The talking machine world (Jan-Mar 1921)

March 15, 1921 THE TALKING MACHINE WORLD 166-a THE MACY-VICTOR CASE IS NOW COMING TO A CLOSE Defense Now Reaching the End of Its Case, to Be Followed by the Summing Up — Several Victor Jobbers Appear as Witnesses and Offer Interesting Testimony — Charles E. Hughes Appears in Behalf of Victor Co. — Summary of the Month's Progress of the Trial of This Suit The action brought by R. H. Macy & Co. against the Victor Talking Machine Co. and a number of Victor jobbers, which went on trial before Judge Mack and a jury in the U. S. District Court on January 17, is still occupying the attention of that court, although the end is now in sight. The plaintiffs rested their case on February 17, having taken just one month to present their side, and on the afternoon of the same day the defense began. The plaintiffs' side was summarized in The World last month. Amount of Damages Reduced As a result of the discussion on the law by and with the court shortly before the plaintiffs rested their case, damages asked for in the suit were reduced from a basic figure of $190,000 to a sum approximately $60,000, including $15,000 counsel fees paid by Macy in the patent case brought against the company by the Victor Co. The damages asked for, trebled under the Sherman Act, will amount to something like $150,000, or slightly over 25 per cent of the original amount asked. The first witness called by the defense, was C. H. North, formerly connected with the legal and contract departments of the Victor Talking Machine Co. and at present connected with the Ohio Talking Machine Co. in Cincinnati. The direct and cross-examination of Mr. North occupied about a week, and he was called upon to give testimony relative to the production of the Victor plant during the several years from 1914 to 1917, the systems used to keep track of machine and record orders from and deliveries to distributors and dealers, various correspondence, direct and general, passing between the Victor Co. and the recognized distributors and dealers, and other matters of similar nature. Par CABINETS MODERATE PRICES IMMEDIATE DELIVERY Cut shows our new 48" E Model Send for circular of our line Everett Hunter Mfg. Co. McHENRY, ILL. ticular attention was called to the letters received from representatives complaining of the price-cutting tactics of Macy & Co. Mr. North told of the manner in which the Victor Co. handled its distribution, how an effort was made to serve various communities without having dealers in too close proximity to each other, how the Victor travelers studied conditions and aided dealers in various ways in getting the maximum business out of their territories, and rehearsed other details connected with the Victor distributing program with which the majority of the trade is quite familiar through experience. Chas. E. Hughes Appears for Victor Co. The case came in for considerable newspaper and public attention on Saturday, February 26, through the fact that former Supreme Court Justice Charles E. Hughes, as a member of the law firm of Hughes, Brown, Schurman & Dwight, made his last appearance as counsel before taking up his portfolio as Secretary of State under President Harding. Mr. Hughes appeared in behalf of the Victor Talking Machine Co. and in presenting his arguments analyzed various Sherman Act suits involving patent rights. In speaking of Federal Court decisions in such cases he remarked that: "A monopoly granted by the Patent Office cannot in any way be interfered with by the Sherman law." He said that in the period from April 14, 1914, to May, 1917, the system of agreements entered into by the Victor concern and dealers in records was lawful and insisted that the defendant should not be mulcted for doing what the law sanctioned. He based his main argument on the contention that after the decision of the United States Supreme Court in the case of Henry vs. A. B. Dick Co., rendered on March 11, 1912, and up to the decision of the same court in the case of the Motion Picture Patents Co. on April 9, 1917, the course of action pursued by the Victor Co. was legal in placing restriction upon its machines and records. Mr. Hughes said that the Supreme Court had reversed itself, and cited a case in which the court had held that the Legal Tender act was unconstitutional, later holding that the law was constitutional, the change of opinion affecting many suits in the same way that the Henry-Dick opinion and others had affected the actions of his clients. He added that in the Henry-Dick case the court had ruled that the method and system of distributing patented machines did not violate the Sherman Act. "They charge," he said, "that the Victor Co. cloaked a sale under a license. But the defendant did it exactly as the courts said it had a right to do. The question narrows itself down to whether the patentee has a right to make a licensed agreement." Judge Mack took Judge Hughes' arguments under consideration. During the past week other notables called to testify for the Victor Co. included former Judge Lacombe, of the United States Circuit Court of Appeals, who testified to the legal ability and knowledge of the law generally, and particularly of the anti-trust laws, held by the late Horace Petit, counsel for the Victor Co., who drew up the Victor Co. license agreements, and by John R. Johnson, who acted as consulting attorney in connection with the drafting of the agreement. Judge Lacombe paid particularly high tribute to the standing of Mr. Johnson in his profession. The witness also testified to the standing of attorneys representing the Victor Co. in the action brought by that company against R. H. Macy & Co. some years ago for alleged infringement of patent for failing to observe fixed resale prices on products manufactured by the Victor Co. Another witness for the defense was Judge Lawrence Maxwell, Solicitor-General of the United States under President Cleveland, and since that time a leading attorney in actions bi ought under the Sherman Act. Judge Maxwell proved a very willing witness and seemed desirous of telling considerably more than Judge Mack was willing to allow to be inserted in the testimony. J. L. Spillane's Interesting Evidence An interesting witness for the defense was John L. Spillane, who in 1913 was assistant manager of the Blackman Talking Machine Co. Mr. Spillane recited experiences he had with Macy & Co. in connection with the threat of that company to offer some shop-worn and cut-out records to the public at reduced prices, following the alleged refusal of the Victor Co. to take back or exchange the records direct. According to the witness the records were offered to the public at special prices, and at the suggestion of Mr. Biackman he went to Mr. Gillam, buyer for the music department of Macy's, and offered to have the Blackman Co. take back the records providing the price-cutting was stopped. The terms were agreed to, declared Mr. Spillane, but after the records had been taken back by the Blackman Co., Macy's continued to cut prices, proffering as an explanation that Mr. Straus was pleased with the success of the sale, for it brought people to the store to shop. It developed in the testimony that before the record question between Blackman and Macy could be adjusted the plaintiffs had been cut off as dealers by the Victor Co. In the course of his testimony Mr. Spillane explained the various features of the cut-out and exchange plan of handling old records, as put in force by the Victor Co. J. N. Blackman a Most Important Witness The most important witness was J. Newcomb Blackman, president of the Blackman Talking Machine Co., the first of the defendant jobbers to be called to the stand. Mr. Blackman had an impressive amount of testimony to ofi'er and got the bulk of it in the records. He declared that he had refused to sell Macy's when approached by Williams, a Macy buyer, "because of my previous experience based on my dealings with R. H. Macy & Co.; because of conversations with me by representatives of Macy & Co. or in my presence, and because of investigations personally made by me regarding Macy & Co. methods of doing business and of price cutting in general." In explanation of his business dealings with Macy & Co., to which reference had been made, Mr. Blackman said: "We were doing business with R. H. Macy & Co. up to the early part of May, 1914. At that time they started to cut prices on Victor goods. As a customer, I was interested in that (Continued on page 1666) WALLKANE PHONOGRAPH (Brilliantone Steel Needles <Tonofbne Flexible Needles Send for complete price List to ft -® 1552 Broadway e^ ■W ~* DISTRIBUTORS