article. In the latter case, however, it appeared that the defendant was insolvent, thus making the remedy by a suit at law for damages inadequate. The Illinois Appellate Court has declined to grant an injunction where the threats were made in good faith but before any suit was begun to settle the question of infringement. The Massachusetts courts regard the circulation of communications of this sort as constituting either libel or slander of title or merely misrepresentation as to the character or quality of the patentee's property or the title thereto, and hold that a court of equity has no jurisdiction to grant injunctions in cases of this character.3

ENGLISH DECISIONS.

The liability of patentees for threats to institute infringement proceedings was the subject of legislation in England in 1883.* For this reason the decisions at the common law are here dealt with very briefly.

There were a number of cases prior to 1883 in which the plaintiffs sought to restrain the issuance of circulars or letters threatening to sue their customers for infringement or to recover damages for such action. The decisions are not entirely in accord, but it appears that to recover damages at common law it was necessary for the plaintiff to prove not only that the statements of infringement were untrue but also that they were not made bona fide or, as it is sometimes expressed, that they were made without reasonable or probable cause. An injunction would also issue in such cases to restrain the further circulation of such threats. Where the statements of infringement were proved to be untrue and there was evidence that the defendants subsequently continued to distribute the notices, an injunction to restrain such distribution would lie, mala fides being necessarily shown by the continued publication after the untruth had been determined.5 In Wren . Weild the court said:

“*** We think the action could not lie unless the plaintiffs affirmatively prove that the defendant's claim was not a bona fide claim in support of a right which, with or without cause, he fancied he had; but a mala fide and malicious attempt to injure the plaintiffs by asserting a claim of right against his own knowledge that it was without any foundation.”

1 Shoemaker v. South Bend Spark Arrester Co., 22 L. R. A., 332 (Ind. Supreme Ct. 1893). See also New Iberia Extract of Tabasco Pepper Co. v. E. McIlhenny's Son et al, 61 So., 131 (La. Sup. Ct., 1912).

Everett Piano Co. v. Bent, 60 III. App., 372 (1895).

3 Boston Diatite Co. r. Florence Mfg. Co. et al., 114 Mass., 69 (1873); Whitehead v. Kitson, 119 Mass., 484 (1876); Aberthaw Construction Co. r. Ransome, 192 Mass., 434 (1906).

4 See p. 543.

Wren r. Weild. L. R. (1869), 4 Q. B., 730; Rollins v. Hinks, L. R. (1872), 13 Eq. 355; Axmann v. Lund, L. R. (1874), 18 Eq., 330; Halsey v. Brotherhood, L. R. (1880), 15 Ch. Div., 514; s. c., L. R. (1881), 19 Ch. Div., 386.

L. R. (1869), 4 Q. B., 730.

46

In Lycett Saddle, etc., Co. v. Brooks & Co.1 the court said:

*

It is necessary for them suing under the common law to prove not only that the statements are untrue but that they are made maliciously, or, as it has been sometimes expressed, without reasonable and probable cause."

Section 11. Combinations to cut off competitors' supplies or to destroy their market.

A number of cases have arisen involving the legality at the common law of concerted action by manufacturers or traders to embarrass or drive out of business an objectionable competitor. The principal methods employed for this purpose have been in the case of retail dealers, to cut off their supplies by boycotting, or threatening to boycott, the wholesalers or manufacturers from whom they purchase; and in the case of manufacturers or wholesale dealers, to destroy the market for their goods by a concerted withdrawal of patronage. In practically all of the reported cases involving the legality of these methods of competition the defendants have been members of trade associations. In one case, however, the plaintiff claimed to have been injured by the members of a steamship conference.3

By the weight of American authority these methods appear to be illegal. The English courts, however, in most cases have adopted the contrary view. It may be noted that even in England, where the efforts of a print sellers' association to cut off the supplies of a competitor by inducing dealers not to patronize publishers who sold to him were held lawful, the defendant's counsel, one of whom was Rufus Isaacs (now lord chief justice), urged that the statement of claim disclosed no cause of action, "as it only alleged an unfair competition on the part of the defendants." In some cases American courts have not only condemned such practices but have contrasted them with "honest" and "lawful" competition, "fair, open competition" or "fair and free competition."8

On the other hand, Carland, district judge, expressed the opinion that the action of an association of retail dealers in notifying wholesalers and jobbers that they were opposed to sales by such wholesalers and jobbers to mail-order houses and requesting the former not to

121 R. P. C., 656 (1904).

2 As to common-law liability, see also Dredge r. Parnell, 13 R. P. C., 392 (1896); Alfred Appleby's Twin Roller Chain (Ltd.) v. Albert Eadie Chain (Ltd.), 16 R. P. C., 318 (1899); Craig v. Dowding, 25 R. P. C., 259 (1908).

* Mogul Steamship Co. v. McGregor, Gow & Co., L. R. (1892), A. C., 25.

Boots v. Grundy, 16 Times Law Reps., 457 (1900).

Doremus v. Hennessy, 62 Ill. App., 391 (1896), aff., 176 Ill., 608 (1898).

Doremus v. Hennessy, supra, and Klingel's Pharmacy v. Sharp & Dohme et al., 104 Md., 218 (1906).

7 Jackson et al. v. Stanfield et al., 137 Ind., 592 (1894).

Bailey v. Master Plumbers, 103 Tenn., 99 (1899).

sell to the latter, was not "unfair trade competition," and that "persuasion" was not "unfair competition." 1

AMERICAN DECISIONS.

CUTTING OFF COMPETITORS' SUPPLIES.-In a number of cases concerted action by dealers to cut off supplies from objectionable competitors has been held lawful. Thus a Federal circuit court has held that it is not unlawful for the members of a retail dealers' association to mutually agree that they will not purchase merchandise from wholesalers and jobbers who sell to catalogue or mail-order houses, and in pursuance of such agreement to notify wholesalers and jobbers that they are opposed to such sales and request that their trade be confined to "legitimate" retail dealers. And in Rhode Island, where it appeared that the members of a national association of master plumbers resolved to withdraw their patronage from any firm selling supplies to others than members of their association or local affiliated organizations, and that as a result of notices sent to certain wholesale dealers not to sell to nonmembers the complainants, master plumbers, were unable to purchase supplies, the court denied an injunction, being of opinion that the object of the members of the association was to free themselves from the competition of nonmembers, and that this was lawful; that the agreement not to deal with wholesalers who sold to nonmembers, and the sending of notices to that end, was lawful; and that, as neither the object of the combination nor the means adopted was unlawful, there was no ground for a charge of conspiracy. In a Pennsylvania case it appeared that in resisting the demands of striking workmen the members of a planing-mill association and a builders' exchange induced lumber dealers and others not to sell materials to dealers who in turn supplied certain contractors and builders who had conceded the demands of the workmen. It appeared that one dealer had been advised that "it would be to his advantage to discontinue" supplying the plaintiff, and that thereafter his orders had been refused. In view of the Pennsylvania statutes legalizing combinations of workmen for certain purposes, it was held that the com

1 Montgomery Ward & Co. v. South Dakota Retail Merchants & Hardware Dealers' Association et al., 150 Fed., 413 (C. C., 1907).

Montgomery Ward & Co. v. South Dakota Retail Merchants & Hardware Dealers' Assn. et al., 150 Fed., 413, 418 (C. C., Dist. S. Dak., 1907). Per Carland, J.: “It must be conceded that complainant has the right to transact and carry on its business free from intimidation or coercion, that this is a property right, and that a combination to interfere with this right otherwise than in fair competition must show justification. The American cases, however, when carefully considered, show that the great weight of authority in the United States, is in favor of the proposition that it is not unfair competition, intimidation, or coercion for a combination to interfere with this right by persuasion or any peaceable means. It thus appears that the retail dealers have

done nothing, nor threatened to do anything, which is actionable." Macauley Bros. v. Tierney et al., 19 R. I., 255 (1895).

bination complained of was not unlawful, because (1) it was not made to lower wages regulated by the supply and demand, but to resist an artificial price made by a lawful combination of workmen, and (2) the methods adopted to further the objects of the employers' combination were not unlawful.1

In other States, however, the interference by combinations of dealers with the business of competitors has been condemned by the courts. Thus in Indiana, where a retail lumber dealers' association collected from a wholesale dealer a penalty for having sold lumber through a broker in violation of a rule of the association, and so prevented further sales of like description, it was held that the broker was entitled to damages and an injunction restraining certain members of the organization from in any way other than by "fair, open competition," interfering with his business and from demanding a penalty from anyone who might sell to him, or through him to a consumer.2

In a subsequent case it appeared that two corporations controlling the manufacture and sale of plumbers' supplies in Indianapolis refused to sell to a licensed plumber solely because he was not a member of the Merchant Plumbers' Association. The plumber thereupon brought an action based on certain sections of the Indiana

1 Cote v. Murphy et al., 159 Pa. St., 420, 431 (1894). Per Dean, J.: "If the employers' combination here had used illegal methods or means to prevent other dealers from selling supplies to plaintiff, the conspiracy might still have been found to exist. The threats referred to, although what are usually termed threats, were not so in a legal sense. To have said they would inflict bodily harm on other dealers, or villify them in the newspapers, or bring on them social ostracism, or similar declarations, these the law would have deemed threats, for they deter a man of ordinary courage from the prosecution of his business in a way which accords with his own notions; but to say, and even that is inferential from the correspondence, that if they continued to sell to plaintiff the members of the association would not buy from them, is not a threat. It does not interfere with the dealer's free choice; it may have prompted him to a somewhat sordid calculation; he may have considered which custom was most profitable, and have acted accordingly; but this was not such coercion and threats as constituted the acts of the combination unlawful." See also Buchanan v. Kerr et al., 159 Pa. St., 433 (1894). Cf. Lefebvre v. Knott, p. 239.

2 Jackson et al. v. Stanfield et al., 137 Ind., 592, 608, 614 (1894). Per Dailey, J.: "There is such an element of coercion and intimidation in the by-law under consideration, towards the wholesale dealers, manufacturers, and even the members of the society, and such provision made for penalties and forfeitures against them, that it will not do to say it was optional with the wholesale dealer whether it would pay the demand or not, or that it was left to the discretion or choice of the members to either trade with the wholesaler or abandon the association. A conspiracy formed and intended directly or indirectly to prevent the carrying on of any lawful business, or to injure the business of anyone by wrongfully preventing those who would be customers from buying anything from the representatives of such business, by threats or intimidation, is in restraint of trade and unlawful. It is not in point to cite cases where men voluntarily agree to observe rules adopted by themselves. This is no voluntary affair of the wholesale dealers. It is not even a combination of wholesalers. They may, and do, sometimes become honorary members, so as to keep within touch of the retail dealers and secure trade. It is, as stated, an association of retailers to restrict the liberty of wholesalers to sell to consumers and brokers, and the wholesalers must obey or lose their trade. Such rules contravene the rights of nonmembers to earn their living by fair

competition."

statutes, charging the supply companies and the association with having combined to suppress competition by fixing prices arbitrarily and selling to members of the association at from 30 to 75 per cent less than list prices, or by refusing to sell to nonmembers and driving them out of business unless they joined the association. The defendants were perpetually enjoined from refusing to sell, or inducing others not to sell to the plaintiff for cash, at the usual and customary prices. This judgment was affirmed by the Supreme Court of Indiana, which held that the statute created no new offense but was declaratory of the common law.2

Likewise in Tennessee the supreme court held that certain bylaws of a master plumbers' association in Memphis constituted an unreasonable restraint upon trade, and were contrary to public policy and void under the common law. As demonstrating the "hurtful and unlawful tendency" of the association, the court referred to certain by-laws which prohibited members from purchasing supplies from any dealer who did not comply with the rules of the association, or purchasing "from a jobber who buys material from a manufacturer who sells plumbing or gas-fitting material to any one in our city who is not a member of our association."

In Wisconsin it has been held actionable for wholesale coal dealers owning practically all the coal docks at Superior and Duluth, to enter into a combination with certain retail dealers in Superior and agree to sell coal only to such retailers, for the purpose of forcing out of the trade all retailers not in the combination, where it further appeared that the conspiracy had been successful and that the business of the plaintiff had been destroyed. So in Georgia where a retail druggists' association, in order to prevent a certain firm from obtaining supplies, notified wholesalers and manufacturers throughout the country that said firm was an aggressive price cutter, and required traveling salesmen to procure from the association a card which could be obtained only by signing an agreement not to sell to said firm, and further, gave the manufacturers and wholesalers to understand that unless they refused to sell goods to said firm the members of the association would not buy from them, it was held that the injured firm was entitled to an injunction against the members of

1 Acts 1899, p. 257; Burns' Ann. Stats. (1908), secs. 3884-3887. * Knight & Jillson Co. et al. v. Miller, 172 Ind., 27 (1909).

Bailey v. Master Plumbers, 103 Tenn., 99, 116, 117 (1899). Per Caldwell, J.: "These by-laws virtually divided the trade in plumbing materials and supplies for Memphis into two main parts, in the nature of combinations, one of them being represented by members of the association and dealers who sell to them alone, and the other being represented by nonmembers and dealers who sell to them alone; and, thereby, the two classes are intended to be arrayed against each other; not in fair and free competition, but with a view to the utter demolition of the latter class and the entire control of the trade by the former class."

4 Hawarden v. The Youghiogheny & Lehigh Coal Co., 111 Wis., 545 (1901).