United States of America v. Motion Picture Patents Company and others (1914)

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8 As an instance of the effect of the enforcement of some of the conditions, we refer to the testimony given by Mr. Schwab (Vol. II, pp. 803-808). Mr. Schwab owned a rental exchange doing a prosperous business in Philadelphia. He had a customer in Baltimore. In order to get the films to Baltimore by eleven o'clock he sent them from his office in Philadelphia ten minutes to eight to catch the eight o'clock express to Baltimore. The time fixed for the release of the films was eight o'clock. Because Mr. Schwab dared to send the films from his office in interstate commerce ten minutes before eight he was fined $100 by the defendants acting through the Motion Picture Patents Company. Yet there were exchanges in Baltimore distributing the same film which could release the film at eight o'clock, several hours before Mr. Schwab could get the film from Philadelphia to Baltimore if his shipment caught the eight o'clock train. The payment of the $100 was a condition precedent to obtaining any further film. This is the sort of restriction which the defendants describe as a lawful and reasonable condition attached to the use of patented articles. One of the rules imposed by the license agreement upon the rental exchanges was that each rental exchange should lease a minimum of $2,500 worth of film per month. A failure to observe this requirement of the license agreement subjected the exchange to liability to have its license cancelled. Assuming, arguendo, that the film was patented,