General Talking Pictures Corp. v. Western Electric Co., 304 U.S. 175 (1938), was a case that the Supreme Court of the United States decided in 1938.

The Transformer Company had no rights outside its licensed field, and thus “could not convey to petitioner [General Talking Pictures] what both knew it was not authorized to sell.” The majority paid no attention to whether the so-called amplifiers were actually interchangeable shelf-item components of amplifying systems, a point that Justice Black emphasized in his dissent.

As he perceived it, and considered of great importance, the tubes that all licensees made were fungible, interchangeable articles of commerce, which the Transformer Company was authorized to manufacture.

Once they left the manufacturing licensee's hands, who sold them to General Talking Pictures, they passed outside the patent monopoly: The patent statute which permits a patentee to “make, use and vend” confers no power to fix and restrict the uses to which a merchantable commodity can be put after it has been bought in the open market from one who was granted authority to manufacture and sell it.

Then, as illustrated by the recent Supreme Court decision in Quanta Computer, Inc. v. LG Electronics, Inc.,[5] “default” rules take over.

A set of field-of-use licenses may be used to allocate markets among competing manufacturers of a product with attendant price manipulation.

Ethyl argued that the licensed patents and the manufacturing brought the case within the shelter of the General Talking Pictures doctrine.

The Supreme Court refused 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.