NAB reports (Jan-Dec 1941)

societies . . . and that the Society’s blanket license permits the licensee to use many hundreds of thousands of compositions composed and written by more than 44,000 members of such foreign societies. It appears that the members assign to the Society the exclusive right of public performance, and the Society then has the exclusive right to permit by licenses, licensees to use or not to use the compositions of the Society’s members, to fix the prices for licenses, to sue for infringement, and in general, to manage the right of public performance in the same manner as the owner of the copyright. The motion to dismiss on behalf of the defendants, was based on several grounds, one of which was “That mere unconstitu¬ tionality, even assuming it to exist, does not warrant injunctive relief, but that the facts alleged must bring the case within the recognized rules of equity relating to injunctions, and that com¬ plainants have not done so.” The motion to dismiss filed by intervener KMO, Inc., states a number of grounds, one being that the plaintiffs are not entitled to equity because they were a monopoly. Although no answers have been filed, we may treat the motions to dismiss as answers. Intervener Lockhart argues the monopoly question, but his motion to dismiss does not present such question. We treat his motion as an answer and amended so as to present the question. Regarding the completeness of the monopoly of the Society, it is said in Buck v. Swanson, D. C., Neb. . . . J. 33 F. Supp. 377, 386. . . . "Of the popular music necessary for the successful operation of radio stations, dance halls, hotels and theaters, the Society has control of about 85 per cent or 90 per cent and also has control of from SO per cent to 75 per cent of the standard or older music that is played occasionally. All of the large and more influential publishers of music in the United States are members of the Society. The users of music in Nebraska can not successfully carry on their business except they deal wdth the plaintiff Society because there is no place where nor person or agency to whom users of music in Nebraska may go in order to deal for public performance rights and negotiate for music in any substantial amount sufficient to meet the ordinary needs of music users in the State, except the Society.” Mr. Justice Black in Gibbs v. Buck, 307 U. S. 66, 81, says: “This combination apparently includes practically all — probably 95 per cent — .American and foreign copyright owners controlling rendition of copyrighted music for profit in the United States. Not only does this combination fix prices through a self-perpetuating board of twenty-four directors, but its power over the business of musical rendition is so great that it can refuse to sell rights to single compositions, and can, and does, require purchasers to take, at a monopolistically fixed annual fee, the entire repertory of all members controlled by the combination.” In the instant case the testimony of the operators of tw'o of the largest radio broadcasting stations in Washington was that it w'ould be impossible to operate such stations without the music controlled by the Society. The Society has neither submitted evidence, nor made argument to the contrary. On the hearing for an injunction pendente lite, we dismissed the cause for lack of jurisdiction. Buck v. Case, 24 F. Supp. 541. On apireal our decree was reversed with directions to take evi¬ dence on the jurisdictional question. Buck v. Gallagher, 307 U. S. 95. Subsequently, we referred the cause to a special master for the taking of evidence on the question, and directed him to make findings. The sprecial master found facts disclosing jurisdiction in the court below. Believing that the evidence supports such findings, we sustain them as not being clearly erroneous. 4 — January 3, 1941 Plaintiffs contend that the Washington Statute is unconstitu¬ tional for a number of reasons, and rely on Buck v. Swanson. . . . D. C. Neb . 33 F. Supp. 377, Buck v. Harton. . . . D. C. Tenn. 33 F. Supp. 1014, and Buck v. Gibbs. . . . D. C. Fla. . . . 34 F. Supp. 510, holding somewhat similar statutes unconstitutional. Before passing on that question, it is necessary to determine whether or not plaintiffs may invoke the aid of a court of equity. If a party “has been engaged in an illegal business and has been cheated, equity wdll not help him.” Wheeler v. Sage, 68 U. S. . . . 1 Wall. . . . 518, 529. In other words, before plaintiffs may invoke the aid of a court of equity, they must come into court with clean hands. Keystone Co. V. Excavator Co., 290 U. S. 240, 244. If the Society exists in violation of the Sherman Anti-Trust .Act, it and the members composing it, are not entitled to a decree for its benefit. Section 1 ... 15 USCA Sec. 1 ... of the Sherman Anti-Trust Act pro¬ vides in part . . . “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is declared to be illegal. Every person who shall make any such contract or engage in any such combination or conspiracy, shall be deemed guilty of a misde¬ meanor.” . . . Section 2 ... 15 USC.A Sec. 2 ... of such Act provides in part: “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a misdemeanor. . . . Whatever the distinction between these two sections may be, the supreme court has recently said that Congress, by the act in question, “Extended the condemnation of the statute to restraints effected by any combination in the form of trust or otherwise, or conspiracy, as well as by contract or agreement, having those effects on the competitive system and on purchasers and con¬ sumers of goods or services which were characteristic of restraints deemed illegal at common law.” .Apex Hosiery Co. v. Leader, 310 U. S. 469, 498. The “Effects” mentioned were “business and commercial transactions which tended to restrict production, raise prices or otherwise control the market to the detriment of purchasers or consumers of goods and services.” ID., p. 493. Such effects were brought about by “Contracts for the restric¬ tion or suppression of competition in the market, agreements to fix prices, divide marketing territories, apportion customers, restrict production and the like practices, which tend to raise prices or otherwise take from buyers or consumers the advantages which accrue to them from free competition in the market.” ID., p. 497. There can be little question here that the Society has the power to fix prices for the right to publicly perform compositions for profit. Likewise, it has restricted substantially all competition in the sale of such rights, because it has all such rights. Since the Interstate Commerce feature is conceded to be present, the Society dearly violates the Act in question . . . United States v. Socony Vacuum Oil Co., 310 U. S. 150, 223 . . . unless the right to publicly perform for profit is not embraced within the Act. Flpon that point the -Act says nothing expressly about rights or commodities. The statute is aimed at “Restraints” of trade and commerce, and not at the “subjects” of the trade or commerce. Rights may be and often are the subject of trade or commerce, and the Sherman law limits restraints of trade in “rights” as well as commodities. Standard Sanitary Mfg. Co. v. United States 226 U. S. 20, 49.