United States v. Sealy, Inc. (1966)
- Docket
- 9
- Decided
- 1966-01-01
- Category
- General
Summary
Question: Did Sealy’s method of allocating territorial manufacturing licenses violate the Sherman Act? Conclusion: Yes. In a 6-1 decision written by Justice Abraham Fortas, the Court held that Sealy’s licensing structure was a horizontal restraint of trade, a per se violation of the Sherman Act. He noted that the licensees controlled the day-to-day business of Sealy through the board of directors and the executive committee, including the grant, assignment, reassignment, and termination of exclusive territorial licenses. Justice Fortas held that Sealy’s behavior was an aggregation of trade restraints, reasoning that Sealy’s territorial restraints were a part of its admittedly unlawful price fixing scheme. While acknowledging that the territorial limitations served other purposes, he reasoned that their connection to price fixing was enough to require they be condemned as an unlawful restraint of trade. Justice John Harlan dissented. He argued that Sealy’s territorial licensing structure was a vertical arrangement not prohibited by the Sherman Act. He described the main purpose of Sealy’s licensing structure as the proper exploitation of the Sealy name and trademarks by licensed bedding manufacturers. Justice Harlan argued that the territorial restrictions were secondary or ancillary to that purpose. He rejected the majority’s theory that Sealy’s actions were an aggregation of trade restraints, noting that the district court did not address the reasonableness of Sealy’s territorial arrangements. Justices Tom Clark and Byron White took no part in the decision of the case.