Automotive news. [volume], March 30, 1940, Page 6, Image 6

About Automotive news. [volume] (Detroit, Mich.) 1938-current

Image provided by: Central Michigan University, Clark Historical Library

                
6
Ethyl Decision Tightens Restrictions on
l .S. High Court Voids Control
’Over Secondary Purchasers
By William I'llman
Staff Correspondent
WASHINGTON. Repercussions
of far-reaching importance to the
automotive and other American
industries are expected to#result
from last weeks U. S. supreme
court’s epochal disposition of the
long-pending ethyl gasoline case.
In effect, the nation’s highest
tribunal wrote into the doctrine of
patents further restrictions on
private control of protected in
ventions.
The decision knocks out the
jobber license system under which
the Ethyl Gasoline Corp. has con
trolled the distribution by refiners
and jobbers of almost 90 percent
of the high-test motor fuel used in
the U. S., upholding the govern
ment’s contention that the system
violates the anti-trust laws.
Regarded as a vitally important
clarification of the power in
dustries may exercise under pat
ents without running afoul of the
federal monopoly statutes, the rul
ing is hailed by Thurman Arnold,
assistant attorney general in
charge of anti-trust prosecutions,
as “the most important decisUns-on
the subject of the use of patents
to restrain trade that ever has
been handed down by any court.”
In substance, the high court
holds that the owner of a legal
patent monopoly cannot utilize the
patent to acquire some other
monopoly, not embraced in the
patent, either for himself or for
another, nor can he use his patent
to achieve controls over secondary
distribution markets.
Specifically, the court’s action
prohibits the Ethyl Gasoline Corp.,
owned jointly by Standard Oil,
General Motors and the duPont in
terests, from requiring that the
gasoline refiners to whom it sells
its patented tetraethyl lead fluid
(which increases the anti-knock
Willys Reports
Factory Sales
117% Above’39
TOLEDO.—F act o r y sales of
Willys passenger cars and trucks
to domestic outlets continue to
register increases over figures of
last year, according to Joseph W.
Frazer, president.
“Factory sales to our dealers in
the United States during the pres
ent model year to the close of
business March 23,” said Frazer,
"were 117.1 percent ahead of the
corresponding period last year.
THIRD AXLE
DOUBLES TRUCK PAY LOADS
Making big trucks out of little ones
is a specialty of The Trucktor
Corporation, Newark, New Jersey.
Trucktor’s third-axle units are’
said to double pay load capacities
of commercial vehicles. Major
parts of Trucktor axles are made
from Nickel alloy steels. Moreover,
service reports show that the in
corporation of these alloy steels
has made breakage and road fail
ures virtually things of the past.
Husky axle shafts—ranging from
3* to 4* in diameter- are ’made of
SAE 3140 Nickel-chromium steel,
heat treated to develop a tensile
strength of around 150,000 p.s.i.
Smaller parts such as spring clips,
are of SAE 3135 Nickel-chromium
steel. Trucktor Ü
bolts are
Nickel
flJljyiS THE
WTWWSPPK INTERNATIONAL
NICKEL COMPANY
INC. NmrYtr*,N.Y.
quality of motor fuel) sell only to
those jobbers who also are licensed
by the corporation. In sum. it re
quires the company to abandon en
tirely its jobber licensing practices.
The corporation’s right to restrict
the use of the ethyl fluid to such
refiners as it may choose to license
is not impaired by the decision,
however.
The Ethyl Corp. does not manu
facture gasoline but sells its tetra
ethyl fluid to nearly all major re'-
finers under a restricted license. It
also has directly licensed some 11,-
000 of the 12,000 jobbers and pro
hibited refiners from selling to
other than licensed jobbers. Jobber
licenses have been subject 4-0 can
cellation if the holders engaged in
“unethical” practices.
Charges of Government
The government charged that,
because of the demand for anti
knock gasoline, the effect of these
licenses was to exclude unlicensed
jobbers from the market and to
place control of the business of
licensed jobbers in the hands of
the Ethyl Corp. In addition, it was
contended, this corporation ac
quired potential power, at least, to
fix and maintain retail prices.
Attorneys for the Ethyl Corp.
defended the licensing system
on the ground that its patents
cover the whole field of distribu
tion of tetraethyl lead fluid for use
in internal combustion engines.
The Supreme Court took the po
sition that the situation was not
the normal one of a patentee ex
ercising his right to sell or refuse
to sell a patented product to price
cutters, for example, because the
price control complained of was
not the control over the original
purchaser, the refiner, but control
over a secondary purchaser.
The situation, declared Associate
Justice Harlan F. Stone, who wrote
the court's opinion, "is one in
which a patent holder, by the
leverage of its licensing contracts
resting on the fulcrum of its
patents, has built up a combina
tion capable of use, and actually
used, as a means of controlling
jobbers’ prices and suppressing
competition among them.” Had
such a comprehensive control of
distribution been acquired by con
tracts between refiners and job
bers without the aid of the patents,
it would have been manifestly a
violation of the Sherman anti
trust act,” the justice said, adding:
Interpretation Is Given
“It seems plain that this at
tempted regulation of prices and
market practices of the jobbers
with respect to the fuel purchased
for which appellant (Ethyl) could
not lawfully contract cannot be
lawfully achieved through the
manipulation of which the same
results are reached by the exer
cise of the power which they give
to control the action of the pur
chasers."
This is interpreted to mean that
patent holders have the right to
control the first sale and may Wll,
or not sell, to whomsoever they
choose and at their own price, but
any exercise of control to obstruct
commerce after the patented ar
ticle has been initially sold con
stitutes a violation of the Sherman
act.
NO MATTKR what the w eal her may he at the moment, it in a sure alien of
spring when Albert W. Rirkenharker, brother of Fiddle Rirkenharker, romea to
town to promote the 500-mlle Indianapolia Speedway rlaaaie. Here he ia taking
delivery of the offirial Studebaker President with Geo. I). Keller, right, viee
preaident in charge of aalea for Studebaker. Rirkenharker ia making an inten
aive 10-week advance tour for the 2Ath annual 500-mile rare to be held on May 30.
AUTOMOTIVE NEWS, MARCH 30, 1940
Pontiac Meetings Set . . .
Mi^m
PONTIAC EXECUTIVES on fuet-tindlng trip. Thin group of Pontiar aalea
exerutlvea, headed by V. L. Murray, aaaiatant general aalea manager, are
meeting with dealera and auleamen in II ritiea in the Kaat, Southeart and
Midwest. Seated at left ia Murray and with him W. J. Mougey, Pontiac
advertiaing manager. Standing are 1,. 11. ltohinaon, left, head of the huaineas
management department, and 11. (i. Ilerah, aalea promotion manager.
ANOTHER (.KOI P of Pontiar aalea executivea, headed by V. A. Daviaon,
aaaiatant general aalea manager, who are meeting with dealera and aaleamen
in 10 ritiea in the Midweat and Southweat during the next two week*. Seated
left ia Daviaon with L. K. Marahall, general aervire manager. Standing are
Harry Hygel In charge of uaed rara for Pontiar, and D. Vreedenherg, of the
aalea promotion department.
Pontiac Officials Launching
Annual Spring Sales Drive
PONTIAC. Three groups of
Pontiac sales executives have left
on their annual spring swing
around the country. During the
next two weeks they will meet
with 3,700 dealers and 7,000 retail
salesmen in 24 meetings at im
portant distributing centers.
D. U. Bathrick, Pontiac general
sales manager, heads the group
covering the West Coast, which
Chrysler Dealers Map
Sales Drive for April
DETROIT. —Plans for an inten
sive sales drive during April,
which has been designated “Anni
versary Month” for Chrysler and
Plymouth dealers, were outlined
at a luncheon held Thursday noon
at the Detroit-Leland hotel for
Chrysler dealers affiliated with the
Chrysler-Detroit Co.
Joseph A. O’Malley, president of
Chrysler-Detroit Co., was host to
the dealers and their retail sales
men. O’Malley described the April
program and delivered a message
from Charles L. Jacobson, vice
president and general sales man
ager, Chrysler sales division.
includes P. W. Warmee, assistant
sales promotion manager, in charge
of new cars; J. F. Nelson, manager
of organization and analyzation de
partment, and G. W. Arnold, assist
ant service manager. This group
will hold meetings at Portland,
San Francisco and Los Angeles.
The Eastern group, headed by
Verne L. Murray, assistant general
sales manager in charge of the
East, includes W. J. Mougey, ad
vertising manager; H. G. Hersh,
sales promotion manager, and L.
H. Robinson, head of the business
management department. The sche
dule of this group includes Char
lotte, N. C., Washington, Boston,
Philadelphia, New York City, Pon
tiac, Buffalo, Pittsburgh, Cleveland,
Cincinnati and Atlanta.
Third group, headed by V. A.
Davison, assistant general sales
manager in charge of the West, in
cludes L. K. Marshall, general serv
ice manager; H. W. Bygel, assistant
sales promotion manager in charge
of used cars and D. Vreedenberg,
sales promotion department. Meet
ings will be conducted by this group
in San Antonio, Dallas, Oklahoma
City, Memphis, St. Louis, Kansas
City. Minneapolis, St. Paul, Chi
cago, Denver and Salt Lake City.
A part of the program in each
city will be given over to refresh
ing dealers and salesmen on the
salient features of the Pontiac car.
with right and wrong methods of
selling. Full stage equipment
travels with each group and in
cludes proscenium arch with cur
tain, back drops and stage prop
erties for use in dramatizing ac
tual sales of both new and used
cars, together with featured pre
sentations of spring selling oppor
tunities.
V. G. Speed
ASHEVILLE. N. C. V G. Speed.
7*i. Vice-president of the St ode baker
Corp for 20 years, died here Mar.
24.
Patentees
100.000 Expected
To Test Willy ß
During Campaign
TOLEDO.— Complete plans hav»
been made for more than 2,00)
Willys distributors and dealers to
conduct national “Drive-a-WiUy,-
demonstration tests for a month
beginning Apr. 1, as part of the
most active promotion campaigj
staged by the company in two
years, according to Joseph W
Frazer, president of Willys-Over
land Motors. Inc.
"Indications already received by
us point to the probability of mor?
than 100,000 motorists participat
ing,” Frazer said.
“Every Willys passenger car and
truck used in “Drive-a-Willyj"
tests will be of strictly stock de
sign right off our production linev
with no changes in our standard
specifications. To enhance the in
dividual interest of drivers in
these novel tests, each car will be
equipped with a special gas-o-mtt
er of l/10th gallon capacity, enabl
ing operators to actually see the
rate of miles per gallon obtains
with the car in their personal ex
periments.” Frazer declared.
Pa. Dealers Urge
FTC to Defer Its
Proposed Rules
HARRISBURG, Pa. (UTPS).-
Board of directors of the Pennsyl
vania Automotive Assn, hai
adopted a resolution suggestinj
that "the adoption and promulga
tion by the federal trade commix
sion of said ‘Proposed Trade Prac
tice Rules for the Automobile In
dustry’ be deferred.”
The resolution pointed out tha:
the proposed rules relate to tlx
sale and distribution in interstate
commerce of passenger cars, com
mercial vehicles, parts, accessory
and equipment, and that there ii
no decision at the present time ai
to when an automobile dealer ii
engaged in interstate cornmew
and when engaged in intrastate
business.
The group pointed out also tha:
the majority of the proposed rule
relate to matters which are al
ready covered by existing lawi
such as misrepresentation, decep
tion, defamation, un/air means
unlawful conspiracies, etc., am
that the adoption of such rules wll
neither benefit nor protect tlx
automobile industry or the pur
chasing public, nor will such rule
apply to the industry as a whole.
Newark Dealers
o PP ose Patman
Bill, FTC Code
NEWARK. Emphasizing the
principle of state rights, the Nf»
ark Automobile Trade Assn, hi l
adopted a resolution opposing tie
Patman-Horner bill. The assoeix
tion also called on the federal trad 1
commission to withhold promulp
tion of its proposed code for tin
industry.
The anti-Patman bill resolutio'
cited that the measure “in no wi!
benefits the dealers of the countr
in solving the important problem
now detrimentally affecting the
business."
For a fresh automotive viewport
read George M. Slocum’s "A Worn
Edgewise.'
WANTED
Full time business manager***
consultant for metropolitan M'*'
mobile trade association. Mud **
thoroughly familiar with auto *
counting methods and dealer pr<*
leniN, and must be rlear, force!*
speaker and writer. Excellent ®P
portunity for right man. Give &
details in your letter. Address C*
eago Automobile Trade Associate*
807 N. Michigan Avc., Chicago, &