Page:The Green Bag (1889–1914), Volume 18.pdf/671

 THE GREEN BAG after. The court states that it has never been distinctly decided that the liability of the editor is coextensive with that of the proprietor, and that while some text writers indulge in statements implying coextensive liability, the authorities cited do not justify the implication. The case of Smith v. Utley, 92 Wis. 133, 65 N. W. 744, 35 L. R. A. 620, is cited as a carefully considered adjudication, in which the liability of the pro prietor and managing editor is held to be co extensive, but after reviewing authorities relied upon in Smith v. Utley, among others Watts v. Fraser, 7 A. & E. 223, and Nevin v. Spieckemann (Pa.) 4 Atl. 497, the court says: " Notwithstand ing these adjudications we are not convinced that the editor's liability is commensurate with that of the proprietor, where it appears that he was not on duty during any part of the time between the reception of the libelous matter and its publi cation. . . . The action of libel is not based on neglect of duty, but is a positive tort."

SALES. (Right to Restrict Future Sales.) U. S. Cir. Ct. E. D. Ky. — Hartman v. John B. Park & Sons Co., 145 Fed. 358, is a case involving the validity of contracts whereby the manufac turer of a widely advertised proprietary medicine sought to avoid " price-cutting," by the control ling in certain respects of the disposition of his property after it had been sold outright by him. It appears that the medicine was compounded in accordance with a secret formula, and invariably placed on the market in a certain style and dress, and under a certain trade name, and that by a system of contracts between the manufacturer and wholesalers they were bound to sell only at a certain price, and only to retail dealers designated by the manufacturer, and that by a contract between him and the retail dealers, in considera tion of such designation, they agreed to sell only at a certain price to consumers. Defendant ob tained the medicine from complainant's whole salers, in violation of their contract with defend ant, and sold the medicines to retailers operating cut-rate drug stores, and the manufacturer sought an injunction. Defendant relied upon two grounds in support of his contention that the con tracts were invalid — that the owner of a patent or copyright has the right to sell the article out right, and retain control of subsequent trade, by virtue alone of the federal statutes, but that the owner of a mere secret process has no such right; and that the contracts were unlawful as in re straint of trade. In disposing of the first ground adversely to defendant, the court discusses Edison

Phonograph Co. v. Kaufmann (C. C.) 105 Fed. 960; Same v. Pike (C. C.) 116 Fed. 863; Victor Talking Machine Co. v. The Fair, 123 Fed. 424, 61 C. C. A. 58; National Phonograph Co. v. Schlegel, 128 Fed. 733, 64 C. C. A. 594, in which cases the owners of patents sold the patented articles under agreements and restrictions on the subse quent trade in the article, which restrictions were sustained, and after an examination into the nature of the rights conferred by the patent and copyright statutes, the court concludes that the "sole creature of the statutes is a distinct prop erty right, to wit: the exclusive right to make, use, and sell the thing patented or copyrighted; that is, to prevent others from making, using, and sell ing it"; that when the owner of a patented or copyrighted article sells it outright he can or can not, as he chooses, give a license to re-sell, and limit the license as he chooses, but that the right to impose restrictions upon vendees and subvendees by contract is a common law right, not derived from the federal statutes alone, the only effect of which, in the case of a patented or copy righted article, is to give a remedy in the state courts for a violation of the license, and that hence there is no reason why complainant did not have the right to lawfully make the contracts in ques tion. On the second ground, contracts in restraint of trade are regarded as falling into two classes — one class being where one party agrees to restrain himself for the benefit of the other, and which are regarded as valid if the restraint is reasonable, and contracts " between two or more persons engaged in the same business, sometimes includ ing all the persons so engaged in a particular locality or elsewhere, but each one engaged sepa rately and with no concern or interest in the business of any other one, and each one agrees to restrain himself in some particular for the mutual benefit of all," — contracts which Judge Taft defines in United States v. Addyston Pipe & Steel Co., 85 Fed. 271, 29 C. C. A. 141, 46 L. R. A. 122, as contracts having no purpose but to re strain competition and maintain prices, and it is held that the manufacturer's contracts, belonging to the former class, are valid as not unreasonable, in that the restraining agreement is ancillary to the main purpose of the contract, and merely for the protection of the complainant's business. As supporting this conclusion the court cites Elliman v. Carrington, 2 Ch. 275, 84 L. T. (N. S.)-853; Garst v. Harris, 177 Mass. 72, 58 N. E. 174; Walsh v. Dwight (Sup.) 58 N. Y. Supp. 91; Park & Sons Co. f. National Wholesale Druggists, 175 N. Y. i, 67 N. E. 136, 62 L. R. A. 632, 96 Am. St. Rep. 578; Whitwell v. Tobacco Co., 125 Fed. 454, 60 C. C. A. 290, 64 L. R. A. 689.