Tying Arrangement With Trademark as the Tying Item Is Not a Per Se Violation of the Antitrust Laws-Susser v. Carvel Corp.

Several independent franchised soft ice-cream outlets brought suit for treble damages against Carvel Corporation, the franchising company, alleging that the contract between them constituted an illegal tying arrangement in violation of section 3 of the Clayton Act and sections 1 and 2 of the Sherman Act. The contract bound the dealers to purchase from Carvel-appointed suppliers all commodities sold as part of the retail dairy composite. Plaintiffs stipulated that they would rely on per se violations at trial. The district court found that the plaintiffs had failed to show the alleged violations and, in any case, the defendant had proved its defense that the arrangements were necessary to protect the integrity of the product. On appeal, held, affirmed. A trademark tie-in, to be per se illegal, must meet the same tests applied in a patent tie-in situation: there must be both market dominance and the affecting of a substantial amount of commerce; here, the plaintiffs had failed to establish either element. One judge dissented in part on the ground that patents and trademarks are sufficiently similar to justify the same presumption of existence of sufficient economic power in the trademark situation as is permitted in the patent setting, leaving only the requirement of affecting a substantial amount of commerce, which he felt was met here. The dissent also disagreed with the district court’s finding that the defendant had adequately proved that its arrangement was justified to protect the good will of the product. Susser v. Carvel Corp., 332 F.2d 505 (2d Cir. 1964), cert. granted, 33 U.S.L. WEEK 3151 (U.S. Oct. 27, 1964) (No. 355).