The talking machine world (Jan-Dec 1912)

THE TALKING MACHINE WORLD. 31 NOTICE Owing to the large increase of our imported needle business, we have REMOVED to larger quarters at 563 5th Avenue where we carry a larger quantity of Imported Needles in bulk, which are put up on the premises in order to take care of jobbers' immediate wants. Don't be fooled by the arguments of our competitors, but send for samples and prices of our HIGH GRADE Imported Nee dies AT ONCE Send for Catalog -of High Grade Repair Parts. THE Talking Machine Supply Company 563 FIFTH AVENUE NEW YORK. N. Y in a frail craft. With such a possibility confronting him as a compulsory license feature no inventor could interest capital--no invention which was not complete and perfect at the date of grant of patent could command any support. All, or nearly all, really great inventions are crude, immature, unripe things in the beginning, requiring to be made useful and practical by the expenditure of time, money and patience. The ability to grant exclusive rights in exchange for the necessary capital is imperatively essential to this development and perfecting. Take away this possibility by compelling the granting of these indiscriminate licenses and the incentive to develop and perfect is gone. Many highly useful inventions possessing great potentialities for good will "die abornin'." In 1878 the Committee on Patents of the United States Senate in a report on the patent system recognized that it had been the foremost agent in promoting the progress of the useful arts, and in discussing changes used this language : "No change should be made in the patent law to weaken the inducement which it offers to those who will successfully invent, and to those who by perseverance and expenditure will perfect the inventions and the machines in which they are embodied, and push their introduction so far as to put the public in possession of perfectly workings machines, or perfectly finished product." There is nothing remarkable about that paragraph except its homely, everyday common sehse. The same kind of common sense which the gentlemen of this committee bring to bear upon their own business problems. I venture the assertion that if any one of you were approached by an inventor to finance his discovery your first point of investigation after its merits would be that of freedom from attack during the period of development which you would know had to be gone through. SECTION THIRTY-TWO. Price Maintenance. — Paragraph 2 of Section 32 is another provision of this measure which, if enacted, will work incalculable harm. It grants to the purchaser of a patented machine or manufactured article powers which nullify completely and effectively all the essential terms of the grant of letters patent. It makes not only possible but probable the destruction of all control of the invention, and turns into jest the terms "exclusive right to make, use and vend the invention or discovery throughout the United States." The paragraph provides that any purchaser of a patented machine, manufacture, or composition of matter shall have the "unrestricted right to vend, or lease to others to be used the specific thing so purchased without liability to action for infringement." This is not alone inconsistent with the grant to the inventor. It is destructive of it. It is a mockery because "unrestricted" right to vend means unrestricted right to revend, and that is putting it beyond the power of the inventor to fix or maintain an established price on his article, reasonable or otherwise. It is a long step backward and a blow at a large number of very deserving and very important people in this country. I mean the country merchants and the small storekeepers in the towns and cities. Some of them may be inventors, but I am considering them only as merchants and storekeepers. They are vitally interested in this feature of the bill, and if enacted in its present form it will hit them hard. I will show you how later, but first permit me to remind the committee very briefly of one or two fundamental principles underlying out patent law. First. — The inventor is the absolute master of his idea, his discovery, or his process only so long as it has not left his brain. Once he discloses it or publishes it the public acquires immediate rights in it. If his idea be one which can be utilized by him secretly and need not be disclosed to be made productive to him and his successors there is no power on earth which can compel its disclosure and he might go on enjoying the monopoly indefinitely. Second.— The Government, wishing to give the people the ultimate property in these ideas, inventions and discoveries offers an inducement to inventors to refrain from keeping their ideas and discoveries secret. It says, in effect, disclose them; make them known so that all may ultimately be enriched, and you will be rewarded and compensated by a grant,, under solemn seal and pledge of the Government, of the exclusive right to make, use and vend the invention or discovery for a term of seventeen years. Third— At the end of the prescribed term the monopoly terminates, and the idea or discovery falls into the common or public domain and anyone may use it. It is a contractual right which the inventor enjoys. The law says to him that if he will communicate his discovery so that the public may benefit by it he may take in exchange for it this exclusive right for the prescribed period. That briefly is the whole story in a nutshell. On that basis and upon those simple terms and conditions we FOR SALE Talking machine business established seven years on West Side of New York City. Residential section. Address "Retirement," care Talking Machine World, 373 Fourth avenue, New York City. FOR SALE. 6,000 Zon-o-phone 10-inch records, 15 cents each; 5,000 Edison 2-minute records, 10 cents each. DENINGER, 335 North St., Rochester, N. Y have been operating for a hundred years. It has placed this country far in advance of all others in the development of the liberal arts; made American machinery, tools and appliances the standard of excellence all over the world. That solemnly pledged protection which the patent has always heretofore afforded induces the patent owner — and is all that will induce him — -to disclose his discovery and to expend time, energy, money and patience in perfecting it. To fasten upon his grant the proviso or condition referred to is farcical because he then no longer enjoys the protection which he bought by his disclosure. The reason is simple and easily comprehended. To make his product, be it machine or composition of matter, profitable he must create a market for it and he must maintain and protect that market. If his article be a necessity, it is perhaps easier but even then he has to create his market. If his be an article in which there is competition the creation of that market is a matter requiring years of unremitting effort, and constant vigilance lest it be taken from him. In the maintenance of his market, one of the strongest, if not the strongest, factor in his favor is the stability of his article. Stability as to quality and price. Quality he must have but if he have quality alone and no stability of price he fails inevitably in creating or retaining a market. If his article be sold at one price today and another price to-morrow, or at one price in Washington and another price in Baltimore, it may be accepted as a fact, that no large stocks of his article will be found on the shelves of merchants. If the article is one which can be sold by department stores, and they are allowed to offer it at a bargain price no small storekeeper or country merchant will stock it at all. ■ Price maintenance, therefore, is as essential to success as quality, and sometimes more so. The right to fix a uniform price and to maintain that price is as vitally important to the inventor as the right to make, tise and vend his invention. This right has been recognized by our Courts for more than 16 years. Not as a right which a strained or distorted interpretation of the law would produce, but as a right which is of the essence and spirit of the law. A right which the public is under obligation to respect and protect. * This is the interpretation given by the Circuit Court of Appeals of the Sixth Circuit in which Judge Taft, now President of the United States, and Judge Lurton, now an Associate Justice of the Supreme Court, both concurred, and has been repeatedly cited with approval of the Supreme Court of the United States. There are numerous other decided cases which adopt this same interpretation. The paragraph under consideration would destroy utterly such control of the established price. It would place it in the power of a competitor to utterly discredit an article no matter how great its merit. It would enable the department store or the large private buyer to make it impossible for the small storekeeper to sell that article at all because the small dealer could not afford, even though he bought as cheap, to sacrifice his profit on the article. Nor could he afford to carry it on his shelves until the department store withdrew the cut price in the hope of eventually getting his investment out of it. All over this country the small merchants, such as stationers, druggists, etc., rely upon the sale of articles on which the manufacturers maintain a uniform price for a large per cent, of their profits. Articles which are in constant demand and which they can supply to their customers as readily as the department stores and cut-rate drug stores solely because a uniform price is maintained. Take away this protection by the enactment of this provision and all that trade will inevitably be diverted from the small merchant to the big one and there it will stay. The public may buy cheaper but that is a doubtful advantage if it results in driving many good men out of business. A LITIGIOUS BILL. Had the entire Patent Bar of the United States met in convention and solemnly deliberated as to ways and means to promote litigation between patentees and owners of patents — assuming that the Patent Bar could so demean ; itself — to the end that patent counsel and patent experts might wax rich and powerful, no more powerful and fruitful medium could have been evolved than this same bill, had they deliberated for months. If this bill be enacted into law the crop of new suits will be appalling. The courts will be choked with litigants. Years must pass before we will begin to see light out of the obscurity of many clauses and sections. Had it been desirable to wrest from the small storekeeper and the country merchant the last measure of protection which has stood between him and annihilation at the hands of the department store syndicate, the cut-rate drug store and the mail order house, no more effective, sure and swift means could have been devised than the abolishment of the price maintenance agreement which this bill proposes. CONCLUSION. The subject is too vital to the welfare of the Nation to be hastily disposed of. It is physically impossible to do it justice in the limited time at the' disposal of your committee. A commission should be appointed and authority given it to consider all phases of the question, to summon witnesses and experts, take testimony and report to Congress its findings, conclusions and recommendations. That way only safety lies. Respectfully submitted, American Graphophone Company, M. Dorian, Treasurer.