Ethyl Gasoline Corp. v. United States, 309 U.S. 436 (1940),[1] was a decision of the United States Supreme Court that limited the doctrine of the Court's 1938 decision in General Talking Pictures Corp. v. Western Electric Co.[2] Beginning with the 1926 decision in United States v. General Electric Co.,[3] the Supreme Court made a sharp distinction between (i) post-sale restraints that a patentee imposed on purchasers of a patented product and (ii) restrictions (limitations) that a patentee imposed on a licensee to manufacture a patented product: the former being illegal and unenforceable under the exhaustion doctrine while the latter were generally permissible under a lenient "rule of reason."

"[7] The Supreme Court, in an opinion written by Chief Justice Harlan F. Stone, refused without dissent to make any distinctions among the different patents and struck the whole program down for improperly “regimenting” the industry in violation of the antitrust laws.

[9]Relying on the exhaustion doctrine and citing Adams v. Burke,[10] the Court stated: By its sales to refiners, it relinquishes its exclusive right to use the patented fluid and it relinquishes to the licensed jobbers its exclusive rights to sell the lead-treated fuel by permitting the licensed refiners to manufacture and sell the fuel to them.

[11]The Court found this violative of the antitrust laws: [Ethyl] has established the marketing of the patented fuel in vast amounts on a nationwide scale through the 11,000 jobbers and, at the same time, by the leverage of its licensing contracts resting on the fulcrum of its patents, it has built up a combination capable of use, and actually used, as a means of controlling jobbers' prices and suppressing competition among them.

Such contracts or combinations, which are used to obstruct the free and natural flow in the channels of interstate commerce of trade even in a patented article, after it is sold by the patentee or his licensee, are a violation of the Sherman Act.