220 U.S. 373 (1911)
Dr. Miles Medical Company prepared proprietary medicines according to secret formulas and devised a system of restrictive agreements to maintain fixed minimum prices for sales at both wholesale and retail levels throughout the United States.1 It entered into consignment contracts with more than four hundred jobbers and wholesale dealers and retail agency contracts with twenty-five thousand retail dealers.2
John D. Park & Sons Company, a wholesale drug concern, refused to execute either form of contract.3 It obtained the medicines by inducing signatories to the agreements to violate the price and vendee restrictions, allowing sales at cut prices.4 Prior to the introduction of the described system the defendant, a wholesale house, had dealt in the remedies and had purchased them from the complainant and from wholesale druggists and jobbers.5
The wholesale contract appointed the signatory as a distributing agent, provided that title remained with the complainant until sale to retail dealers, required the agent to sell only to designated retail agents at listed prices, and entitled the agent to commissions upon accounting for proceeds.6 The retail contract obligated the buyer to sell only at the full retail price printed on the package and only to accredited agents of the company.7
Dr. Miles filed a bill in equity against Park, alleging that the defendant had unlawfully procured medicines from its agents in violation of the contracts and seeking equitable relief for the interference.8 The bill set forth the forms of the agreements and the scope of the system.9 The lower court addressed the construction of the agreements in an opinion reported at 164 Fed. Rep. 805, and the case came before the Supreme Court for review.10
Whether the complainant's consignment contracts with wholesale dealers contemplate true consignments for sale on the complainant's account?11
No. The bill states that it has been the uniform custom to sell medicines to jobbers who then sell to retail druggists and that the contract was required of all jobbers to whom complainant sold its remedies.14 The agreement itself permits one wholesale agent to sell to another wholesale agent, so goods obtained by the defendant may have been purchased rather than consigned.15 Because the bill does not allege that the medicines procured were still held as consigned goods, the agency theory fails to support relief.16
The consignment contracts do not furnish a basis for relief on a breach-of-agency theory.17
Whether the restrictive agreements limiting prices and vendees are valid?18
No. The interlocking contracts require every jobber and retailer to sell only to accredited agents at fixed minimum prices, thereby destroying all competition between wholesalers and between retailers who supply the public.21 Complainant has already sold its product at prices satisfactory to itself yet seeks to govern every subsequent sale throughout the channels of trade.22 Such a combination for the sole purpose of maintaining prices and stifling competition is injurious to the public and void.23
The restrictive agreements are invalid both at common law and under the Act of July 2, 1890.24
Related opinions on this issue
The conduct of the defendant falls within a general prohibition of the law. It is fraudulent and has no merits of its own to recommend it to the favor of the court.25 The analogy relied upon to establish that evil effect is that of combinations in restraint of trade.26
I believe that we have some superstitions on that head, as I have said; but those combinations are entered into with intent to exclude others from a business naturally open to them, and we unhappily have become familiar with the methods by which they are carried out.27 I venture to say that there is no likeness between them and this case.28
Whether a distinction exists for such restrictions between articles manufactured under a secret process and those produced under ordinary conditions?29
No. Complainant has retained its secret intact whether the remedies are sold or unsold.32 The medicines embody the process only in the sense that they are made according to it; they do not communicate the formula.33 The same monopoly-of-production argument would apply to any producer who controls a necessary raw material, yet that circumstance has never been thought to authorize control of the entire subsequent trade in the finished article.34
No distinction validates the restrictions for secret-process medicines.35
Whether a manufacturer may control resale prices of its own products after parting with title?36
No. Complainant has parted with title to the medicines yet seeks through identical contracts to fix the prices at which all subsequent dealers must sell.39 The asserted benefit to the manufacturer from stable retail prices cannot support restrictions that the dealers themselves could not lawfully impose by combination among themselves.40 Once the goods have entered the channels of trade, the public is entitled to the advantages of competition in the subsequent traffic.41
A manufacturer may not control resale prices of its own products after parting with title.42