Instead of holding that the Anti-Trust Act included all contracts, reasonable or unreasonable, in restraint of interstate trade, the ruling should have been that the contracts there presented were unreasonable restraints of interstate trade, and as such within the scope of the Act....  Whenever a departure from common-law rules and definitions is claimed, the purpose to make the departure should be clearly shown.  Such a purpose does not appear and such a departure was not intended.

[Footnote 1:  United States v.  Trans-Missouri Association, 166 U.S., 290.]

[Footnote 2:  Northern Securities Company v.  United States, 193 U.S., 197.]

Nevertheless, the troublesome question remained, to plague lawyers and the community generally, until it was finally put at rest and the statute once more planted on the firm ground of common-law rule and definition by the decisions in the Standard Oil and Tobacco cases.

What, then, is this common-law rule which President Taft found so clear?  No one has discussed it more lucidly than did the youthful Circuit Judge Taft himself in delivering the opinion of the Circuit Court of Appeals in the Addyston Pipe & Steel Co. case,[1] an opinion in which his two associates on the bench, the late Justices Harlan and Lurton, concurred.  The rule may be briefly stated as follows: 

Every contract or combination whose primary purpose and effect is to fix prices, limit production, or otherwise restrain trade is unlawful, provided the restraint be direct, material, and substantial.

Where, however, the restraint of trade is not direct, but merely ancillary or collateral to some lawful contract or transaction, it is not unlawful, provided it is reasonable, that is to say, not broader than is required for the protection of the party in whose favor the restraint is imposed.

[Footnote 1:  United States v.  Addyston Pipe & Steel Co., 85 Fed.  Rep., 271.]

A familiar illustration is the sale of a business and its goodwill, accompanied by a covenant on the part of the vendor not to compete.  Such a covenant is collateral to the sale, and if not broader than is reasonably required for the protection of the vendee it will be upheld, although a similar agreement, standing alone and not collateral to a sale or other lawful transaction, would be in direct restraint of trade and unlawful.

So much for the alleged uncertainty of the law.  Candid men must agree with President Taft that in the light of the Supreme Court decisions it is reasonably clear what the Sherman Law means.  But the fact that “the business community now knows or ought to know where it stands” with respect to the law does not greatly help the business situation.  The real difficulty lies, not in the uncertainty of the law, but in the fact that the law does not fit actual present-day conditions.  This is partly because many of the trusts were organized with full