436 Argument for Appellants. abuse of discretion. Sugar Institute v. United States, 297 U. S. 553, 602. Cf., United States v. Standard Oil Co., 173 F. 177, 192. The lower court recognized appellant's legitimate interest in insuring compliance with the Surgeon General's health regulations and in protecting the trademark, good will, and reputation of the patented product. The only practice it found unlawful was the exclusion of price cutters. Abolishing the whole system of jobber licenses was not necessary to enjoin this practice since an adequate, selfpolicing decree could have readily been entered. The scope of the decree thus exceeded the proof of any unlawful activity. See, Bliss Co. v. United States, 248 U. S. 37, 48; American Steel Foundries v. Tri-City Council, 257 U. S. 184; Warner & Co. v. Lilly & Co., 265 U. S. 526. Cf., Hague v. C. I. O., 307 U. S. 496. Moreover, its drastic provisions will foreclose the protection of appellant's admittedly legitimate and essential interests. Cf., Coca-Cola Co. v. Bennett, 238 F. 513. The district court's conclusion that jobber licenses were not necessary is based on assumptions unwarranted and contradicted by the record. Dist'g International Business Machines case, 298 U. S. 131, 140. There is no support for its view that the mere reporting of violation to refiner licensees will be effective. Nor is there any evidence as to what other methods are possible to prevent dilution, adulteration, or substitution, or to insure compliance with health regulations. The decree, therefore, drastically impairs appellant's present ability safely and efficiently to market its patented product. More than this, it seriously hampers the development of the patents and limits the return from them during their remaining life. For it is now clear that in the immediate future the importance of quality controls and public health safeguards will be far greater. As it stands, even upon the view taken by the lower court that jobbers may not be refused licenses Argument for the United States. 309 U.S. because of a prior history of price cutting, the decree is a cumbersome, drastic, and unjustifiable solution. Assistant Attorney General Arnold, with whom Solicitor General Biddle and Messrs. Hugh B. Cox, James C. Wilson, John Henry Lewin, and Samuel E. Darby, Jr. were on the brief, for the United States. Appellant, through the use of its licensing system, has combined with 123 refiners producing all of the leadtreated gasoline sold in the United States to exclude from the business of handling such gasoline all jobbers except those licensed by appellant. It is conceded that appellant has, in the exercise of its uncontrolled discretion, excluded jobbers from the market and has fixed the terms and conditions which must be met by those jobbers who have been given permission to enter the market. The combination restrains trade because it empowers appellant to decide who shall be allowed to enter the market and on what terms and conditions the permission to do so shall be granted. Paramount Famous Pictures Corp. v. United States, 282 U. S. 30; United States v. First National Pictures, Inc., 282 U. S. 44; Interstate Circuit v. United States, 306 U. S. 208, 226-229. See, also, Dr. Miles Medical Co. v. Park & Sons Co., 220 U. S. 373, 408; United States v. Brims, 272 U. S. 549; Eastern States Lumber Assn. v. United States, 234 U. S. 600. Appellant's licensing system also violates the antitrust laws because its basic purpose has been to compel jobbers to maintain resale prices of gasoline. Appellant refuses licenses to jobbers who, in its judgment, are not likely to maintain the marketing policies and price policies of the major oil companies. Licensees believe they must comply with such policies in order to retain their licenses. Appellant, through its field representatives, investigates the marketing practices of jobbers whom it licenses and has exerted direct, substantial, and extraordinary influ 436 Argument for the United States. ence over the price policies of the individual jobbers. This kind of arrangement is clearly illegal under the antitrust laws. Dr. Miles Medical Co. v. Park & Sons., 220 U. S. 373; Eastern States Lumber Assn. v. United States, 234 U. S. 600; Federal Trade Comm'n v. Beech-Nut Co., 257 U. S. 44; United States v. Trenton Potteries Co., 273 U. S. 392; Interstate Circuit v. United States, 306 U. S. 208. Appellant's licensing system must be justified on the basis of its ownership of patents. However, an analysis of appellant's business demonstrates that appellant is not entitled to assume complete control over the marketing of lead-treated gasoline through the use of its patents. Appellant's business is the manufacturing of the patented fluid which is used in the production of such motor fuel. When it sells the fluid to refiners it receives all the pecuniary reward which it seeks for the exploitation of its patent rights. Having thus chosen to obtain the reward for its invention through the manufacture and sale of the fluid, appellant has no right to control the marketing by its customers of motor fuel containing the fluid. Adams v. Burke, 17 Wall. 453; Hobbie v. Jennison, 149 U. S. 355. See also Kendall v. Winsor, 21 How. 322, 327328; Motion Picture Co. v. Universal Film Co., 243 U. S. 502, 510-511; Keeler v. Standard Folding Bed Co., 157 U. S. 659; Bauer v. O'Donnell, 229 U. S. 1; Straus v. Victor Talking Machine Co., 243 U. S. 490; Boston Store v. American Graphophone Co., 246 U. S. 8. Cf., BobbsMerrill Co. v. Straus, 210 U. S. 339; Dr. Miles Medical Co. v. Park & Sons Co., 220 U. S. 373, 404–405. The appellant is not attempting to obtain any financial return from the mixing and use patents. It is attempting to use them solely for the purpose of dominating the marketing of lead-treated gasoline in the United States. This is an improper use of the patent privilege. The rule is well established that a patentee can not extend his Argument for the United States. 309 U.S. control over subject matter which lies outside of the patent privilege by merely including such subject matter in his patent claims. Motion Picture Co. v. Universal Film Co., 234 U. S. 502; Carbice Corp. v. American Patents Corp., 283 U. S. 27; Leitch Mfg. Co. v. Barber Co., 302 U. S. 458; American Lecithin Co. v. Warfield Co., 105 F. 2d 207; Philad Co. v. Lechler Laboratories, 107 F. 2d 747. A patentee is entitled only to impose such restrictions in connection with the sale of a patented article as are normally and reasonably adapted to secure pecuniary reward for the patentee's monopoly. United States v. General Electric Co., 272 U. S. 476. Restrictions imposed under this rule must be tested by an objective standard of reasonableness. General Electric case, supra, 489, 490; Kendall v. Winsor, 21 How. 322, 327-328; Motion Picture Co. v. Universal Film Co., 243 U. S. 502, 510-511. Protection of the public health is not the real reason for the licensing scheme. It is not to be assumed that refiners and jobbers are not as zealous to protect the public health as is appellant or that they would behave in a reckless or improper manner in the absence of the licensing scheme. The licensing system is not necessary to prevent the dilution, adulteration, and deterioration of motor fuel containing the fluid. Ethyl gasoline constitutes only about 6 per cent of all lead-treated motor fuel. Furthermore, the product which appellant fears may be adulterated is in reality the product of the refiners. The latter have a direct interest in maintaining the quality of this product and appellant's interest is too remote to justify its licensing system. See, Dr. Miles Medical Co. v. Park & Sons Co., 220 U. S. 373, 407. The privileges flowing from the ownership of the trademark can be no greater than those covered by appellant's patents, and cannot justify the licensing system. Coca 436 Opinion of the Court. Cola Co. v. Bennett, 238 F. 513; Coca-Cola Co. v. Butler & Sons, 229 F. 224; and Coca-Cola Co. v. Koke Co., 254 U. S. 143, distinguished. See Manufacturing Co. v. Trainer, 101 U. S. 51; Lawrence Mfg. Co. v. Tennessee Mfg. Co., 138 U. S. 537; Columbia Mill Co. v. Alcorn, 150 U. S. 460; Bourjois & Co. v. Katzel, 260 U. S. 689; Dover Stamping Co. v. Fellows, 40 N. E. 105. That it is necessary for appellant to maintain resale prices of motor fuel, cannot justify the licensing system, for that is the very thing which makes its scheme illegal. United States v. General Electric Corp., 272 U. S. 476, is inapplicable because appellant does not manufacture the product upon which it seeks to fix the price. In striking down the entire jobber licensing scheme the court below granted proper and effective relief. No other decree would suffice to assure jobbers that they were completely free of domination and free to engage in the competition which is protected by the antitrust laws. A decree which permitted appellant to retain the licensing system in any form would invite abuses through secrecy and concealment. The government should not be required continually to police a licensing plan which presents inherent opportunities for misuse. Local 167 v. United States, 291 U. S. 293, 299; Gompers v. Bucks Stove & Range Co., 221 U. S. 418, 438-439; Purity Extract Co. v. Lynch, 226 U. S. 192, 201. MR. JUSTICE STONE delivered the opinion of the Court. The Government brought this suit in the District Court for Southern New York, to restrain appellant, Ethyl Gasoline Corporation, a Delaware corporation, and the other appellants, who are its officers, from granting licenses, under patents controlled by it, to jobbers to sell and distribute lead-treated motor fuel, and from enforcing |