Variety (Mar 1935)

Wednesday! March 6* 1935 P ■ C¥ E S VARIETY FOX LOSES PATENT SUIT ation Th© tl. S.V Supreme Court's nesatlon o£ the talker patent claims by Atoeriqan Trl-Ergon has stifled Virjllkm Fox's rpyalty intisnt. But ATE has pther pitehts which It ■ believes are valid, amoner these' be- ing: one on the photo-electric ceil. However, it Is held to be prob- lematical! whether wniranTTOX Will : how pursue the prosecution of this or other claims he may have. It Is believed pressing of the talker patent claims has cost William Pox ■1200,000,- and - that-^-estimate. : Js dtemecl conservative. The patent quarrel between ATE ahd the industry, was bfought Into the .Federal C30urts of s Pennsylvania and Brooklyn early In 1933, Last • October, after ATE "won victories in the Circuit Courts, the U. ,S: Supreme Court. refused to reyiew . the cases,;but later changed Its view and cohsented to review the case: This is one of the- vei^y rare occa- Blons when tho country's highest court granted a reyiew after one ; bad been denied, • •-^^■"v' Chase Bank and Erpl are re- '■ ported to have~dlscusse"d~ari^^^^ tloh at that time that should the Supreme Court liBhold the ATE claims, as prosecated by William Fox, some deal ihigrbt be arranged VWkrhereby Erpl and ATE could amalgamate^ That would have been presumedly In the event that Fox - Film's claims of Ownership, throu gh Bill Fox's" holding of the rights, were successfully prosecuted against WiUlani Fox: There Is at present a, suit pending In Nassau County , courts of New Yoi'k by ITox Film against William Fox in which Fox Fllm|s claims of Tri-Ergon ■ ownersiiii) are set forth. r - William -Fox,- It -lis said; .rlntended to. use his Tri-Ergoh w^iP to con- trol the newsreels and that It might ' be his Intention, as accounted- then, to inflict heavy royalties on the in- dustry, mostly through the majors. The scrambliB for possible protcc- _ .tlohuagainst. WlUianl .,F<?x. was.on and the companies were actually at a loss on what to do. Swiss Tri-Ergon William Fox holds 90 % of the - stock of-^Americah Tri-Ergon and the. parent coriipany, giwiss Tri- Ergon, oSyhs: the remaining ] 10% of the common. Swiss Tri-Ergon made -rthe--,deal -with-William-Fox; in-192& Ayhen he was head of Fox Film.. Ampng conditions there. was re- ported to have been bnie whereby .- William Fox—was ..to..-establlsh---th«s. Tri-Ergon system in the U. S., and that It was. presuitied that Fox Film ' would be tile first to so establish it. However, after two years, Tri- Ergon renewed with William; Fox for another perlodi It Is claimed; :. during which the: Tri-Ergon sys- tem still failed of beliig generally established. Swiss TrUErgon, through Attor- ney Milton Diamond, of the law firm of Gilbert, Diamond and Bran- dels, eventually filed Incorporatlori papers for a new firm known ks the Swiss Tri-Ergon corp. of America, as distinctive from American Tri-, Ergon Corp. ■ v • ■ What American "Trl-Ergoh might _jjaye .aolleitedlin-^royitltles-lrpni-thei. fllm businesis, had its clairhs been .|Upheld, is one of those things. It would have been'subject to exteh- elve lltlgatlohi anyway, and It could hiaye been years before Fox collected anything. On this angle there Was fuVther gloom ahead, as conflicting ■accoiihts In the. tra felt it was not responsible to the film companies in any; possible roy- .alty damage action, resulting by ATE's clailms . on> the double print ; matter. : , .:■ ,;■ ' ; De Forest ■ -. DeForest Phonofilm also stepped Into the picture. This firm's patent attorney Is . Samuelv Darby,; if r., of the firm of Darby & Darby.. It seehied that the double print paitent wliich ATE: claimed was one which had been conceded tb ,it by .DeFor- iest phonoflhn . on the advice of IJarby in another case. Film com- pany lawyevs are kno\yn to have ':, consulted .with Darby and Darby . then Jbecame the pivot, point of the ' bhtire' BltuatiOri as ,the William Fox Sisk iais Producer Hollywood,. March 6. Robert Slsk, .assistant to J. E. Mc- Dbnoiigh kt Badio, will make his debut OS a producer within the next three mbntlis, ;!.V ■( ;' ;. : Currently Slsk ^Is functioning? as Cp-producer-with:^lilt-Reld.von--;Sy.lr: vester, Bernard.' Slsk was head of publicity and advertising for Radio before' coming out here from New Torlc. - HONEY READY .; Washingtbn, March 6. . Funds for tlie government;s probe of Americaa Telegraph & Telephone Ca; Erpii, Tind~; o'ther" 8 wjere_jyJntually_-a3siii:ed_y.e.steFdax. (Monday)- when Hhe House com- pleted action on the Wheeler-Ray- burn resolution appropriating: $750,- 000 and broadening authority, of the Federal Communications Commlsr slon. Measure went. to the White House for President RobseVeit's sig- nature. Doubtful If actual hearings will got imdor w ay for annth<>r mn nth or six ^^yeeks, although . considerable preliminary work has been accbni- pilshed under direction of Commis- sioner Paul Walker. Plan is to take up matters directly relating.to. rates charged consumers for phone serv- ice, then delve into col-poratibn secrets and Inter-cOmpany relations as to-financial; Interest ijri film and radio as well as Erpl's activities in sound picture flield. MUSIC HALL'S DEALS WAIT ON VAN SCHDMUS ■ . ■■ > W. G, Van Schmus, managing di- rector of the Music Hall, N. T„; ls due to return Thursday (7), any deal on either the Rpxy or Rivoll, latter carrying with It a United Artists product' buy.: remaining status quo meanwhile. _ .'^ ! \. While X west Van Schmus : con- tacted .studios furnishing the Hall productr-and-vacatloned.-- - - - —— 'ZIEGFELDV DELAY WifeV lllneM Calls Louis Mayer to Palm Springs—Film Trantftr Waits Hollywood, March 6. Deal fOr the transfer, of 'Great Zlegfeld' from Universal to Metro has been held up by Louis Mayer's departure for Palm Springs, where his wlfo Is seriously 111. Frank Mastroly, U!k studio man ager, and Judge McCay, counsel for tJ, .win resume deliberations Upon Mayer's retum. Me^anwhlle picture rs"Tttt~a~ft tttffdstlli "(g^i^^ hi© rehearsals. THI-EIIGOIIEDIC Declares Gerniaii: Soiind- Film Patents Void iPbr Waioit of Invention^Eiads i^^rr2-Year :I^gal '$tr^ Bill Fox*| Prosp^t of Royalties. DOUBT ANY REVIEW -—- ":-Was^^ ■ .U. S. Supreme Court terminated litigation of two years' dututlon yesterday (Monday) when; It ruled that German sound-plbtUre patents, held . by . William -Foi's Trl-ErgOh Corp., were invadld and void for want of Invention. I„ . iEleileving the domestic picture in- dust ry from Ja .thteati_6f _seyere, financial bUrdens.'the nation's high- ^est -trlbuhal-reveraed^the decisions of two separate. circuit courts and sustained thei contentions of Para- mouht-Publlx, Altoona PUbllx The- atres, and WUmer & Vincent that German' ihventors made hb :contrI- butlon to'the art of recording and reproducing sound photographlc- .aily. . ■• Decision puts a stopper oh Wilr -Uam—Fox-sHhTeatehcd^damage-and royalty suits, v The two decisions, both by Jus- tice Stone, beldi that application of the flywheel principle of controlling speeds to' projection' apparatus, and the double-printing process of pro- duction were not novelties and; did hot. (idrvanc'e. the " phofbgraphlcT art Decision was that all essential pirin- Clples had long been known and that only skill In employing these pirln- piples were, demonstrated by thiB German'Inventors wiiose rights were acquired for the Ui S. by Fox's hold- ing. company....^. i . ;. Twhniical .Phas» .;„ , / 7he gist of the decision in the two exhibitor infringement suits was: ,'An imprpvraiient to, an. appara- tus or, method, to be patentable, must be the result of invention ' £uid -not the; mere exercise of thie .skill of the caUInir or an advance ' plCLlhly Indicated by the prior art The Inclusion of a fljrwheel in any form of .mechanism, to secure uniformity of Ita motion; .has ao long "be^ii standard procedure In the field of mechanic! and ma- chine design that the use of It in th.e manner claimed by the -present patent. InvQlyed/np mora that the skill of the caillng..'.. "Tho patentees brought .together old eiements, in a mechanism in-, volvlng no new principle, to pro- duce an old result, greater uni- fonhlty ot motion. However slclll- fully this was ; don«, and even though there . was produced a machine of greater precision and. a higher degree of inotlon-con- Alfred pokAtty..]^^ But IS Call Rein stancy; and/hence one more, useful in the art, It was still the piroduct ; ~ bf sicIlli-noL of . inyeivt!ort,!^j „ Similar reaspniiig was employed In: holding the <ipul>le-pi-intlng patent • Invaild and reversing the lower court ruling that Paramount had infringed . Fox. rights.. In thie production "case 'the court held ; • "The simultaneous photograph- ing of sound and. picture records was hot novel; separate develop- jhcrit" bf~ the negatives was well known, the advantage of. uhiting the two recbrds, Sound and pic- ture,, on a separate film was well known, arid the method of unit- ing two phbtpgraphlc picture, recprds by printing them, frOm the separate negatives was well ■known, . -- - JThls use -of- an old method to produce an bid result was not,In- vention—EVeh if ■ltr~be-assumed- that the Greeni^felder patent did not anticipate that of respohdent, because the sound record there, mentioned was designed ' directly ■ - to operate niUsIcai: instruments, ■ 'ra,tKer than a ibudspeaker, : all that was hovel In the, claimed. methbd was, its appllcatlbn In the : production of a combined sound and picture record. Instead bfra~ .. combination of, two picture rec- ords. To claim the merit of in-. vfention the patented process must itself possess novelty. The application of an old process to a' new and closely Analogous sub- - -ject - matter, - plainly., indicated .hy-i. tlie prior art as an appropriate subject of the process, Is. npt. In- yentlon.' .' Efforts Of Fox to rescue thie pro- jectlbn patents case by use of a disclaimer restflctlrig . original claims of novelty fell flat when the "court took the pOsItloiinhat patent ilaw 'does not-jpermlt the addition of a new element to the combina- tion previously Claimed whereby the patent .originally, for one. .combina- tlpn is transferred'Into a new and different one for the combination.'. Transformatlbn of the patent by addlnp the fiyw to the 'arcuate flexing' a,, d the 'optical' claims was not contemplated by the statutes, Juistlce Stone asserted. ' •- ■- -r,-~EKhibitor Reveres^ In reversing both the Pennsyl- vania District Court and the Third Circuit court of appeals In the ex- hibitor cases, the high tribunal analyzed the- individual claims of the patent and: noted that the ap- pellate body in upholding the patent /made no examination of its separate claims but treated the patent throughbut as thougb it were a .combination ot flye distinct elements, the photoelectric cell, the arcuate flexing of the film, the fly- (Cbntlnued on page 21) Interests ialso had made, overtures to the DeForest counsel to represent theni. However, the film companies eyentuaUy went ahead on jthelr Own- Vogt, Massole and Engle,' iEuro- peahs, are tlie original men In the Trl-Ergbh' situation. Swiss Trl-Eri gon owns the patents Inycnied by this trio, and William Fox, when bnying .the Anierican rights, paid around i-iO,pOO, believed the only money to have been passed between tl\e parties. This, suni Is supposed to have covered the Inventors' exr penses ;ln lieu of actual royalties which.: were to haye conxe later through development of Tri-Ergon in Ariierica; .. ,: - 'The FOx Film ciialm is that Wil- liam FOx when purchasing thoVTrl- ISi'gon . rights actually pUrciiaB^d these rights On behalf of Fox Film. William Fox has always denied ;that contention. : .'/ ee to its a condition dependent .upon their gaining cbntrbi: of Universal, the Warner brothers (Harry. Jack and Albert) hkve agreed to grant long, term contracts at Unlversa,! not only to Carl Laemmie,. Sr;, but also to. his son, Carl Iiaemmle,\ jr.. ahd the elder Laemmile's son-in-law, Stanley Bergernian. and certain other U empipyes, -^'Thls is-ln addic- tion to the 13,000,000: wiiich Warners are reported to have bid for the eld- er Laemmle's controlling : interest.. Close friends Of liaenimie maintain that he won't sell, and laemmle has denied that any deal Is on tap. The Warner: bid Is, through the brothers' holding flnn. Benraw, Inc. It is :autboritattVeIr i>bport<ed that as late as Monday (4) U dlsoussed the Warner offer by crbss-country phone.;'. ■' Also believed that the Fa-nchon & M£(.rco bid. for U has cooled :a3 well as other bids which have been made or which niay hive been. In the wind. ■ Any offer for U must take Into conslderatipri tiie $1,000,000. In cumu- lative dlvidehds due-, on the first preferred stock.'besldes the $1,000,- 000 loan held .by Consolidated Film ■^^(Yaties) Laboratories,., . Attorney. Alfred Cpok may be. Pafamount's ISth dlrectpr bltiA pos' sible --chalrmah---of - tHe^-,cbmip« new board., He Is. counsel to the stockholders' committee. There are now 17 directors named in the cpmpany's, reprgahlzatlpn plan. Cft that number eight await . ft>rma1 stpclthcfder orectibn, Thie special stockholders' me^eting for this purpose is expected to be held as: soon as possible_ after April j. j. ' Cbokis hbminatlbn presuma^ la being si)onsored by the stockholders*: : committee:;: Equal division bf the dlrectbrS intp»the required terms of oriiBi two and three years;, as the ":~ plan requires, could be had were there 18 Ijoardi members. Same holds true If only 15. In the flhal analysis there may still be only IB . dlrectprs approved. —In- auch-even»^^- - tuallty Cook will nbt be among^ them--It-^Is-being-flgured—- — Chance that only 16 directors may eventuate comes from one posslbll- . Ity that Charles E. Richardson, tormer Par trustee, and .one other director may. not be on the approved ; hoard.^ No difficulty is anticipated In ac- quiring the necessary number . of assents frpm Creditprs and security -hclders-pf--Paraniouhtrrbefpre~ATJrtl7^ 4, sp: that at the hearing on tiiat date, to be held:before Federal Judge A. C. COxe, the company's re- . organization plan may be formally approved. Complaints and criticism on parts of the reorganizatlpn, plan are expected^ tO be alred^ at this' h^aflrig. 'These' complaints, it ap- ' pears, will pertain mostly to the possible board setup ;and future ad- ministrative, cpntrol pf the "bbm- pany. Fprmal apprpval pf the plan r has already ;been Indicated by va-. rious reorganization committees. .- At-least oixe minorlty-report- by-» member of one of the committees, is expected as previously indicated. He Is stated to .be Attorney Morris Ernst, member of the 'Vanderllp : committee which Is-the prlnclpttl'de-' behture holders' group.. But llks the cpmplaln; of the Szold-Munger . grbupi Erhst's complaint, it is In- dicated, - will probably be pivoted ; ■ around ^the company/a administra- tive phase. The SzOld committee isi known to be favorable to Charles B. -Richardson,————:.-, Creditors have 30 days, from Feb. 28 last; in which to dissent;or maks application to the court for permis- V slon to withdraw from' any deptfsit agreement The court previouslf Indicated it might be ihcllned t«» grant permission to withdraw to sp«. pllcants on the mere sppllcatioa» and without any fee, as the fees would come from the company es- tate for the committees involved after determination by the court. AyleswortlhSwope Gome And Go, but No One Else Hollywood, March B. M. H. Ayieswortb iand Herbert Bayard Swppe returned to New York last week alter 10 days sk the Radio; studio/ Before leaving' both stated their visit had nb' sj^eclal igighlflcanc^^ far as studio operation was cpn- cerned. Prior to their arrival film colony, as usual, was Ipaded with ; rumprs. ' ■ ■ .. .Hollywood, March 6. . Warners' deal' for purchase, of Universal seems -In status quo with Wlllard filpiCay; counsel for U, and Harry-Earner said to bb .talking It oyer quietly, ;;. Botsford Mo?es Up . . Hbllywood, March 5. A. M. Botsford has been appointed oxecutlve assistant to : Parambunt's new studio head, Henry ;Herzbrun.. jSoK.art ' Roirers takes Botsford's place , ais writing; ;department head. .in adililion to his other duties, I!qt.;<rord will liandle negotiations on \VL-M.oiv director a.nd player: cohr tract!?. ■ : !' ' '.'[ ' ■ '•