Zenith Radio Corporation v. Hazeltine Research, Inc.

PETITIONER: Zenith Radio Corporation
RESPONDENT: Hazeltine Research, Inc.
LOCATION: United States District Court for the Northern District of Illinois, Eastern Division

DOCKET NO.: 49
DECIDED BY: Warren Court (1967-1969)
LOWER COURT: United States Court of Appeals for the Seventh Circuit

CITATION: 395 US 100 (1969)
ARGUED: Jan 22, 1969
DECIDED: Jan 22, 1969

Facts of the case

Question

Media for Zenith Radio Corporation v. Hazeltine Research, Inc.

Audio Transcription for Oral Argument - January 22, 1969 in Zenith Radio Corporation v. Hazeltine Research, Inc.

Earl Warren:

Number 49, Zenith Radio Corporation, petitioner, versus Hazeltine Research, Inc., et al.

Mr. McConnell.

Thomas C. Mcconnell:

Mr. Chief Justice and members of the Court.

I represent the Zenith Radio Corporation which is the petitioner in this case.

Respondents are the Hazeltine Research, Inc., a corporation which is a wholly owned subsidiary of the Hazeltine Corporation.

And, it was stipulated by the parties in this case in a pretrial stipulation that, for all purposes in this lawsuit and all purposes in the instant case, that the two corporations should be considered one and the same.

The instant suit was brought for the alleged infringement of a patent, a monochrome patent alleged to have been infringed by the Zenith Corporation.

And, both the District Court and the Court below, the Court of Appeals held that that patent was invalid and not infringed.

Abe Fortas:

Mr. McConnell, I'm sorry but you -- there is an issue that's submitted to us, isn't there, as to whether both Hazeltine Corporations are bound here or whether it's just a subsidiary and not the parent?

Thomas C. Mcconnell:

That's right, Your Honor.

Abe Fortas:

Is there a difference on that?

Thomas C. Mcconnell:

I'm going to reach that in the course of my argument.

Abe Fortas:

That's why I didn't really understand why you made your opening statement because there is that issue.

Thomas C. Mcconnell:

There is that issue, Your Honor.

I simply made a statement because -- as part of the facts in the case that there was that pretrial stipulation and I'm treating, for this portion of the argument, the two corporations as the same.

In that suit, Zenith answered by setting up a patent and other patents of Hazeltine have been misused by putting them into foreign patent pools, which foreign patent pools had refused to license imports and had restricted commerce between United States and foreign countries, namely Canada, England, and Australia, contrary to the provisions of the antitrust law, the federal antitrust law that any restriction or any combination, conspiracy, or arrangement between competitors which restrain commerce not only between the states of the United States but between the comp -- the country of the United States and foreign countries, violated Section 4 of the Clayton Act, Sections 1 and 2 of the Sherman Act.

And, under those two sections, also Section 16 of the Clayton Act, alleging the same facts as we'd set up in the misused answer we filed in counterclaim and, in that counterclaim, asked for travel damages and asked for an injunction against the activities of these foreign patent tools.

After a trial and findings of fact in detail made by the District Court, a judgment was entered on April 5, 1965 pursuant to Rule 54 (b) of the Federal Rules of Civil Procedure for damages which have been occasioned by the plaintiff or by the counterclaim in the amount of $19,042,173 for the loss of sales and profits in the Canadian market in the sale of home receiving sets in television and radio.

At the time the findings came down, Hazeltine obtained new counsel and came in and made various motions which are discussed in the briefs, purport of which was to reopen the case on evidence which was available at the time of the trial and for further proceedings on the claim that there were embargoes imposed by the government as opposed to private patent pools and conspiracies in England and Australia.

And, for that limited purpose, the case was reopened and after further hearing, on December 13, 1965, the Trial Court awarded petitioner trouble damages in the amount of $15,919,458 for loss of sales and profits in England and Australia during the damage period.

In the first judgment, an injunction was added against the continuance by the respondent companies and these pools for putting their patents in the pools or in any way furthering the activities of these pools, and this is important.

No supercedias was ever foiled to that judgment, even though there was an appeal, and since that first judgment was entered on April 15, 19 -- or April 5, 1965, Zenith has been operating under the protection of the injunction of the United States District Court in their activities in Kent.

On appeal or in entering the last judgment after the Trial Court had heard all the evidence that was produced on the original trial press, all of the different matters which were urged and argued in a three or four-day hearing on the motions to reopen the case and after hearing everything that was submitted in the case, Trial Court made this comment, "there could be no question in my mind that Zenith suffered damages during the damage period by a virtue of the pools which I have found and, reiterate, existed at the time of the damage period."

The Court of Appeals reversed both the judgments on the ground that there is no substantial evidence in this record that Zenith was injured by the activities of these pools in its business or property, and held as a matter of law that, on this record, Zenith was not even threatened with injury by the activities of these pools.

Now, the proof of injury to Zenith's business in Canada was, in a large part, documentary and I'm going into it in some detail in the course of this argument, and was not denied by any single witness or document in this case.

So, It is my submission to this Court that what is presented is whether on admitted facts, which we claim in the District Court, found was unequivocal in its proof of actual substantial damage to the Zenith Corporation, whether under those admitted facts, as a matter of law, the federal antitrust laws, namely 1 and 2 of the Sherman Act and 4 and 16 of the Clayton Act, do not reach and have no sanction which will stop that country.

Now, before going to the individual markets, I want to -- if the Court will bear with me, I want to take just a few minutes to give some of the background of this conspiracy.

And, this Court in 1962 and in subsequent cases has held, namely in the Continental Ore case, that conspiracies which are designed to control a complete market and which are put together by competitors to exclude competition permanent should not be judged by taking particular parts of the proofs and examining them and passing on to something else, but that the proof should be looked at as a whole and, in the Continental Ore case, that it was highly relevant to go back and look at the proofs at the inception of the conspiracy and the proofs out of which the conspiracy was created to show its intendment, its purpose, its effect, and its result.

Now, I've been in this litigation with these pools on behalf of Zenith since 1953 and I'm not going to refer any of my own personal knowledge.

Everything I'm going to tell this Court with reference to the beginning is in this record.