Motion Picture Herald (Sep-Oct 1935)

18 MOTION PICTURE HERALD October 26, 1935 FILM INQUIRY ENDS (^Continued from preceding page) tract with Erpi did not prevent him from selling film to any exhibitor regardless of the reproducing equipment installed. Concerning the proposal in Congressman Sirovich's bill to have the pooling of patents and cross-licensing registered with the Bureau of Patents, Mr. Kent said, "I think everybody's mind would be relieved if they knew to whom the patents belonged." Mr. Kent testified that his company contributes $100,000 annually to the Motion Picture Producers and Distributors of America. While he said the amounts the member companies contribute are based on a formula "known only to Mr. Hays," he estimated the total contributions to the MPPDA as not exceeding $600,000 yearly, the mem.bers contributing in proportion to their grosses. Mr. Kent explained that the MPPDA maintains a large staff engaged in censorship, settling internal difficulties of the industry, watching for adverse legislation, registering titles, books and stories and to some extent seeing after relations of the companies in foreign countries. The question of registering patent pools and cross-licensing probably would not be a subject to come up before the MPPDA, testified Mr. Kent. Sees No Objection to Pooling In reply to a question by Congressman Charles Kramer of California, Mr. Kent said he would not object to a central pooling of sound equipment patents "if they continued the improvement of sound." He also indicated that definite objection would be made by the film companies if A T & T or any of its subsidiaries endeavored to engage in producing because of their vast hold on the sound equipment phase of the industry. He said he was not worried about that eventuality because in his opinion the electric companies knew no more about production than the film companies did about making sound equipment. Mr. Kent testified his annual salary was around $66,000 a year, although it varies. Stressing the necessity for continuous improvement in sound equipment, Mr. Kent said : "Sound motion pictures today are as crude as the telephone was 20 years ago." Denies Company Lobbying Congressman Matthew A. Dunn, blind lawmaker from Pennsylvania, asked : "How much money does your company spend to lobby in Washington ?" "So far as I know, I have not spent any money down there for Fox Films." replied Mr. Kent. "Wait a mipute," Mr. Dunn said, "you say you did not ? That may be true, but does your company spend anything?" "Not that T know of," was the answer. "How In thunder are vou people so successful In keeping legislation fronn being enacted which we believe Is going to be of benefit to the people?" Congressman Dunn asked. "How Is that done?" "I should think you could answer It better than I, Congressman," "Do you want to know my answer?" pur sued the Congressman. "My answer is that the corporations spend gigantic sums of money for that purpose." "I am under oath, and I say we don't," replied Mr. Kent. Proposes 'Phone Cost Reduction Congressman Sirovich contended it would be only fair if the AT&T employed the profits made from the production of sound equipment to reducing the cost of telephone calls, since the funds for the development of sound equipment patents had been obtained from the telephone using public. C. C. Colby, former president of the Samson Electric Company, Canton, Mass., testified his company was liquidated in 1932 when it was unable to effect an acceptable cross-licensing agreement with AT&T and subsidiaries for the manufacture of sound equipment units. He said an agreement had been offered him, the signing of which would have been equivalent to signing "our death warrant." Pressed for an explanation, Mr. Colby explained the agreement proferred called for dissolution of the licensing benefits if royalty payments were not made within a 30-day period. Would Restrict Utilities Replying to questioning, Mr. Colby testified he favored federal regulation confining public utilities to the field for which they were franchised and favored the availability of patents of a company such as A T & T to any responsible company at a reasonable royalty fee. Joseph Numero, former president of the Cinema Supplies Company, Minneapolis, testified that he had been unable to obtain licensing agreement from A T & T in 1932 and that his company is now defendant in actions by that company for infringement of amplifying patents. After hearing these witnesses Congressman Sirovich said he believed the situation could be remedied for independent sound manufacturing concerns by making provision in his bill for the granting of licenses to outsiders by a large company developing such patents as a by-product to its main field. Representatives McFarland of Texas and Buckler of Minnesota said they, too, favored such a licensing provision. SEC Report Shows Laemmie Holdings Reports of stock holdings of officers and directors of corporations to the Securities and Exchange Commission in Washington show that Carl Laemmie on August 31 held 7,016 shares of Universal common outright, 58,692 shares through one voting trust, 120,127 shares through another voting trust, 1,265 shares of special cumulatiAfe first preferred and 15,703 shares of second preferred. A similar report on Trans-Lux Daylight Pictures showed that H. P. Farrington, director, disposed of 400 shares of common and at the end of the month held 9,600 shares. Local Arbitration Proposal Up Soon (Continued from page 13) had ever gone into the courts on such matters and come out with anything left for himself, even though he won a judgment against the exchange, or against a competing exhibitor. Seeing Coast Exhibitors Mr. Kuykendall already has talked with owners and leaders, "both large and small," in the principal cities of the east, midwest, and south, and will follow the same procedure in the Pacific northwest, the west coast, the mountain regions, and then pick up any sections he has missed on a swing back across country. He declined at this time to comment on the identities of the exhibitors he has talked with about the arbitration proposal or other MPTOA policies. He is making typewritten reports on all reactions and will consolidate these findings after he has cover-ed the country. Mr. Kuykendall then will present them to the national MPTOA directorate in New York in November for final discussion and action, thence taking up the conclusions with the distributors. That distributors themselves are now well aware of the dissatisfaction of exhibitors in the field over the workings of some trade practices is reflected by the daily reports emanating from Washington and St. Louis, where theatre owners hourly are pouring their grievances into the laps of Department of Justice agents now prosecuting distributors in St. Louis for alleged conspiracy in restraint of trade. These complaints are said to be reaching the Department from all sections of the country. Favor Local Groups The MPTOA leaders felt that the arbitration groups could be established in every exchange center, and with sufficient authority delegated to them by the interests which they represent, could adjudicate in joint hearings, virtually every trade practice complaint arising locally, excepting, of course, those involving national distributor policy — such as score charges and the like, which would be outside the jurisdiction of the local courts, and, therefore, would have to be settled at headquarters in New York. It was these responses that influenced Mr. Kuykendall to make the trip to the field. A preponderance of exhibition opinion saw distinct disadvantages in any invitation to any federal agency to take over industry regulation without compensating benefits in return. Distinct sentiment for a form of trade practice regulation which could and would be administered entirely within the industry and by the industry, preferably through local organizations, was revealed in the responses to the questionnaire and to Mr. Kuykendall. Sentiments for some such arbitration plan are emanating from exhibitor ranks, rather than from distribution quarters. Its adoption has long been delayed, even from the standpoint of being suggested by distributors because of their fear that it would conflict with the Tndp'e ThaclT^r decree of six years ago which outlawed the distributors' arbitration svstem of that time.