Mr. SMITH. Well, let's take the whole thing, Mr. Cox, after you finish. You go right ahead.

Mr. Cox. Your licenses do contain provisions restricting the territory within which the licensee may sell?

Mr. SMITH. There is only one.

Mr. Cox. Is that the Northwestern Glass Co.?

Mr. SMITH. Correct.

Mr. Cox. I hand this to you, which is a certified copy of that license contract and ask you if you are satisfied as to the accuracy of it.

Mr. SAFFORD. That is for a very small plant in a limited area. Mr. Cox. I understand. Under this license he is permitted to manufacture ware which can be sold only in Oregon, Idaho, Montana, and Alaska. Is that right?

Mr. SAFFORD. Yes; I think so. That is the only limited territory. Mr. Cox. I should like to offer this.

Senator KING. Is that to be inserted?

Mr. Cox. I have no interest in having it printed. I'd like to have it marked as an original exhibit and certified.

The CHAIRMAN. Is that true of "Exhibit No. 118"?

Mr. Cox. Yes.

The CHAIRMAN. Both of these exhibits may be filed with the committee and certified as exhibits offered by the Department of Justice for the purpose of this hearing.

(The contract referred to was marked "Exhibit No. 119" and is on file with the committee.)

Mr. Cox. Sometimes in your license agreements you specify the customers to whom the manufactured ware may be sold? Mr. SMITH. No.

Mr. Cox. Are you quite sure about that, Mr. Smith?

Mr. SMITH. I don't remember any such situation. Yes; I think there are only two such occasions.

Mr. Cox. Well, the one I have here is the license to the Laurens Glass Works, Inc., Laurens, S. C., which reads as follows, or a letter which was attached as a rider reads as follows [reading from "Exhibit No. 120"]:

You are authorized to make under the said licenses a total of not over 4,000 gross per calendar year under both of said licenses, of panel bottles not exceeding 14 ounces in weight.

By the way, what is a panel bottle?

Mr. SAFFORD. It is a flat-sided bottle.

Mr. Cox. [reading further]:

The said bottles are to be sold chiefly to the Globe Medicine Co. or to the Standard Drug Co., or both, both of Spartanburg, S. C. But you are also authorized, until further notice, to sell a part of such total of 4,000 gross per year to small users of such bottles in your vicinity.

That was one of the provisions I had in mind.

Mr. SMITH. You may find one or two or possibly three, but that

Mr. SAFFORD (interposing). I don't want to interrupt the proceedings, but are you sure that wasn't subsequently revoked and embodied in a larger license?

Mr. Cox. Not so far as we could tell.

Mr. SMITH. That comes about due to this fact. A licensee may be making packer's ware or some other field, and they occasionally bob up and say, "I have a friend over here and I have known him a long time. For heaven's sake, let me make 4,000 gross of prescription bottles for him. We don't want to go into the prescription business. We don't want to make that kind of ware, as a general thing, but just as a courtesy from Hartford let us supply that particular fellow.

Mr. Cox. You do it under those circumstances.

Mr. SMITH. Not as a general proposition, but every once in a while. We decide each case on its own merits. If it seems reasonable and a decent thing to do, we will expand his license so that he can take some particular advantage of some particular situation, but that isn't an intrinsical part of our general licensing.

Mr. Cox. It would be accurate to say, then, that in the cases where that kind of provision is in the agreement, what you have done is to carve out a limited exception to a prohibition against any manufacture of that kind of ware. Is that correct?

Mr. SMITH. No; not quite.

Mr. Cox. I thought that is what you said a moment ago, Mr. Smith. Mr. SMITH. One particular man under a license may not have the right to make that particular line of ware because that wasn't his business; but if some particular situation arose where you might say, almost as a matter of courtesy, if he wanted to make just a small quantity of that particular line of ware for a particular concern, we say, "All right, go ahead," and we added that right to his license.

Mr. Cox. What I wanted to be sure of is this: As you explain it, it is a situation in which the man in the first instance under the license had no right to make that

Mr. SMITH (interposing). He has no right because he has never been in the habit of producing that ware and his business wasn't in that particular line.

Mr. Cox. His license wouldn't let him make it?

Mr. SMITH. But as a general licensing policy, when a manufacturer came to us for license, we said, "What have you been making? What would you like the license for?" And we would give him the license to make the particular glassware that he was manufacturing, selling, and marketing.

Mr. Cox. I would like to have this go into the record to be marked as an exhibit. There has been a change in the quantity provision, Mr. Safford, but we found no provision in that I read, but I will correct it.

Mr. SAFFORD. Let it go in subject to check.

The CHAIRMAN. Do I understand that it is your desire to have this printed in the record or filed as the others were? Mr. Cox. Filed as the others were.

The CHAIRMAN. I want to be sure of your desire.

Mr. Cox. I want to make my own position clear about that. I have no interest in burdening the record by having these things printed. On the other hand, I wish to be sure they are certified as exhibits so they can be used by the Department in connection with any report to be prepared.

The CHAIRMAN. Of course, it would be the desire of the committee to have a complete story told. Therefore, I am anxious that whenever you present these that you are satisfied in your own mind that you have sufficiently developed the character of the exhibit to make the record clear.

Mr. Cox. I read or paraphrased the part of interest to the Department, and we are not interested in having the rest of it printed.

The CHAIRMAN. Very well, it may be admitted with that understanding.

(The contract referred to was marked "Exhibit No. 120" and is on file with the committee.)

Mr. Cox. Now sometimes your licenses contain restrictions which may be made as to the use of the manufactured ware, do they not? Mr. SMITH. Can you give me an example?

Mr. Cox. Well, take the license which you have issued the BuckGlass Co. Isn't there a provision in there which authorizes them to manufacture wine bottles for sacramental wine?

Mr. SMITH. I think there is although I am not sure, but if there is such a provision, it is right along the line with what we just have been talking about. The Buck Glass Co. is not a wine house, not a liquor house, but they had a little extra business coming from somebody that wanted some wine bottles for sacramental wine. That may be in there. I assume it is if you say it is.

Mr. Cox. That is what I am informed. Another example I have in mind would do with the Latchford Glass Co. I think they are licensed to manufacture bottles to be filled with milk of magnesia. I assume that under that license they can't manufacture bottles to be filled with any other kind of medicine.

Mr. SAFFORD. I think that is a descriptive term of the type of bottle rather than the use.

Mr. Cox. I see. In other words, under that license they can manufacture a bottle of that type and it can be filled with any kind of medicine.

Mr. SAFFORD. That is right.

Mr. Cox. Tell me this: Under your license agreements, some of your licensees are entitled to manufacture packers' ware. There is a kind of jar which fits into the packers' ware category which is comparable to a fruit jar in size and shape, is it not?

Mr. SMITH. They are very much alike.

Mr. Cox. When you license a man to produce a bottle of that kind for use for packing food products by processing food products, do you regard it as a violation of the license agreement if he uses the bottle to preserve fruit?

Mr. SMITH. The license we extend to the manufacturer is to make certain lines of bottles: what those bottles are used for determines the kind of the license. Now if a man were making ordinary packers' jars and a jar goes to the producing manufacturer of food products they use that jar and put their own products up in that jar. The manufacture of fruit jars for the domestic household trade is an entirely different kind of business, and the licensee who had the right to make the packers' jars would not have the right to make fruit jars for household domestic trade. Does that answer your question?

Mr. Cox. I think it does with one exception. I want to make sure that I understand what you mean by that. If such a licensee should manufacture a packers' ware jar and begin selling it for use as a fruit jar, would that be a violation of his license?

Mr. SMITH. It would

Mr. Cox. Now the licenses which you have which you issue on some of your machines, and I am speaking now particularly of the lehr or annealing oven, contain a provision which restricts use of the licensed machine, or in connection with other machinery which is patented by you and licensed to the licensees, do they not?

Mr. SMITH. That was true at first, but that is no longer in force. Mr. Cox. Now, what I have specifically in mind is a provision which I found, which I shall hand to you in a moment, in the agreement, the license agreement, with Whitall Tatum Co. The agreement was made in 1933, containing this provision [reading from "Exhibit No. 121"]:

The said leased machines are designed, developed, and adapted especially for use with other glass machines controlled by the licensor. The grant of rights berein to use such leased machines and to use the said patent rights therein embodied is therefore restricted and limited as follows: In case the said leased machinery shall at any time be used by the licensee for the annealing or treatment of glassware produced by the aid of any feeding machinery not then controlled or under license from the licensor, and such use shall continue after the licensee shall have received from the licensor written notice of objection to such use, then in such case the licensor reserves the right, in its option, to revoke and cancel this license and lease, upon paying to the licensee the amount of 1 year's minimum royalty hereunder.

Mr. SMITH. That was in our early contracts and since has been changed and was never enforced. I think we started out with the idea that we wanted to have the use of our equipment tied to our own forming machines and feeders.

Mr. Cox. Has that particular provision in that particular license agreement been changed? Can you answer that?

Mr. SAFFORD. No.

Mr. Cox. So under that agreement as it stands today Whitall Tatum Co. cannot use the lehr except in connection with your machinery, is that right?

Mr. SAFFORD. That is not quite correct.

Mr. Cox. I realize that; I put it this way. If it does, it then brings into operation the right to cancel which is provided by that contract. Mr. SAFFORD. That is not quite true. It is merely we reserve the right.

Mr. Cox. You can cancel that contract.

Mr. SAFFORD. But until we exercise it, they have the right to use the machinery with another.

Mr. Cox. But if they use the machinery with others, you have the right to cancel that upon payment of 1 year's royalty.

Mr. SAFFORD. That is correct.

Mr. Cox. Is this same provision in effect in many other existing contracts today under lehrs?

Mr. SAFFORD. It is not in the latest edition of the standard contract and it is probably in all editions prior to that.

Mr. Cox. When was that change made?

Mr. SAFFORD. Well, this is the edition of May 1936, that I have here that doesn't contain that provision.

Mr. Cox. You think probably until that time the provision was contained in these lehr contracts?

Mr. SAFFORD. Yes.

Mr. Cox. Can you tell us, Mr. Smith, why the company decided to abandon that provision?

Mr. SMITH. No, necessarily some legal reason. I will have to refer to my legal staff. In fact, I didn't know it had been abandoned. Mr. Cox. Do you have any opinion on that, Mr. Safford?

Mr. SAFFORD. I think it is a legal conclusion, namely, that the combination of the lehr and the feeder had no reasonable relation from the manufacturing point of view and, inasmuch as we had no patents covering the combination of the two, it was thought advisable to omit the provision.

Mr. Cox. Well, if I should suggest that you might and did abandon it because you had reason to believe that it might present some question as to whether or not such an agreement was prohibited by the antitrust laws, would you deny that?

Mr. SAFFORD. I don't think we'd deny that.

Mr. Cox. That is one case where the the antitrust laws may have had such an effect. I'd like to have the contract marked, if I may, and treated the same way as the others.

The CHAIRMAN. It may be so marked.

(The contract referred to was marked "Exhibit No. 121" and is on file with the committee.)

Mr. Cox. Under these license agreements, the agents or employees of your company, of course, have a right to go on the premises of the licensee at reasonable times to make reasonable repairs?

Mr. SMITH. Correct. In fact, they are quite welcome.

Mr. Cox. You attach a plate on each of your machines, do you not, Mr. Smith, stating that the machine is licensed under certain patents and giving the numbers?

Mr. SMITH. Correct.

Mr. Cox. And from time to time as new patents are issued, you add numbers to the plates, is that correct?

Mr. SMITH. Correct.

Mr. Cox. Do you have the latest standard form of your stacker and conveyor agreement there, Mr. Safford?

Mr. SAFFORD. Yes; I have.

Mr. Cox. May I see it?

Mr. SAFFORD. That is the stacker.

Mr. Cox. You don't have it consolidated? Has this form been abandoned by your company?

Mr. SAFFORD. Well, that agreement is just with the one company, owing to the number of machines involved.

Mr. Cox. I see; that is not in common use.

Mr. SAFFORD. That is not in any use at all except with that one company.

Mr. Cox. This contract 1 contains a provision similar to the provision which I read a moment ago in the Whitall Tatum contract. In fact, it appears at first sight to read word for word with it and restricts the use of this equipment to use in connection with other ma

1 Referring to "Exhibit No. 122."