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The CHAIRMAN. Eliminating the question as to the constitutionality of the act, what do you say about the equity of the complaint which the composer makes?
Mr. DYER. I do not see any equitable ground for their complaint. As a matter of fact, we have in the past had many publishers come to us with requests to publish their music, because it becomes popular in that way. I understand that through the instrumentality of talking machines the demand for sheet music has enormously increased.
Mr. BONYNGE. The demand for the writings of public men and authors have also very materially increased..
Mr. DYER. Yes, sir.
Mr. BONYNGE. And they continue to get paid for them through the copyright law when they furnish them; is not that true? Mr. DYER. Yes.
Mr. BONYGNE. Is there any distinction between the two?
Mr. DYER. In an ethical sense?
Mr. BONYNGE. Yes.
Mr. DYER. I don't know as there would be in an ethical sense. It seems to me that, ethically, we are entirely justified, but possibly that is because we have become accustomed to it.
Senator SMOOT. Would your company object to paying a royalty for the use of these popular airs to the composers, if all other companies had the right to pay the royalty and secure the production?
Mr. DYER. If that is what the committee thinks ought to be done, if that can be constitutionally done, and if the court says we shall pay further tribute, of course we prefer to do it rather than to have our business interrupted.
Senator CLAPP. Why do you use the expression " further tribute?" Mr. DYER. Because we already pay tribute when we buy the music, assuming that it has been copyrighted.
The CHAIRMAN. You pay the artist an agreed compensation?
The CHAIRMAN. And he gets the music from the music store? Mr. DYER. Yes, sir; that is, as I understand it; although in some cases, possibly, we buy the music ourselves.
Drawing an analogy from the patent practice, I submit that, under these circumstances, when we have gone on for fifteen years under the present law without molestation, have invested large sums of money as capital in these enterprises, and have built up a business along these lines which has now become established, that, as a matter of equity, the publishers and the public are estopped from contesting our right to go on further. I submit that we should be allowed to do so.
The analogy to which I would like to call your attention is found in the doctrine of the patent law, because the patent law is very much more firmly established than the copyright law. I may invent a machine, patent it, and start to operate under that patent. One of my competitors finds that the claims of my patent can be avoided by omitting some unimportant detail or by varying the construction in some immaterial respect, even although the idea fully realized my intellectual conception. He makes those changes and goes into business himself. I find, when I consult my attorney, that he does not infringe my patent. My attorney then advises me to have my
patent reissued. I go to the Patent Office and the Patent Office say: Certainly, you ought to have had this broad claim in the first instance. Your attorney was derelict or did not understand his business. You are entitled to a broad claim, which would cover this man's mechanism."
This question has been very frequently submitted to the Supreme Court. The Supreme Court does not say that you can continue the infringement up to the date of the reissue of this patent, but you must stop from that time on and go to making something else. The Supreme Court says that you can continue to make that device as long as you choose; that you have obtained rights you are entitled to under the law as it existed when you went into the business; and that this man, by reason of the reissue of his patent and the change of his grant, can not affect you.
The CHAIRMAN. Do you understand that the proposed legislation was intended to affect any conditions that are now existing or that have existed in the past?
Mr. DYER. Not at all; but future copyrights.
The CHAIRMAN. Then in what way is your argument pertinent to this question?
Mr. DYER. I thought that it was somewhat analogous, from the fact that the Supreme Court says, in the case of an infringer, that you can not make him pay for infringements that were committed up to the date of this reissue. It seems to me that would be analogous to the position taken in this bill. The Supreme Court has said that when these rights have once become vested you can not divest them.
Mr. BONYNGE. The difference is that you still have a vested right in this piece of music, copyrighted before the passage of this act, and would continue to have it after the passage of this act. It would be only the new pieces of music, composed after the passage of the act, to which the act would apply.
Mr. DYER. That is very true; but we would have to change the whole business scheme of our enterprise, and, I believe, that if we were obliged to stop using current music the company would not succeed.
We make two kinds of records. We make the ordinary recordthat is, popular record-and then we make what we call grand opera records. We exert special pains in the making of those grand opera records, and try to make them just as good as we possibly can. We try to sell them to the public, and we do sell them to some extent; but I do not think that the sale of the grand opera records amounts to 1 per cent of the sales of current music. I think we would probably not be able to succeed if we were denied the use of current music. Mr. HINSHAW. How would you be denied the right to use them? Mr. DYER. We would be infringing rights.
Mr. BONYNGE. You could get them by complying with the law and paying royalty to the composers.
Mr. DYER. That would be possible if we could make proper arrangements with the composer; but when there is a monopoly it is sometimes impossible to make arrangements, particularly where such combinations exist as have been suggested in this case.
Mr. CHANEY. You have no trouble in buying your machines?
Mr. CHANEY. You have got a monopoly on that, have you not? Mr. DYER. No; we think we are very badly treated in the way of infringements. It may be of interest to you gentlemen to know that Mr. Edison has never made a solitary cent out of any of his patents.
Mr. CAMPBELL. That means that the company makes the money under Mr. Edison's patents.
Mr. BowKER. Will you repeat that statement?
Mr. DYER. It is that Mr. Edison has never made a cent out of his patents.
Mr. BOWKER. How about stock in the illuminating company ?
Mr. HINSHAW. You mean that he has made his money out of the manufacture?
Mr. DYER. Yes; out of his business. He is a manufacturing patentee.
In this business a composer's chance is small, since of the many thousand musical copyrights registered, only about forty are used each month. Under the present law, composers have only to submit their compositions to the talking-machine companies, instead of the publishers. Under the present law, and under the situation as it exists to-day, the composers can be adequately protected, because in the talking-machine business a scoop is just as important at it is in the newspaper business. If Mr. Sousa would come to us with one of his compositions and we should have an opportunity of putting that on the record three months ahead of our competitor, it would be of great value to us, and we could pay him very handsomely for that composition. So I think that so far as the composers are concerned they have the same opportunities that a newspaper reporter has, if he has what he considers a scoop.
But, after all, why should composers be treated with any greater tenderness than inventors? They are both the creators of intellectual property. They are both referred to in the same clause of the Constitution. They should both be protected by the same laws. It is not a fact, as the gentlemen have so earnestly argued before this honorable committee, that the law contemplates the protection of intellectual property. Probably the most wonderful invention of the nineteenth century, and certainly the most beneficent, was that anæsthesia could be accomplished by means of ether. Doctor Morton, who made that discovery, obtained a patent on it, and that patent was held to be invalid, because the court said that was merely an effect; that the discovery or invention contemplated by the Constitution was something else. It was one of the greatest inventions of modern times.
Another very great invention was the electric telegraph, which was made the subject of a patent, and it was litigated before the Supreme Court. The court said that the idea of sending messages over wires by electricity was a mere principle, and that patent was held to be invalid, and the intellectual property in the idea was lost. A very simple invention, with which you gentlemen are all familiar, is the modern lead pencil with the piece of rubber in the end. That is a very simple thing, and it is a very useful invention. The court
said that was not an invention or discovery such as the Constitution contemplated, but that it was an aggregation. When you bring two old elements together, and when those elements cooperate in some way so as to produce a new effect, you can not get a patent on that aggregation, so that not all aggregations are patentable. Another inventor in San Francisco engaged in the manufacture of wooden pulleys. He discovered that he could make very much better pulleys than had ever been made before and make them very much cheaper. That patent was litigated before the Supreme Court, and the court said this is a mere mechanical method, and you can not get a patent on a mechanical method. It is not such a discovery or invention as the Constitution contemplates.
Mr. CHANEY. That was on the ground that it was not an intellectual creation at all, but was simply the gathering together of several intellectual creations.
Mr. DYER. This is one of the ideas that I wanted to emphasize before this committee, namely, that the law only contemplates the actual embodiment of an invention and not the principle involved. I think the law contemplates the registration of the sounds themselves and not any present means of embodying them.
Mr. CHANEY. You are addressing yourself to an intellectual creation. These matters were not intellectual creations. They were simply an aggregation of intellectual creations.
Mr. DYER. Those are the rules which the Supreme Court has laid down, under the broad language of the Constitution. The courts have also held that methods of doing business are not patentable.
The CHAIRMAN. Perhaps each one of those elements was patentable.
Mr. DYER. You mean in the case of the lead pencil?
The CHAIRMAN. In the case of the lead pencil and in the case of the aggregation of the different elements.
Mr. DYER. If either one or both are patentable, you can obtain a patent. But the law of aggregation is that you can not get a patent on bringing two things together, when the bringing of the two things together does not result in a new effect.
Public policy, in the law of patents, requires that when tribute has once been paid under a monopoly, that when a patentee has once been paid his price, the patented article may be used anywhere in the United States, free from restriction, even when that use invades a territorial right under the same patent. That is to say, if I am the manufacturer of folding beds in Washington, D. C., and the patentee of that bed, and I should give to Senator Kittredge, who lives in Baltimore, we will say, a license under that patent for the State of Maryland, and he also goes into the manufacture of folding beds, if a dealer in folding beds in Baltimore finds that I sold those beds cheaper than Senator Kittredge and came to Washington to buy his beds from me and paid my price for them and took them to Baltimore and sold them and used them for any purposes he saw fit, he would be protected under the patent law. This is the law as established by the Supreme Court, by reason of the public policy involved in connection with patents.
Mr. Burkan, who spoke on Saturday, very kindly gave me a copy of his brief. He refers in that brief to many patent cases and he seems to find a good deal of comfort in them. It happens that in
two of those cases I was of counsel, so I know more or less about them. And I find in reference to those two cases he has entirely misunderstood the effect of the decision. He says that, for instance, "upon the sale of a patented article the owner of the patent does not part with control over the article sold." That, of course, is absurd, and is not supported by the cases cited. If I am a manufacturer, of automobiles and I sell to any one of you gentlemen one of my automobiles, you get title to that automobile and you can do with it as you see fit. You can burn it or destroy it or throw it in the river.
The cases to which Mr. Burkan refers are cases of conditional sales, where the sale was made with the express understanding that the purchaser of the patented article would observe some covenant as to selling price or manner of use. Mr. Burkan, however, failed to call attention to the most recent case on the point by the circuit court of appeals, second circuit, which is the case of Cortelyou v. Lowe. In that case the circuit court of appeals held that a patented article could not be sold subject to a restriction which would result in a monopoly of an unpatented device. That is to say, they said that a man who owned an automobile could not sell that automobile with the condition that you should buy your gasoline from him, because that would practically amount to a monopoly in gasoline. Yet the present bill puts the seal of legislative approval on a scheme which the courts have declared to be contrary to public policy, and which will enable copyright proprietors to do just that thing.
I have heard more or less of the suspicion, in this hearing, that there were contracts of this kind with the Eolian Company. I do not know anything about the Æolian Company, but I have not heard any suspicions that there were any such contracts with the talkingmachine companies. I do not want to charge that there is a conspiracy or combination, because there seems to be more or less doubt about it. I do not want to be involved in such a discussion. I say that if there is such a combination it is possible that such a combination would be enormously more powerful than would be possible under any system of patents. In patent practice it is not infrequent that manufacturers in a certain line, for instance in the line of harrows, will find that they are losing all their profits by fighting one another on patents, as patent suits are very expensive, and they will pool their patents with each other and license each other to use them. In that way they form more or less of a monopoly and keep their companies out of litigation. That is done in other lines, but it has never gone beyond individual industries. This bill makes it possible to practically monopolize the entire business of copyrights. It is not limited to coon songs or to dance music, but applies to the entire field. I do not think I am betraying any confidence when I say that I have been told by a gentleman who is very intimately connected with the Music Publishers' Company, that they have seventy-five contracts, and that there are very few concerns out of that combination. Now, if it is possible to have contracts controlling 50 per cent of the musical productions it is possible to have contracts controlling substantially all of them. I think it is important for the committee to see that nothing shall be done which will permit a monopoly of that kind. It would be almost as powerful a monopoly as the taking over of the telegraph companies by the Government and then granting to