TRADE RESTRAINTS - PATENTS - EFFECT OF ILLEGAL CONDITION IN PATENT LICENSING AGREEMENT

Plaintiff, owning a patent on a process involving the use of unpatented lecithin in the production of chocolate, assured potential users that the process might be employed by them in the manufacture of chocolate on condition that all lecithin so used be purchased exclusively from plaintiff. Defendant at .first complied with the condition but subsequently, while continuing to use the patented process, began to buy lecithin from plaintiff\u27s competitors. Plaintiff brought suit for an injunction restraining infringement. Defendant, in counterclaiming for an injunction against future suits, in effect asked the court to hold that the implied license under which it had once practiced the process continued for the life of the patent, even though the condition was invalid and failed ab initio. The circuit court of appeals, in affirming the decree below, held that plaintiff was properly denied relief, since its attempt to secure a limited monopoly of an unpatented article is condemned under the law as being contrary to public policy; that defendant was properly denied relief, since the court will not work a forfeiture on plaintiff by depriving it of all its patent rights against the defendant. American Lecithin Co. v. Warfield Co., (C. C. A. 7th, 1939) 105 F. (2d) 207