ring to Fall v. Eastin, 215 U. S. 1, disposed of the matter by noticing that no relief was given on the cross complaint and that specific performance was denied on other grounds. Judgment affirmed.

UNITED STATES v. WINSLOW.

ERROR TO THE DISTRICT COURT OF THE UNITED STATES FOR THE DISTRICT OF MASSACHUSETTS.

No. 620. Argued January 10, 1913.-Decided February 3, 1913. On appeals under the Criminal Appeals Act of 1907 this court has no jurisdiction to review the interpretation of the indictment by the lower court, United States v. Patten, 226 U. S. 525, and if that court has construed the count as alleging a combination of a particular date to be in violation of the Sherman Law, without regard to subsequent acts, this court cannot pass upon the validity of those acts. A combination for greater efficiency does not necessarily violate the Sherman Anti-trust Act.

Where each of several groups are carrying on a legal business of making patented machines which do not compete with each other, although the machines of all the groups are used by manufacturers of the same article, such as shoes, a combination of the several groups does not violate the Sherman Anti-trust Act.

Exclusion of competitors from making the patented article is of the very essence of the right conferred by the patent.

Where the share in interstate commerce does not appear in the record, and the machines in question are not alleged to be types of all the machines used in manufacturing the article for which they are made, the Government cannot claim that a specified proportion of the business was put into a single hand.

The disintegration aimed at by the Sherman Anti-trust Act does not extend to reducing all manufacture to isolated units of the lowest degree.

The Criminal Appeals Act of March 2, 1907, c. 2564, 34 Stat. 1246, is a special provision and, as it is not mentioned in the repealing section of the Judicial Code of 1911 and is not superseded by any other regulation of the matter, it was not repealed by the Judicial Code. United States, Petitioner, 226 U. S. 420.

The District Court rightly held that the counts under review of the indictment against various persons for combining their businesses of

227 U.S.

Argument for the United States.

manufacturing patented machines for making different parts of shoes, and not competing with each other, did not constitute an offense under the Sherman Anti-trust Act.

195 Fed. Rep. 578, affirmed.

THE facts, which involve the construction of the Sherman Anti-trust Act, and determining whether the combination charged in an indictment thereunder of various manufacturers of patented shoe machinery constituted a violation thereof, are stated in the opinion.

The Solicitor General for the United States:

This case presents the question whether it is legal to gather together into one corporation about 80 per cent. of all the interstate trade in some particular line of activity when it is done gradually by legitimate methods and without any unfair competition such as characterized the Tobacco and Standard Oil cases. If that is legal, the sooner the business world understands it the better.

The indictment alleged that three separate groups of individuals (each controlling a different group of machines essential to the manufacture of shoes), combined together whereby their separate businesses were combined into one under the joint management of these individuals; that each of the separate groups controls about 70 or 80 per cent of the interstate trade in the particular kind of machines manufactured by it; and that by the combination there were placed into one hand from 70 to 80 per cent of all the business in those kinds of shoe machinery manufactured by the defendants.

The constitutionality and sufficiency of the criminal provisions of the Sherman Anti-trust Act are settled. United States v. Kissel, 218 U. S. 601; Northern Securities Co. v. United States, 193 U. S. 197, 401; Standard Oil Co. v. United States, 221 U. S. 1, 69; United States v. Swift, 188 Fed. Rep. 92.

Argument for the United States.

227 U.S.

Individuals are subject to indictment for acts done under the guise of a corporation where the individuals personally so dominate and control the corporation as to immediately direct its action. United States v. Swift, 188 Fed. Rep. 92, 98; United States v. McAndrews & Forbes Co., 149 Fed. Rep. 823; Crall v. Commonwealth, 103 Virginia, 855, 859, 860; People v. Clark, 8 N. Y. Crim. Rep. 179, 194, 195, 212; People v. White Lead Works, 82 Michigan, 471, 479; People v. Duke, 44 N. Y. Supp. 336, 337–339; State v. Great Works &c. Co., 20 Maine, 41; United States v. Durland, 65 Fed. Rep. 408, 415; S. C., 161 U. S. 306; Balliet v. United States, 129 Fed. Rep. 689; Fitzsimmons v. United States, 156 Fed. Rep. 477,.481; Foster v. United States, 178 Fed. Rep. 165, 173, 176-178; La Societe Anonyme &c. v. Panhard Motor Co. (1901), 2 Ch. 513, 516–517.

Prior to February 7, 1899, competition with reference to the different kinds of shoe machinery was so distributed between the different groups of defendants and the Independents that a shoe manufacturer had 24 different choices for obtaining shoe machinery.

By the organization of the United Shoe Machinery Company and the coalescence into one of the three groups of businesses formerly carried on separately by the defendants, the variety of choice open to a shoe manufacturer for obtaining the necessary shoe machinery was reduced from 24 ways to 16 ways.

The defendants then adopted what is known as the "tying" clause lease, which provided that any shoe manufacturer using any one class of machines furnished by the defendants should use for all his other machines only those furnished by the defendants; and that if he used any machine made by an Independent, the defendants would forfeit his lease and remove his machines. This form of lease immediately reduced from 16 to 2 the different ways by which a manufacturer could equip his factory, so that he had to get all his machinery from the defendants or get it all from the Independents.

227 U. S.

Argument for the United States.

The effect of the combination was to place from 70 to 80 per cent. of all the shoe machinery business (in so far as it related to those essential machines known as the lasting, welt-sewing, heeling and metallic fastening machines) into one hand. This combination into one group of four non-competitive businesses (which, taken together, constitute one complete business) curtailed the customer's liberty of action by compelling him to deal with one and the same group as to all four classes of machinery, whereas formerly he could deal with four separate groups. The question presented, then, is whether the combination into one group of 75 per cent. of the whole business of the country in a particular line is in such restraint of trade as to violate the Sherman law, it being conceded that the combination was not attended by any methods of unfair competition or illegitimate trade practices. Without attempting to determine exactly at what percentage of trade control a combination passes into the region of illegal restraint, the Government insists that when a combination acquires between 70 and 80 per cent. of the total trade in a particular business, the line between legal and illegal combinations has been passed; and that this is so even though the combination is made without resorting to any wrongful methods to coerce anyone to come into the combination. Swift v. United States, 196 U. S. 375; Standard Sanitary Mfg. Co. v. United States, 226 U. S. 20; Standard · Oil Co. v. United States, 221 U. S. 1; United States v. American Tobacco Co., 221 U. S. 106; United States v. Union Pacific R. R. Co., 226 U. S. 61; United States v. The Reading Co., 226 U. S. 324.

The adoption by the United Shoe Machinery Company of the "tying" clause lease whereby a customer was compelled to take all his machines from the defendants or all from the Independents was- a direct restraint upon competition and trade (1) of the defendants by limiting their trade to those who would agree to use only the de

Argument for the United States.

227 U. S.

fendants' machines; (2) of the customers by depriving them of the right to use some machines unless they would also use others, (3) of the Independents by preventing them from selling their machines to their former customers. Montague v. Lowry, 193 U. S. 38; United States v. St. Louis Terminal, 224 U. S. 383; Standard Sanitary Mfg. Co. v. United States, 226 U. S. 20; United States v. Union Pacific R. R. Co., 226 U. S. 61; United States v. The Reading Co., 226 U. S. 324.

The patent laws do not authorize the "tying" clause leases.

The precise point decided in Henry v. Dick Co., 224 U. S. 1, was that a patentec might impose a restriction that his machine should be used only in connection with certain supplies which in point of fact bore so direct a relation to the invention that it could not be operated without their use in physical connection with the patented machine.

The doctrine of Henry v. Dick Co. should not be extended to permit a license restriction beyond the actual use of supplies in connection with the necessary physical operation of the patented machine. Standard Sanitary Mfg. Co. v. United States, 226 U. S. 20.

But even if the doctrine of Henry v. Dick Co. is extended to the extreme limit of permitting any kind of restriction upon the use of a patented machine, yet when such restrictions are a part of one general scheme of combination the patent laws no longer authorize such restrictions. The rights given by the patent laws do not give universal license against the positive prohibitions of the Sherman law, which is a limitation on all rights that might otherwise be, pushed to evil consequences. Standard Sanitary Mjy. Co. v. United States, 226 U. S. 20; United States v. The Reading Co., 226 U. S. 324.

The Criminal Appeals Act, 34 Stat. 1246, was not repealed by the adoption of the Judicial Code.