Leegin Creative Leather v. PSKS (Supreme Court 2007)
[updated] In today’s Sherman Act decision, the Supreme Court found that the antitrust effect of vertical minimum-price restraints should be judged under a rule of reason. This overturns a longstanding per se rule.
An interesting aspect of the opinion is Justice Breyer’s dissent where he focuses on benefits of free riding.
[F]ree riding often takes place in the economy without any legal effort to stop it. Many visitors to California take free rides on the Pacific Coast Highway. We benefit freely from ideas, such as that of creating the first supermarket. Dealers often take free rides on investments that others have made in building a product's name and reputation. The question is how often the free riding problem is enough significantly to deter dealer investment.
Despite Breyer’s dissent, this case continues the trend to allow increased downstream control (through both property and contract) of the use of a company’s goods and services.
