Argument for the United States.

that this is so even though the combination is made without resorting to any wrongful methods to coerce anyone to come into the combination. Swift v. United States, 196 U. S. 375; Standard Sanitary Mfg. Co. v. United States, 226 U. S. 20; Standard Oil Co. v. United States, 221 U. S. 1; United States v. American Tobacco Co., 221 U. S. 106; United States v. Union Pacific R. R. Co., 226 U. S. 61; United States v. The Reading Co., 226 U. S. 324.

The adoption by the United Shoe Machinery Company of the "tying" clause lease whereby a customer was compelled to take all his machines from the defendants or all from the Independents was a direct restraint upon competition and trade (1) of the defendants by limiting their trade to those who would agree to use only the de[206] fendants' machines; (2) of the customers by depriving them of the right to use some machines unless they would also use others, (3) of the Independents by preventing them from selling their machines to their former customers. Montague v. Lowry, 193 U. S. 38; United States v. St. Louis Terminal, 224 U. S. 383; Standard Sanitary Mfg. Co. v. United States, 226 U. S. 20; United States v. Union Pacific R. R. Co., 226 U. S. 61; United States v. The Reading Co., 226 U. S. 324.

The patent laws do not authorize the "tying" clause leases.

The precise point decided in Henry v. Dick Co., 224 U. S. 1, was that a patentee might impose a restriction that his machine should be used only in connection with certain supplies which in point of fact bore so direct a relation to the invention that it could not be operated without their use in physical connection with the patented machine.

The doctrine of Henry v. Dick Co. should not be extended to permit a license restriction beyond the actual use of supplies in connection with the necessary physical operation of the patented machine. Standard Sanitary Mfg. Co. v. United States, 226 U. S. 20.

But even if the doctrine of Henry v. Dick Co. is extended to the extreme limit of permitting any kind of restriction

Argument for Defendants.

upon the use of a patented machine, yet when such restrictions are a part of one general scheme of combination the patent laws no longer authorize such restrictions. The rights given by the patent laws do not give universal license against the positive prohibitions of the Sherman Law, which is a limitation on all rights that might otherwise be pushed to evil consequences. Standard Sanitary Mfg. Co. v. United States, 226 U. S. 20; United States v. The Reading Co., 226 U. S. 324.

The Criminal Appeals Act, 34 Stat. 1246, was not repealed by the adoption of the Judicial Code.

[207] The defendant's right of appeal to the Supreme Court was given in the fifth and sixth sections of the Circuit Court of Appeals Act which, in the proposed revision of the laws of the United States, was placed in chapter 10 on the "Supreme Court," in the title called "The Judiciary." The right of the United States to appeal to the Supreme Court was contained in the Criminal Appeals Act, which, in the same proposed revision was placed in chapter 18 on "Procedure on Error and Appeal."

Congress, in passing the Judicial Code, did not attempt to cover the whole body of the revision submitted to it, but only adopted the first 14 chapters of the title "The Judiciary"; so that while it incorporated into the Judicial Code, chapter 10, on the "Supreme Court" giving the defendant a right to appeal, it did not attempt to cover any of the field embraced in the later chapters of the revision. Therefore, those subjects, inter alia, which were dealt with in proposed chapter 18 were never even considered by Congress and therefore remained controlled by the former laws governing them-one of which was the Criminal Appeals Act. (Cf. Committee Report of 1907 of "Commission to Codify and Revise the Laws of the United States" and the Joint Committee of Congress' Revision of 1910. See Title XVI, "The Judiciary," chapters 10 and 18).

Mr. Frederick P. Fish and Mr. Charles F. Choate, jr., with whom Mr. Malcolm Donald and Mr. William A. Sargent were on the brief, for defendants in error:

Only a single question is presented by the case.

95825°-VOL 5-17-14

Argument for Defendants.

The lease question is not before this court, as hereinafter shown.

The fact that the machines manufactured by the United Shoe Manufacturing Company are protected by letters patent was not considered by the District Court in its construction of the Sherman Act, and is not open in this court.

[208] The facts alleged in the first and second counts are not brought out or are erroneously stated by the United States.

The second count is almost identical, word for word, with the first count, except as to the allegation in regard to interstate commerce, and changing the charge of combination of defendants' own trade into one of conspiracy to restrain the trade of shoe manufacturers in shoe machinery.

On this writ of error, the question is whether the District Court erred in the construction of the Anti-Trust Act in sustaining the demurrers to counts one and two and so far as that act is construed by the District Court in its opinion relating to those two counts.

For construction of the Criminal Appeals Act as applied to the question before this court, see United States v. Bitty, 208 U. S. 393; United States v. Keitel, 211 U. S. 370; United States v. Mason, 213 U. S. 115; United States v. Mescall, 215 U. S. 26; United States v. Stevenson, 215 U. S. 190; United States v. Kissel, 218 U. S. 601; United States v. Barber, 219 U. S. 72; United States v. Miller, 223 U. S. 599.

The District Court decided the two counts now before this court were bad for duplicity in pleading, that is to say, on a question of general law not involving the construction of the Sherman Act, and that cannot be reviewed here. United States v. Keitel, 211 U. S. 370; United States v. Mason, 213 U. S. 115; United States v. Mescall, 215 U. S. 26; United States v. Stevenson, 215 U. S. 190.

The District Court also held the two counts bad on a second ground, namely, that the original organization of the company was neither a combination in restraint of trade nor a conspiracy in restraint of trade under the Sherman Act. By such decision the District Court construed the Sherman Act.

Argument for Defendants.

The Criminal Appeals Act of 1907, under which the present writ of error was brought, was repealed by the [209] Judicial Code which became effective January 1, 1912, and therefore this court has no jurisdiction, as the writ of error was filed after that date. United States v. Stevenson, 215 U. S. 190.

The fact that the machines manufactured by the company are protected by letters-patent was not considered by the District Court in its construction of the Sherman Act, and is not open in this court.

The District Court was not in error in its construction of the Sherman Act in relation to counts one and two.

The organization of the company by said defendants together, and the turning over by said groups of defendants to and the taking over by the company of the stocks and business of the three corporations, was not, and is not, a combination in restraint of defendants' own trade nor a conspiracy in restraint of trade of the shoe manufacturers in shoe machinery. United States v. American Tobacco Co., 221 U. S. 106.

By the organization of the United Shoe Machinery Company there was no restriction of competition. The three groups of defendants, prior to the organization of the company, were not engaged in competition with each other. Their businesses were absolutely different, and each business related to a different commodity. Kokomo Fence Machine Co. v. Kitselman, 189 U. S. 8; Addyston Pipe Co. v. United States, 175 U. S. 211;Northern Sec. Co. v. United States, 193 U. S. 197; Montague v. Lowry, 193 U. S. 38; Miles Medical Co. v. Park Co., 220 U. S. 373; Shawnee Compress Co. v. Anderson, 209 U. S. 423; Continental Wall Paper Co., v. Voight, 212 U. S. 227; U. S. Machinery Co. v. La Chapelle, 212 Massachusetts, 467; Swift & Co. v. United States, 196 U. S. 375; United States v. John Reardon Co., 191 Fed. Rep. 454; Standard Sanitary Co. v. United States, 226 U. S. 20; United States v. Un. Pac. R. R. Co., 226 U. S. 61; United States v. Terminal R. R. Ass'n, 224 U. S. 383; United States v. Reading Co., 226 U. S. 324.

[210] By the organization of the company the defendants, taken individually, or in groups, or together, did not agree

Argument for Defendants.

to restrain such trade as they had in different commodities, or in any manner to restrain their own trade. Addyston Pipe Co. v. United States, 175 U. S. 211; Montague v. Lowry, 193 U. S. 38; Shawnee Compress Co. v. Anderson, 209 U. S. 423; Continental Wall Paper Co. v. Voight, 212 U. S. 227; Ellis v. Inman, 131 Fed. Rep. 182; Standard Oil Co. v. United States, 221 U. S. 1; United States v. American Tobacco Co., 221 U. S. 106; Blount Mfg. Co. v. Yale Mfg. Co., 166 Fed. Rep. 555; United States v. TransMissouri Ass'n, 166 U. S. 290; Swift & Co. v. United States, 196 U. S. 375; Miles Medical Co. v. Park Co., 220 U. S. 373; United States v. Standard Sanitary Co., 191 Fed. Rep. 172; Bigelow v. Calumet & Hecla Co., 167 Fed. Rep. 721.

The combination created by the organization of the United Shoe Machinery Company was purely an economic arrangement, not in violation of any rule in restraint of trade at common law, or which has been announced by the Supreme Court. Joint Traffic Case, 171 U. S. 505.

The combination of businesses, each dealing with a different commodity, into one corporation, has never been held a restraint of trade either at common law or under the Sherman Act. United States v. American Tobacco Co., 221 U. S. 106; United States v. Reading Co., 226 U. S. 324; Union Pacific Coal Co. v. United States, 173 Fed. Rep. 737; United States v. Standard Oil Co., 173 Fed. Rep. 177.

If

That the District Court was right in the only construction of the Sherman Act now before this court, to wit, in holding that the organization of the United Shoe Machinery Company was not within the purview of the Sherman Act, is further apparent from the fact that such organization of the United Shoe Machinery Company had no direct or immediate effect upon interstate commerce. it had any effect at all upon interstate com[211]merce, such effect was accidental, secondary, remote, and not even probable. Bigelow v. Calumet & Hecla Co., 167 Fed. Rep. 721; Anderson v. United States, 171 U. S. 604; Field v. Barber Asphalt Paving Co., 194 U. S. 618; Standard Oil Co. v. United States, 221 U. S. 1.