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departments, and tlint those people arc using the Government for the purpose of milking the pockets of the American people for their own profits.
Mr. President, because of the lateness of the hour I shall not tiike auy more of the time of the Senate. I had not expected tn address the Senate to-day at. all. At some later time I shall attempt to go into the snliject more .specifically.
CAMPAIGN EXPENSES OF OOV. ALFRED E. SMITH
Mr. HKFLIN. Mr. President, the Washington Herald this morning carried a statement to the effect that Mayor William A. Gunter, of Montgomery, Ala., had been elected a delegate at large from the State, and that this was "a repudiation of Senator Hkstjn." It will be recalled that Mr. Gunter Is the man who sent a telegram to the senior Senator from Arkansas [Mr. Robinson] criticizing me when I discussed the Roman Catholic-Mexiean-Hearst scandal in the Senate in January.
The opposition to Governor Smith in Alabama had 10 candidates for delegates from the State at large and we could only elect 4. The opposition to o«r delegates, those who were said to favor Smith, had only 4 candidates in the field, while we had 10. All 10 of our candidates received a good vote. So our forces were naturally divided. But in spite of that, we swept the fleld entirely, elected the entire delegation of 24, all against Smith, and the lowest delegate selected on our ticket of 4 from the State at large, defeated Mayor Guuter by between 15,000 and 16,000 votes.
A friend informs ine that while some clever citizens and good Democrats voted for Gunter for various reasons, that his main vote came from the Roman Catholics.
That particular vote really represents the real opposition to me in the State because of the fight I have made and am making and will continue to make for the protection and preservation of free institutions in America.
Sir. Gnnter lias been rejected. He would not admit that he was for Governor Smith—so he must have obtained some votes on that score. He made speeches over the State and they say he had active workers in various sections of the State. It is believed in the State, and I believe it, that funds wero furnished by Governor Smith's secretive and artistic campaign managers. If the Washington Herald thinks or thought, when it thought that Gunter had been elected, that I was repudiated, I wonder now what it thinks about it since he lias been overwhelmingly defeated? I will not take the time to comment on that.
Mr. President, I hold in my hand the forerunner—the outside cover or advertisement of a book that is to appear soon, written by Mr. Hapgood and somelx>dy else, entitled "Alfred E. Smith," a biographical study in Democratic politics, and so forth, illustrated by photographs, cartoons, original drawings, for wile at $2.50 a volume. Governor Smith has evidently approved this. It must have been submitted to him before it was submitted to the public. It carries this statement, quoting from the Nation:
No newspaper editor or politician who desires nil the facts can be without this volume, and likewise no citizen who wishes to know truths about the man who will either be the next presidential nominee nf his parly or be the cause, by reason of his defeat, of his party again going on the rocks.
I want Democrats to take note of that statement. That is being carried in his biography. No doubt he is paying for it or some of his close friends are. They are already spreading the idea over the country, before the convention meets, that this man will be the nominee or his defeat will be the means of driving the party on the rocks.
1 have shown heretofore that Governor Smith's friends, the Roman Catholic newspapers, have threatened to defeat the party if they did not nominate Smith. I have shown that their leaders in various States have said that. But here it comes, with the sanction of Governor Smith himself, it appears, that, if lie is not nominated they are going to bring about the defeat of the Democratic Party.
Mr. President, in addition to that I want this to go in the Rkcobd to-day. Yesterday Governor Smith was interrogated briefly in New York. He said to the Senate committee investigating campaign funds that he knew nothing about his campaign, that lie had authorized nobody to accept money or to spend money. He knew nothing about anything except about New York, and yet he is running to be President of a Union of 48 States. He admits by that lie is not acquainted with the problems that affect the Nation at large; he knows nothing except about New York.
Mr. President, he reminds me of the images of the three little monkeys which the Japanese have made well known. One has his hands over his mouth, another has his hands over his ears,
and another has his hands over his eyes—" see no evil, epeak no evil, hear no evil." So Governor Smith sees nothing, hears nothing, tells nothing. That is the situation he is in before the Senate committee. Senators, is it possible that this man is going to let that statement stand—running for President of the United States and yet swearing before a committee of the Senate that he knows nothing about his campaign; that he has authorized nobody to make any preparations to run it: that he knows nothing about his campaign expenditures? Is he to let that statement stand before this Senate committee and the country?
Let me suggest to the committee how to get at some of the facts. Call Mr. Norman Hapgood before the committee—I suggest It. in the open Senate—and ask him who furnished the money for the printing of the stories he has written day after day in the Washington News. Call Mr. Hoover's man in and ask him to tell the committee who paid him; and call in the manager of the Washington News and ask who paid for those many pages that appeared day after day for a month, or perhaps more. That cost money. I know, because I myself have been held up a few times by certain daily papers. I remember that a daily newspaper in my State printed a si>eech of mine and a cut; it filled a whole page; and they charged me only $300 for it in one issue.
How much did the articles to which I refer cost, appearing 30 or 40 days, page after page? They cost somebody several thousand dollars. I now suggest to the committee that they call the News in, and call Norman Hapgood and this other man. who seems to have picked out the.^e two candidates for us, one for the Republicans and one for the Democrats, and interrogate them, ask them who paid them this money and how much.
Let me say to the Senate that it was disclosed in the testimony yesterday that one contractor in New York—just one out of the hundreds and thousands in New York City—had given to Governor Smith's campaign fund .$20,000 and had loaned $50,000 more to his committee. Just one contractor in New York had contributed $70,(K)0 to Governor Smith's campaign fund, a contractor who is under obligations to Governor Smith and Mayor Walker for getting these jobs in the city of New York, where Tammany holds sway and feeds and fattens on graft. That is worth looking into.
It has been suggested by a newspaper—and I will discuss the matter more ut length later—that there is a graft fund of .$00,000,000 being raised in New York for Governor Smith; that it has been collected out of contracts let in New York City for various purposes. The suggestion is made in that newspaper that Mayor Walker ought to resign or that he ought to be impeached. I hope our committee has not finished with New York. I trust that it will go back again or call the witnesses here.
Let me remind Senators that Governor Smith is following somebody's example. Newberry tried similar tactics on the Senate committee. He said, "I do not know anything about it." The vouchers came in and in spite of the destruction of checks, we traced about $200,000. "But what about this?" he was asked. "I do not know." "Well, but these people say they got the money." "Well, my brother John must have attended to that. I knew nothing about it." I wonder if Gov. Alfred Smith of New York has a friend or brother who imposed upon and mistreated him, or who kindly took the responsibility—all off of him. He said, "I do not know"; and that he had authorized nobody—he has just drifted and drifted and drifted on the edge of the sea of polities; he does not know the way out to the open sea. He said so; he knows nothing except New York: and yet it is alleged they knew how to grab up this $60,000,000 presidential campaign fund in New York, so this newspaper charges, which I shall later discuss here.
Let the committee go hack to New York, call every contractor they can find, and ask him how much he has contributed to Governor Smith's campaign fund. This should be done at once. Let the Senator from Indiana [Mr. Watson] tell what he knows about Hoover's large expenditures in Indiana. Let some of the friends of the late Senator Willis, the great Senator from Ohio, who died not long ago, tell of the large Hoover expenditures there. They made a terrific campaign against him and spent tremendous sums of money. Senator Willis talked about it frequently with some of the Senators here. Let them ask his friends to tell them whom to call here.
Senators, we owe It to our country to interrogate every Republican and Democrat who is engaged in this sort of corrupt and infamous business. Both parlies ought to join sincerely in the effort to crush out the candidates who are trying to put the Presidency upon the auction block for sale and traffic to the highest bidder. It ought to he stopped; it has got to be stopped; and we are going to stop it.
Mr. SIMMONS. Mr. President
The PRESIDING OFFICER (Mr. Sheppard In the chair). Does the Senator from Alabama yield to the Senator from North Carolina?
Mr. HEFLIN. I do, very gladly.
Mr. SIMMONS. I should like to ask the Senator from Alabama if, after the disclosures in the Smith and Vare investigations, any friend of a candidate who desired to use large sums of money would be likely to send that money to the candidate or even to the candidate's manager? Would he not, in other words, be disposed to put that money into somebody's hands who was not connected with the organization, and so arrange it that the candidate would know nothing about the expenditures?
Mr. HEFLIN. Certainly; and that is what I think has happened. The Newberry case disclosed that checks had been given, money had been delivered and receipts taken, and vouchers were shown. Candidates have learned from that to cover up their tracks, and not to give any checks, not to take any receipts and to hstve no record which will show the facts— except their own private records locked up in a safe.
Somebody admitted yesterday for Governor Smith that $41.500 was sent to the one State of California. Suppose they are sending $40,000 or $50,000 to each State. That would be a very large sum. But the governor, so he says, does not know anything about it Strange indeed!
So, Mr. President, I call on my party, in the name of millions of clean and incorruptible Democrats, not to permit this man's nomination. I wish to assert again—and then I am going to yield the floor—that Governor Smith is not going to be nominated by the Democrats. The true and tried Jeffersonian democracy will hold the line against him. Indiana has gone for Woollen. We will see how strong the people of that State are for their home candidate. They are seeking to make him appear as a stalking horse for Smith— Governor Donahey will hold Ohio; Reed has 100 and more delegates; Smith claims delegates.that belong to Reed. Keep your eye on Judge Hull of Tennessee; the solid South will be there standing like the rock of Gibraltar; and Governor Smith is not going to get enough votes to nominate him. I also think that the defeat of Hoover in Indiana by Watson has "fixed his clock." I think the Republicans are going to hold him, as some of them would like to do, and relieve the country of having to pick between these two. It is to be hoped that that will be done.
Mr. DILL. Mr. President, a few. weeks ago I introduced a bill, being Senate bill 2783, for the purpose of providing that the owners of patents who use them to form corporations and monopolies in violation of the Sherman law or the Clayton Antitrust Act, should forfeit their patent rights. Hearings were held on that bill before the Committee on Patents, and it was argued that the provisions of the bill were too stringent; that the punishment was too drastic because of the indefinite provisions of the law, and the fact that the courts have not always made clear exactly what constitutes a violation of the law. For that reason I have introduced a substitute for that bill, which I ask may be printed in the Record at this point in my remarks, without being read.
The PRESIDING OFFICER. Without objection, it is so ordered.
The proposed substitute is as follows:
Amendment Intended to be proposed by Mr. Dill as a substitute for 8. 2783, to provide for the forfeiture of patent rights In case of conviction under laws prohibiting monopoly, viz: Strike out all after the enacting clause and insert the following:
"That it shall be a complete defense in any suit for infringement of a patent to prove that the complainant in such suit is a party to any combination (in the form of trust or otherwise), agreement, understanding, license, or cross license, with any other patentee or other person owning or controlling patent rights, the effect of which is substantially to lessen competition or to tend to operate a monopoly in any line of commerce.
"Sec. 2. It shall be a complete defense in any action for infringement of a patent to prove that the complainant in such infringement suit is violating any law of the United States relating to unlawful restraints and monopolies or relating to combinations, contracts, agreements, or understandings in restraint of trade, or is engaged in any practice declared to be unlawful by the Clayton Act or the Federal Trade Commission act."
Mr. DILL. Mr. President, the substitute which I have offered provides that in any infringement suit brought by the owner or holder of a patent it shall be a complete defense to show that that patent is being used in combination with other patents in violation of the Sherman Act or the Clayton anti
trust law. I believe that the greatest monopolies In America to-day are built around the illegal use of patents, and I believe that some legislation is necessary in order to protect the public against such illegal use.
The Constitution gives Congress the right to grant patents for the purpose of encouraging the arts and sciences, but not for the purpose of enabling a few holders of patents to establish monopolies, to pick the pockets of the people in a manner that would not be possible did they not hold such patents. The bill which I offer as a substitute does not destroy the patent rights so long as the patents are used legally, and anyone who is using patents illegally can regain the right to sue for infringements by ceasing to violate the law.
The most striking illustration of the kind of violation which I have mentioned is found in the radio combination that has grown up in this country, generally known as the Radio Trust. This giant monopoly represents a pool of patents of the American Telephone & Telegraph Co., the General Electric Co., the Westinghouse Electric & Manufacturing Co., the United Fruit Corporation, and the Radio Corporation of America. This combination has undertaken to monopolize radio communication, radio broadcasting, and radio manufacturing, and does this all under the pretense of protection by patents. It has done more than that. It has attempted to apportion this monopoly among the constituent members by a series of cross-licensing agreements which violate both the Clayton Act and the Sherman antitrust law. These agreements should be read by everyone who wants to know of these violations, and I therefore ask unanimous consent that they may be printed in the Record at this point.
The PRESIDING OFFICER. Without objection, It is so ordered.
The agreements referred to are as follows: License Agreement—General Electric Co. Asd Radio Corporation
Agreement made this 20th day of November, 1019, between General
A. The General Co. has developed various inventions relating to, or applicable to, radio work and other communication work.
B. The General Co. is under obligation to certain foreign companies to give them for their territory, respectively, exclusive rights to its various Inventions and discoveries and to the business of selling General Electric products. Some of these companies are substantially controlled by the International General Electric Co., a New York corporation, hereinafter referred to as the International Co.
C. The Radio Corporation proposes to establish, maintain, and operate radio stations, and cable and wire lines and stations, and to deal in, lease, and maintain radio devices, and desires to utilize in sucn work the various Inventions now controlled by the General Co., and which may hereafter be controlled by it.
Article I. Definition*
1. Radio purposes is defined as the transmission or reception of communications, telegraphic, telephonic, or other, by what are known as electromagnetic waves, bat not by wire.
2. Radio devices are defined as comprising:
(a) Devices useful only In radio purposes.
(b) Devices especially adapted to radio purposes, but capable of other uaes, such, for example, as the Alexanderson alternator with accessories or the pllotron, except where the same are sold licensed only for uses other than radio uses, in which case the same are not to be regarded as radio devices hereunder.
3. The expression "devices" shall include apparatus, devices, systems, connections, and methods.
Article If. Lteenset
1. Reserving to itself and its controlled companies, present and future, respectively, personal licenses, transferable only to the successors to their business or part thereof, and divisible only as their business is divided, to use for their own communication or other purposes for convenience or to save expense, but not for profit, the General Co. hereby grants to the Radio Corporation an exclusive, divisible license to use and sell as well as a nonexclusive indivisible license to make only when, and to the extent that the General Co. is not in a position to supply the desired device with reasonable business promptness (the right to use and soil being limited to the use and sale of apparatus purchased from the General Co. or with its written consent, so far as the General Co. is from time to time in condition to supply the same with reasonable business promptness) for radio purposes under all patents, applications for patents, inventions and rights, or licenses under or in connection with patents which the General Co. now owns or controls, or which it may acquire during the term hereof, except those acquired by purchase and referred to below.
2. The General Co. also grants to the Radio Corporation a nonexclusive nontransferable license to use, but not to make or sell (with the name limitations) for wire communication purposes under all patents. applications, Inventions, rights, and licenses which It now owng or controls or which it may acquire during the term hereof by inventions of Its employees.
3. For the purposes hereof the inventions, patents, and rights of the General Co. are taken as including those of the International Co. as well as following corporations, namely:
Australian General Electric Co.
4. The Radio Corporation grants to the General Co. the exclusive, divisible right to make and to sell radio devices to the Radio Corporation only as well as the exclusive, divisible right to make, use, and eell devices other than radio devices, under all Its patents and applications for patents, inventions, and rights, or licenses under or In connection with patents which the Radio Corporation now owns or controls, or which It may acquire during the term hereof, except as far as Is provided below In the case of certain such acquired by purchase. The Radio Corporation grants the General Co. and its controlled companies, present and future, nonexclusive licenses transferable only to successors to their business or parts thereof, divisible only as their business is divided, to use for their own communication or other purposes for convenience or to save expense, bnt not for profit under all the patents which the Radio Corporation now owns or controls or which it may acquire during the term hereof from the General Co. or by inventions of its own employees or through contracts which it now has.
5. The said licenses are nil to run for the terms for which the patents ire or may be granted, reissued, or extended, and are subject to royalty only In so far as such royalties are payable to others by virtue of the contracts by which the pnrty granting the licenses acquired or shall acquire the right to grant the same, and only at a rate not greater than *hnt paid by such party.
6. Where in any case a party does not own or control a patent but **» lawful power to grant rights or licenses thereunder to the other for
t or all of Its field of territory it shall do so subject to the condtions
• In case the General Co. shall acquire by purchase from others
patent applications, or rights or licenses under or In connection ii:""ni;j useful for or applicable to radio purposes or wire com
- iiiinn, and in case the Radio Corporation similarly acquires such t patent applications, or rights or licenses, the party making «qiils1tion will offer to the other to bring the same within the
of tbls contract on payment of a fair proportion of the price ly paid or to be paid therefor. This shall not apply in the case patent, patent application, right, or license secured by the Radio from or through the Marconi Wireless Telegraph Co. of Marconi's Wireless Telegraph Co. (Ltd.), Compagnie Generate ^legraphie sans Fils, or others with whom the Radio Corporation '".'.,• relations similar to its actual or proposed relations with any * «3 companies; all such are to be treated as though they were not *~«d by purchase. - The General Co. has sold its Inventions for certain countries to ^***^-nies other than those mentioned In section 3 of this article. All ?Ia^nts of the General Co. with respect to such countries are subject », Present rights of the companies holding such Inventions. As
*~'sbta revert to the General Co. they shall pass under the operation *"* contract without further consideration.
ch company agrees to continue the present practice of the Gen- of requiring those employees considered likely to make Inven,tao —^<*ng this line of work to assign Inventions to It; It being undertlsjo *~**«t each company shall use its best efforts to carry out this proilinj» * Vjut if due care and diligence are exercised neither company jo . liable to damages for failure to carry it out.
soon as Is reasonably possible after the filing by or on behalf hereto of a United States patent application, rights to or should pass to the other party, the party filing the appllfcnll transmit a copy thereof to the other party with a stateits filing date and shall notify the other party of tbe counries to the United States in which it has decided to file and will file i to cover the Invention of such application. The other ay then suggest that applications should be filed in additional countries In which the first pnrty has the right to file. If <*ar as the first party does not within 30 days after such suggesto file In such other foreign countries the other party may applications for protecting such invention in such otber countries, and take patents thereon in its own name at its own . Before either party intentionally drops an application or pat*ny country, rights to or under which should pass to the other •, it shall notify tbe other party, in which case such other party the prosecution of the application or continue the life patent In question at Its own expense, being entitled In such an assignment thereof.
11. In case a right, application, or patent la transferred by one party to the otber In accordance with the provisions of section 10 of tbls article, the party with which such right, application, or patent originated shall be entitled to its full rights thereunder as though such patent had originated with and bad been taken out by the other party subject to any royalty or other payment required to be made to an outsider in accordance with this agreement.
12. The admission of validity implied in the acceptance of licenses and assignments hereunder Is limited to the field and terms for which such licenses exist.
13. The General Co. empowers the Radio Corporation to release the United States Government from any and all claims arising from past Infringement by the Government of any radio patents which the General Co. now owng or under which it has power to grant such release, provided that this can be done In a contract otherwise satisfactory to the General Co.
Article III. Restrictions on tales of apparatus
1. The General Co. agrees that it will not sell or dispose of any radio devices whatever covered by patents, rights under which are granted or agreed to be granted herein, for use In the United States except to fill orders now on hand, and except to the United States Government in cases where the Government Insists on purchasing directly from the General Co. (In which case the profits from such sales over the price of such devices to the Radio Corporation hereunder shall be paid to the Radio Corporation). The General Co. further agrees that It will not sell or dispose of for use outside the United States any radio devices whatever covered by patents, rights under which are granted or agreed to be granted herein, except as it may be required to do so by existing contracts with others than the companies specifically named In section 3 of article 2 hereof, and except for Its own use or for the use of the Radio Corporation. This reservation is not intended to enlarge the scope of the licenses granted In article 2 hereof.
Article IV. Bale of apparatus
1. The Radio Corporation agrees to purchase from the General Co. all radio devices covered by patenU, rights under which are granted or agreed to be granted herein, which the General Co. is from time to time In a position to supply with reasonable business promptness for use in, or which are used in, the business and operation of the Radio Corporation and Its licenses and customers.
2. The General Co. agrees to produce or cause to be produced such, patented devices of good quality, workmanship, and material with reasonable business promptness on the written order of the Radio Corporation.
8. The basis for determining the price charged by the General Co. to the Radio Corporation shall be cost plus 20 per cent, except that for all articles complete In themselves which are purchased by the General Co. from outside manufacturers and which form a necessary part of the complete device supplied by the General Co., the price charged by the General Co. to the Radio Corporation shall be cost plus 10 per cent for handling charges.
4. The basis for determining cost shall be In accordance with the "Standard accounting and cost system for the electrical manufacturing Industry," as approved by the Federal Trade Commission January 27, 1917.
6. Terms of payment shall conform to the standard terms of the General Co. current at the time of placing the order.
6. If the Radio Corporation in any particular instance wishes the General Co. to make a definite and firm price for such radio devices, and the General Co. consents to make such firm price, such firm price upon acceptance by the Radio Corporation shall be substituted In such Instance or Instances for the cost plus 20 per cent arrangement above mentioned.
7. All prices mentioned above shall be f. o. b. factory.
8. Standard material not specially designed for radio purposes Is to be sold to the Radio Corporation at standard prices and on standard terms of payment, but at the lowest price at which such standard material is sold In like quantities to any otber customer of the General Co. for use in the United States of America; and if at any tlm'e material, apparatus, or supplies especially designed for radio purposes shall be sold by the General Co. to Its other customers for other uses than radio purposes In an amount greater than that taken by the Radio Corporation, the price at which such material, apparatus, or supplies shall be sold to the Radio Corporation shall be the lowest price at which such material, apparatus, or supplies are sold in like quantities to any other customer of the General Co. for use in the United States of America. In determining such lowest price under this section 8 no account shall b'» taken of sales:
(1) To those corporations in which the General Co. may own a substantial amount of stock.
(2) Where the General Co. sells material on a schedule, such material is to be billed to the Kadlo Corporation according to such schedule.
(3) Where the General Co. has a lawful contract not to sell material below a certain price, such material Is not to be billed to the Itadlo Corporation for a less price.
(4) To the United States Government or any of its departments.
9. It la agreed that the Radio Corporation shall not resell patented articles except as a part of the radio system.
10. The Radio Corporation agrees not to lease, sell, or dispose of devices bought of the General Co. where the General Co. or one of the companies mentioned In section 3 of article 2 hereof would not be free to sell such devices. It being understood that the rights of the Radio Corporation are only for radio purposes as above defined, the Radio Corporation agrees to use care not to enter with any patented device, process, or system into the field of the General Co. or to encourage or aid others to do so, and specifically that in selling radio devices it will use such precautions, by contract of sale, restricted-license notices, etc., .- ; may be necessary or advisable to prevent its customers from acquiring (by purchase from it of devices or otherwise) licenses to use the same for purposes of which the Radio Corporation has no right to grant such licenses. The General Co. agrees to observe similar precautions in selling apparatus and devices especially adapted to radio work but capable of other uses.
11. The General Co. agrees to sell the Radio Corporation such patented communication devices as it may be in position to supply, other than radio devices, on the same terms, but only for the use of the Radio ^Corporation, and not for resale or lease or other disposal and not exclusively.
Article V. Aleranderfon alternator
1. The Radio Corporation agrees to purchase from the General Co. and the General Co. agrees to sell and deliver f. o. b. factory to it, as fast as they cuu reasonably be constructed, and prior to January 1, 191'2, 12 Alexanderson alternators, complete with accessories, in accordance with specifications attached hereto and marked "Exhibit B," at the special price of $127,000 apiece. Spare alternators or other Incomplete spare equipments may be substituted at prices to be agreed upon, provided that the total purchases hereunder aggregate in price the price of the 12 Alexanderson alternators with their accessories. In consideration for such agreement on the part of the General Co., the Radio Corporation agrees to Issne and deliver to the General Co. 804,800 shares of Its preferred stock, but subject to the provisions of article 6 hereof.
Article VI. Sale of materials
1. The Radio Corporation proposes to purchase from the Marconi Wireless Telegraph Co. of America, hereinafter referred to as the Marcoiil Co., all of Its property used or useful in connection with its manufacturing business, except the factory at Aldene, N. J. In case this purchase Is made, the Radio Corporation agrees forthwith to sell and does sell the property so purchased to the General Co., such sale to take effect immediately on the purchase of the same by the Radio Corporation, Including all drawings, blue prints, and material for manufacture and unfinished parts on hand or on order as of the date of the RTMdlo Corporation's acquisition of the same, and any factory plants, tools, machinery, and dies which It may acquire from the Marconi Co., but not including the publishing plant of the Wireless Press (Inc.) nor the building and real estate at Seattle, Wash., which latter will no longer be used for factory purposes. The accounts receivable are to be collected and the accounts payable are to be paid by the Radio Corporation.
2. The General Co. agrees to pay for the property thus transferred by paying for tile unfinished parts, work in progress, and material on hand to be manufactured at actual cost of the samtt plus 20 per cent, which amount U to be ascertained by two appraisers, one appointed by the General Co. and one appointed by Mr. Edward J. Nally. In case they disagree, the matter shall be referred to Mr. S. Roger Mitchell, or other public accountant satisfactory to both parties, whose decision shall be flnaL
8. In case the Radio Corporation shall acquire, prior to January 1, 1922, the factory plants, lands, etc., of the Marconi Co. at Aldene, N. J., as set forth In Exhibit C hereto attached, it agrees forthwith to sell the same to the General Co., and the General Co. agrees to buy the same for $500,000.
4. The payments by the General Co. to the Radio Corporation under this article and deliveries of preferred stock to the General Co. in payment for Alexanderson alternators and their accessories in accordance with article 5 hereof are to proceed as follows: At the time of taking over the unfinished parts, work in progress, and material on hand, a special account is to be set up between the General Co. and the Radio Corporation, in which account is to be charged against the General Co. the value of such unfinished parts, work in progress, and material on hand, ascertained as above; if and when, prior to January 1, 1022, the Radio Corporation acquires the Aldene factory and transfers it to the General Co., its price, $500,000, Is to be charged In the same account against the General Co. As and when the Alexanderson alternators and their accessories sold at the special price referred to abovearc shipped to the Radio Corporation, the price thereof is to be credited to the General Co. on such account until such credits aggregate $1,524,000. At any time when such account shows a balance in favor of the General Co. the General Co. may demand and shall then receive preferred stock of the Radio Corporation at par to any amount demanded, not exceeding such credit balance, the par value of such stock to be charged to it In such special account; and If at any time the
balance of said account Is in favor of the Radio Corporation, the General Co. shall liquidate such balance by surrender to the Radio Corporation of preferred stock of the Radio Corporation of a par value equal to the amount of such balance. Such special account shall be entirely independent of all other accounts between the parties.
5. The Radio Corporation agrees to place forthwith with the General Co. orders which will exhaust and consume said unfinished parts, work In progress, and material; unfinished parts, work In progress, and material not covered by such orders may be regarded by the appraisers as scrap in case the General Co. shall find itself unable profitably to utilize the same.
6. The General Co. agrees to fill the orders so to be placed on It and to bill the same to the Radio Corporation: In making up price of the articles so billed In accordance with article 4 hereof the price of the unfinished parts, work In progress, and material taken over and Inventories shall be taken as the price actually paid for the same by the General Co. as above set forth, the additional work and material being charged on the basis of article 4 hereof.
Article VII. Expert adclce and technical information
1. The General Co. agrees that it will from time to time permit the Radio Corporation to have and will assist It in obtaining full information concerning inventions, patents, and the patent situation of the General Co. in the radio field. The Radio Corporation engages reciprocally to do the same for the General Co.
2. The General Co. agrees upon request to furnish the Radio Corporation suitable plans for buildings, layout of machinery, antennae, etc., for use by the Radio Corporation hereunder, and if desired a man or men to supervise the construction and erection of such buildings, and the erection and installation of such machinery, etc., and also such other engineers and experienced men as the General Co. can reasonably spare and the Radio Corporation may reasonably require in the organization, management, and development of the business of the Radio Corporation, and to give the Radio Corporation and those whom the Radio Corporation may designate from time to time all Information in regard to technical and engineering but not manufacturing matters which it may possess from time to time and which the Radio Corporation may reasonably require for the conduct of its radio business hereunder, and further agrees to assist the Radio Corporation in every reasonable way to the end that the Radio Corporation shall have, whenever needed, in its operations herennder, the benefits of the widespread experience of the General Co. The Radio Corporation agrees to pay in each case the reasonable cost of furnishing such information and service, but not any part of the cost of acquiring the information except as the same may properly be charged as part of the development cost of apparatus which the General Co. sells to the Radio Corporation.
3. Each party agrees to give the other at cost of supplying the same Information and advice In connection with patent matters in its field.
4. The Radio Corporation agrees to give full Information to the General Co. on the same terms, and further agrees to afford the engineering representatives of the General Co. the fullest possible facilities, consistent with the reasonable operation of the Radio Corporation, for experimenting and for developing and testing new apparatus, devices, and Inventions.
Article VIII. Term and termination
1. This agreement shall continue until January 1, 19-15, at which date it shall expire. As soon as Is reasonably practicable after that licenses shall be granted as provided above under all patents to Issuo on patent applications which are then or mny hereafter be filed in any country on Inventions made or conceived by employees of either company up to the date of termination.
2. The Radio Corporation shall after January 1, 1945, be licensed under all patents referred to in this agreement so far as the General Co. now has or mny hereafter acquire the right to grant such license to the extent necessary to enable it to manufacture for its own use bereunder, but not for lease, resale, or other disposal, radio devices which it is unable to purchase of the General Co. in accordance with the terms of article 4 hereof.
Article IX. Further anavrances
1. The parlies agree to execute such further instruments as may reasonably be necessary for carrying out the purposes hereof. Article -T. Controlled companies
1. This agreement .-lull be binding upon and inure to the benefit of the parties hereto and their successors und their controlled companies, present and future. The British Thomson-Houston Co. (Ltd.) and the Tokyo Electric Co. (Ltd.) shall not for the purposes hereof be regarded as controlled companies of the General Co. Article XI
1. Inasmuch as the General Co. is not willing to turn over Us patents, patent rights, and licenses for any definite sum of money, but ii willing to transfer such patents, patent rights, and licenses only for a considerable interest in the profits to be derived from the use by the Radio Corporation of such patents, patent rights, and licenses, It Is therefore understood nnd nsroed that In the event of the taking over of the Kadlo Corporation by any superior authority all right, title, and intorost of the Rndlo Corporation In any patent, patent right, or Jireiise lierein granted or agreed to be granted by the General Co. to the Radio Corporation shall cease and shall be reassigned and shall revert to the General Co. as of the date of such taking over except to the extent provided below. If Instead of taking over the Radio Corporation the Government takes over Its radio stations In any field and /of territory, except In and for time of war or public danger, the saine result shall follow so far as concerns that field and/or territory. TJ«t till*5 action shall In no way affect the rights of Marconi's Wireless T<-lo£rrr>i»ti Co. (Ltd.), or of Shielton (Ltd.) as set forth In the "Kadio Corporation and British Marconi Co. principal agreement"; such rights ihall l>o reserved from any such reassignment by the Hadlo Corporation tor tlic teneflt of Marconi's Wireless Telegraph Co. (Ltd.).
In testimony whereof the parties hereto have caused these presents to be oxe-cuted and their corporate seals to he hereunto affixed by their proper- officers thereunto duly authorized at New York City the day nndyo-or first above written.
General Electbic Co.,
.agreement — General Ei.ectbic Co. And American Telephone
& Telegraph Co.
made this 1st day of July, 1920. between the General Electric New York corporation (herein called the General Co.), and rricnn Telephone & Telegraph Co., a New York corporation, called the Telephone Co.
ig the General Co. is engaged in the manufacture and sale in J t. cd States of apparatus and systems for the generation, disn^ aluj utilization of electricity for light, heat, power, traction, u elated purposes, and in the manufacture and sale of a general t- 1,-ctrloal and power apparatus, machines, and appliances, and, nnd through affiliated companies, is engaged In the purchase **I>I»a.retiiR and devices of various kinds from others and In the sale nn(J )s also c,igttged |n the manufacture and sale of wireless and appliances; and
the telephone company and Its associated companies are |u the operation of telephone and telegraph systems ; and
each party Is in possession of information, patents and iuapplicable to, and has research organizations engaged in bearing upon, not only Its own business but also the of the other party; and
various patents or applications for patents of the parties invc**ved in interference with each other in the United States Patent
the restrictions upon each party Imposed by the patent of the other and the uncertainties arising out of interferences ended to, nnd If permitted to continue will, hamper and delay °8r*=**» in the development and production of wire and wireless teletelegraph apparatus and systems; and
the effective and prompt development of the arts In question **« »«?cured only by the free and frank cooperation and exchange of °«~ma.t.ion between the parties, which can not well take place if "**l"°'*renQent8 and knowledge resulting from one party's cooperation *** the other party may without its consent be made available In its lol«* to the use of others;
Now, |n consideration of the premises and the mutual agreements contained, it is agreed ae follows:
Article I. Definition* the purposes of this agreement the following terms are defined as
telephony" Is the nrt of communicating or reproducing sound (oreated, directly or indirectly, by the voice or by musical inslru by means of electricity, magnetism, or electromagnetic waves. nations Or impulses conveyed or guided by wires, nnd includes all . "'*nf'n#. measuring, switching, signaling, and other means or methods
..VwL1?*1*' to or Involved in such communication.
nln tl"e*e»8 telephony" is to be taken as meaning the same as the tli ' ***t-ept that the waves, variations, or impulses are radiated
*'»«!.• ' ^legrophy" Is the art of communicating messages by code agii^ft uth as the Morse code, for example) by means of electricity, |?(|j,j '*'• or '•lectroniagnetlc waves, variations or Impulses conveyed » ^*J' wires, and includes all generating, measuring, switching, • Und other menus or methods incidental to or involved in
such communication, but does not include such devices as annunciators, elevator signals, engine-room telegraphs, etc.
"Wireless telegraphy" is to be taken as meaning the same as "wire telegraphy," except that the waves, variations, or impulses are radiated through space.
"Power purposes" are defined as Including all prime movers and their accessories nnd all generation, use, measurement, control, and application of electricity for light, heat, and power, but does not include any communication purposes.
"Household devices" are electric -or electrically operated devices designed primarily for domestic use, but do not include devices for communication purposes.
"Transoceanic" communication shall be understood to include all communication between two continents, or between a continent and an Island more than 100 miles from Its shores; islands within 100 miles of the shores of a continent being considered parts thereof. North America, including the Panama Canal Zone and all of Central America north thereof, is to be considered as one continent, and South America and all of Central America south of the Panama Canal Zone as another. This definition does not Include communication between ships, or between ships and shore.
"The United States Government" shall be understood to Include not only the Federal Government but also the governments of the Philippines, Porto Hico, and other Federal possessions, present or future, but shall not Include any municipal, county, or State government.
"Train dispatching" is telegraphic or telephonic conveyance of train orders or operating information between the office of a train dispatcher or similar official and way stations, or other points along the line of way, or railway vehicles (with or without incidental provision for operating at will in an emergency and not automatically, signals, brakes, stops, and switches) for controlling the movements of trains or other automotive vehicles.
"Railway signaling" is the operation of signals, swKches. brakes, stops, etc., controlling the movements of trains or other automotive vehicles controlled by or In accordance with train or vehicle movements or track conditions, including block signaling, cab signals, and train stops. It does not include train dispatching as above defined.
Any question arising as to the meaning or application of the foregoing definitions shall be settled by arbitration, as hereinafter provided. Article II. The patents included in this agreement
The licenses provided for herein are granted and agreed to tie granted under all patents and rights to or under patents of the United States now or hereafter during the term of this agreement owned or controlled by the parties hereto, and under all such patents hereafter issued upon Inventions now or hereafter during said term so owned or controlled, and to the extent to which the parties have or may have the right to grant licenses, excepting as otherwise specified In connection with the several grants hereinafter contained, and excepting such patents and Inventions as may be excluded from the operation of this agreement in the following manner:
A list of all United States patents under which it now holds transferable rights shall be furnished by each pnrry to the other within 60 days from the date of this agreement. Such lists shall separately identify those patents and shall also include those applications as to which rights, If granted hereunder, would be restricted in scope or would Involve continuing obligations not Implied by law. Copies of all contracts creating such restrictions or obligations shall, upon request, be furnished by each party to the other. Thereupon, and within six months after the receipt of the lists to be furnished as aforesaid, each party may, in writing, advise the other as to the patents and applications described in such list, furnished by the other, which (or the patents to Issue on which) it desires to exclude from this agreement; and no licenses are granted by this agreement under any patents so excluded. Each party shall thereafter, at such periods as may be agreed upon, or whenever requested by the other party, furnish to such other party like lists of subsequent patents and applications, and upon request therefor like copies of conrracts; and each party may, within six months after the receipt of any such list, advise the other, in writing, as to the patents and applications described In such list which (or the patents to issue on which) It desires to exclude from this agreement, nnd no licenses are grunted by this agreement under any patents so excluded.
Article in. Scope of licences
All of the licenses herein granted are, unless otherwise expressed In connection with the several grants, licenses to use methods and processes, and to make, use, lease, sell, or otherwise dispose of apparatus, machines, devices, appliances, and systems embodying the Inventions of the several patents In the lields in which the licenses are granted.
But no rights are granted to either party to manufacture, or to have manufactured, under patents under which it receives licenses hereunder, apparatus of the character at the time manufactured by the other party, except In factories owned or operated by one or the other of the parties hereto, or by their controlled companies, without the written consent ol the party granting such licenses.