Broadcasting Telecasting (Jan-Mar 1956)

GOVERNMENT IBM, AT&T AGREE TO RELEASE PATENTS; RCA LICENSING SETUP MAY BE NEXT American Telephone & Telegraph will divest itself of noncommon carrier interests and release patent rights royaltyfree under reciprocal licensing agreement. International Business Machines will sell office machines it has used until now on rental-only basis. RCAJustice Dept. talks take place. THE government won two electronics patent suit consent decrees last week — against giant AT&T and International Business Machines Corp. — and speculation was strong that a consent judgment was in the process of being worked out with the Radio Corp. of America. In a sweeping judgment, filed in Newark, N. J., federal court last Tuesday, the nation's telephone communications titan agreed to: • Engage only in telephone communications under federal and state common carrier regulations. • Divest itself of non-common carrier activities, including private communications systems. • Throw on the open market, royalty-free, all its patents involved in the so-called B-2 agreement with RCA, GE and Westinghouse. • Sell off Westrex Corp., a wholly owned subsidiary of AT&T subsidiary Western Electric Co. Westrex specializes in sound recording equipment for motion pictures. Westrex Corp. had $16 million sales in 1955. The government's suit against the $14 billion AT&T was brought in 1949. Its prime purpose was to divorce Western Electric Co., the Bell Systems' manufacturing arm, from the parent AT&T. By the consent decree last week Western Electric remains as AT&T's manufacturing affiliate, but is limited to making equipment for the Bell System. One Exception AT&T will be permitted to perform noncommon carrier communications work for the federal government, it was explained. This is the only exception, it was pointed out. There are about 8,600 patents owned by AT&T involved in the B-2 group, it was understood. These include such developments as the transistor, solar battery and color tv. These patents are the result of 70 years of research, AT&T pointed out. The B-2 agreement divided the electronics market among the four electronic giants, the lustice Dept. charged, with AT&T embracing telephone and communications inventions, RCA radio and tv patents, and GE and Westinghouse sharing power developments. All Bell patents must be offered for licensing without discrimination, the consent judgment stated, at a reasonable rate. Those who desire to use AT&T's royalty-free patents must grant AT&T reciprocal licensing agreements at a reasonable fee for patents they hold, it was explained. IBM agreed to make tabulating machines available for sale and to license its patents without discrimination among other details of its consent decree. Up to now IBM only rented its machines to customers. In its complaint against IBM, the lustice Dept. charged that it controlled 90% of the tabulating machine business in the U. S. Attorney General Herbert Brownell Jr. said the AT&T judgment will lead to "a further expansion of the electronics art." Cleo F. Craig, AT&T president, said in a statement, that the terms of the judgment are "severe." He added: "We believe the longstanding relationships among the manufacturing, research and operating functions of the Bell system are in the public interest and under the decree they remain intact." A statement by Irving G. Rosenberg, technical products vice president of DuMont Labs., said that DuMont was looking into plans for handling private communications systems which AT&T will be forced to discontinue. In its antitrust suit against the $1 billion RCA, filed in November 1954, the lustice Dept. charged that RCA's patent licensing arrangements— whereby the licensee pays royalties on a "package" whether or not he uses all the patents — was in violation of the antitrust laws. It was widely reported last week that RCA attorneys had been in Washington recently conferring with Justice Dept. lawyers on the suit. There have been talks on the subject between RCA and Justice attorneys, B«T ascertained, but this is understood not to be unusual in cases of this type. Lending currency in some quarters to the reports of an imminent settlement was the presence in New York Thursday of Asst. Attorney General Stanley N. Barnes, head of the department's antitrust division. Judge Barnes addressed the New York State Bar Assn. on labor unions and the antitrust laws. The government forced AT&T, RCA, GE and Westinghouse to dissolve cross ownership holdings through a consent decree in the '30s. The recently approved NBC-Westinghouse swap of radio and tv stations gave rise to further speculation when Mr. Barnes referred to a "television matter" under investigation when he appeared Monday before a House Judiciary subcommittee holding hearings on a bill to require firms to notify the Justice Dept. at least 90 days before a proposed merger was to take place — if the merger involved combined assets of $10 million or more. Asked whether this provision should apply to companies under federal regulation, Mr. Barnes answered in the affirmative and made his reference to tv. In an amplification of this statement, some reports hinted that the Justice Dept. was considering the question of whether networks should be permitted to own tv stations and also whether radio-tv set manufacturers should be allowed to own stations. In the NBC-Westinghouse swap [B»T. Jan. 2], the network acquired Westinghouse's KYW and WPTZ (TV) Philadelphia in exchange for its own WTAM-AM-FM Cleveland. NBC, in addition, paid Westinghouse $3 million. The transaction gave rise to reports that the network had threatened Westinghouse with cancellation of NBC affiliations unless it agreed to the exchange. This was explained as a purely business judgment on the part of both companies, and the FCC approved the exchanges in the closing days of 1955. The threat of network cancellation in the NBC-Westinghouse deal was used as one of the charges made by WGR-TV Buffalo in opposing the network's $312,500 purchase of ch. 17 WBUF-TV Buffalo. A protest hearing on this and other charges was begun early this month, but was postponed a fortnight ago. It was understood then that WGR-TV was considering dropping its protest [B«T, Ian. 23]. V' Windsor ^ CRAVEN ^V\\\ ONSLOW ^ , pjfj Jacksonville J®5 VV^f CARTE RE1 channel in eastern Carolina is witnland 7 witn channel serving eastern north Carolina transmitter at grifton, n. c. studios & offices at Washington, n. 316,000 .watts headley-reed co. , rep. Broadcasting Telecasting January 30, 1956 Page 51