Lynch v. Magnavox Co.

94 F.2d 883, 1938 U.S. App. LEXIS 4533
CourtCourt of Appeals for the Ninth Circuit
DecidedFebruary 7, 1938
Docket8471
StatusPublished
Cited by29 cases

This text of 94 F.2d 883 (Lynch v. Magnavox Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lynch v. Magnavox Co., 94 F.2d 883, 1938 U.S. App. LEXIS 4533 (9th Cir. 1938).

Opinions

HANEY, Circuit Judge.

Appellant brought an action to recover treble damages from appellees for the latter’s alleged violations of the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1-7, 15 note. Appellees demurred to the second amended “Bill of Complaint,” which, demurrer was sustained, and after appellant elected •not to amend, judgment of dismissal was entered. This appeal followed.

• It appears from the record that prior to the filing of the complaint in question, a demurrer to a first amended complaint had been sustained, and leave granted to appellant to amend within twenty days. Thereafter, a “Second Amended Bill of Complaint,” hereinafter called the complaint, was filed.

Appellant, as trustee in bankruptcy of Jackson Bell Company,. Limited, a California corporation, hereinafter called the bankrupt, filed the complaint against eight defendants. The defendants were: The Magnavox Company, an Arizona corporation, having its principal place of business in Fort Wayne, Ind., hereinafter referred to as Magnavox; one O’Connor, who was president of Magnavox; Jensen Radio Manufacturing Company, a Nevada corporation, having its principal place of business in Chicago, 111., hereinafter referred to as Jensen; one Jensen, who was president <3f the corporation just mentioned; Utah Radio Products Company, an Illinois corporation, having its principal place of business in Chicago, 111., hereinafter referred to as Utah; one Caswell, who was president of Utah; Lektophone Corporation, a Delaware corporation, having its principal office in New York City, hereinafter referred to as Lektophone; and one Winship, who was secretary of Lektophone. Appellees Magnavox and Jensen were the only defendants who appeared in the action. Appellant in his brief states that they were the only defendants who were served with process.

With respect to the formation of the plan, scheme, or conspiracy, the complaint alleges on information and belief : “ * * * That in', about or between the months of May and. September, 1932, the said date being at this time unknown to plaintiff, but known to defendants, the defendants herein, jointly and severally, each with the other, and one with the other, [886]*886entered into and consummated a plan, scheme or conspiracy •* * * That pursuant to said plan, scheme or conspiracy and in order to effect the purposes thereof, the defendants herein, and each of them, did jointly and severally, enter into a plan, scheme or combination, in restraint of trade. * * * ”

A later paragraph in the- complaint begins as follows: “Plaintiff is informed and believes and therefore alleges, that in, about or during the months of May and. June, 1932, and at or about the time the said combination and pooling of patent and patent rights was agreed upon. * * * ”

With respect to the purposes of the plan, scheme, or conspiracy, the following allegations are pertinent: “* * * To effect, or attempt to effect a monopoly in the manufacture, sale and distribution of radio loud speakers in inter-state commerce throughout the United States of America, as well as elsewhere and to attempt to control and increase the price thereof, and particularly with radio receiving set manufacturers located throughout and in the several states of the United States of America. * * * ”

The complaint also alleged that Magnavox, Jensen, and Utah manufactured loud speakers, and shipped them from the factories located in Chicago, 111., and Fort Wayne, Ind., to their agents and representatives in Los Angeles; that orders for such loud speakers were either filled from the- stock in Los Angeles or were shipped directly to the purchasers from the factories mentioned. It was also alleged that bankrupt shipped its products by various common carriers, to buyers located “throughout and in the several states of the United States and in foreign countries.”

The plan, scheme, or conspiracy was to be carried out, it is alleged, in the following manner: (1) Utah, Jensen, Magnavox, and Lektophone each possessed patent or patent rights, pooled them, and extended cross-licenses to each other; (2) “under threat of patent litigation of all asserted patent rights of all of the parties to the pool and combination, to force radio re-, ceiving set manufacturers to discontinue the purchase of radio loud speakers from any one other than the members of the said pool, or radio loud' speaker manufacturers having a sub-license, under the patents of the pool, and to thereby increase, maintain and control the price that radio receiving set manufacturers would be compelled to pay for radio loud speakers necessarily used in the manufacture and .sale of their radio receiving sets, and purchased by them, in interstate commerce, from said other manufacturers of loud speakers”; (3) “under threat of patent litigation of all asserted patent rights of all of the parties to the pool and combination, to force legitimate manufacturers of loud speakers not members of the said pool, or licensed thereunder, to discontinue the manufacture and sale thereof in inter-state commerce.”

The last-mentioned detail was elaborated upon and alleged differently, to be: Under threat of patent litigation to force loudspeaker manufacturers (other than defendants) to “acquire a license under the alleged patents of the pool on exorbitant, unreasonable and extortionate terms, and thereby increase the ultimate cost of radio loud speakers to the users and consumers thereof throughout the United States of America, and particularly radio receiving set manufacturers using the same in interstate commerce, and so increase the selling price of such speakers to consumers above the selling price of defendants’ loud speakers and thereby cause competitive or other loud speaker manufacturers to be unable to sell their products in interstate commerce in competition with defendants and be thereby compelled to retire from business.”

Other details of the plan, scheme, or conspiracy were alleged to be: Loud speaker manufacturers, who did not obtain sub-licenses from defendants, which could be acquired only “at excessive and unreasonable license fees, to the pecuniary benefit, advantage and gain of the defendants,” were to be forced by a “ruinous commercial campaign” which “was not to be waged by direct action against the manufacturers of radio loud speakers for alleged infringement by them of asserted patent or patent rights, but by a campaign of intimidation and harassment of the customers and users of the products of such independent, non-member, non-license [d] loud speaker manufacturers.”

The campaign was to be waged in the following manner: (a) By a member of the pool who would institute, in a specified geographical area, an infringement suit against the “leading, or ‘key’ accounts, customers and retail outlets of radio receiving set manufacturers using, incorporating or embodying in their radio receiving sets” loud speakers manufactured by manufacturers, other than defendants, specifying. therein [887]

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Bluebook (online)
94 F.2d 883, 1938 U.S. App. LEXIS 4533, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lynch-v-magnavox-co-ca9-1938.