Chicago Lino-Tabler Co.

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FEDERAL TRADE COMMISSION v. CHICAGO LINO- TABLER COMPANY.

CO~IPLAINT IN THE MATTER OF THE ALLEGED VIOLATION OF SEC• TION l'i, OF THE ACT OF CONGRESS APPROVED SEPTE:&IBER 36,, 1914, Question modified December 19, 1919.

Docket No. 23-Aprll 4, 1918.

SYLT..ABtTS.

Where a manufn~turer of devices used by printers to produce ruled llnes for tabulatlon- (a) interfered with a competitor's customers by threatening to sue them for Infringement of ce1·turn patents claimed to be owned by It. such thrmts not bP!ng made In good faith for the purpose of prote<·ting the manufacturer's rights under said patents; (b) en <leu vored to persuade or force trade journals to refuse a competltot·'s advertisements, by means of false and misleading statements to the effect that said competitor's apparatus and devices in· fringed Its patents;

(c) endeavored to Induce trade journnls to refuse a competitor's advertbsl'ments, by mrnns of faiHe and mlsll'adlng statements relative to suld competitor's tinnnclul standing and condition; and (d) mndt> to trade journuls urul customers of u competitor, false and misleading statements In reference to the defense made by said compt-titm· to un Infringement sult Instituted against It by snld manufacturer:

Hc/rl, 'that sull1 acts trnnsf't>rHird the rights and privlleg!'S of a patentee In tht~ protection of Its patents, and, undrr the ch·cumstnnees set forth, constltutNI unfulr mf'tho<IR of competition, in violutlon of section ti of the uct of St'lltPillhei' 26, 1914. COMPLAINT.

The Federal Trade Commission, having re11son to believe from a preliminary investigation made by it, that Chicago Lino-Tnbler Co., hereinafter referred to as respondent, has l•een and is using unfair methods of cot11petition in intcr- !itate commerce in violation of the provisions of section 5 of lite act of Congress appro\·Nl S(lph'mber 26, 1914, entitled "An net to create a Federal Trade Commission, to define its powrrs allll dutil'S and for other purposes," and it appearing that a proceeding by it in respect thereof would be to the interest of the public, issues this complaint stating its charges in that respect on in formation and belief as follows: FEDERAL TRADE COMMISSION DECISIONS, 111 PARAGRAPH 1. That the respondent, Chicago Lino-Tabler Co., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Illinois, having its principal office and place of business at the city of Chicago, in said State, and is now, and was at all times hereinafter mentioned, engaged in the manufacture of a certain tabular system which is used by printers to produce printed ruled lines for products requiring tabulation. PAR. 2. That the respondent is the owner of a patent upon the said system or device, and is now and has for more than two years last past, been engaged in manufacturing, selling, aud leasing the same in commerce among the several States and Territories of the United States, and in the District of Columbia.

PAR. 3. That with the intent, purpose and effect of stifling and suppres.sing competition in interstate commerce in the manufacture and sale of devices and apparatus used by printers to produce printed ruled lines for tabulation, the respondent has caused for more tlum two years last past and F.till continues to cause to be issued nnd circulated in pamphlet form and published in trade papers among the printing trade in the several States and Territories of the United Statl's, and in the District of Columbia, what purports to be en accurate quotation of claim No. 7 of Patent 1,168,602, on n. system of ruling type forms for tabular lin£'s, said patent being owned by said respondent, which quotation is incorrect and mislra<ling in that the word" type" was changed to the word "printing" and the words "as for the purpose Hpecified" were omittPtl, and that the effect of said change und omission was to broaden the sn.id patent claim so as to cover devicrR und apparatus of respondent's competitors. PAR. 4. That with the intent, purpose, and effect of stifling and suppressing competition in interstate eommeree in the manufacture n.nd sale of the above-mentiow~(l devices and apparatus, the respondent has been intPrferi!Jg for more than two years last past and still continues to interfet·e with custo~ers of its competitors, anrl hns endeavored an(l coutinues to endeavor to coerce them into ceasing from pmchasing their supply of surh devices and apparatus from its competitors, by threatening to sue its competitors' customers 112 FEDERAL TRADE COMMISSION DECISIONS. for infringement of certain patents claimed to be owned by :-;aid respondent, and that such threats are not made in good faith for the purpose of protecting respondent's claim of right under said patents.

PAR. 5. That during the pendency of a certain suit in equity for alleged infringement of respondent's pat.ent, instituted Ly respondent against a certain competitor's customer, and before said suit had come to trial, hearing, or final dctermination, the respondent, with the intent, purpose, and effect of stifling nnd suppressing competition in interstate commerce in the manufacture and sale of the aforesaid devices and apparatus, for more than two years last past has been endeavoring and still continues to endeavor to persuade or fon·e certain trade journals to refuse to accept the advertising of its aforesaid comrwtitor by making false and misleading statements conceming the devices and appamtus of it<> competitors to the efl"ect that said compel itors' devices and apparatus infringed its Haid patent therl.'on. PAR, 6. That with the intent, pm·pose and effect of stifling and suppressing competition in interstate commerce in the manufacture and stde of the n.foresaid dcviees and appn.ratus, the rP~pondont for mm·e than two years lust past has h<'en Pndeavoring to induce and still continues to cndnt\'OJ· to induce certain t.rudc joumals to re.fuse to accept the adn•rtising- of its aforesaid competitor by making false anrl mislrading statements as to the financial condition of sa icl competitor·.

PAn. 7. That with the intent, purpose and effect of stifling and suppn•ssing competition in int.erslttte commerce in the manufacture and sale of the aforesairl devices and upparatus, the respondent has been making for more tha.n two years last pu..c;;t and still continues to make false and misleading stat~ments concerning said c.competitor to ccr·tain trade journals and to court1tin customers of said comprtitor in refererwe to said putmtt litig-ation to the effect that the said com- JWtitOJ· filP<l no defense whatsoever in said action. P.ur. 8. That while11 the aforesaid suit in equity against a ct>rtn in customer of one of tlw r('spondent 's competitors was p<\nding-, the r·rspondPnt JWr!'lll!tdPd anrl induced the said com}Jl'titor's customer (who wat." a deft'rHlnnt in ::;aid action), FEDERAL TRADE COMMISSION DECISIONS, 113 its servants, agents and employees, to write and circulate among said competitor's other customers, letters containing statements in disparagement of the devices and apparatus of responthmt's competitor, that said letters were so worded to encourage replies in disparagement of said competitor's devices and apparatus, and that certain alleged replie.'i to ~mid disparaging letters were sent and circulated among the customers and prospccti ve customers of said competitor throughout the SP\'eral States and Territories of the United States and the District of Collllnbin, and that the intent, purpose and eflect of the circulu.tion of said letters and the replies thereto were and are to stifle and suppress competi: tion in interstate commerce in the manufacture and sale of the aforesaid devices and appnrntus.

REPORT, FINDINGS AS TO THE FACTS, AND onder.

The Federal Trade Commission having issued and served its complaint herein, wherein it alleged that it had rea:;on to believe that the above named respondent, Chicago Lino- Ta.bler Co., has been anJ is using unfair ml'thods of competition in interstate commerce in violation of the provisions of section 5 of the act of Congress approved September 26, 1914, entitled "An Act to create a. Federal Trade Commission, to define its p<>Wltb and duties, and for other purposes," and further stn.ting its ehnrges in that re:>pect, and said re· spondent having made and fileu its answer to said complaint and having further entered into, agreed to, and signed an agreement or stipulation as to the fads; now on this 4th day of April, A. D. 1918, on the said complaint, answer, and agreement or stipulation, the Commission makes its report a.nd findings a.s to the facts and conclusions. FINDINGS AS TO THJ!l FAOTS.

The Commission finds:

1. That the resp<mdent, Chicago Lino-Tabler Co., is a corporation created and existing under the laws of the State of Illinois, with its princip11.l ollice and place of business at Chi· 147-l:W 0-2o--8 114 FEDERAL TRADE COMMISSION DECISIONS, cago, in said State, and is now, and was at all times hereinafter mentioned, engaged in the manufacture and selling in interstate commerce of certain apparatus or devices used by printl'rs in producing tabulated work. 2. That the Auto-Mat Tabular Co., of the city of Fort Worth, State of Texas, and its suc~essor, the Matrix Ruled Form & Tubular Co., is the only competitor of said respondent in said business.

3. That the said respondent, Chicago Lino-Tabler Co., has, from .January 20, 1916, for more than one year last past ,and up to the filing of the said complaint, continued, through the mc>.dinm of circulars and letters, to threaten customers of said respondent's competitor, Auto-Mat Tabular Co., with suits for infringement of <·certain patents claimed to be owned by said respondent, Chicago Lino-Tnhlcr Co. 4. That no suit wns instituted by the said respondent, Chicngo J.Jino-Tabler Co .. against anyone for infringement until April H), HH7, more than a year after said threats had first been mndl' and more than two years after at t.orney for said respondent, Chicago Lino-Tabler Co., rendered an opinion, pointing out the legal rrrn<>dy of said re,c;pondent, Chicago Lino-Tabler Co., of instituting a legal proceeding to enjoin the said respondent's competitor, Anto-~Jat Tabular Co., from marketing the apparatus and devices of said competitor, Auto-Mat Tabular Co., and then only after repeat<'o demands by said competitor, Auto-Mat Tabular Co., that suit be instituted and at least two warnin~-,rs by the Federal Tmde Commission that the threats must cease or suit be instituted by the said respondent, Chicnp;o Lino-Tahler Co. lS. That the said threats, under all the circmnstances, were not mn.de in good faith and constituted an interference with the business of said competitor, Auto-Mat Tabular Co., by intimidation of customers of said competitor, Auto-J\lnt Tabular Co., and by coercing said customers of said competitor, Auto-Mat Tabular Co., into cen.sing from pnrchaRing their supplies of apparatus and de\'ices from said competitor, Auto-Mat Tabular Co.

6. That the said respondent, Chicago Lino-Tnbler Co., for the last year and more past has been entleavoring to persuade and coerce certain t~ade journals, to wit: Typesetting \fa- FEDERAL TRADE COMMISSION DECISIONS. 115 chine Engineers' Journal, the Inland Printer and the Pacific Printer, by letters and verbal conversations, to refuse to accept the auYeltising of respondent's competitor, l:i<tiJ. Auto- Mat Tabular Co., such letters and conversations being (a) in the form of statements as to an alleged infringing nature of such competitor's devices; and (u) in the form of disparaging statements as to the financial condition of said competitor offering such ad Yertisements. 7. That the said respon<lent, Chicago Lino-Tahler Co., has been making, for more than two years last past, and up to the time of the filing of the said complaint, continued to make, false and misleading statements concerning said competitor to certain trade journals uud customers of saitl eompetitor, to wit: Typesetting Machine Engineers' Joumal, the InlaJHl Printer, and the Intcrtype Corporation, through the meclimn of verbal conversations and letters in reference to a certain suit pending as to ib status and to the effect that said competitor had made practically no defense in the suiu suit in equity.

CONCI,O~lons.

That the said methods of competition set forth in the forogoing findings of facts, and each and all of the said methods of conJiwtition, under the circumstances therein set forth, transcend the rights anu privileges of a patentee in the protection of its patents and constitute unfair mctho<ls of competition in interstate eomn1erce in violation of the provisions of section 5 of the said net of Congress approved ScptPmber 2G, 1!)14, entitled" An net to create a Federal Trade Commission, to define its powers and duties, and for other purposes." OUDER TO CK-\SE AND Dl<~SIST.

The Federal Trade Commif>sion huvin~ issued and served its complaint herein, and the respondent, Chicago · Lino- Ttlbler Co., having made and filed its answer to said complaint, and having further entereu into, agree.(l to. nnd sigrHid nn agreement or stipulation as to the facts, and the Commission, on the said complaint, answer, and stipulation, on the date hereof, having made and filed a report c(mtaining ilj findings as to the facts and its conclusions that the 116 FEDERAL TRADE COMMISSION DECISIONS. respondent has violated section 5 of the act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," which said report is hereby referred, to and made a part hereof; now, therefore, It is ordc1·ed: That the said respondent, Chicago Lino- Tabler Co., forever cease and desist from- 1. Interfering, through the medium of circulars, letters, or any other method of communication whatsoever, with any customer or customers of its competitor, the Auto-Mat Tabular Co., or any customer or customers of any other competitor or competitors, that the said Chicago Lino-Tabler Co. may now or hereafter have, and- endeavoring through the medium of circulars, letters, or any other method of communication whatsoever, to coerce any customer or customers of the said Auto-Mat Tabular Co., or any customer or customers of any other competitor or competitors that the said Chicago Lino-Tabler Co. may now or hereafter have, into ceasing from purchasing their supply of devices and apparatus from the said Auto-Mat Tabular Co., or any other competitor or competitors that the said Chicago Lino-Tabler Co. may now or hereafter have, by threatening to sue any customer or customers of the said Auto-Mat Tabular Co., or any customer or customers of any other competitor or competitors that the Chicago Lino-Tabler Co. may now or hereafter have, for infringement of any or all patents owned, or claimed to be owned, by the said Chicago Lino-Tabler Co., when such threats n.re not made in good faith for the purpose of protecting the Chicago Lino-Tabler Co.'s claims of right under any or all of its said patents. 2. Endeavoring to persuade or force by verbal conYersations, circulars, letters, or by any means of communication whatsoever, any trade journals to refuse to accept the advertising of its competitor, the said Auto-Mat Tabular Co., or the advertising of any other competitor, or competitors, which said Chicago Lino-Tabler Co. may now or hereafter have, by statements to the effect that the devices and apparatus of any competitor of said Chicago Lino-Tabler Co. advertising or seeking to advertise in any trade journal infringed any or all patents owned or claimed to be owned by FEDERAL TRADE COMMISSION DECISIONS. 117 the said Chicago Lino-Tabler Co.; or by statements relating to the financial standing and condition of any competitor of thfl said Chicago Lino-Tabler Co. advertising or seeking to advertise in any trade journal, or by any other statements calculated to interfere with the right of any competitor of the said Chicago Lino-Tabler Co. to advertise his devices or apparatus.

3. Making any statements, false, misleading, or otherwise, to any trade journal, or customer, or customers, of the said Auto-Mat Tabular Co., or any customer or customers, of any other competitor, or competitors, that the said Chicago Lino- Tabler Co. may now or hereafter have in reference to a certain suit in equity, instituted by the said Chicago Lino-Tabler Co. in the United States District Conrt for the Northern Di!::itrict of Illinois, Eastern Division, as to the defense of the Auto-Mat Tabular Co. in the aforesaid suit in equity; or indulging in the same or similar practice as to any other suit or suits hereafter brought by said Chicago Lino-Tabler Co. agttinst any customer or customers of any competitor or competitors, or against any competitor or competitors, which the said Chicago Lino-Tabler Co. may now or hereafter have.

MODU'IED ORDER TO CEASE AND DESIST.

The Federal Trade Commission, having issued and served its complaint herein, and the respondent, Chicago Lino-Tabler Co., having made and filed its answer to said complaint and having further entered into, agreed to, and signed an agreement or stipulation as to the facts, and the Commission, on the said complaint, answer, and stipulation, having made and filed a report containing its finding as to the facts and its conclusions that the respondent has violated section 5 of the act of Congress approved September 26, 1914, entitled, "An act to create a Federal Tradtl Commission, to define its powers and duties, and for other purposes," which said report is hereby referred to and made a part hereof, and the Commission having heretofore, to wit, on the 4th day of April, 1918, entered and served its order upon the respondent requiring it to cease and desist from certain practices, ns rrference to the said order being had will more fully unu at large appear: 118 FEDERAL TRADE COMMISSION DECISIONS. And it appearing to the Commission, upon reconsideration of the matter, that said order should be modified in certain respects:

Now, therefore, the Federal Trade Commission, on its own motion, under and by virtue of the provisions of section 5 of an act of Congress approved September 26, 1914-, en tit led, "An act to create a Federal Trade Commission, to define its powers and duties, and :for other purposes," hereby ordl'rs that the order to cease and desist heretofore made in this prod'eding on the 4th day of April, 1!H8, he, and the home is, hereby modified so that, as modified, said order shall rend as follows, to wit: Now, therefore, It is ordered, That the respondent, Chicago Lino-Tabler Co., foren'r cease and desist from- ( 1) Thr0at0ning, hy means of circulars, letters, or any other means of con1mtmication whatsoever, any customer or customers of the Auto-Mat Tabular Co., or any customer or customers of any other competitor of the Chicago Lino- Tabler Co., wit.h suits for infringement of any or all patents owned or claimed to be owned by the said Chicago Lino- Tubler Co., unless such said threats be made in good faith and be promptly followed by bona fide suits to protect the ;-;aid Chicago Lino-Taller Co.'s rights under such patents. (2) Endeavoring, by verbal conversations, circulars, letters, or by any other means of communication whatsoever, to persuade, incluce, or compel any trade journal to refuse to accept the advertising of its competitor, the said Auto- Mat Tabular Co., or the advertising of any other competitor or competitors of the said Chicago Lino-Tnbler Co. by statements to the effect that the devices and apparatus of any competitor of the Chi~ago Lino-Tabler Co. advertising or seeking to advertise in any trade journal, infringe any or all patents owned or claimed to be owned by the said Chicago Lino-Tablrr Co. or by false or misleading statements relating to the financial standing or condition of any competitor of the said Chicago Lino-Tabler Co. advertising or senking to advertise in any trade journal. (3) Making any false or misleading statements to any trade journal, or to any customer, or customers of any other competitor or competitors of the said Chicago Lino- FEDERAL TRADE COMMISSION DECISIONS, 119 Tabler Co. in reference to a certain suit in equity instituted by the said Chicago Lino-Tnbler Co. in the United States District Court for the Northern District of Illinois, Enstcrn Division, respecting the defense made by the Auto-Mat Tabular Co. in Lhe aforesaid suit in equity, or making such statements as to any other suit or suits hereafter brought by the said Chicago Lino-Tabler Co. against any customer or customers of any competitor or competitors, or against any competitor or competitors of the said Chicago Lino-Tabler Co.