Automatic Radio Manufacturing Company v. Hazeltine Research
In Automatic Radio Mfg. Co. v. Hazeltine Research, Inc., 339 U.S. 827, 70 S.Ct. 894, 94 L.Ed. 1312, 85 USPQ 378 (1950), the licensee agreed to pay royalties measured by a percentage of the licensee's sales regardless of use of the inventions patented. 339 U.S. at 833, 70 S.Ct. at 897-98, 85 USPQ at 380.
The district court sustained the royalty provision "on the theory that it was a convenient mode of operation designed by the parties to avoid the necessity of determining whether each type of the licensee's product embodies any of the licensor's numerous patents." Id.
The court of appeals and the Supreme Court affirmed.
The Court stated that this method of calculating royalties may represent "the most convenient method of fixing the business value of the privileges granted by the licensing agreement." Id. at 834, 70 S.Ct. at 898, 85 USPQ at 381
In Automatic Radio Manufacturing Company v. Hazeltine Research, 339 U.S. 827, 70 S.Ct. 894 (1950), the Supreme Court classified the "Tie-in" cases as cases involving schemes "requiring the purchase of unpatented goods for use with patented apparatus or processes, prohibiting production or sale of competing goods, and conditioning the granting of a license under one patent upon the acceptance of another and different license."
In that case the court also said, "That which is condemned as against public policy by the `Tie-in' cases is the extension of the monopoly of the patent to create another monopoly or restraint of competition - a restraint not countenanced by the patent grant."