Television digest with electronics reports (Jan-Dec 1958)

license from RCA under any, some or all of the 100 listed color television patents at reasonable royalties. Under the judgment, any future patent relating to radio purpose apparatus which RCA acquires within the next ten years, must be licensed to any applicant upon a reasonable royalty basis. These future patent licenses must contain the same terms relating to sales in foreign countries as those licenses under existing patents. Of particular significance is the requirement of the judgment that RCA must make it a term of any license, under existing and future patents, that the licensee may at any time contest the validity and scope of the patents licensed and may surrender the license under some of the patents, with the right to renegotiate the royalty rate, or cancel the license at any time after the first anniversary date of the license. Because the Government’s case was primarily aimed at an alleged illegal monopolization of the business of licensing radio purpose patents, and the research and development relatihg to this field rather than of manufacturing, the judgment permits RCA to require of any applicant for a license under the judgment a limited, reciprocal license back to RCA, on a reasonable royalty basis, under patents owned or controlled by the applicant. Before RCA may insist upon such a reciprocal license, however, (a) the applicant must have licensed, offered to license, or knowingly allowed others to use the patents to manufacture or sell radio purpose apparatus under the patent, (b) RCA must be using the invention covered by the patent, and (c) the apparatus which RCA desires to make or sell under the patent must be of the same general character or kind as that for which a license from RCA is sought by the applicant. RCA must pay a reasonable royalty for this reciprocal license, irrespective of whether the applicant seeks a royalty free or royalty bearing license from RCA. Injunctions as to licensing and other commercial practices of RCA: The judgment contains a number of injunctions against RCA future patent licensing practices, all designed to prevent RCA in the future from engaging in those activities alleged in the complaint to have been used to achieve its dominant power in the patent licensing business in the radio purpose apparatus field. Thus, RCA is enjoined from conditioning the issuance of a patent license upon a grant back of a license to RCA, except those reciprocal licenses specifically permitted in connection with the compulsory licensing provisions of the judgment. RCA is enjoined from (a) licensing its foreign patents through any other person engaged in licensing patents owned by someone else; (b) conditioning the grant of a license under one patent upon an applicant taking a license under another patent; (c) having any agreement or program under which any foreign or domestic patents are licensed upon the understanding that the licensee will limit imports into or exports from any country; and (d) restricting a licensee to the manufacture, use or sale of any particular product within the radio purpose field. The judgment further requires, in effect, that in assessing royalties against the net selling price of an article RCA must permit deduction for services or unpatented parts. RCA is also prohibited from licensing a limited number of patents at the same royalty rate at which it licenses a larger number of patents if there is a reasonable difference in their value. There are other injunctive provisions against allocating territories or fields for the manufacture or sale of radio purpose apparatus. General Provisions: The judgment contains provisions which require that RCA, so long as it offers its Industry Services Laboratories services to licensees, must offer such services on a non-discriminatory basis to licensees and non-licensees; make available for ten years, for a reasonable charge, approximating cost, such of its technical information as the licensee may reasonably need to enable him to utilize the inventions or patents under which he is licensed by RCA; and annually make up a list of its patents available for licensing under the judgment. In order to prevent any future amassing of patents by RCA, the judgment enjoins RCA for a period of ten years from acquiring title to patents from anyone not in its employment and, perpetually, from acquiring exclusive licenses under, or any right to grant sub-licenses under, any U. S. patent owned by someone else, without first securing court approval. * V * * Victor R. Hansen, Assistant Attorney General in charge of the Antitrust Division, commenting on the judgment, stated: “The Government’s complaint in this case alleged that RCA’s practices gave it a monopoly of radio-television research, patents, patent rights and patent licensing — all having the result of discouraging other manufacturers from realizing their full research, manufacturing and profit potentialities. The judgment entered today, applying well established legal principles, cuts through the jungle of patents and patent rights and makes them available to the entire industry. The judgment assures that hereafter patent owners in this field will have a competitive market for their inventions or will be in a position to exploit the fruits of their owm research. “Our hope is that today’s judgment, by assuring availability of existing and future patent rights, will signal a new era of development for radio purpose technology.” Statement by RCA Chairman David Sarnoii and President John L. Burns RCA WELCOMES the termination of this long and burdensome litigation. The settlement comes at a time when the electronics industry is on the threshold of its greatest period of expansion— an era that calls for our fullest energies in fulfilling the extensive requirements of national defense in meeting the needs of our Government, the public and our customers. Terms of the decree deal primarily with apparatus for radio purposes. They do not affect RCA’s present activities in the important new industrial fields, ‘such as automation, electronic computers, atomics, electronic tape recorders, Electrofax and medical electronics. RCA has consistently maintained that its policies, practices and pioneering work have contributed greatly to the tremendous development of the electronics industry — the fastest growing major industry in the United States — and the national security of the United States. The settlement expressly recognizes that no admission to the contrary is made. In the promising field of color television, the decree provides for a patent pool in which any manufacturer may participate on a royalty-free licensing basis. The pool will include RCA’s important color patents and the color patents of other pool participants. Those who do not join the pool can acquire use of these RCA patents by paying reasonable royalty rates. Under terms of the decree, RCA is free to license all future inventions on an equitable royalty basis. Ever since RCA was founded at the request of the United States Navy in 1919, the company’s business has been built on the firm foundation of developing new and better products and services for the armed forces, industry and the home. RCA intends to continue this same vigorous research program. 6