author: Mr. Justice Stevens Mr. Justice Brennan, Mr. Justice Stewart,

text:
    WHALEN, COMMISSIONER OF HEALTH OF NEW YORK v. ROE et al.
    No. 75-839.
    Argued October 13, 1976
    Decided February 22, 1977

      A. Seth Greenwald, Assistant Attorney General of New York, argued the cause for appellant. With him on the brief were Louis J. Lefkowitz, Attorney General, and Samuel A. Hirshowitz, First Assistant Attorney General.

      Michael Lesch argued the cause for appellees Roe et al. With him on the brief was Solomon Z. Ferziger. H. Miles Jaffe argued the cause for appellees Patient et al. With him on the brief were Melvin L. Wulf and John H. F. Shattuck.

        Evelle J. Younger, Attorney General of California, Jack B. Winkler, Chief Assistant Attorney General, S. Clark Moore, Assistant Attorney General, and Shunji Asari and Owen Lee Kwong, Deputy Attorneys General, filed a brief for the. State of California as amicus curiae urging reversal.

        Robert Plotkin and Paul R. Friedman filed a brief for the National Association of Mental Health et al. as amici curiae urging affirmance.

   Mr. Justice Stevens

delivered the opinion of the Court.

The constitutional question presented is whether the State of New York may record, in a centralized computer file, the names and addresses of all persons who have obtained, pursuant to a doctor’s prescription, certain drugs for which there is both a lawful and an unlawful market.

The District Court enjoined enforcement of the portions of the New York State Controlled Substances Act of 1972 which require such recording on the ground that they violate appellees’ constitutionally protected rights of privacy. We noted probable jurisdiction of the appeal by the Commissioner of Health, 424 U. S. 907, and now reverse.

Many drugs have both legitimate and illegitimate uses. In response to a concern that such drugs were being diverted into unlawful channels, in 1970 the New York Legislature created a special commission to evaluate the State’s drug-control laws. The commission found the existing laws deficient in several respects. There was no effective way to prevent the use of stolen or revised prescriptions, to prevent unscrupulous pharmacists from repeatedly refilling prescriptions, to prevent users from obtaining prescriptions from more than one doctor, or to prevent doctors from over-prescribing, either by authorizing an excessive amount in one prescription or by giving one patient multiple prescriptions. In drafting new legislation to correct such defects, the commission consulted with enforcement officials in California and Illinois where central reporting systems were being used effectively.

The new New York statute classified potentially harmful drugs in five schedules. Drugs, such as heroin, which are highly abused and have no recognized medical use, are in Schedule I; they cannot be prescribed. Schedules II through Y include drugs which have a progressively lower potential for abuse but also have a recognized medical use. Our concern is limited to Schedule II, which includes the most dangerous of the legitimate drugs.

With an exception for emergencies, the Act requires that all prescriptions for Schedule II drugs be prepared by the physician in triplicate on an official form. The completed form identifies the prescribing physician; the dispensing pharmacy; the drug and dosage; and the name, address, and age of the patient. One copy of the form is retained by the physician, the second by the pharmacist, and the third is forwarded to the New York State Department of Health in Albany. A prescription made on an official form may not exceed a 30-day supply, and may not be refilled.

The District Court found that about 100,000 Schedule II prescription forms are delivered to a receiving room at the Department of Health in Albany each month. They are sorted, coded, and logged and then taken to another room where the data on the forms is recorded on magnetic tapes for processing by a computer. Thereafter, the forms are returned to the receiving room to be retained in a vault for a five-year period and then destroyed as required by the statute. The receiving room is surrounded by a locked wire fence and protected by an alarm system. The computer tapes containing the prescription data are kept in a locked cabinet. When the tapes are used, the computer is run “off-line,” which means that no terminal outside of the computer room can read or record any information. 'Public disclosure of the identity of patients is expressly prohibited by the statute and by a Department of Health regulation. Willful violation of these prohibitions is a crime punishable by up to one year in prison and a $2,000 fine. At the time of trial there were 17 Department of Health employees with access to the files; in addition, there were 24 investigators with authority to investigate cases of overdispensing which might be identified by the computer. Twenty months after the effective date of the Act, the computerized data had only been used in two investigations involving alleged overuse by specific patients.

A few days before the Act became effective, this litigation was commenced by a group of patients regularly receiving prescriptions for Schedule II drugs, by doctors who prescribe such drugs, and by two associations of physicians. After various preliminary proceedings, a three-judge District Court conducted a one-day trial. Appellees offered evidence tending to prove that persons in need of treatment with Schedule II drugs will from time to time decline such treatment because of their fear that the misuse of the computerized data will cause them to be stigmatized as “drug addicts.”

The District Court held that “the doctor-patient relationship is one of the zones of privacy accorded constitutional protection” and that the patient-identification provisions of the Act invaded this zone with “a needlessly broad sweep,” and enjoined enforcement of the provisions of the Act which deal with the reporting of patients’ names and addresses.

I

The District Court found that the State had been unable to demonstrate the necessity for the patient-identification requirement on the basis of its experience during the first 20 months of administration of the new statute. There was a time when that alone would have provided a basis for invalidating the statute. Lochner v. New York, 198 U. S. 45, involved legislation making it a crime for a baker to permit his employees to work more than 60 hours in a week. In an opinion no longer regarded as authoritative, the Court held the statute unconstitutional as “an unreasonable, unnecessary and arbitrary interference with the right of the individual to his personal liberty ....” Id., at 56.

The holding in Lochner has been implicitly rejected many times. State legislation which has some effect on individual liberty or privacy may not be held unconstitutional simply because a court finds it unnecessary, in whole or in part. For we have frequently recognized that individual States have broad latitude in experimenting with possible solutions to problems of vital local concern.

The New York statute challenged in this case represents a considered attempt to deal with such a problem. It is manifestly the product of an orderly and rational legislative decision. It was recommended by a specially appointed commission which held extensive hearings on the proposed legislation, and drew on experience with similar programs in other States. There surely was nothing unreasonable in the assumption that the patient-identification requirement might aid in the enforcement of laws designed to minimize the misuse of dangerous drugs. For the requirement could reasonably .be expected to have a deterrent effect on potential violators as well as to aid in the detection or investigation of specific instances of apparent abuse. At the very least, it would seem clear that the State’s vital interest in controlling the distribution of dangerous drugs would support a decision to experiment with new techniques for control. For if an experiment fails — if in this case experience teaches that the patient-identification requirement results in the foolish expenditure of funds to acquire a mountain of useless information — the legislative process remains available to terminate the unwise experiment. It follows that the legislature’s enactment of the patient-identification requirement was a reasonable exercise of New York’s broad police powers. The District Court’s finding that the necessity for the requirement had not been proved is not, therefore, a sufficient reason for holding the statutory requirement unconstitutional.

II

Appellees contend that the statute invades a constitutionally protected “zone of privacy.” The cases sometimes characterized as protecting “privacy” have in fact involved at least two different kinds of interests. One is the individual interest in avoiding disclosure of personal matters, and another is the interest in independence in making certain kinds of important decisions. Appellees argue that both of these interests are impaired by this statute. The mere existence in readily available form of the information about patients’ use of Schedule II drugs creates a genuine concern that the information will become publicly known and that it will adversely affect their reputations. This concern makes some patients reluctant to use, and some doctors reluctant to prescribe, such drugs even when their use is medically indicated. It follows, they argue, that the making of decisions about matters vital to the care of their health is inevitably affected by the statute. Thus, the statute threatens to impair both their interest in the nondisclosure of private information and also their interest in making important decisions independently.

" We are persuaded, however, that the New York program does not, on its face, pose a sufficiently grievous threat to either interest to establish a constitutional violation.

Public disclosure of patient information can come about in three ways. Health Department employees may violate the statute by failing, either deliberately or negligently, to maintain proper security. A patient or a doctor may be accused of a violation and the stored data may be offered in evidence in a judicial proceeding. Or, thirdly, a doctor, a pharmacist, or the patient may voluntarily reveal information on a prescription form.

The third possibility existed under the prior law and is entirely unrelated to the existence of the computerized data bank. Neither of the other two possibilities provides a proper ground for attacking the' statute as invalid on its face. There is no support in the record, or in the experience of the two States that New York has emulated, for an assumption that the security' provisions of the statute will be administered improperly. And the remote possibility that judicial supervision of the evidentiary use of particular items of stored information will provide inadequate protection against unwarranted disclosures is surely not a sufficient reason for invalidating the entire patient-identification program.

Even without public disclosure, it is, of course, true that private information must be disclosed to the authorized employees of the New York Department of Health. Such disclosures, however, are not significantly different from those that were required under the prior law. Nor are they meaningfully distinguishable from a host of other unpleasant invasions of privacy that are associated with many facets of health care. Unquestionably, some individuals’ concern for their own privacy may lead them to avoid or to postpone needed medical attention. Nevertheless, disclosures of private medical information to doctors, to hospital personnel, to insurance companies, and to public health agencies are often an essential part of modern medical practice even when the disclosure may. reflect unfavorably on the character of the patient. Requiring such disclosures to representatives of the State having responsibility for the health of the community, does not automatically amount to an impermissible invasion of privacy.

Appellees also argue, however, that even if unwarranted disclosures do not actually occur, the knowledge that the information is readily available in a computerized file creates a genuine concern that causes some persons to decline needed medication. The record supports the conclusion that some use of Schedule II drugs has been discouraged by that concern; it also is clear, however, that about 100,000 prescriptions for such drugs were being filled each month prior to the entry of the District Court’s injunction. Clearly, therefore, the statute did not deprive the public of access to the drugs.

Nor can it be said that any individual has been deprived of the right to decide independently, with the advice of his physician, to acquire and to use needed medication. Although the State no doubt could prohibit entirely the use of particular Schedule II drugs, it has not done so. This case is therefore unlike those in which the Court held that a total prohibition of certain conduct was an impermissible deprivation of liberty. Nor does the State require access to these drugs to be conditioned on the consent of any state official or other third party. Within dosage limits which appellees do not challenge, the decision. to prescribe, or to use, is left entirely to the physician and the patient.

We hold that neither the immediate nor the threatened impact of the patient-identification requirements in the New York State Controlled Substances Act of 1972 on either the reputation or the independence of patients for whom Schedule II drugs are medically indicated is sufficient to constitute an invasion of any right or liberty protected by the Fourteenth Amendment.

Ill

The appellee doctors argue separately that the statute impairs their right to practice medicine free of unwarranted state interference. If the doctors’ claim has any reference to the impact of the 1972 statute on their own procedures, it is clearly frivolous. For even the prior statute required the doctor to prepare a written prescription identifying the name and address of the patient and the dosage of the prescribed drug. To the extent that their claim has reference to the possibility that the patients’ concern about disclosure may induce them to refuse needed medication, the doctors’ claim is derivative from, and therefore no stronger than, the patients’. Our rejection of their claim therefore disposes of the doctors’ as well.

IV

A final word about issues we have not decided. We are not unaware of the threat to privacy implicit in the accumulation of vast amounts of personal information in computerized data banks or other massive government files. The collection of taxes, the distribution of welfare and social security benefits, the supervision of public health, the direction of our Armed Forces, and the enforcement of the criminal laws all require the orderly preservation of great quantities of: information, much of which is personal in character and potentially embarrassing or harmful if disclosed. The right to collect and use such data for public purposes is typically accompanied by a concomitant statutory or regulatory duty to avoid unwarranted disclosures. Recognizing that in some circumstances that duty arguably has its roots in the Constitution, nevertheless New York’s statutory scheme, and its implementing administrative procedures, evidence a proper concern with, and protection of, the individual’s interest in privacy. We therefore need not, and do not, decide any question which might be presented by the unwarranted disclosure of accumulated private data — whether intentional or unintentional — or by a system that did not contain comparable security provisions. We simply hold that this record does not establish an invasion of any right or liberty protected by the Fourteenth Amendment.

Reversed.

Mr. Justice Brennan,

concurring.

I write only to express my understanding of the opinion of the Court, which I join.

The New York statute under attack requires doctors to disclose to the State information about prescriptions for certain drugs with a high potential for abuse, and provides for the storage of that information in a central computer file. The Court recognizes that an individual’s “interest in avoiding disclosure of personal matters” is an aspect of the right of privacy, ante, at 598-600, and nn. 2A-25, but holds that in this case, any such interest has not been seriously enough invaded by the State to require a showing that its program was indispensable to the State’s effort to control drug abuse.

The information disclosed by the physician under this program is made available only to a small number of public health officials with a legitimate interest in the information. As the record makes clear, New York has long required doctors to make this information available to its officials •on request, and that practice is not challenged here. Such limited reporting requirements in the medical field are familiar, ante, at 602 n. 29, and are not generally regarded as an invasion of privacy. Broad dissemination by state officials of such information, however, would clearly implicate constitutionally-protected privacy rights, and would presumably be justified only by compelling state interests. See, e. g., Roe v. Wade, 410 U. S. 113, 155-156 (1973).

What is more troubling about this scheme, however, is the central computer storage of the data thus collected. Obviously, as the State argues, collection and storage of data by the State that is in itself legitimate is not rendered unconstitutional simply because new technology makes the State’s operations more efficient. However, as the example of the Fourth Amendment shows, the Constitution puts limita not only on the type of information the State may gather, but also on the means it may use to gather it. The central storage and easy accessibility of computerized data vastly increase the potential for abuse of that information, and I am not prepared to say that future developments will not demonstrate the necessity of some curb on such technology.

In this case, as the Court’s opinion makes clear, the State’s carefully designed program includes numerous safeguards intended to forestall the danger of indiscriminate disclosure. Given this serious and, so far as the record shows, successful effort to prevent abuse and limit access to the personal information at issue, I cannot say that the statute’s provisions for computer storage, on their face, amount to a deprivation of constitutionally protected privacy interests, any more than the more traditional reporting provisions.

In the absence of such a deprivation, the State was not required to prove that the challenged statute is absolutely necessary to its attempt to control drug abuse. Of course, a statute that did effect such a deprivation would only be consistent with the Constitution if it were necessary to promote a compelling state interest. Roe v. Wade, supra; Eisenstadt v. Baird, 405 U. S. 438, 464 (1972) (White, J., concurring in result).

Mr. Justice Stewart,

concurring.

In Katz v. United States, 389 U. S. 347, the Court made clear that although the Constitution affords protection against certain kinds of government intrusions into personal and private matters, there is no “general constitutional ‘right to privacy.’ . . . [T]he protection of a person’s general right to privacy — his right to be let alone by other people — is, like the protection of his property and of his very life, left largely to the law of the individual States.” Id., at 350-351 (footnote omitted).

Mr. Justice Brennan’s concurring . opinion states that "[b]road dissemination by state officials of [the information collected by New York State] . . . would clearly implicate constitutionally protected privacy rights . . . .” Ante, at 606. The only possible support in his opinion for this statement is its earlier reference to two footnotes in the Court’s opinion, ibid., citing ante, at 598-600, and nn. 24r-25 (majority opinion). The footnotes, however, cite to only two Court opinions, and those two cases do not support the proposition advanced by Mr. Justice Brennan.

The first case referred to, Griswold v. Connecticut, 381 U. S. 479, held that a State cannot constitutionally prohibit a married couple from using contraceptives in the privacy of their home. Although the broad language of the opinion includes a discussion of privacy, see id., at 484-485, the constitutional protection there discovered also related to (1) marriage, see id., at 485-486; id., at 495 (Goldberg, J., concurring); id., at 500 (Harlan, J., concurring in judgment), citing Poe v. Ullman, 367 U. S. 497, 522 (Harlan, J., dissenting); 381 U. S., at 502-503 (White, J., concurring in judgment); (2) privacy in the home, see id., at 484-485 (majority opinion); id., at 495 (Goldberg, J., concurring); id., at 500 (Harlan, J., concurring in judgment), citing Poe v. Ullman, supra, at 522 (Harlan, J., dissenting); and (3) the right to use contraceptives, see 381 U. S., at 503 (White, J., concurring in judgment); see also Roe v. Wade, 410 U. S. 113, 169-170 (Stewart, J., concurring). Whatever the ratio decidendi of Griswold, it does not recognize a general interest in freedom from disclosure of private information.

The other case referred to, Stanley v. Georgia, 394 U. S. 557, held that an individual cannot constitutionally be prosecuted for possession of obscene materials in his home. Although Stanley makes some reference to privacy rights, id., at 564, the holding there was simply that the First Amendment — as made applicable to the States by the Fourteenth — protects a person’s right to read what he chooses in circumstances where that choice poses no threat to the sensibilities or welfare of others, id., at 565-568.

Upon the understanding that nothing the Court says today is contrary to the above views, I join its opinion and judgment.

       1972 N. Y. Laws, c. 878; N. Y. Pub. Health Law §3300 et seq. (McKinney, Supp. 1976-1977) (hereafter Pub. Health Law, except as indicated in n. 13, infra).

        Roe v. Ingraham, 403 F. Supp. 931 (SDNY 1975). Earlier the District Court had dismissed the complaint for want of a substantial federal question. Roe v. Ingraham, 357 F. Supp. 1217 (1973). The Court of Appeals reversed, holding that a substantial constitutional question was presented and therefore a three-judge court was required. Roe v. Ingraham, 480 F. 2d 102 (CA2 1973).

       Jurisdiction is conferred by 28 U. S. C. §§ 1253, 2101 (b).

         1970 N. Y. Laws, c. 474, amended by 1971 N. Y. Laws, c. 7. The Temporary State Commission to Evaluate the Drug Laws (hereafter T. S. C.) issued two reports which, it is stipulated, constitute part of the legislative history of the Act. The reports are the Interim Report of the Temporary State Commission to Evaluate the Drug Laws (State of New York, Legislative Doc. No. 10, Jan. 1972); and the Second Interim Report of the Temporary State Commission to Evaluate the Drug Laws (Albany, N. Y., Apr. 5,1971).

        Id., at 3-5.

       The Chairman of the T. S. C. summarized its findings:
      “Law enforcement officials in both California and Illinois have been consulted in considerable depth about the use of multiple prescriptions, since they have been using them for a considerable period of time. They indicate to us that they are not only a useful adjunct to the proper identification of culpable professional and unscrupulous drug abusers, but that they also give a reliable statistical indication of the pattern of drug flow throughout their states: information sorely needed in this state to stem the tide of diversion of lawfully manufactured controlled substances.” Memorandum of Chester R. Hardt, App. 87a-88a.
      T. S. C. Interim Report 21; T. S. C. Second Interim Report 27-44. Cal. Health & Safety Code §§ 11158, 11160, 11167 (West, 1975 and Supp. 1976); Ill. Ann. Stat., c. 56y2, §§ 1308, 1311, 1312 (a) (Supp. 1977).

       These five schedules conform in all material aspects with the drug schedules in the Federal Comprehensive Drug Abuse Prevention and Control Act of 1970. 21 U. S. C. § 801 et seq.

       These include opium and opium derivatives, cocaine, methadone, amphetamines, and methaqualone. Pub. Health Law § 3306. These drugs have accepted uses in the amelioration of pain and in the treatment of epilepsy, narcolepsy, hyperkinesia, schizo-affective disorders, and migraine headaches.

       Pub. Health Law §§ 3334, 3338. These forms are prepared and issued by the Department of Health, numbered serially, in groups of 100 forms at $10 per group (10 cents per triplicate form). New York State Health Department — Official New York State Prescription, Form NC-77 (8/72).

       Pub. Health Law §§ 3331-3333, 3339. The pharmacist normally forwards the prescription to Albany after filling it. If the physician dispenses the drug himself, he must forward two copies of the prescription to the Department of Health, § 3331 (6).

       Pub. Health Law § 3370,(3), 1974 N. Y. Laws, c. 965, § 16. The physician and the pharmacist are required to retain their copies for five years also, Pub. Health Law §§3331 (6), 3332 (4), 3333(4), but they are not required to destroy them.

       Section 3371 of the Pub. Health Law states:
      “1. No person, who has knowledge by virtue of his office of the identity of a particular patient or research subject, a manufacturing process, a trade secret or a formula shall disclose such knowledge, or any report or record thereof, except:
      “(a) to another person employed by the department, for purposes of executing provisions of this article; or
      “(b) pursuant to judicial subpoena or court order in a criminal investigation or proceeding; or
      “(c) to an agency, department of government, or official board authorized to regulate, license or otherwise supervise a person who is authorized by this article to deal in controlled substances, or in the course of any investigation or proceeding by or before such agency, department or board; or
      “(d) to a central registry established pursuant to this article.
      “2. In the course of any proceeding where such information is disclosed, except when necessary to effectuate the rights of a party to the proceeding, the court or presiding officer shall take such action as is necessary to insure that such information, or record or report of such information is not made public.”
      Pursuant to its statutory authority, the Department of Health has promulgated regulations in respect of confidentiality as follows:
      “No person who has knowledge by virtue of his office of the identity of a particular patient or research subject, a manufacturing process, a trade secret or a formula shall disclose such knowledge, or any report or record thereof, except:
      “(a) to another person who by virtue of his office as an employee of the department is entitled to obtain such information; or

        “(b) pursuant to judicial subpoena or court order in a criminal investigation or proceedings; or
      “(c) to an agency, department of government, or official board authorized to regulate, license or otherwise supervise a person who is authorized by article 33 of the Public Health Law to deal in controlled substances, or in the course of any investigation or proceeding by or before such agency, department or board; or
      “(d) to a central registry established pursuant to article 33 of the Public Health Law.” 10 N. Y. C. R. R. § 80.107 (1973).

       N. Y. Pub. Health Law § 12-b (2) (McKinney 1971).

       The physicians’ associations, Empire State Physicians Guild, Inc. and the American Federation of Physicians and Dentists, articulate no claims which are severable from the claims of the named physicians. We therefore find it unnecessary to consider whether the organizations themselves may have standing to maintain these suits.

       In addition to the appeal from the original dismissal of the complaint, the parties took depositions which were made a part of the record and entered into a stipulation of facts.

       Two parents testified that they were concerned that their children would be stigmatized by the State’s central filing system. One child had been taken off his Schedule II medication because of this concern. Three adult patients testified that they feared disclosure of their names would result from central filing of patient identifications. One of them now obtains his drugs in another State. The other two continue to receive Schedule II prescriptions in New York, but continue to fear disclosure and stigmatization. Four physicians testified that the prescription system entrenches on patients’ privacy, and that each had observed a reaction of shock, fear, and concern on the part of their patients whom they had informed of the plan. One doctor refuses to prescribe Schedule II drugs for his patients. On the other hand, over 100,000 patients per month have been receiving Schedule II drug prescriptions without their objections, if any, to central filing having come to the attention of the District Court. The record shows that the provisions of the Act were brought to the attention of the section on psychiatry of the New York State Medical Society (App. 166a), but that body apparently declined to support this suit.

       Pub. Health Law §§3331 (6), 3332 (2) (a), 3333 (4).

        Roe v. Wade, 410 U. S. 113, 117; Griswold v. Connecticut, 381 U. S. 479, 481-482; Ferguson v. Skrupa, 372 U. S. 726, 729-730; FHA v. The Darlington, Inc., 358 U. S. 84, 91-92.

       “We are not concerned, however, with the wisdom, need, or appropriateness of the legislation.” Olsen v. Nebraska ex rel. Western Reference & Bond Assn., 313 U. S. 236, 246.

       Mr. Justice Brandéis’ classic statement of the proposition merits reiteration:
      “To stay experimentation in things social and economic is a grave responsibility. Denial of the right to experiment may be fraught with serious consequences to the Nation. It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country. This Court has the power to prevent an experiment. We may strike down the statute which embodies it on the ground that, in our opinion, the measure is arbitrary, capricious or unreasonable. We have power to do this, because the due process clause has been held by the Court applicable to matters of substantive law as well as to matters of procedure. But in the exercise of this high power, we must be ever on our guard, lest we erect our prejudices into legal principles. If we would guide by the light of reason, we must let our minds be bold.” New State Ice Co. v. Liebmann, 285 U. S. 262, 311 (dissenting opinion) (footnote omitted).

       The absence of detected violations does not, of course, demonstrate that a statute has no significant deterrent effect.
      “From the beginning of civilized societies, legislators and judges have acted on various improvable assumptions. Such assumptions underlie much lawful state regulation of commercial and business affairs . . . .” Paris Adult Theatre I v. Slaton, 413 U. S. 49, 61 (citations omitted). “Nothing in the Constitution prohibits a State from reaching ... a conclusion and acting on it legislatively simply because there is no conclusive evidence or empirical data.” Id., at 63.

       “Such regulation, it can be assumed, could take a variety of valid forms.” Robinson v. California, 370 U. S. 660, 664. Cf. Minnesota ex rel. Whipple v. Martinson, 256 U. S. 41, 45; Beauharnais v. Illinois, 343 U. S. 250, 261-262.

       As the basis for the constitutional claim they rely on the shadows cast by a variety of provisions in the Bill of Rights. Language in prior opinions of the Court or its individual Justices provides support for the view that some personal rights “implicit in the concept of ordered liberty” (see Palko v. Connecticut, 302 U. S. 319, 325, quoted in Roe v. Wade, 410 U. S., at 152), are so “fundamental” that an undefined penumbra may provide them with an independent source of constitutional protection. In Roe v. Wade, however, after carefully reviewing those cases, the Court expressed the opinion that the “right of privacy” is founded in the Fourteenth Amendment’s concept of personal liberty, id., at 152-153.
      “This right of privacy, whether it be founded in the Fourteenth Amendment’s concept of personal liberty and restrictions upon state action, as we feel it is, or, as the District Court determined, in the Ninth Amendment’s reservation of rights to the people, is broad enough to encompass a woman’s decision whether or not to terminate her pregnancy.” Id., at 153 (emphasis added). See also id., at 168-171 (Stewart, J., concurring); Griswold v. Connecticut, 381 U. S. 479, 500 (Harlan, J., concurring in judgment).

       Professor Kurland has written:
      “The concept of a constitutional right of privacy still remains largely undefined. There are at least Three facets that have been partially revealed, but their form and shape remain to be fully ascertained. The first is the right of the individual to be free in his private affairs from governmental surveillance and intrusion. The second is the right of an individual not to have his private affairs made public by the government. The third is the right of an individual to be free in action, thought, experience, and belief from governmental compulsion.” The private I, the University of Chicago Magazine 7, 8 (autumn 1976). The first of the facets which he describes is directly protected by the Fourth Amendment; the second and third correspond to the two kinds of interests referred to in the text.

       In his dissent in Olmstead v. United States, 277 U. S. 438, 478, Mr. Justice Brandéis characterized “the right to be let alone” as “the right most valued by civilized men”; in Griswold v. Connecticut, 381 U. S. 479, 483, the Court said: “[T]he First Amendment has a penumbra where privacy is protected from governmental intrusion.” See also Stanley v. Georgia, 394 U. S. 557; California Bankers Assn. v. Shultz, 416 U. S. 21, 79 (Douglas, J., dissenting); id., at 78 (Powell, J., concurring).

        Roe v. Wade, supra; Doe v. Bolton, 410 U. S. 179; Loving v. Virginia, 388 U. S. 1; Griswold v. Connecticut, supra; Pierce v. Society of Sisters, 268 U. S. 510; Meyer v. Nebraska, 262 U. S. 390; Allgeyer v. Louisiana, 165 U. S. 578. In Paul v. Davis, 424 U. S. 693, 713, the Court characterized these decisions as dealing with “matters relating to marriage, procreation, contraception, family relationships, and child rearing and education. In these areas, it has been held that there are limitations on the States’ power to substantively regulate conduct.”

       The T. S. C.’s independent investigation of the California and Illinois central filing systems failed to reveal a single case of invasion of a patient’s privacy. T. S. C. Memorandum of Chester R. Hardt, Chairman, Re: Triplicate Prescriptions, New York State Controlled Substances Act, effective Apr. 1, 1973 (reproduced at App. 88a).
      Just last Term in Buckley v. Valeo, 424 U. S. 1, we rejected a contention that the reporting requirements of the Federal Election Campaign Act of 1971 violated the First Amendment rights of those who contribute to minority parties:
      “But no appellant in this case has tendered record evidence .... Instead, appellants primarily rely on 'the clearly articulated fears of individuals, well experienced in the political process.’... At best they offer the testimony of several minor-party officials that one or two persons refused to make contributions because of the possibility of disclosure. On this record, the substantial public interest in disclosure identified by the legislative history of this Act outweighs the harm generally alleged.” 424 U. S., at 71-72 (footnote omitted).
      Here, too, appellees urge on us “clearly articulated fears” about the pernicious effects of disclosure. But this requires us to assume even more than that we refused to do in Buckley. There the disclosures were to be made in accordance with the statutory scheme. Appellees’ disclosures could only be made if the statutory scheme were violated as described, supra, at 594-595.
      The fears of parents on behalf of their pre-adolescent children who are receiving amphetamines in the treatment of hyperkinesia are doubly premature. Not only must the Act’s nondisclosure provisions be violated in order to stigmatize the children as they enter adult life, but the provisions requiring destruction of all prescription records after five years would have to be ignored, see n. 11, supra, and accompanying text.

       The physician-patient evidentiary privilege is unknown to the common law. In States where it exists by legislative enactment, it is subject to many exceptions and to waiver for many reasons. C. McCormick, Evidence §§ 98, 101-104 (2d ed. 1972); 8 J. Wigmore, Evidence § 2380, nn. 3, 5, 6, §§2388-2391 (McNaughton rev. ed. 1961).

       Familiar examples are statutory reporting requirements relating to venereal disease, child abuse, injuries caused by deadly weapons, and certifications of fetal death. Last Term we upheld the recordkeeping requirements of the Missouri abortion laws against a challenge based on the protected interest in making the abortion decision free of governmental intrusion, Planned Parenthood of Central Missouri v. Danforth, 428 U. S. 52, 79-81.

       It is, of course, well settled that the State has broad police powers in regulating the administration of drugs by the health professions. Robinson v. California, 370 U. S., at 664-665; Minnesota ex rel. Whipple v. Martinson, 256 U. S., at 45; Barsky v. Board of Regents, 347 U. S. 442, 449.

       In Doe v. Bolton, 410 U. S. 179, for instance, the constitutionally defective statute required the written concurrence of two state-licensed physicians, other than the patient’s personal physician, before an abortion could be performed, and the advance approval of a committee of not less than three members of the hospital staff where the procedure was to be performed, regardless of whether the committee members had a physician-patient relationship with the woman concerned.

       The Roe appellees also claim that a constitutional privacy right emanates from the Fourth Amendment, citing language in Terry v. Ohio, 392 U. S. 1, 9, at a point where it quotes from Katz v. United States, 389 U. S. 347. But those cases involve affirmative, unannounced, narrowly focused intrusions into individual privacy during the course of criminal investigations. We have never carried the Fourth Amendment’s interest in privacy as far as the Roe appellees would have us. We decline to do so now.
      Likewise the Patient appellees derive a right to individual anonymity from our freedom of association cases such as Bates v. Little Rock, 361 U. S. 516, 522-523, and NAACP v. Alabama, 357 U. S. 449, 462. But those cases protect “freedom of association for the purpose of advancing ideas and airing grievances,” Bates v. Little Rock, supra, at 523, not anonymity in the course of medical treatment. Also, in those cases there was an uncontroverted showing of past harm through disclosure, NAACP v. Alabama, supra, at 462, an element which is absent here.
      Cf. Schulman v. New York City Health & Hospitals Corp., 38 N. Y. 2d 234, 342 N. E. 2d 501 (1975).

       The doctors rely on two references to a physician’s right to administer medical care in the opinion in Doe v. Bolton, 410 U. S., at 197-198, and 199. Nothing in that case suggests that a doctor's right to administer medical care has any greater strength than his patient’s right to receive such care. The constitutional right vindicated in Doe was the right of a pregnant woman to decide whether or not to bear a child without unwarranted state interference. The statutory restrictions on the abortion procedures were invalid because they encumbered the woman’s exercise of that constitutionally protected right by placing obstacles in the path of the doctor upon whom she was entitled to rely for advice in connection with her decision. If those obstacles had not impacted upon the woman’s freedom to make a constitutionally protected decision, if they had merely made the physician’s work more laborious or less independent without any impact on the patient, they would not have violated the Constitution:

       Boyer, Computerized Medical Records and the Right to Privacy: The Emerging Federal Response, 25 Buffalo L. Rev. 37 (1975); Miller, Computers, Data Banks and Individual Privacy: An Overview, 4 Colum. Human Rights L. Rev. 1 (1972); A. Miller, The Assault on Privacy (1971). See also Utz v. Cullinane, 172 U. S. App. D. C. 67, 78-82, 520 F. 2d 467, 478-482 (1975).

      See 389 U. S., at 350 n. 5:
      “The First Amendment, for example, imposes limitations upon governmental abridgment of ‘freedom to associate and privacy in one’s association.’ NAACP v. Alabama, 357 U. S. 449, 462. The Third Amendment’s prohibition against the unconsented peacetime quartering of soldiers protects another aspect of privacy from governmental intrusion. To some extent, the Fifth Amendment too ‘reflects the Constitution’s concern for . the right of each individual ‘to a private enclave where he may lead a private life.'’ ” ’ Tehan v. Shott, 382 U. S. 406, 416. Virtually every governmental action interferes with personal privacy to some degree. The question in each case is whether that interference violates a command of the United States Constitution.”
      As the Court notes, ante, at 599-600, and n. 26, there is also a line of authority, often characterized as involving “privacy,” affording constitutional protection to the autonomy of an individual or a family unit in making decisions generally relating to marriage, procreation, and raising children.


source: Caselaw Access Project

author: Mr. Justice Stevens Mr. Chief Justice Burger,

license: Public Domain

text:
    UNITED STATES STEEL CORP. et al. v. FORTNER ENTERPRISES, INC.
    No. 75-853.
    Argued November 1, 1976
    Decided February 22, 1977

      Macdonald Flinn argued the cause for petitioners. With him on the briefs were Albert F. Reutlinger, William H. Buchanan, and Norman Yoerg, Jr.

      Kenneth L. Anderson argued the cause for respondent. With him on the briefs was A. Scott Hamilton, Jr.

   Mr. Justice Stevens

delivered the opinion of the Court.

In exchange for respondent’s promise to purchase prefabricated houses to be erected on land near Louisville, Ky., petitioners agreed to finance the cost of acquiring and developing the land. Difficulties arose while the development was in progress, and respondent (Fortner) commenced this treble-damages action, claiming that the transaction was a tying arrangement forbidden by the Sherman Act. Fortner alleged that competition for prefabricated houses (the tied product) was restrained by petitioners’ abuse of power over credit (the tying product). A summary judgment in favor of petitioners was reversed by this Court. Fortner Enterprises v. United States Steel Corp., 394 U. S. 495 (Fortner I). We held that the agreement affected a “not insubstantial” amount of commerce in the tied product and that Fortner was entitled to an opportunity to prove that petitioners possessed “appreciable economic power” in the market for the tying product. The question now presented is whether the record supports the conclusion that petitioners had such power in the credit market.

The conclusion that a violation of § 1 of the Sherman Act had been proved was only reached after two .trials. At the first trial following our remand, the District Court directed a verdict in favor of Fortner on the issue of liability, and submitted only the issue of damages to the jury. The jury assessed damages, before trebling, of $93,200.. The Court of Appeals reversed the directed verdict and remanded for a new trial on liability. 452 F. 2d 1095 (CA6 1971), cert. denied, 406 U. S. 919. The parties then waived the jury; the trial judge heard additional evidence, and entered extensive findings of fact which were affirmed on appeal. 523 F. 2d 961 (1975). Both courts held that the findings justified the conclusion that petitioners had sufficient economic power in the credit market to make the tying arrangement unlawful.

Before explaining why we disagree with the ultimate conclusion of the courts below, we first describe the tying arrangement and then summarize the findings on the economic-power issue.

I

Only the essential features of the arrangement between the parties need be described. Fortner is a corporation which was activated by an experienced real estate developer for the purpose of buying and improving residential lots. One petitioner, United States Steel Corp., operates a “Home Division” which manufactures and assembles components of prefabricated houses; the second petitioner, the “Credit Corp.,” is a wholly owned subsidiary, which provides financing to customers of the Home Division in order to promote sales. Although their common ownership and control make it appropriate to regard the two as a single seller, they sell two separate products — prefabricated houses and credit. The credit extended to Fortner was not merely for the price of the homes. Petitioners agreed to lend Fortner over $2,000,000 in exchange for Fortner’s promise to purchase the components of 210 homes for about $689,000. The additional borrowed funds were intended to cover Fortner’s cost of acquiring and developing the vacant real estate, and the cost of erecting the houses.

The impact of the agreement on the market for the tied product (prefabricated houses) is not in dispute. On the one hand, there is no claim — nor could there be — that the Home Division had any dominance in the prefabricated housing business. The record indicates that it was only moderately successful, and that its sales represented a small fraction of the industry total. On the other hand, we have already held that the dollar value of the sales to respondent was sufficient to meet the “not insubstantial” test described in earlier cases. See 394 U. S., at 501-502. We therefore confine our attention to the source of the tying arrangement— petitioners’ “economic power” in the credit market.

II

The evidence supporting the conclusion that the Credit Corp. had appreciable economic power in the credit market relates to four propositions: (1) petitioner Credit Corp. and the Home Division were owned by one of the Nation’s largest corporations; (2) petitioners entered into tying arrangements with a significant number of customers in addition to Fortner ; (3) the Home Division charged respondent a noncompetitive price for its prefabricated homes; and (4) the financing provided to Fortner was “unique,” primarily because it covered 100% of Fortner’s acquisition and development costs.

The Credit Corp. was established in 1954 to provide financing for customers of the Home Division. The United States Steel Corp. not only provided the equity capital, but also allowed the Credit Corp. to use its credit in order to borrow money from banks at the prime rate. Thus, although the Credit Corp. itself was not a particularly large company, it was supported by a corporate parent with great financial strength.

The Credit Corp.’s loan policies were primarily intended to help the Home Division sell its products. It extended credit only to customers of the Home Division, and over two-thirds of the Home Division customers obtained such financing. With few exceptions, all the loan agreements contained a tying clause comparable to the one challenged in this case. Petitioner’s home sales in 1960 amounted to $6,747,353. Since over $4,600,000 of these sales were tied to financing provided by the Credit Corp., it is apparent that the tying arrangement was used with a number of customers in addition to Fortner.

The least expensive house package that Fortner purchased from the Home Division cost about $3,150. One witness testified that the Home Division’s price was $455 higher than the price of comparable components in a conventional home; another witness, to whom the District Court made no reference in its findings, testified that the Home Division’s price was $443 higher than a comparable prefabricated product. Whether the price differential was as great as 15% is not entirely clear, but the record does support the conclusion that the contract required Fortner to pay a noncompetitive price for the Home Division’s houses.

The finding that the credit extended to Fortner was unique was based on factors emphasized in the testimony of Fortner’s expert witness, Dr. Masten, a professor with special knowledge of lending practices in the Kentucky area. Dr. Masten testified that mortgage loans equal to 100% of the acquisition and development cost of real estate were not otherwise available in the Kentucky area; that even though Fortner had a deficit of $16,000, its loan was not guaranteed by a shareholder, officer, or other person interested in its business; and that the interest rate of 6% represented a low rate under prevailing economic conditions. Moreover, he explained that the stable price levels at the time made the risk to the lender somewhat higher than would have been the case in a period of rising prices. Dr. Masten concluded that the terms granted to respondent by the Credit Corp. were so unusual that it was almost inconceivable that the funds could have been acquired from any other source. It is a fair summary of his testimony, and of the District Court’s findings, to say that the loan was unique because the lender accepted such a high risk and the borrower assumed such a low cost.

The District Court also found that banks and federally insured savings and loan associations generally were prohibited by law from making 100% land acquisition and development loans, and “that other conventional lenders would not have made such loans at the time in question since they were not prudent loans due to the risk involved.” App. 1596.

Accordingly, the District Court concluded “that all of the required elements of an illegal tie-in agreement did exist since the tie-in itself was present, a not insubstantial amount of interstate commerce in the tied product was restrained and the Credit Corporation did possess sufficient economic power or leverage to effect such restraint.” Id., at 1602.

III

Without the finding that the financing provided to Fortner was “unique,” it is clear that the District Court’s findings would be insufficient to support the conclusion that the Credit Corp. possessed any significant economic power in the credit market.

Although the Credit Corp. is owned by one of the Nation’s largest manufacturing corporations, there is nothing in the record to indicate that this enabled it to borrow funds on terms more favorable than those available to competing lenders, or that it was able to operate more efficiently than other lending institutions. In short, the affiliation between the petitioners does not appear to have given the Credit Corp. any cost advantage over its competitors in the credit market. Instead, the affiliation was significant only because the Credit Corp. provided a source of funds to customers of the Home Division. That fact tells us nothing about the extent of petitioners’ economic power in the credit market.

The same may be said about the fact that loans from the Credit Corp. were used to obtain house sales from Fortner and others. In some tying situations a disproportionately large volume of sales of the tied product resulting from only a few strategic sales of the tying product may reflect a form of economic “leverage” that is probative of power in the market for the tying product. If, as some economists have suggested, the purpose of a tie-in is often to facilitate price discrimination, such evidence would imply the existence of power that a free market would not tolerate. But in this case Fortner was only required to purchase houses for the number of lots for which it received financing. The tying product produced no commitment from Fortner to purchase varying quantities of the tied product over an extended period of time. This record, therefore, does not describe the kind of “leverage” found in some of the Court’s prior decisions condemning tying arrangements.

The fact that Fortner — and presumably other Home Division customers as well — paid a noncompetitive price for houses also lends insufficient support to the judgment of the lower court. Proof that Fortner paid a higher price for the tied product is consistent with the possibility that the financing was unusually inexpensive and that the price for the entire package was equal to, or below, a competitive price. And this possibility is equally strong even though a number of Home Division customers made a package purchase of homes and financing.

The most significant finding made by the District Court related to the unique character of the credit extended to Fortner. This finding is particularly important because the unique character of the tying product has provided critical support for the finding of illegality in prior cases. Thus, the statutory grant of a patent monopoly in International Salt Co. v. United States, 332 U. S. 392; the copyright monopolies in United States v. Paramount Pictures, Inc., 334 U. S. 131, and United States v. Loew’s Inc., 371 U. S. 38; and the extensive land holdings in Northern Pacific R. Co. v. United States, 356 U. S. 1, represented tying products that the Court regarded as sufficiently unique to give rise to a presumption of economic power.

As the Court plainly stated in its prior opinion in this case, these decisions do not require that the defendant have a monopoly or even a dominant position throughout the market for a tying product. See 394 U. S., at 502-503. They do, however, focus attention on the question whether the seller has the power, within the market for the tying product, to raise prices or to require purchasers to accept burdensome terms that could not be exacted in a completely competitive market. In short, the question is whether the seller has some advantage not shared by his competitors in the market for the tying product.

Without any such advantage differentiating his product from that of his competitors, the seller’s product does not have the kind of uniqueness considered relevant in prior tying-clause cases. The Court made this point explicitly when it remanded this case for trial:

“We do not mean to accept petitioner’s apparent argument that market power can be inferred simply because the kind of financing terms offered by a lending company are 'unique and unusual.’ We do mean, however, that uniquely and unusually advantageous terms can reflect a creditor’s unique economic advantages over his competitors.” 394 U. S., at 505.

An accompanying footnote explained:

“Uniqueness confers economic power only when other competitors are in some way prevented from offering the distinctive product themselves. Such barriers may be legal, as in the case of patented and. copyrighted products, e. g., International Salt; Loew’s, or physical, as when the product is land, e. g., Northern Pacific. It is true that the barriers may also be economic, as when competitors are simply unable to produce the distinctive product profitably, but the uniqueness test in such situations is somewhat confusing since the real source of economic power is not the product itself but rather the seller’s cost advantage in producing it.” Id., at 505 n. 2.

Quite clearly, if the evidence merely shows that credit terms are unique because the seller is willing to accept a lesser profit — or to incur greater risks — than its competitors, that kind of uniqueness will not give rise to any inference of economic power in the credit market. Yet this is, in substance, all that the record in this case indicates.

The unusual credit bargain offered to Fortner proves nothing more than a willingness to provide cheap financing in order to sell expensive houses. Without any evidence that the Credit Corp. had some cost advantage over its competitors — or could offer a form of financing that was significantly differentiated from that which other lenders could offer if they so elected — the unique character of its financing does not support the conclusion that petitioners had the kind of economic power which Fortner had the burden of proving in order to prevail in this litigation.

The judgment of the Court of Appeals is reversed.

So ordered.

Mr. Chief Justice Burger,

with whom Mr. Justice Rehnquist joins,

concurring.

I concur in the Court’s opinion and write only to emphasize what the case before us does not involve; I join on the basis of my understanding of the scope of our holding. Today’s decision does not implicate ordinary credit sales of only a single product and which therefore cannot constitute a tying arrangement subject to per se scrutiny under § 1 of the Sherman Act. In contrast to such transactions, we are dealing here with a peculiar arrangement expressly found by the Court in Fortner 1 to involve two separate products sold by two separate corporations. Fortner Enterprises v. United States Steel Corp., 394 U. S. 495, 507 (1969). Consequently, I read the Court’s assumption that a tie-in existed in this case, required as it is by the law of the case, to cast no doubt on the legality of credit financing by manufacturers or distributors.

       As explained at the outset of the opinion, Fortner I involved “a variety of questions concerning the proper standards to be applied by a United States district court in passing on a motion for summary judgment in a civil antitrust action.” 394 U. S., at 496. Petitioners do not ask us to re-examine Fortner I, which left only the economic-power question open on the issue of whether a per se violation could be proved. On the other hand, Fortner has not pursued the suggestion in Fortner I that it might be able to prove a § 1 violation under the rule-of-reason standard. 394 U. S., at 500. Thus, with respect to § 1, only the economic-power issue is before us.
      In Fortner I, the Court noted that Fortner also alleged a § 2 violation, namely, that petitioners “conspired together for the purpose of . . . acquiring a monopoly in the market for prefabricated houses.” 394 U. S., at 500. The District Court held that a § 2 violation had been proved. Although the Court of Appeals did not reach this issue, a remand is unnecessary. It is clear that neither the District Court’s findings of fact nor the record supports the conclusion that § 2 was violated. The District Court found only that “the defendants did combine or conspire to increase sales of prefabricated house packages by United States Steel Corporation by the making of loans to numerous builders containing the tie-in provision” and that “the sole purpose of the loan programs of the Credit Corporation was specifically and deliberately to increase the share of the market of United States Steel Corporation in prefabricated house packages . . . .” App. 1603 (emphasis added). But “increasing sales” and “increasing market share” are normal business goals, not forbidden by §2 without other evidence of an intent to monopolize. The evidence in this case does not bridge the gap between the District Court’s findings of intent to increase sales and its legal conclusion of conspiracy to monopolize. Moreover, petitioners did not have a large market share or dominant market position. See n. 3, infra. No inference of intent to monopolize can be drawn from the fact that a firm with a small market share has engaged in nonpredatory competitive conduct in the hope of increasing sales. Yet as we conclude, infra, at 621-622, that is all the record in this ease shows.

       26 Stat. 209, as amended, 15 U. S. C. § 1.

       In 1960, for example, the Home Division sold a total of 1,793 houses for $6,747,353. There were at least four larger prefabricated home manufacturers, the largest of which sold 16,804 homes in that year. In the following year the Home Division’s sales declined while the sales of each of its four principal competitors remained steady or increased.

       After reviewing extensive evidence taken from the files of the Credit Corp., including a memorandum stating that “our only purpose in making the loan ... is shipping houses,” the District Court expressly found “that the Credit Corporation was not so much concerned with the risks involved in loans but whether they would help sell houses.” App. 1588-1589.

       This figure is not stated in the District Court’s findings; it is derived from the finding of total sales and the finding that 68% of the sales in 1960 were made to dealers receiving financial assistance from the Credit Corp. See id., at 1589-1590.

         The prime rate at the time was 5% or £%%.

       See Bowman, Tying Arrangements and the Leverage Problem, 67 Yale L. J. 19 (1957).

       See e. g., United Shoe Machinery v. United States, 258 U. S. 451; International Business Machines v. United States, 298 U. S. 131; International Salt Co. v. United States, 332 U. S. 392. In his article in the 1969 Supreme Court Review 16, Professor Dam suggests that this kind of leverage may also have been present in Northern Pacific R. Co. v. United States, 356 U. S. 1.

       Fortner’s expert witness agreed with the statement:
      “The amount of the loan as a percentage of the collateral or security is only one element in determining its advantage to a borrower. The other relevant factors include the rate of interest charged, whether the lender discounts the amount loaned or charges service for [sic] other fees and maturity in terms of repayment.” App. 1686.

       Relying on Advance Business Systems & Supply Co. v. SCM Corp., 415 F. 2d 55 (CA4 1969), cert. denied, 397 U. S. 920, Fortner contends that acceptance of the package by a significant number of customers is itself sufficient to prove the seller's economic power. But this approach depends on the absence of other explanations for the willingness of buyers to purchase the package. See 415 F. 2d, at 68. In the Northern Pacific case, for instance, the Court explained:
      "The very existence of this host of tying arrangements is itself compelling evidence of the defendant’s great power, at least where, as here, no other explanation has been offered for the existence of these restraints. The 'preferential routing’ clauses conferred no benefit on the purchasers or lessees. While they got the land they wanted by yielding their freedom to deal with competing carriers, the defendant makes no claim that it came any cheaper than if the restrictive clauses had been omitted. In fact any such price reduction in return for rail shipments would have quite plainly constituted an unlawful rebate to the shipper. So far as the Railroad was concerned its purpose obviously was to fence out competitors, to stifle competition.” 356 U. S., at 7-8 (footnote omitted).
      As this passage demonstrates, this case differs from Northern Pacific because use of the tie-in in this case can be explained as a form of price competition in the tied product, whereas that explanation was unavailable to the Northern Pacific Railway.

       The Court in Northern Pacific concluded that the railroad “possessed substantial economic power by virtue of its extensive landholdings” and then described those holdings as follows:
      “As pointed out before, the defendant was initially granted large acreages by Congress in the several North-western States through which its lines now run. This land was strategically located in checkerboard fashion amid private holdings and within economic distance of transportation facilities. Not only the testimony of various witnesses but common sense makes it evident that this particular land was often prized by those who purchased or leased it and was frequently essential to their business activities.” Id., at 7.

       “Since one of the objectives of the patent laws is to reward uniqueness, the principle of these cases was carried over into antitrust law on the theory that the existence of a valid patent on the tying product, without more, establishes a distinctiveness sufficient to conclude that any tying arrangement involving the patented product would have anti-competitive consequences.” United States v. Loew’s Inc., 371 U. S. 38, 46.

       “Accordingly, the proper focus of concern is whether the seller has the power to raise prices, or impose other burdensome terms such as a tie-in, with respect to any appreciable number of buyers within the market.” 394 U. S., at 504.
      Professor Dam correctly analyzed the burden of proof imposed on Fortner by this language. In his article in the 1969 Supreme Court Review 25-26, he reasoned:
      “One important question in interpreting the Fortner decision is the meaning of this language. Taken out of context, it might be thought to mean that, just as the 'host of tying arrangements’ was 'compelling evidence’ of 'great power’ in Northern Pacific, so the inclusion of tie-in clauses in contracts with 'any appreciable numbers of buyers’ establishes market power. But the passage read in context does not warrant this interpretation. For the immediately preceding sentence makes clear that market power in the sense of power over price must still exist. If the price could have been raised but the tie-in was demanded in lieu of the higher price, then — and presumably only then — would the’ requisite economic power exist. Thus, despite the broad language available for .quotation in later cases, the treatment of the law on market power is on close reading not only consonant with the precedents but in some ways less far-reaching than Northern Pacific and Loew’s, which could be read to make actual market power irrelevant.” (Footnotes omitted.)

       One commentator on Fortner I noted:
      “The Court’s uniqueness test is adequate to identify a number of situations in which this type of foreclosure is likely to occur. Whenever there are some buyers who find a seller’s product uniquely attractive, and are therefore willing to pay a premium above the price of its nearest substitute, the seller has the opportunity to impose a tie to some other good.” Note, The Logic of Foreclosure: Tie-In Doctrine after Fortner v. U. S. Steel, 79 Yale L. J. 86, 93-94 (1969).

       The opinion of the Court in Fortner I notes that smaller companies might not have the “financial strength to offer credit comparable to that provided by larger competitors under tying arrangements.” 394 U. S., at 509. Fortner’s expert witness was unaware of the financing practices of competing sellers of prefabricated homes, App. 1691-1692, but there is nothing to suggest that they were unable to offer comparable financing -if they chose to do so.