The Court further held that the licensees who, with knowledge of such arrangements, entered into the price-fixing licenses thereby became party to a hub-and-spoke conspiracy in violation of Sherman Act § 1.

The agreement also provided that all sublicenses granted by Southern under Line's patents were required to include provisions for minimum prices to be established by Line, and all sublicenses under the Lemmon patent were to include provisions for minimum prices to be fixed by Southern.

Several defendants, particularly General Electric, attempted to design around the patents and thus avoid infringement, but these efforts were unsuccessful.

Under a new agreement, Line was granted a license under Southern's patents but only for cutouts in which the circuit interruption is caused by a fuse melting.

Line also was authorized to grant licenses to third persons to make and sell electrical equipment embodying the inventions of Southern's patents.

The Supreme Court observed: Undoubtedly, one purpose of the arrangements was to make possible the use by each manufacturer of the Lemmon and Schultz patents.

Justice Stanley F. Reed delivered the judgment of a closely divided Court, in an opinion in which he spoke principally for himself.

Justice Reed began by observing, "General Electric is a case that has provoked criticism and approval," and it received "only bare recognition in Ethyl Gasoline Corp. v. United States."

In United States v. Masonite Corp., he noted, the Court found it 'unnecessary to reconsider the rule" because the price fixing occurred on the sale of goods after "the patent privilege was exhausted by a transfer of the articles to certain agents who were part of the sales organization of competitors."

For example, "business arrangements have been repeatedly, even though hesitatingly, made in reliance upon the contractors' interpretation of [General Electric's] meaning."

That legislative inaction "is to be weighed with the counterbalancing fact that the rule of the General Electric case grew out of a judicial determination.

"[8] Reed continued: The writer accepts the rule of the General Electric case as interpreted by the third subdivision of this opinion.

Furthermore, we do not think it wise to undertake to explain, further than the facts of this case require, our views as to the applicability of patent price limitation in the various situations listed by the Government.

[10]Justice Reed therefore considered it appropriate to explain what points "are not contested or are not decided in this case," so that the necessarily narrow nature of the ruling will be understood.

By the patentees' agreement the dominant Lemmon and the subservient Schultz patents were combined to fix prices.

In the absence of patent or other statutory authorization, a contract to fix or maintain prices in interstate commerce has long been recognized as illegal per se under the Sherman Act.

[14] The General Electric case gives a patentee a right to license another person to make and sell at a fixed price.

[17] In the 1926 General Electric case, the Court followed Bement v. National Harrow Co.,[18] decided in 1902, and it sustained a price-fixing provision of a license to make and vend the patented invention.

Those who can get stabilized markets, assured margins, and freedom from price-cutting will find a price-fixing license an attractive alternative to the more arduous methods of maintaining their competitive positions.

"[23] The dissent concluded that there was "neither adequate reason nor authority for overruling" the General Electriuc case or for distinguishing it.

[24] ● The 1955 Report of the Attorney General's National Committee to Study the Antitrust Laws stated that most members of the committee believed, based on the Line Material case and similar decisions,[25] that use of price-fixing clauses in patent licenses would be illegal if the result of "any concert or arrangement aimed at or resulting in industry-wide price fixing.

"[26] The Report amplified this comment: A number of efforts have been made to overrule the General Electric case.

These culminated in the Line Material decision where no majority of the Supreme Court could be obtained either to affirm or overrule General Electric.

[27]● Chicago patent lawyer James Wetzel questioned "whether Line Material has any real meaning," given the subsequent 4-4 failure to overrule General Electric in United States v. Huck Mfg.