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5. To substantially uphold and maintain certain important agreements made with foreign countries, the discount quoted to dealers applies only to the sale of Victor talking machines, records, and supplies to users in the United States of America. Our dealers must exert all due caution to guard against the evasion of this clause. A violation of this clause will constitute a good and sufficient ground for forfeiture of this agreement at the election of the Victor Company.
ABSOLUTE GOOD FAITH.
6. Dealers must cooperate in absolute good faith with the Victor Talking Machine Company and inform them direct of any person or persons, either in their locality or at a distance, who, not being entitled to them, are enjoying our discounts. Also they must inform us direct of any other dealer who is not living up to the contract system. The above cooperation for our mutual good is imperative.
BREACH OF CONTRACT.
7. All Victor talking machines, records, horns, sound boxes, and supplies, as before stated, are covered by United States patents, owned and controlled by the Victor Talking Machine Company, and are sold subject to the foregoingmentioned conditions. Upon the breach of any of these conditions the license to sell or use said Victor talking machines, records, sound boxes, horns, and supplies shall cease and terminate immediately, without notice, and the vender and the user of same becomes at once an infringer of said patents and may be proceeded against for infringement of any of the said patents and for injunction and damages, etc., or both. No variation of these terms and conditions authorized by any employee of the Victor Talking Machine Company will be valid unless first ratified in writing by its president or secretary.
VALIDITY OF PATENTS ADMITTED,
8. The validity of the patents of the Victor Talking Machine Company under which the said goods are manufactured and sold is hereby expressly admitted upon the acceptance of the terms of this contract, and it is distinctly and expressly understood and provided that the party accepting the terms of this contract will not, in the event of the breach of the contract or any termination of the contract, hereafter contest the validity of any of said patents of the Victor Talking Machine Company under which the said goods shall be or shall have been manufactured or sold.
METHODS OF TERMINATING CONTRACT.
9. The Victor Talking Machine Company shall have the right, and reserves unto itself the right, to terminate this contract at any time for cause, or otherwise, notice of the termination of said contract to be forwarded by mail, in writing, by the Victor Talking Machine Company, to the last known address of the party or parties accepting this contract, the said termination and annulment of said contract to take effect at once. It is distinctly understood and agreed, however, that at any such termination, or any termination of this contract, can not relieve the dealer or party operating under this contract from any liability to the Victor Talking Machine Company which occurred or accrued during the existence of the contract.
LIQUIDATED DAMAGES FOR VIOLATION.
10. In the event of any termination of said contract by reason of the breach of any of the conditions by the party accepting the contract, damages for the same, shall, at the election of the Victor Talking Machine Company, be estimated $50, which the party accepting the contract hereby covenants and agrees to pay as liquidated damages; the Victor Talking Machine Company may, however, if it so elects and can so establish, prove actual damages to a greater amount, and be entitled to recover the same.
VOIDS ANY PREVIOUS AGREEMENT.
11. It is understood that this agreement is to take the place of any prior existing agreement between the parties bearing upon the subject-matter as covered in, or provided by, this agreement.
12. It is expressly understood that in the event of any breach of any of the terms or conditions of this agreement by the party accepting the same, the Victor Talking Machine Company, in addition to its other rights, may place and publish the name of said party upon its suspended list.
This agreement is personal to the party accepting the same, and is not transferrable or assignable. VICTOR TALKING MACHINE COMPANY.
CAMDEN, N. J., U. S. A.
In consideration of the right to purchase Victor talking machines, parts thereof, records, sound boxes, horns, and supplies from the Victor Talking Machine Company, or their authorized distributors, at the regular dealers' discount provided in the foregoing agreement, for the purpose of vending in the United States of America, I hereby accept all the terms and conditions provided in the foregoing, and covenant and agree to faithfully perform all the said conditions and terms and to observe the said list prices, discounts, and terms, as well as other prices and terms that may be established from time to time by the Victor Talking Machine Company, upon such patents, sizes, or styles of their wares as may be introduced or marketed by them, and to conform to and adhere strictly and to be governed by the same, the right of the Victor Talking Machine Company at any and all times to establish and change such new prices on all its manufactures in the hands of dealers or distributors, as well as on those hereafter to be manufactured or sold by it, being hereby admitted.
It is distinctly understood that this agreement grants no exclusive agency or territory to the undersigned, and that any violation of any of the conditions or terms mentioned in the foregoing clauses will justify the Victor Talking Machine Company, among other things, to at once cut off the supply of goods and place the undersigned upon the suspended list.
RETAIL DEALERS' PRICE LIST, DISCOUNTS, NET PRICES, TERMS, CONDITIONS OF SALE, AND AGREEMENT FOR UNITED STATES OF AMERICA.-EDISON PHONOGRAPHS, RECORDS, AND BLANKS.
(Subject to change.)
RETAIL DEALERS' PRICE LIST.
Any dealer desiring to handle our apparatus must place an initial order for at least three machines, each of a different style, and 150 records. In addition, he must have an established store suitable to display and handle our goods, and at all times carry a sufficient stock for exhibition and sale purposes.
CONDITIONS OF SALE.
All Edison phonographs, records, and blanks are sold at Orange, N. J., under the license of Thomas A. Edison, the Edison Phonograph Company, and others, subject to the following conditions:
1. Retail dealers must not give away or sell or offer for sale, either directly or indirectly, Edison phonographs or parts thereof, records or blanks at a
discount, or at less than current list prices, nor to dealers who are on our suspended list, nor include with a machine at list price any extra material or supplies not listed to go with same as a regular outfit. When other goods are included with an Edison phonograph or records and are advertised or sold as an outfit at a special or fixed price, the price of the phonograph or records, or both, also of each and every other article in the outfit, not listed as part of the regular phonograph outfit, must be given and must be the same whether included in an outfit or sold separately. Edison phonographs or parts thereof, records or blanks must not be disposed of as premiums, not by lottery, raffle, or any game of chance, nor in any other way whereby any person or persons may acquire such goods for less than the full current list price.
2. Giving away or selling other goods at less than current prices or giving away trading stamps or premiums of any kind in order to induce the sale of Edison phonographs or parts thereof, records, or blanks will be a violation of the conditions hereof.
3. All Edison phonographs bear a serial number; all Edison records are boxed and ticketed with copyright and registered tickets and labels, and any retail dealer selling or offering for sale an Edison phonograph, the serial number upon which has been removed or changed, or an Edison record without the copyright and registered label and ticket, infringes the patents under which such phonographs and records are sold, and will be considered as haying violated his agreement.
4. Exchanging Edison phonographs, or parts thereof, records, or blanks, in whole or in part payment for advertising privileges, or for goods of some other make or nature, or the acceptance of goods or merchandise of other make or nature in whole or part payment for Edison phonographs, or parts thereof, records, or blanks, is contrary to the conditions hereof. This does not prohibit the acceptance of a talking machine at full list price, if good as new (or less cost of necessary repairs to make good as new), in exchange for an Edison phonograph sold at full retail list price, but does prohibit the acceptance of records or blanks of any kind, at any price, in exchange for Edison phonographs, records, or blanks.
5. The selling or offering for sale of Edison phonographs, or parts thereof, records, or blanks that have become shopworn, or in any way damaged, or have been taken in exchange as second-hand phonographs, or parts thereof, records, or blanks, at reduced prices will be considered a cutting of prices and will not be allowed.
6. Exchange between dealers.-Authorized dealers in case of emergency will be allowed to borrow from any authorized dealer, provided the goods so borrowed are actually replaced with goods of the same style and make. In case a sale takes place between two dealers it must be at full list prices.
7. Edison phonographs, or parts thereof, records, and blanks are sold to jobbers and dealers in the United States with the express reservation that such goods shall not be sold to jobbers or dealers outside of the United States, nor for export from the United States except at full list price.
8. Dealers violating any of the above conditions or failing to pay accounts due the National Phonograph Company may be at once cut off from any further supply of goods and placed on the suspended list.
9. All Edison phonographs, records, and blanks are covered by United States patents and are sold under the condition that the license to use and vend them, implied from such sale, is dependent on the observance by the vendee of all the foregoing conditions; upon the breach of any of said conditions the license to use or vend said phonographs, records, and blanks immediately ceases, and any vender or user thereafter becomes an infringer of said patents and may be proceeded against by suit for injunction or damages, or both.
10. No variation of these terms and conditions and no representations or agreements made by any employee of the National Phonograph Company will be valid unless ratified in writing by its president or secretary.
RETAIL DEALERS' AGREEMENT.
In consideration of the sale of Edison phonographs, records, and blanks to me at current retail dealers' net prices and discounts by Jacot Music Box Company, New York City, and after carefully reading the above price list, discounts, net prices, terms, and conditions of sale, I hereby agree with the National Phonograph Company to conform with and adhere strictly to and be bound by the
same; and I hereby recognize and acknowledge the validity of the several patents under which such goods are manufactured. I also understand that this agreement gives me no exclusive rights whatsoever either as to agency or territory.
NOTICE TO PURCHASERS OF COLUMBIA GRAPHOPHONES, RECORDS, AND BLANKS.
All Columbia" graphophones, records, and blanks are manufactured by the American Graphophone Company under certain patents, and licensed and sold through its sole sales agent, The Columbia Phonograph Company, General, subject to conditions and restrictions as to the persons to and the prices at which they may be resold by any person into whose hands they come. Any violation of such conditions or restrictions makes the seller or user liable as an infringer of said patents.
CONDITIONS OF SALE.
1. Jobbers shall be entitled to current jobbers' discounts as long as they purchase Columbia product to an amount aggregating $5,000 each year following the date of signing this agreement.
2. Jobbers must not sell or offer for sale at wholesale or supply or place on consignment, either directly or through any intermediary, to dealers Columbia graphophones or parts thereof, records, or blanks at better discounts than those authorized by The Columbia Phonograph Company, General; nor shall they allow any discount whatever from list prices, either directly or through any intermediary, to dealers on the suspended list, or to any person or persons who have not an established shop or suitable place in some established shop allotted to a proper display of said goods, and who, having such, will not purchase at least two Columbia graphophones, each of different style, and at least 150 Columbia XP records, or 100 Columbia 10-inch disk records, to establish them as dealer or dealers, and sign and comply with the required price maintenance agreement.
3. Jobbers must forward within ten days of signing to the Columbia Phonograph Company, General, New York City, the required price maintenance agreement properly dated and signed, before a witness, by all dealers established by them.
4. Jobbers must keep a record of the serial numbers of all Columbia graphophones sold by them to dealers and send a copy thereof to The Columbia Phonograph Company, General, at any time upon request.
5. Columbia graphophones or parts thereof, records, and blanks are sold to jobbers and dealers in the United States, with the express reservation that such goods shall not be sold to jobbers and dealers outside of the United States, nor for export from the United States except at full list price.
6. Jobbers violating any of the conditions herein stated or failing to pay accounts to the Columbia Phonograph Company, General, may be at once cut off from any other supply of goods and placed on the suspended list.
7. After reading the foregoing notice and conditions of sale, and after reading the Columbia Phonograph Company, General's, list prices, discounts, and net prices, and being fully informed in regard thereto, and in consideration of trade discounts given to me by the Columbia Phonograph Company, General, I hereby agree to take any goods received by me from said company, either directly or through any intermediary, under the conditions and restrictions referred to in said notice, and, except in case of sales to bona fide retail dealers, as hereinafter provided for, I agree to adhere strictly to and to be bound by the official list prices established from time to time by said company, and that I will neither give away, sell, offer for sale, nor in any way dispose of said goods, either directly or through any intermediary, at less than such list prices, or induce the sale of such goods by giving away or reducing the price of other goods. I further hereby agree not to sell or supply said goods or any part or parts thereof, either directly or through any intermediary, at less than said official list prices to any but bona fide retail dealers, and not until they have first signed said company's prescribed price-maintenance contract, governing and controlling sales by retail dealers, and in such sales I agree to adhere strictly to and to be bound by the official discounts established from time to time by said company, and that our
discounts to said dealers shall not exceed those of said company on equal quantities and under the same conditions. I also agree not to sell to dealers on said company's suspended list or continue to sell to a dealer if he cuts prices or discounts, and I understand that a breach of this agreement will amount to an infringement of said patents and subject me to a suit and damages therefor.
I acknowledge the receipt of a duplicate of the foregoing notice and contract, and also a copy of the official list prices and discounts of said company in force at the date hereof.
No representations or guarantees have been made by the salesman on behalf of the said company, which are not herein expressed.
Mr. BURKAN. I also offer in evidence the case of the Edison Phonograph Company v. Pike (116 Fed. Rep., 863); also the case of the Edison Phonograph Company v. Kaufman (105 Fed. Rep., p. 960); also the case of the Victor Talking Machine Company v. The Fair (123 Fed Rep., 424). All of these were suits in which injunctions were granted restraining dealers and consumers from selling these patented devices for less than the price fixed by the trust.
I hold in my hand an agreement between the Victor Talking Machine Company and The American Graphophone Company, dated the 8th of December, 1903, by which agreement it is agreed that:
When any of said patent or patents shall be so adjudicated as valid, that the party owning or controlling such patent or patents will, with due diligence, actively proceed against all infringers of the said patent or patents to enjoin such infringing parties from said infringements and for an accounting when requested in writing to proceed against any such alleged infringements by the other party hereto.
It is further agreed that neither party to this contract shall copy or reproduce in any manner any records owned or controlled or first produced by the other party, nor will they deal in or handle in any way whatsoever such copies if made by others, and that they will cooperate to secure a discontinuance of such acts on the part of others and to secure legislation making it illegal to copy or counterfeit records, if it shall be found that the present laws do not cover the case.
So we find that these two companies, apparently rivals in business, have joined hand in hand to keep any third party from entering this most lucrative field. I say to you that if you pass this bill no man can get into this field of manufacturing records, because of these 300 patents which cover every conceivable improvement the human mind can invent.
The CHAIRMAN. You do not think that all of the improvements in this particular line of business have been discovered, do you? Do you not think there will be patents coming right along, and that they will be perfected as time goes on?
Mr. BURKAN. Yes; but the moment a rival enters the field you will find, if you will look at the record in the Federal Reports, that he is oppressed with litigation and is driven out of business. He can not continue in business because of the claims they make that he has infringed their patents. The entire field in this country is under their absolute control.
Representative CURRIER. How do they put him out of business? Mr. BURKAN. By injunction.
Representative CURRIER. How do they get their injunction until they have had their case adjudicated? They do not get an injunction until they have had an adjudication.