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

Record Details:

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we have to consider whether this requirement respecting the amount of film to be handled per month was a legal and reasonable condition attached to the use of the film and lawfully inserted in the exchange agreement. The proof shows that this restriction was not imposed by the owner of the patent, but was devised and approved by the rental exchanges and was at their instance inserted in the license agreement, Mr. Dyer, a witness for defendants (Vol. Ill, 1484, fol. 2), testified that the $1,200 requirement contained in the rules of the Film Service Association, and made a part of the Edison exchange licenses of 1908, had been drawn up by the exchanges. He stated that in January, 1909, the change from $1,200 to $2,500 was made and incorporated in the exchange licenses issued by the Patents Company at the instance of the exchangemen. At Vol. Ill, 1485, fol. 2, he said: My recollection is that this increase was made at the suggestion and request of the exchangemen themselves, who represented to us that at that time the exchange that did a smaller business than $2,500 per month in the purchase of films would not be selfsustaining, and therefore would be open to the temptation of objectionable practices, particularly " duping,"1 which was a common practice at that time. 1 Duping had been largely practised by the defendants before they formed the combination (Swanson I, 321, fol. 4-322).