The talking machine world (Jan-Dec 1912)

30 THE TALKING MACHINE WORLD. It's carrying goods that people want and can't get elsewhere that brings the profits. The Columbia "Princess" for instance: Fremstad's records for instance. Columbia Phonograph Co., Gen'l Tribune Building, New York STRONG ARGUMENT AGAINST PATENT REVISION BILL. Made by the Treasurer of the American Graphophone Co. Before the Committee on Patents of the House of Representatives — Shows in a Most Detailed Way Why the Provisions of Sections 17 and 32 of the Oldfield Bill Are Harsh and Oppressive and Work a Distinct Injury to the Interests of the Trade and Kill the Maintenance of Prices So Essential to Its Health and Development — Why the Bill Should Be Opposed. We present herewith the argument recently made by M. Dorian, treasurer of the American Graphophone Co. before the committee on patents of the House of Representatives in opposition to the harsh and oppressive provisions of sections seventeen and thirty-two of the Oldfield bill introduced in the H ouse of Representatives to codify, revise and amend the laws relating to patents. To the Committee on Patents, House of Representatives: Gentlemen — The American Graphophone Co. is a manufacturing corporation organized under the laws of the State of West Virginia. Its principal factory, located at Bridgeport,^ Conn., gives employment to 2,000 people. Its output consists of graphophones and grafonolas — two types of socalled talking machines — and sound reproducing records for use theron. All of its output is manufactured under letters patent of the United States owned or controlled by it. All of this output is marketed through its sole selling agent, the Columbia Phonograph Co., which organization maintains about 50 stores throughout the United States, in addition to having a large number of dealers and distributors. Neither the American Graphophone Co. nor its selling agent, the Columbia Phonograph Co., is a member of any pool, combination or syndicate for the control or regulation of the business in which it is engaged. It fixes the retail price at which its products may be sold by a dealer's contract or price maintenance agreement, of which copies are herewith submitted for the information of the committee. It is vitally interested in the bill now under discussion and requests consideration of the views herein expressed. While many paragraphs of the bill affect it seriously it confines its present argument to two sections only — 17 and 32 — which it regards as particularly objectionable and unwise, and which it opposes for the reasons which follow: Section 17. Working.— Paragraph 2 of Section 17 provides that if at any time during the term of the patent, except the first four years, it shall not be manufactured to an adequate extent any person demanding it shall be entitled to a license, etc. This is what is commonly known as the "working" provision, and in most foreign statutes a simple, relatively inexpensive, but effective procedure is provided" which is in great contrast to the drastic, mandatory and oppressive one proposed here. Under the English statute of 1907 the inventor is given a reasonable time after notice within which to manufacture in adequate measure or show cause why he does not. If he makes a proper showing he is entitled to a further period of 12 months in which to comply with the law. The notice to the inventor emenates from the Fatent Office and his showing is made there, where he can appear in person, if he so elects, or by an attorney. Even if he employs an attorney the expense is small and the procedure simple. Compare this rational, humane and simple provision with the one proposed in the pending measure. Without preliminary notice of any kind the inventor is cited to appear before the district court and show cause why he should not be compelled to grant a license to, perhaps, his principal rival in business or his bitterest personal enemy. It is no answer to say that the Court may not award the license. The inventor cannot appear before the Court in his on proper person. If he does he has a fool for a client. He must retain patent counsel and they are an expensive class of counsel. He must fight a long drawn out and costly suit involving many pages of typewritten testimony, printed briefs and records and numerous other items of cost incident to even ordinary litigation. He may be too poor and friendless to do these things and the case goes against him by default. He is ruined. He may have impoverished himself and his family in bringing his invention to the point where it could be covered by an application; he may find it necessary to improve and perfect it, and may, in fact, have reached the point where he has succeeded in doing this and is ready to begin the actual manufacture, but is at the end of his resources for the moment. Just at that psychological moment comes this summons to appear and show cause why he should not be compelled to grant a license. It may be, and in many cases will be, a fact that the summons has been craftily timed for just that moment; that there will be a number of them either as the result of a well laid conspiracy or pure accident. Just when the poor inventor sees an end to all his struggles and sacrifies and success within reach, he is smothered, annihilated, by a storm which carries him and all belonging to him to destruction. This is not exaggeration. It will occur and frequently if this provision of your bill is enacted. It is the most expensive, protracted and oppressive method which could be devised. It affords a legalized means of persecution which will be unscrupulously invoked by business rivals and enemies to ruin where they cannot coerce or cozen. Give the inventor a chance. Minimize the danger' of oppression. Be more just and provide a simpler, less expensive method. The public can be protected just as effectively. Compulsory License.— The same paragraph of Section 17 contains another provision which is on a plane with that of the court procedure for oppressiveness. I do not wish to convey more than that both provisions will be utilized by the unscrupulous as a means of coercion and oppression. They will employ them to harass and ruin if they cannot make them serve as instruments of blackmail. Why legislate in favor of the schemer, the wrecker and the blackmailer What justification can there be for entering into a combination with this class and against the inventor? Is it upon the mistaken theory that the public, the people, will be the gainers? Quite the contrary, because the inventor, who is a useful productive member of the family, will be discouraged and discountenanced. After one such experience he will either invent no more or will keep his inventions secret as long as he can and never disclose them to the public. What justification can there be for depriving the inventor of any part of his rights and conferring them upon another for the mere asking? Why not impose upon that other some obligations and conditions? Why not compel him to enter into an undertaking to the State to do and perform that which he alleges the inventor has failed to do? He wouldn't give such undertaking.. He would be a fool to do it in view of the fact that any person can obtain a license in the same way he secured his, but"' if no restrictions are imposed upon him who has contributed nothing to that particular invention or discovery and who is actuated solely by mean motives — of greed, spite or destructiveness — why impose them upon the man who has added something to the world's fund of knowledge, has produced something useful and good? In the effort to curb or regulate some abuses which have crept into or become grafted upon our patent system our legislators appear to have gone astray; to have laid aside their wonted calm deliberativeness and customary cool -judgment and to have engaged in* a frantic assault upon the whole fabric of our latent law and practise. Nowhere is this more apparent than in this pro, posed provision of compulsory license. The idea is borrowed bodily from the English statutes, but without the safeguards of the English law. This provision may fit in well with English needs and conditions, although there is room for doubt as to that, but is entirely out of place in the United States and will not produce the results anticipated or promised. Its introduction into the English law was an attempt to give the British manufacturer and the British workirigman an advantage over his foreign rivals; to confiscate for their benefit the inventions, discoveries and processes of their more progressive and inventive American and German trade rivals. It was aimed at the British patents issued to these foreign inventors, to acquire which by confiscation was the purpose of the law. During the discussions which preceded the act of Parliament of 1907 the English newspapers were full of editorials and special articles making clear that this was the end in view. I was living in England at the time and was naturally very much interested in the whole subject matter, as I was representing an American company which owned a number of British patents, some of which we were "working" in England and some of which we were not. The newspapers and trade journals freely discussed the probability that many valuable inventions and processes owned by American and German manufacturers would be abandoned and would fall into the laps of the British, later these same papers declared that many products manufactured abroad under equivalent foreign patents would have to be produced in England, thus affording employment to British workmen. This did come to pass, but not to the extent anticipated, because the Germans have an abiding distrust of the British workingmen, and when they erected plants in Great Britain, as some of them did, imported German workmen to operate them. Great Britain, being a free trade country, was undoubtedly at a disadvantage, and this, coupled with the fact that their manufacturers and workmen are less inventive and progressive than the American or German, afforded some justification for the efforts of the government to help by legislation. No such conditions exist or are ever likely to prevail in this country. The American manufacturer and inventor have never up to the present trailed any other. They lead. They are being followed pretty closely by the Germans just at present. The hope is we can continue to lead, but a few more jolts like this proposed measure will put the American in the "also ran" class and give the German the advantage. He will not need urging to profit by it. The German government is mighty careful of its manufacturers, and no legislation adversely affecting them can get on the statute books until it has passed through many tests. We have had the same idea in this country for many years, especially in the matter of patent legislation, but we seem to be getting away from it in this bill. The man whom the framers of our patent laws have always had in mind until the present day is the man in whose brain the "idea" germinated — the man behind the invention — the inventor. He seems to have been left out of the present measure entirely; to have been replaced by some imaginary being who is hideous and repulsive, someone or something to be attacked, hampered, hindered and crippled, affrighted and discouraged. "Any person demanding it shall be entitled to a license." Mandatory and confiscatory. Not mere annulment of the patent, a donation of it to the public so that all may use and enjoy ' it, but only that the owner has his property confiscated, and -that property turned over to his business rivals and enemies for -wrecking. Once the inventor is forced to grant these indiscriminate licenses his control over the invention is gone forever. What was once a valuable property or capable of being made such, soon becomes a valueless, discredited thing fit only for the discard. Not one of the great inventions of the last twenty years but would have been arrested short of development to the point of practicability by the enforcement of such a provision. Not one of them was sufficiently developed within four years from the date of the original grant of -letters patent to have achieved commercial success. Had such a provision been a part of our patent law not a single one of all the marvellous discoveries which have made American inventors and scientists famous in the past twenty years would have progressed beyond the stage of discovery, because it would have been impossible to finance the experiments and the exploitation necessary to develop and perfect them. Timid capital will not embark