United States v. Loew's Inc.
Headline: Blocks 'block booking' of copyrighted films for television, ruling such tying illegal under the Sherman Act and forcing distributors to offer individual films, protecting TV stations and rival film sellers.
Holding: The Court held that conditioning the sale or license of copyrighted feature films to television stations on the purchase of other films (block booking) is an illegal tying arrangement violating Section 1 of the Sherman Act.
- Stops distributors from forcing TV stations to buy unwanted film packages.
- Requires distributors to provide individual film prices on first request.
- Limits coercive pricing and temporary refusals to deal that force package sales.
Summary
Background
The United States sued six major film distributors in 1957, accusing them of "block booking" — forcing television stations to take packages of copyrighted feature films instead of buying single titles. After a lengthy trial the district court reviewed 68 licensing agreements and found 25 contracts to be illegally tied. The court entered injunctions stopping the challenged tying practices against the distributors, including Loew's, Screen Gems, Associated Artists, United Artists, National Telefilm, and C & C Super Corp.
Reasoning
The Supreme Court applied earlier decisions treating copyrighted films as legally unique and therefore presumptively giving the distributor enough leverage to force tied sales. The Court agreed that forcing stations to accept unwanted films denied stations access to other suppliers and harmed competition. The Court rejected business excuses, including C & C’s claim that advertising and loan arrangements made block booking necessary, and held that copyright protection cannot be used to extend a monopoly by coercive package sales.
Real world impact
The Court made the tying finding final and sent the cases back to the district court for a more precise injunction. It directed changes: require distributors to offer and price films individually on first request, bar price discounts that cannot be justified by legitimate cost savings, and limit so-called temporary refusals to deal except during brief, bona fide competing negotiations. Those remedies aim to let stations buy single pictures while still allowing honest package offers.
Dissents or concurrances
Justice Harlan (joined by Justice Stewart) agreed with the liability rulings but protested the majority’s willingness to revise the detailed remedial terms drawn by the district court, preferring to leave those orders undisturbed.
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