Mr. HAMILTON. Is that litigation terminated, or is the case still pending? Mr. GEER. No; the case is still pending. Mr. HAMILTON. Is the reason that your sales dropped the fact that your customers are apt to be sued if they buy? Mr. GEER. That is true. Mr. HAMILTON. Mr. Geer, can you tell me who Mr. Hazelton was, and Mr. Collin? What did you say their full names were? Mr. GEER. Everybody knows him as Ben Hazelton, but I think his full name is Benjamin. Mr. HAMILTON. Can you give me the full name of Mr. Collin? Mr. HAMILTON. You told us awhile ago that you were offered $260,000 in the first part of 1934 for your glass-manufacturing machine business. Mr. GEER. That is correct. Mr. HAMILTON. You say the litigation has cost you $50,000 already? Mr. GEER. That is correct. Mr. HAMILTON. I would like to ask you this: You also told us, I believe, that you have sold only one lehr so far this year. Mr. GEER. That is correct. Mr. HAMILTON. That you sold no lehrs last year. What would you say the value of the glass-manufacturing machinery business is now? That is, your business. Mr. GEER. I will give you a comparison. In '28 we were doing $800,000 worth of business and last year we had $18,000 worth of business in the glass industry-quite a drop. Mr. HAMILTON. You are still continuing the fight? Mr. GEER. We are going to continue as long as we can. We believe we are right and we are going to stick to it. Senator KING. Was Mr. Hazelton identified when he came to see you? Mr. GEER. He was vice-president of the Owens-Illinois Glass Co. Senator KING. Is he still? Mr. GEER. I can't answer that. Mr. HAMILTON. Did the Hartford-Empire Co. circularize the glass machinery purchasing trade after they filed their suit against Swindell? Mr. GEER. They circularized them sometime after that. I can't say exactly when, but they had previously circularized the trade, advising that we were infringing their patents long before that. Mr. HAMILTON. Thank you very much. Mr. GOODRICH. At this point, Mr. Chairman, in connection with this last witness, I offer to you and ask that it be taken into the record and printed, a copy of the decision of the fourth circuit court of appeals in the case of Hartford-Empire Co. versus Swindell Bros., Inc., and the Amsler-Morton Co., intervenor, which is found in 39 U. S. Patent Quarterly, 87, and the decision on rehearing and the argument which is found in 96 Fed. (2) 227. The CHAIRMAN. Mr. Goodrich, we have been trying to keep the record down as much as possible. You have observed that I have excluded many of the documents presented by the Department of Justice. In this case if you will be good enough to file the citations of all of the cases I think they will be available to all the members of the committee. We each have libraries and the Supreme Court Library is available and the Library of the Senate, and it probably would be unnecessary to put it in the record. Mr. GOODRICH. I am sure that is so, Your Honor, but this record goes out to a great many people who are not members of the committee, and if this patent case is to be retried before this committee, certainly I would like to have the decision there. The CHAIRMAN. I think the patent case is not being retried. Mr. ARNOLD. The statement is in the record that the lower court was reversed, and that is all you really want, isn't it? Mr. GOODRICH. Coupled with the statement, Mr. Arnold, that there was a rehearing before the circuit court and the decision again upheld. Mr. ARNOLD. I think we can show that and you can give the citation in the record now. Mr. GOODRICH. 96 Federal Reporter (2d) 227, and the first report was found in 39 U. S. Patent Quarterly 87. Senator KING. Have you extra copies of your brief? Mr. GOODRICH. These are not the brief, Senator; these are the decisions. I will be glad to leave these. We have extra copies. Mr. Cox. I should like to make a vigorous objection to any characterization of this testimony as a retrial of the patent case. The CHAIRMAN. It was stated by the chair as not a retrial. Are there any other questions? Mr. HAMILTON. I have none. The CHAIRMAN. Do any members of the committee desire to ask Mr. Geer any questions? Mr. GEER. I think I ought to make a further statement here before leaving, and that is during the trial they brought out the importance of their design of lehr and at the same time they were getting ready to offer to the trade a cheaper and more inexpensive lehr, amounting to $2,500, and $2 per day royalty. The CHAIRMAN. The committee will stand in recess until tomorrow morning at 10 o'clock. (Whereupon, at 4:20 p. m., an adjournment was taken until Friday, December 16, 1938, at 10 a. m.) INVESTIGATION OF CONCENTRATION OF ECONOMIC POWER FRIDAY, DECEMBER 16, 1938 UNITED STATES SENATE, TEMPORARY NATIONAL ECONOMIC COMMITTEE, Washington, D. C. The committee met at 10:15 a. m., pursuant to adjournment on Thursday, December 15, 1938, in the old caucus room, Senate Office Building, Senator Joseph C. O'Mahoney presiding. Present: Senators O'Mahoney (chairman), and King; Messrs. Henderson, Arnold, Berge, Peoples, and Coe (U. S. Commissioner of Patents); Representative Sumners. Present also: Department of Justice staff for Temporary National Economic Committee study-counsel, H. B. Cox (Special Assistant to the Attorney General); Joseph Borkin, Ernest Meyers, Charles L. Terrel, Benedict Cottone, David Clarke, George Dession, Fowler Hamilton, H. C. Engelbrecht, Victor H. Kramer, J. M. Henderson, Monroe Karasik, Irving Glickfeld, Hyman Ritchin, Norman Bursler, and Seymour Lewis; also chief counsel for Federal Trade Commission Temporary National Economic Committee study, George W. Williams. The CHAIRMAN. The committee will please come to order. We have convened this morning a little bit earlier than our usual hour, and I regret to say, Senator King, Mr. Peoples, and other members of the committee, the attendance is a little bit light this morning. Three of the members are suffering from colds and asked me to send word to proceed without waiting for them. Have you your witness? Mr. Cox. Mr. Safford. Mr. Pease. Mr. Pease is another official of Hartford. Mr. Pease has not been sworn. The CHAIRMAN. Mr. Pease, do you solemnly swear that the testimony you are about to give in this proceeding shall be the truth, the whole truth, and nothing but the truth, so help you God? Mr. PEASE. I do, sir. The CHAIRMAN. You may be seated. TESTIMONY OF A. T. SAFFORD, SECRETARY AND COUNSEL, HARTFORD-EMPIRE CO., HARTFORD, CONN.-Resumed; AND A. M. PEASE, ASSISTANT TREASURER, HARTFORD-EMPIRE CO., HARTFORD, CONN. Mr. Cox. Mr. Safford, I am going to hand you a document and ask you if it is a document that you are prepared to accept as a true and correct photostatic copy of an agreement between the HartfordEmpire Co. and the Lynch Corporation, dated August 23, 1933. Mr. SAFFORD. The agreement is not complete. Mr. Cox. You are referring to a later amendment of the agreement? 1 1 The amended agreement, dated November 12, 1938, was subsequently entered as "Exhibit No. 152." See infra, p. 606. Mr. SAFFORD. A later amendment; yes. Mr. Cox. But this, prior to the amendment which was made of a date this year, and I will take that up in a moment, is a true and correct copy of the agreement? Mr. SAFFORD. Yes; as executed. Mr. Cox. I should like, before I offer this document for the record, to read one provision which is found in section 2 of the agreement. which reads as follows [reading from "Exhibit No. 150"]: Lynch grants to Hartford a nonexclusive license to make for itself or have made for it, to sell, and lease forming machines of designs made or acquired by Hartford and embodying Lynch forming machine inventions, and to license others to use, but not to make and/or sell, any forming machines embodying Lynch licensed forming machine inventions. Provided, That neither the grant herein to Hartford of the right to license others to use said inventions, nor any sublicense granted by Hartford thereunder, shall be extended by implication under any circumstances to include a right in Hartford's sublicensee to make any forming machine embodying Lynch licensed forming machine inventions. The license granted in this section 2 shall be nonassignable except to the successor of the entire business of Hartford. I should like to have this contract marked as an exhibit though it need not be printed in full in the record. The CHAIRMAN. The document may be marked as an exhibit. (The agreement referred to was marked "Exhibit No. 150" and is on file with the committee.) Mr. Cox. Mr. Safford, will you tell us briefly what the Lynch Corporation is? Mr. SAFFORD. The Lynch Corporation is engaged in the manufacture of forming machines and at the present time it is the largest manufacturer of forming machines, I believe, in the world. Mr. Cox. Was it the largest in 1933 when the contract was made? Mr. SAFFORD. So far as I know; yes. Mr. Cox. Now, Mr. Safford, will you tell us who Mr. Werbe is? Mr. SAFFORD. Mr. Werbe is president of the Lynch Corporation. Mr. Cox. I am now going to read to you a part of a letter which you addressed to Mr. Werbe under the date of September 20, 1933, and afterwards I will hand you this document and ask you if it is the letter which in fact you did send to Mr. Werbe. The CHAIRMAN. Mr. Cox, may I inquire? You stated that the contract which you just had identified was amended. Mr. Cox. That is correct. The CHAIRMAN. I was wondering if that amendment in any way modified the contract. Mr. Cox. It does, and I am coming to that. The reason I am taking the letter up first is because the letter antedates the amendment Mr. Safford spoke of [reading from "Exhibit No. 151"]: This is in answer to your letter of September 13 regarding Universal and the procedure to be followed generally in granting forming machine licenses to those persons who wish to obtain forming machines from you. If Universal advised you that they had a forming machine license they are evidently laboring under some misconception as to the extent of their present license. This license is merely to cover six feeders in the production of principally milk bottles. We shall, however, send them a forming machine license some time this week, along with our form letter and such other information in regard to their particular situation as seems necessary. I am going to omit the next two paragraphs, which are not germane [reading further from "Exhibit No. 151"]: As our general procedure for dealing with each person who wishes one of your forming machines, we suggest the following: We shall send you a list of our feeder licenses and keep it revised for you. When you get an order for a forming machine you will advise us. If it is free from the feeder licensee we shall then forward to the licensee our standard forming machine license agreement adapted to the licensee's particular field of ware. This the licensee is to sign and return to us. If he is not a licensee, then you will decline to furnish the machine in such language as appears proper to you under the circumstances. If it is to a feeder licensee to whom we are sending a forming machine license, you will send your usual sales contract for execution. When we have advised you that our forming machine license is signed and you have a signed copy of your own contract, you can then make delivery of the machine. Is this the letter which in fact you did send to Mr. Werbe? Mr. SAFFORD. Yes. I recognize that letter, Mr. Cox, and that letter may be capable of misconstruction. Under the Lynch forming-machine agreement, as I recollect it, there was a covenant on our part to extend the licenses of all our feeder licensees automatically, so that they without further payment would be entitled to use Lynch forming machines with a license from us. That appears from the agreement as written. Subsequently some misconception arose as to the meaning of the agreement. As a matter of fact, the Department of Justice itself raised the question of the construction of that contract and subsequently we wrote another letter clearing up that matter. I might explain, Senator, that in 1935 some question came up by which the Department of Justice became interested in us. I have forgotten the exact details. At that time we voluntarily went to the Department, offered to let them have access to all our contracts, and we stated at that time we welcomed any suggestions which they might have with reference to our contracts. They sent an investigator to Hartford who did make such an investigation and raised various points which he felt made those contracts susceptible to misinterpretation. In those two or three instances, so far as I know, we modified the contracts accordingly, and after his visit we wrote again to the Department stating the original purpose of the visit of the investigator, and stating also that we welcomed any suggestions which they might make with reference to our contractual system. Mr. ARNOLD. What year was this? Mr. SAFFORD. I think that was 1935, Mr. Arnold. It was when Mr. Dickinson was Assistant Attorney General. Mr. Cox. Have you finished, Mr. Safford? I point out to the committee that the answer was not responsive to the question, but I am prepared to let it stand and let the contract speak for itself and let the letter speak for itself, too, which I should like to offer now. The CHAIRMAN. The letter may be received. (The letter referred to was marked "Exhibit No. 151" and is included in the appendix on p. 793.) Mr. Cox. So far as this particular letter is concerned and so far as section 2 is concerned, whenever the investigator of the Department may have visited you, you didn't modify that until November of this year, did you? Mr. SAFFORD. I think your investigators took at least one letter from our files in which we wrote to the Lynch Corporation stating that there was a misconception of the meaning of that term, and we were stating what we felt was our meaning of the term, and also |