makes agency status depend ‘upon
whether the parties agree that his duty is to act pri-
marily for the benefit of the one delivering the goods
to him or is act primarily for his own benefit,”’ there
are serious obstacles to classifying Wheelabrator as an
agent. It is difficult, first of all, to understand why
Wheelabrator needs price-support assurances from
Agrashell if Wheelabrator is acting primarily not for
its own benefit but for Agrashell’s. Moreover, the
agreement recognizes Wheelabrator as being a pro-
ducer and marketer of various types of cleaning equip-
ment and the materials used therein (V App. 14) and
specifies that Wheelabrator is to make sales under the
contract in its own name, not in Agrashell’s name (V
App. 15). Each of these features of the arrangement
is inconsistent with agency status. See RESTATEMENT

- ees eT eeeee

PINAR TRO SE I de

14

(2d) or AcENoy, §14J, Comment b(6) and (7). See also
United States v. Masonite Corp., supra. *

Agrashell makes much of the fact that the written
contract with Wheelabrator is terminable on sixty
days’ notice. But it is terminable only on its anniver-
sary date, November 1 (V App. 18), which means its
initial force necessarily extended to a date nearly five
months after the expiration of Agrashell’s patent on
June 10, 1964 (IV App. 2). It actually remained in
effect right up to the time of the trial of this case in
1970. Agrashell’s point boils down to an untenable
argument that an agreement in restraint of trade
escapes condemnation under Section 1 of the Sherman
Act if it is voidable at the option of either party.

B. The finding below of a Section 1 Sherman Act violation is
correct for reasons quite unrelated to the question presented.

To reach the second question presented by the Peti-
tion, this Court must (1) view the Wheelabrator con-
tract in isolation from the rest of Agrashell’s anti-
competitive activity proven at the trial (as the court of
appeals apparently did), (2) ignore all restrictive fea-
tures of the agreement except Agrashell’s reservation
of the right to set price and (3) avoid comparing the
scope of the patent’s product claims with the products
covered by the contract and its exclusive-dealing
clause.’

5 Had the contract been limited to ‘‘abrasive material for use
in air blasts for cleaning metal comprising pelletized nutshells
having the kardness of black walnut shells’? (IV App. 3), an
exclusive-dealing arrangement for the life of the patent would have
been lawful despite the contract’s other restraints on competition
between the parties. Under these circumstances, however, an
exclusive-dealing clause would have been superfluous until the
patent had expired. Agrashell’s status as exclusive supplier would
have been fully protected by its limited patent monopoly.

15

If the case Hammons presented to the jury at trial
is not thus ‘“compartmentalized”’ (Continental Ore
Co. v. Union Carbide & Carbon Corp., supra, 370 U.S.
at 699), the restraint of trade shown is of an intensity
and scope that extends beyond not merely the practice
sanctioned in the General Electric case but also that
outlawed in United States v. Masonite Corp., 316 U.S.
265 (1942). Masonite, like Agrashell, utilized *‘the
sales organization of another business—a business with
which [it] has no intimate relationship—. . . a regimen-
tation of a marketing system . . . peculiarly suscep-
tible to the restraints of trade which the Sherman Act
condemns.”’ United States v. Masonite Corp., supra,
316 U.S. at 279. Masonite, like Agrashell, reserved
specific markets to itself and limited those available to
the “‘agent.”’ 316 U.S. at 271. But Masonite’s ‘fagents’’
were left free to deal in competing wallboard
products. Indeed, many of Masonite’s ‘fagents’’ were
holders of competing patents and manufacturers of
competing wallboard products. Even ignoring Agra-
shell’s extension and enforcement of its ‘fagency’’
contracts beyond the 17-year life of the Perry patent,
Agrashell’s control of the market in which its patent
functioned was much more complete than that of
Masonite.

MEIC TG ILE MA: REALE PED

16

CONCLUSION

For the reasons stated above, the Petition for a
Writ of Certiorari should be denied.

Respectfully submitted,

Joun OC. Scorr
Worth ROowLeEY
Sreven K. YABLONSKI
1730 Rhode Island Ave., N.W.
Washington, D.C. 20036
Counsel for Respondent

Of Counsel:

Morris CHERTKOV
1730 Rhode Island Ave., N.W.
Washington, D.C. 20036

Fs EL LG MALL ELD RES RN ENNIS

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385607_0919%3A2. Public record. Not legal advice.