[Trade Journal]
Publication: Verbatim Record of the Proceedings of the Temporary National Economic Committee
Washington , DC, United States
vol. 1, no. 10, p. 277-296, col. 1-3
VERBATIM RECORD
of the
Proceedings of the
TEMPORARY NATIONAL
ECONOMIC COMMITTEE
VOLUME 1
December 1, 1938 to January 20, 1939
CONTAINING
Economic Prologue
Automobile Patent Hearings
Glass Container Patent Hearings
Presentation on Patents by Department of Commerce
Published 1939 by
THE BUREAU OF NATIONAL AFFAIRS, INC.
WASHINGTON, D. C.
·
·
Ninth Day's Session
_____________________
VERBATIM RECORD
of the Proceedings of the
Temporary National Economic Committee
Vol. 1, No. 10 WASHINGTON, D. C. Dec. 15, 1938
THURSDAY, DECEMBER 15, 1938.
THE TEMPORARY NATIONAL ECONOMIC COMMITTEE MET AT 10:50 A. M. PURSUANT TO ADJOURNMENT ON WEDNESDAY, DECEMBER 14, 1938, IN THE OLD CAUCUS ROOM, SENATE OFFICE BUILDING, SENATOR JOSEPH C. O'MAHONEY PRESIDING.
PRESENT: SENATOR O'MAHONEY OF WYOMING, CHAIRMAN; SENATOR WILLIAM H. KING OF UTAH.
REPRESENTATIVE B. CARROLL REECE OF TENNESSEE.
MR.THURMAN W. ARNOLD, ASSISTANT ATTORNEY GENERAL, REPRESENTING THE DEPARTMENT OF JUSTICE; WENDELL BERGE, SPECIAL ASSISTANT TO THE ATTORNEY GENERAL.
MR. RICHARD C. PATTERSON, JR., ASSISTANT SECRETARY OF COMMERCE, REPRESENTING THE DEPARTMENT OF COMMERCE.
ADMIRAL CHRISTIAN JOY PEOPLES, DIRECTOR OF PROCUREMENT, REPRESENTING THE DEPARTMENT OF THE TREASURY.
MR. LEON HENDERSON, EXECUTIVE SECRETARY OF THE COMMITTEE.
COUNSEL: H. B. COX (CHIEF COUNSEL); ERNEST MEYERS, JOSEPH BORKIN, FOWLER HAMILTON, BENEDICT COTTONE, GEORGE W. WILLIAMS, CHARLES L. TERREL, HYMAN RITCHIN, AND NORMAN BURSLER.
The CHAIRMAN. The committee will please come to order. Mr. Cox, are you ready to proceed?
Mr. COX. I am, sir. The first witness this morning will be Mr. F. C. Ball.
Mr. COX. Mr. Bracken, will you be sworn, too? Mr. Bracken will be sworn.
The CHAIRMAN. Do you and each of 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. BALL. I do.
Mr. BRACKEN. I do.
The CHAIRMAN. Proceed.
TESTIMONY OF FRANK C.
BALL, PRESIDENT, BALL
BROTHERS, MUNCIE, IND.
AND
A. M. BRACKEN, ASSISTANT
TREASURER AND COUNSEL,
BALL BROTHERS, MUNCIE,
IND.
AND
E. W. McCALLISTER, PATENT
ATTORNEY, PITTSBURGH,
PA., (Resumed)
Mr. COX. Mr. Ball, will you give the reporter your name and address?
Mr. BALL. Frank C. Ball, Muncie, Indiana.
Mr. COX. Mr. Bracken, will you do the same?
Mr. BRACKEN. A. M. Bracken, Muncie, Indiana.
Mr. COX. Mr. Ball, you are president of the Ball Brothers Company?
Mr. BALL. I am.
Mr. COX. That company manufactures glass containers?
Mr. BALL. Yes, sir.
Mr. COX. Principally fruit jars?
Mr. BALL. Yes, sir.
FRUIT JAR PRODUCTION
Mr. COX. Could either you or Mr. Bracken give us an approximate figure as to the percentage of fruit jars which in any given year are manufactured by your company? If I should suggest around 60 per cent, would that be substantially accurate?
Mr. BALL. That is about right.
Representative REECE. That is, Mr. Cox, of all the fruit jars in the country?
Mr. COX. Of all the fruit jars in the country.
Mr. BALL. That refers to fruit jars only.
Mr. COX. How long have you been manufacturing fruit jars, Mr. Ball?
Mr. BALL. Since 1882.
LICENSING AGREEMENTS
Mr. COX. You were one of the licensees under the original Owens suction machine, were you not?
Mr. BALL. Yes, sir.
Mr. COX. Do you remember when you obtained that license?
Mr. BALL. In 1909.
Mr. COX. And you are now a licensee of the Hartford Empire Company?
Mr. BALL. Yes, sir.
Mr. COX. How long have you been a licensee of the Hartford Empire Company, Mr. Ball?
Mr. BALL. Since 1933.
Mr. COX. Had you at any time before entering into the negotiations which led to that license agreement negotiated with Hartford Empire with respect to obtaining a license under their patents?
Mr. BALL. Before that time we had some little discussion, but not to any extent.
Mr. COX. Nothing ever came of it?
Mr. BALL. No.
Mr. COX. That was about in 1926?
Mr. BALL. In that neighborhood.
HARTFORD-EMPIRE LICENSES
Mr. COX. Were you interested at that time in obtaining a license from Hartford-Empire?
Mr. BALL. No, sir, not particularly.
Mr. COX. It was a matter, rather, of that company approaching you than of you approaching that company?
Mr. BALL. Yes, sir.
Mr. COX. Now you were at some time in 1931 notified by Hartford-Empire that the equipment which you were using to manufacture glass containers infringed their patents?
Mr. BALL. I think they notified us several times that, in their opinion, we were infringing some of their patents.
Mr. COX. And was that one of the circumstances which led to the making of the license agreement in 1932?
Mr. BALL. No, sir, not directly.
Mr. COX. Well, did that circumstance have anything to do with the negotiations which led to that contract?
Mr. BALL. The only thing that had anything to do with it was the decision in the Hazel-Atlas case that indicated that perhaps gob feeds might infringe.
Mr. COX. Was the decision in that case as far as your company was concerned the decisive factor which led to the making of the license agreement?
Mr. BALL. Yes, sir.
FRUIT JAR LICENSES
Mr. COX. Now, in connection with your negotiations with the Hartford-Empire Company, did you make any request to them in connection with the granting of the license. I will strike out that question, if I may, and start again. Whom did you negotiate with in connection with the license of the Hartford-Empire, Mr. Goodwin Smith?
Mr. BALL. When we commenced negotiations, yes, sir.
Mr. COX. With Mr. Goodwin Smith ,and in connection with those negotiations, did you suggest to Mr. Goodwin Smith that if you were going to take a license, you wanted a license that was exclusive for fruit jars?
Mr. BALL. Yes, sir, as far as they were in a position to grant it.
Mr. COX. In other words, you wanted a license which would permit you to make fruit jars on their machinery and no one else, so far as they could give it to you?
Mr. BALL. Yes, sir.
Mr. COX. Did Mr. Goodwin Smith ever suggest to you that he was denying other people the right to make fruit jars on Hartford equipment, as an inducement to you to enter into this license agreement with him?
Mr. BALL. Yes, sir, he made that suggestion.
Mr. COX. I am going to show you a letter now, Mr. Ball, and ask if you or Mr. Bracken can identify this letter as a letter which you received from Mr. F. Goodwin Smith.
Mr. BRACKEN. Mr. Cox, this is not a letter which you got from our files, is it?
Mr. COX. I think not.
Mr. MCALLISTER. It is dated April 22, 1932, and it is addressed to you, Mr. Ball.
Mr. COX. Do you recall whether you in fact received a copy of that letter?
Mr. BALL. I don't recall it, no. Probably it was received, if it was addressed to our company.
Mr. COX. Neither you nor Mr. Bracken recollect ever having seen this letter before?
Mr. BRACKEN. I don't.
Mr. BALL. I don't recall having seen it.
Mr. COX. But you are quite clear in your own mind that Mr. Goodwin Smith spoke to you about denying others the right to make fruit jars in consideration of your accepting a license from his company.
Mr. BALL. Yes, sir, as far as he could, beyond the licenses that he had already granted.
Mr. COX. Then on March 25 1933, your company took a license from Hartford-Empire Company, you testified a moment ago, and would it be correct to say that that license agreement provided that as long as you made royalty payments, Hartford would not thereafter during the continuance of the license grant to any other person any further license or right to use in the continental United States their machinery for the making of fruit jars for the domestic household use?
Mr. BALL. Yes, sir, in substance that is as we understand it.
LICENSES: LIMITED; EXCLUSIVE
Senator KING. Could I interrupt right there? You stated that he said he would give an exclusive right so far as he could, and intimated that he had granted licenses to others. Did he so state that a license had been granted to other corporations for the manufacture of fruit jars.
Mr. BALL. Limited licenses we understood, yes, sir.
Senator KING. Similar to the one you were seeking?
Mr. BALL. I don't know the shape of their license.
Senator KING. All I want to know is whether he said to you whether or not you had an exclusive license or whether other people had received a license at that time.
Mr. BALL. Exclusive as far as they were in position to grant, which would recur, as we understood it, to companies who had not so far taken licenses. We understood that they had granted limited licenses to one or two companies, but that they had not so far granted licenses to other companies, and if they entered into this license agreement with us, they would not grant to others.
FEEDER LICENSE AGREEMENT
Mr. COX. I hand you this document and ask you if you or Mr. Bracken can identify it as a correct copy of the license agreement which was entered into between your company and Hartford-Empire.
Mr. BRACKEN. Without reading it all through I assume that it is.
Mr. COX. Would you have any objection if we offer it subject to correction?
Mr. BRACKEN. No.
Mr. COX. This document which I am about to offer as an exhibit contains in Schedule (c)
The CHAIRMAN (interposing). What is the document?
Mr. COX. The General Feeder License Agreement between Hartford-Empire Company and Ball Brothers Company, dated March 25, 1933. Schedule (c) thereof shows that as of the date of this contract Hartford had granted certain licenses to other persons; prior to the date of this contract Hartford had granted licenses to certain persons to make fruit jars on the Hartford machines. The companies which have been so licensed included the Salem Glass Works, Gayner Glass Works. Salem is owned by the The Anchor Hocking Glass Company. The other two licensees that I wish to mention as having licenses at this time to manufacture fruit jars were Owens-Illinois and Hazel-Atlas.
I should like to offer this document now. It is not necessary to have it printed in the record. I should like to have it certified as an exhibit.
The CHAIRMAN. The document maybe admitted for the files and certified without printing in the record.
(The General Feeder License Agreement between Hartford-Empire and Ball Brothers, dated March 25, 1933, was received in evidence and marked "Exhibit No. 143.")
The CHAIRMAN. You were referring to Schedule (c).
Mr. COX. Schedule (c), yes. There are some other companies listed in that schedule, but they are not licensed for fruit jars.
Mr. BRACKEN. It is only 1, 2, 5 and 6.
Mr. COX. Salem and Gayner, Hazel and Owens . And I think the same document shows the Hazel and Owens licenses were unrestricted as to number.
Mr. MCALLISTER. At least it doesn't say they were restricted.
Mr. COX. The other two were restricted as to number. Mr. Ball, can you tell us what consideration you paid for this license agreement?
Mr. BALL. I think it was $400,000.
Mr. COX. Did that $400,000 include any damages for past infringement?
Mr. BALL. That was to settle any past damage claims that they might make.
Mr. COX. I want to ask you one more question about your reasons for entering into this contract. Would it be accurate to say that after the Hazel-Atlas decision you felt that if you did not come to some agreement with Hartford you would be faced with involved and expensive and perhaps lengthy litigation which you didn't wish to endure?
Mr. BALL. Yes, sir. We wanted to escape any such unpleasant litigation, and any claims that they might make for past damages.
INFRINGEMENT LITIGATION
Senator KING. Had any suits been instituted by the Hartford or by the Owens against your company for alleged infringement on their patents? Prior to the time you made this settlement with them, had either of these corporations, the Owens or the Hartford, instituted any suits against your company for alleged infringement of their patents?
Mr. BALL. No, sir.
Mr. COX. At this point, Mr. Chairman, I should like to recall Mr. Mc Nash and Mr. Levis for some brief testimony.
The CHAIRMAN. Before these gentlemen are recalled, let me ask, is it your intention to develop at this point in the record the provisions of Section 2 of this document, which you have just had certified?
Mr. COX. I had paraphrased the provisions of that section in my question .The CHAIRMAN. Let me suggest that you read it into the record and ask the witness what his understanding of that section is. It strikes me as being very important.
Mr. COX. I shall now read into the record the provisions of Section 2, the section I paraphrased to you a moment ago, Mr. Ball. That is on page 5.
Mr. BRACKEN. Section 2 of Article II?
Mr. COX. Article II, yes.
"Hartford agrees, if Ball shall make the minimum payments provided in Section 3 below, that it will not hereafter during the continuance of this General Feeder License Agreement grant to any person, firm or corporation, other than Ball, any further license or right to use in continental United States for the making of fruit jars for domestic (household) use any apparatus and (or) method for dropping mold charges of molten glass into molds;
"PROVIDED, however, that said agreement of Hartford not to grant such license or rights to others shall not be held to conflict with or in anyway prejudice the rights now outstanding of certain concerns to use, under license from Hartford, apparatus and (or) method for dropping mold charges of molten glass into molds for the manufacture of fruit jars for domestic (household) use, as set forth in Schedule C annexed hereto. Hartford represents that there are no such rights outstanding, other than those listed in said Schedule C."
Mr. COX. I ask you, Mr. Ball, if it was your understanding that, after the execution of this contract, and during the life of the contract, Hartford-Empire would not be free to grant any new license to any one to use its machinery for the manufacture of domestic fruit jars in the continental United States?
Mr. BALL. Yes, sir, that was our understanding.
Mr. COX. And was the inclusion of this provision in the contract required by you as a condition precedent to your entering into this arrangement?
Mr. BALL. Yes, sir.
The CHAIRMAN. Was that provision of the contract carried out, Mr. Ball, by Hartford?
Mr. BALL. As far as we know, yes.
The CHAIRMAN. You have known of no violation?
Mr. BALL. We have known of no granting of licenses.
EXCLUSIVE LICENSES
The CHAIRMAN. So, to the best of your knowledge, since you entered into this contract with the Hartford-Empire, it has not issued any licenses to any other person or company to use this particular device for the manufacture of fruit jars?
Mr. Mc CALLISTER. Domestic fruit jars.
Mr. BALL. Yes, sir, that is our understanding.
Representative REECE. Mr. Chairman, I am interested to know if your attorneys studied the question as to whether the Hartford or any other concern had a right to grant a lease on this or other machines which embodied the patented idea with restrictions of any kind.
Mr. McCALLISTER. May I aswer [sic] answer that? I was representing Ball Brothers at the time. We had looked not only into the Hartford-Empire patent situation, but also into the law, and we were convinced that Hartford had the right to grant just such a license as you have had outlined to you by Mr. Cox in his reading from the license agreement.
Representative REECE. It is your opinion, then, that under the law a concern who manufactures a patented article has a right to grant a license for the use of that article with restrictions; that is, any restriction which he sees fit to place upon the licensee with reference to the manner in which he might use it, the price he might charge for the product resulting from the use of it, the quantity of
Mr. McCALLISTER (Interposing). You are going too far. I can't say either "yes" or "no" to your question.
Representative REECE. It would seem to me that when a case of restriction was involved that those questions become very material.
Mr. McCALLISTER (interposing). They are material, but your question is far too broad. For example, there was no consideration on our part nor did we have the thought that Hartford-Empire had the right or the opportunity to establish or fix prices on that ware manufactured by or with the aid of these Hartford-Empire feeders. The ware, you must understand, is unpatented ware and we were very, very much of the opinion that no license situation or no patent situation would enable any patentee to fix prices on unpatented articles of commerce.
Representative REECE. But would he, do you think, be able to fix the amount of product produced on the licensed machine?
Mr. McCALLISTER. Yes, we thought that was a proper limitation at the time.
Representative REECE. What is the difference between that and fixing price
ANTITRUST LAWS
Mr. ARNOLD (interposing). May I say for your information, Congressman, that the Department of Justice has filed a brief in the Supreme Court which deals explicitly with the amount of restrictions which are proper under the antitrust laws, and that the law, I think you will agree with me, at present is far from clear.
Mr. McALLISTER. Yes, I agree with that statement.
The CHAIRMAN. This is a question as to whether or not this was a reasonable restraint of trade.
Mr. McALLISTER. I understand what he is leading at, and that is why I wanted him to limit it one step at a time.
Representative REECE. May I ask one more question , if you will bear with me. I, of course, realize that this question doesn't deal with the issue involved in your contract there. Is it the opinion of your able patent attorneys
The CHAIRMAN (interposing. You are addressing a patent attorney. We will all agree he is able.
LEASES ON MACHINES
Representative REECE. I admit it, but he has some assistants, as able as he is. Is there any difference in the right to lease a patented idea, that is, the patent itself, with restrictions, and a right to lease a machine which embodies a patented idea with restrictions?
Mr. McALLISTER. Well, again I think Mr. Arnold will agree with me when I say that it isn't clear cut. There are some decisions on that point, but you will notice every time a license is granted where restrictions follow the use of the license, if the machine involved is a patented machine, it is not sold; it is merely leased because the law is clearly this: That where a patented machine is sold outright. the purchaser has the right to use that patented machine in every way he cares to use it and without restrictions. Now, in this case, it probably has been, or will be brought out that the machines here involved are all leased machines.
Mr. COX. It has been brought out.
Representative REECE. If I may say so, it seems rather strange to me that, as large a question as is involved and as much cost as it has been to certain concerns, that the law in the case might not have been cleared up before now.
Mr. McCALLISTER. Well, our patent law has been developing for the last one hundred years, and it develops with litigation. Now this particular point has not yet been decided by the Supreme Court, so far as I know. I have to put that reservation in.
The CHAIRMAN. Would you care to express an opinion as to whether or not Congress should decide that point by providing by statute that a patentee who leased his patent should not be permitted to require as a consideration for the lease a restriction of production?
Mr. McCALLISTER. I haven't thought about that enough to want to answer it, but I would say this: That we must remember that all restrictions that we are putting on our patent law, as we now know it, are restrictions to the individual inventor. Of course, it has been brought out here about group inventions, but there are still individual inventors and every restriction that you place on a patent right means value to the individual inventor.
Jumping at a conclusion from the standpoint of group invention. I should undoubtedly agree with the thought that you implied or expressed, that what I think of is the little man and little man is also our client.
ASSIGNMENTS OF PATENTS
The CHAIRMAN. Since you have suggested that thought, may I suggest this one to you. Under the law as it now stands, a corporation may not file an application for a patent and may not receive a patent. In other words, in the contemplation of the law as drafted by Congress, patents were to be issued to the individual inventors; because Congress had placed no restriction about the assignment of patents there has developed this system under which a corporation may become the repository of an unlimited number of patents, although the law does not contemplate the issuance of patents to a corporation. Now, then, the question: Would you care to express an opinion as to whether or not it would be in the public interest for Congress to provide by statute that there should be a limit to the number of patents which a corporation might obtain by assignment?
Mr. McCALLISTER. Oh, I am sure that wouldn't be good , because a patent is like a will, it stands on its own base; it maybe of large scope or it may be of very limited scope. Consequently, from the standpoint of numbers we don't imply anything as to quality. Quantity and quality, they are as important as when we are buying potatoes, so if we just arbitrarily say that a patent holding company shall only hold a hundred patents , that might mean no value for some company and it might mean a tremendous value for another company.
"FENCING IN" PATENTS
The CHAIRMAN. But you testified here the other day as to the practice which has been termed "fencing in."
Mr. McCALLISTER. Yes.
The CHAIRMAN. Whereby one corporation may and in some instances does undertake to study the machines of a competitor, with the view of developing improvements upon that machine so as to compel the competitor to take licenses for the improvements from the corporation undertaking the study, that situation obviously developing a certain restriction of improvement in the art, unless tribute is paid to the corporation which does it.
Mr. McCALLISTER. I think there is a shade of difference in what I testified to and the way you have expressed it.
The CHAIRMAN. Yes, you have covered it on both sides.
Mr. McCALLISTER. I was trying to say that in connection with this fencing-in when we are considering the competitor's machine, it has been the practice to try to foresee the line of commercial development which Congress would demand.
The CHAIRMAN. Perfectly natural for you to do.
Mr. McCALLISTER. And then try to fence in by making those improvements and patenting them, but you see I also said that the man would be optimistic who thought that he would fence in because he would have to foresee the trend of the commercial development and he might and he might not be lucky in his forethought.
The CHAIRMAN. Oh, well, of course he couldn't be at all certain that his invention would be the invention, but it is a practice which is followed, is it not?
Mr. McCALLISTER. As I understand it, yes, and I admit that I have been guilty of suggesting just such a practice.
The CHAIRMAN. Let's not use the word "guilty" in that connection. It was a matter of your study and attempts to secure those patents.
Mr. McCALLISTER. But when I say I suggested such practice, don't misunderstand that I have suggested it to the present witness.
EFFECT OF ANTITRUST LAWS
Mr. ARNOLD. May I ask just two or three questions to tie your testimony up with the main purpose of this hearing, which is the possible effect of the anti-trust laws. The situations with respect to different patents and different industries are very dissimilar, are they not?
Mr. McCALLISTER. Yes.
Mr. ARNOLD. And one way (and I am not asking you at this point to give an opinion on the advisability of that way) of treating different situations according to their facts, and not having a rule which spreads a regulation over all situations, would be through the application of the antitrust laws, wouldn't it?
CORPORATIONS AND PATENTS
Mr. McCALLISTER. Undoubtedly.
Senator KING. Under the Fourteenth Amendment, a corporation is regarded as a person. Is there any inhibition in the law, or any moral turpitude involved, incorporations acquiring patents?
Mr. McCALLISTER. No. I was going to correct the Chairman
The CHAIRMAN (interposing). Wait a minute. The Chairman didn't even suggest that, so that there couldn't possibly be any corrections on that basis.
Mr. McCALLISTER. Correct the idea that the Chairman gave me in one of his questions. The law does provide for assignments of applications, therefore we do talk of patents being issued to corporations, but the application for the patent must be filed by the first, must be granted to the first, inventor. He can assign it either before or after. If he assigns it before, then it goes direct to the corporation.
Senator KING. I am not speaking as to the wisdom of permitting corporations to become assignees of patentees, but the point I am trying to elicit is that so far as I understand the law, there is no inhibition or prohibition against you, if you have a patent, assigning it to Senator O'Mahoney and myself, if we have a corporation.
Mr. McCALLISTER. Absolutely not.
Senator KING. And the Supreme Court has frequently said the holder of a patent may use it or not use it, as he pleases.
Mr. McCALLISTER. That is right.
Senator KING. And he may assign it to whom he pleases?
Mr. McCALLISTER. That is right.
Senator KING. And such restrictions as he sees fit?
Mr. McCALLISTER. There are limitations to the restrictions.
Senator KING. Without violation of the antitrust laws?
PATENT ASSIGNMENTS
Mr. McCALLISTER. Perhaps, that is one thing that is involved, and I have tried to point to another one. You cannot assign a patent on a machine or process and hope to fix prices on the product of that machine, or the process, if the product is an unpatented product.
The CHAIRMAN. In other words, you will express as your opinion the thought that it would be possible for a licensee to attach to his license restrictions which in your judgment would be in violation of the antitrust laws?
Mr. McCALLISTER. Oh, yes, and such restrictions have been attached.
The CHAIRMAN. And the whole question with respect to these restrictions is whether or not they are such as would come within the rule of reason.
Mr. McCALLISTER. I think you are right in that.
Senator KING. The patentee may transfer or assign his patent to whom he pleases with such restrictions as would be regarded as reasonable in the light of the common law and our economic and social situation.
Mr. McCALLISTER. Yes. Such a transfer would probably not be termed an assignment by the technical patent man. It would be termed a license carrying restrictions.
ANCILLARY PATENTS
Senator KING. You spoke about the fencing in. Do not corporations or individuals who have patents, who have for instance a primary patent, frequently try to obtain patents upon what some would call immaterial, I would say ancillary matters, so that they would strengthen the basic patents which they have?
Mr. McCALLISTER. A very good example of that is the fountain pen. Assume we are 100 years back, the man who has the fundamental patent on the fountainpen would undoubtedly try to get the patent on the self-filling device, because he would assume that the commercial trend would be in simplification. And there we have the situation, if the man owning the fundamental patent on the fountain penis not fortunate enough to acquire the patent on the self-filling device, we have a checkmate. The man owning the self-filling device must build a fountain pen to get it to the customer. Consequently, he is stopped by the man who has a fundamental patent on the fountain pen. On the other hand, the fact that a self-filling device is in existence makes the public want that self-filling device, but the owner of the patent on the pen per se can't furnish it because of the adverse ownership of the filling device patented.
You see, each patent is an entity in itself. It must be based on invention, and even though we call that invention an improvement.
MINOR AND BASIC PATENTS
Senator KING. Are not many of the patents held by individuals as well as by corporations ancillary-using your expression to the basic patent, so that the person who has a basic patent may have a dozen or twenty or thirty minor patents for the purpose of protecting the basic patent?
Mr. McCALLISTER. Necessarily so. You take the radio situation . Now I am not up on radio patents and I am not trying to intimate that I am, but I can assume that possibly the broad patent on the radio has expired within the last several years, but still we know that there are a great many patents still outstanding on radios, and that they give each manufacturer at least a talking point because he knows his competitor cannot encroach upon his own patented field.
HARTFORD-EMPIRE ROYALTIES
Mr. COX. Before I recall the witnesses I mentioned a moment ago, I would like to ask Mr. Ball two or three more questions. Mr. Ball, under this contract, which was made in 1933, you pay royalties to the Hartford-Empire Company; that is right, isn't it?
Mr. BALL. It is.
Mr. COX. Mr. Ball, were you ever told before you signed this contract that those royalties were going to be divided with Owens-Illinois and Hazel-Atlas?
Mr. BALL. No, sir, we had no idea of it.
Mr. COX. When did you find out about that, Mr. Ball?
Mr. BALL. Read it in the newspaper a couple of days ago.
Mr. COX. I think now I will call Mr. McNash. I would like to have Mr. Ball stay. I might call Mr. Levis at the same time.
I would like to say, as far as Mr. Levis is concerned, that yesterday afternoon I did excuse him, and he is here again this morning because we asked him last night to come back and he very kindly agreed to do so.
TESTIMONY OF J. H. McNASH,
PRESIDENT, HAZEL-ATLAS
GLASS COMPANY, WHEELING,
WEST VIRGINIA (Resumed)
AND
TESTIMONY OF WILLIAM E.
LEVIS, PRESIDENT, OWENS-
ILLINOIS GLASS COMPANY,
TOLEDO, OHIO (Resumed).
Mr. COX. Mr. McNash, you were aware, of course, of the negotiations between Hartford-Empire and Ball Brothers looking toward the issuance of a license to Ball Brothers.
Mr. McNASH. That is correct.
Mr. COX. And would it be an accurate statement to say that you were interested in seeing that Ball Brothers did take a license from Hartford-Empire?
Mr. McNASH . We might have had a selfish interest in that.
Mr. COX. I wasn't describing it in such an invidious term, Mr. McNash. What I really was trying to develop was that you participated in some discussion with respect to that license, did you not?
Mr. McNASH. Correct.
Mr. COX. Mr. McNash, I am going to hand you a letter which is a certified copy taken from your files and ask you if you can identify that as a letter which you wrote, or a copy of a letter which you wrote.
Mr. McNASH. That is correct.
FRUIT JAR PRODUCTION
Mr. COX. This is a copy of a letter written by Mr. McNash to Mr. Levis dated Sept. 1, 1932. Mr. McNash, I wish to read a paragraph of that letter to you and then I want to ask you some questions about it. The paragraph reads as follows:
"About Ball I really don't have any additional views. This Company, however, is willing to go pretty far, as I indicated in New York, to give Ball what he wants as long as that want does not actually cramp our style. I don't mean by this that your company or this Company should actually pay Ball to come in but I believe the Hazel-Atlas Glass Company could restrict itself in such a way that there actually would not be a penalty. For instance, have the quantity of jars that we are allowed to make under the license from Hartford-Empire for fruit jars, be sufficiently large to have an excess each year to accumulate to the benefit of some year when we have a repetition of the conditions that existed in 1931."
I want to ask you, Mr. McNash, whether it was your understanding at that time that Mr. Ball wished to have your company make some agreement to restrict its production of fruit jars?
Mr. McNASH. That is true.
Mr. COX. Is that correct, Mr. Ball, did you wish to have the Hazel-Atlas Company restrict its production of fruit jars?
Mr. BALL. Yes, we did.
Mr. COX. And you had made that request to Mr. Goodwin Smith?
Mr. BALL Yes, sir.
Mr. McNASH. It is true, is it not, that that paragraph refers only to restriction as to the quantity of jars we might make?
Mr. COX. As to fruit jars you might make. It has nothing to do with any other line of work.
Mr. McNASH. And it has no other significance.
Mr.COX. I would like to have it marked as an exhibit and admitted, if I may.
The CHAIRMAN. It may be admitted to the record.
(The letter dated September 1, 1932, addressed to Mr. William E. Levis, was received in evidence and marked "Exhibit No. 144.")
It reads as follows:
The letter, dated September 1, 1932, reads in full:
(Personal)
Mr. William E. Levis,
Post Office Box 1035
Toledo, Ohio.
Dear William:
Your letter of August 31st is in connection with Root, and so on, Referring to that part in connection with Hazel-Atlas, enclosed is a working copy of our Assets and Liabilities statement as of July 23rd. These figures are, of course, subject to audit, as they are prepared by our own accounting department.
I hope you do not let this out of your own hands. It is all right to give your Illinois Company directors information from it, but I would not like for them to have in their possession one of our work sheets.
Since July 23rd we borrowed one million dollars for the Hartford-Empire transaction. Since then we have paid off that obligation by selling some of our short term Treasury's and Fourth Liberty 44% Bonds, on which we have a profit. I will be glad to answer any questions in connection with this statement.
Thank you very much for information about Root. You certainly have things progressing in fine shape and I hope you get your wishes concluded fairly soon.
About Ball, I really don't have any additional views. This Company, however, is willing to go pretty far, as I indicated in New York, to give Ball what he wants as long as that want does not actually cramp our style. I don't mean by this that your Company or this Company should actually pay Ball to come in, but I believe the Hazel-Atlas Glass Company could restrict itself in such a way that there actually would not be a penalty. For instance, have the quantity of jars that we are allowed to make under the license from Hartford-Empire for fruit jars, be sufficiently large to have an excess each year to accumulate to the benefit of some year when we have a repetition of the conditions that existed in 1931. I do agree with you, that it is important to have Ball take a license and I will do everything I can in that direction.
With kindest regards,
Sincerely yours,
President.
J. H. McNash
MF
Mr. COX. Now Mr. McNash, will you tell us whether any such agreement and understanding was finally made on the part of your company?
Mr. McNASH. We were perfectly willing to make such an agreement. I think the restriction discussed for our company was 300,000 gross per year. That was of no particular moment, for the reason that our business did not amount to that much, actually, per year, following 1931.
Mr. McCALLISTER. Did you hear his answer, Mr. Ball?
Mr. BALL. I didn't get all of it.
PRODUCTION RESTRICTION
Mr. McNASH. I said, Mr. Ball, that the restriction discussed was one of 300,000 gross per year. We were willing to assume that restriction, because actually we had not sold since 1931 that amount of jars.
Mr. COX. In 1931 you sold about 500,000.
Mr.McNASH. And I might add we have not sold near that amount since.
Mr. COX. In fact, since 1931 your sales of fruit jars have always been below 300,000 gross.
Mr. McNASH. That is right, and not in any attempt to stay below the 300,000 gross.
Mr. COX. Is it your present understanding, Mr. McNash, that there is no agreement on the part of your company to limit your production to 300,000?
Mr. McNASH. I am not sure whether there is or is not. We were perfectly willing to sign such an agreement. Whether that willingness evolved itself into a contract, I am unable to say.
The CHAIRMAN. Did you sign the agreement?
Mr. McNASH. I am unable to say, because I have forgotten whether I have or have not signed such a contract. I will admit, as I said awhile ago, a perfect willingness to sign such an agreement.
Mr. COX. I am going to read to you from this memorandum , a certified copy of a memorandum taken from your files, which I am going to ask you in a moment if you can identify. This document is entitled, "Hartford-Empire Company Memorandum," dated February 9, 1933, and begins:
"The Hazel-Atlas Glass Company have a non-restricted, non-exclusive license from Hartford-Empire to make fruit jars.
"Negotiations are under way looking forward to Ball Brothers taking a license.
"Hartford really offered Ball the residual rights excepting as to Hazel and Owens-Illinois. Ball really wants more than that he wants some restriction placed upon Owens-Illinois and Hazel." I expect I had better read it all:
"Various conversations have been had on this subject between the interested parties." During some of these conversations the atmosphere became very tense. Even questions of good faith were involved.
"All these things finally came to the top Friday, February 3, in New York. Messrs. F. C. and G. A. Ball questioned me about a quarter to six on that day, in connection with the attitude of Owens-Illinois in case an agreement could be reached."
I want to ask you there, Mr. McNash, if you can tell us who else was at that meeting in New York besides Mr. F. C. Ball and Mr. G. A. Ball.
Mr. McNASH. At this particular discussion I don't believe anybody with the exception of the Ball brothers and myself.
Mr. COX. I see. That was the meeting on February 3?
Mr. McNASH. At that particular time.
Mr. COX. At that particular time.
Mr. McNASH. Yes.
Mr. COX. Did you have any other meeting on that day?
Mr. McNASH. I think the meeting that day lasted the better part of the day on this subject.
Mr. COX. On this subject.
Mr. McNASH. That is right.
HARTFORD-EMPIRE MEMORANDUM
Mr. COX. Very well, I will begin reading from the memorandum again.
"I explained my view of the thing with respect to Owens-Illinois, and why.
"Apparently there was a desire on the part of Messrs. F. C. and G. A. Ball to arrive at a satisfactory situation.
"As a consequence of this I was willing to change my view to some extent with respect to Hazel's position in this matter, and restrict our license to 300,000 gross per year, without any mention in the contract of any conditions modifying this amount.
"Previous to this I had been insisting upon some understanding in event of an increase in the use of fruit jars for the domestic trade; or some repetition of what took place in September of 1930 in our New England territory, which might put us over our restricted license; or, a repetition of what transpired in 1931 when, by a combination of many circumstances, an unusual demand was had for domestic fruit jars.
"I told Mr. F. C. and Mr. G. A. Ball it was not necessary to have these modifications in the contract as far as I was concerned, if they (Messrs. F. C. and G.A.) would permit me to tell my story to Mr. F. Goodwin Smith in their presence, inasmuch as he would have to be the umpire under the licensing arrangement, and for them to see whether my statement was correct or not.
"Mr. F. Goodwin Smith came into the room. I presented my story as outlined, particularly with respect to an increase in the use of jars generally, or some recurrence in some particular territory of what happened in New England in 1930, or a repetition of 1931 generally, and the fact that the Ball Brothers had said that in these respects a very liberal interpretation should be given to our restriction.
"Messrs. F. C. and G. A. Ball confirmed my understanding in Mr. F. Goodwin Smith's presence, and I am asking Mr. F. Goodwin Smith to make a record of this, certify to it, to be in his files as a part of the atmosphere, at least of this Ball situation, so that anyone following Mr. F. Goodwin Smith will know just how the situation is to be handled.
"I am certifying to this record here for the same purpose."
Mr. McNASH. So what have you?
Mr. COX. Will you identify that as your memorandum?
Mr. McNASH. That is correct.
The CHAIRMAN. It may be received.
(The memorandum dated Feb. 9, 1933, was received in evidence as "Exhibit No. 145.")
Mr. COX. Mr. McNash, does that refresh your recollection at all as to whether any agreement was actually made?
Mr. McNASH. It does not. I said I was perfectly willing to sign one, but whether I did or not I do not remember. I might ask if you found any.
Mr. COX. We found no such written agreement.
Mr.McNASH. What I suggest to you now is that the last paragraph of this memorandum would appear to indicate that the parties decided to handle the matter by an agreement which was not in writing. Would you accept that suggestion?
Mr. McNASH. No, sir.
Mr. COX. You would agree that there is language in here which indicates that nothing was to be put into the contract as to the restrictions on production, would you not?
Mr. McNASH. There was nothing in this contract to prevent a contract being drawn restricting us to 300,000 gross per year.
Mr. COX. I am going to ask you one more question, Mr. McNash, and I think I shall have finished with you on this subject, so far as you are concerned.
Mr. McNASH. Where do you find that suggestion?
Mr. COX. I call your attention to this language particularly: "As a consequence of this I was willing to change my view to some extent with respect to Hazel's position in this matter, and restrict our license to 300,000 gross per year, without any mention in the contract of any conditions modifying this amount."
Mr. McNASH. That refers to the modifications of the 300,000 gross per year as a result of some unusual demand for fruit jars. It does not refer to the 300,000 gross.
Mr. COX. You are quite sure about that?
Mr. McNASH. I am positive.
Mr. COX. What would be the point of having any provision as to the unusual circumstances if you weren't going to have an understanding as to the 300,000?
Mr. McNASH. I don't say there is not an understanding as to the 300,000 gross, but I can not tell you as to whether it was put in writing and a contract signed.
The CHAIRMAN. What is the purpose of the second paragraph from the end, beginning, "Messrs. F. C. and G. A. Ball.***"?
Mr. McNASH. That relates to this: We were willing to assume a restriction of 300,000 gross per year, but we wished it fully understood that in case there was a favorable circumstance in connection with the use of fruit jars, as resulted in 1931, from a large fruit crop, cheap sugar, the disposition on the part of the house-wife to conserve, if there was a repetition of that, we were not bound by any 300,000 gross per year.
The CHAIRMAN. I have in mind whether or not it was your understanding at the time of this conference that no written contract should be made but that in lieu of a written contract there should be a memorandum of exactly what transpired to be placed in the files of Mr. Smith so that he or anybody who succeeded him would know exactly what the oral understanding was. In other words, when I read this paragraph, which apparently was your language
Mr. McNASH (interpolating). Correct.
The CHAIRMAN. "Messrs. F. C. and G. A. Ball confirmed my understanding in Mr. F. Goodwin Smith's presence, and I am asking Mr. F. Goodwin Smith to make a record of this, certify to it, to be in his files as a part of the atmosphere, at least of this Ball situation, so that anyone following Mr. F. Goodwin Smith will know just how the situation is to be handled." Would I be justified, after reading that language, in inferring that it was the specific intention of all the parties to this conference that there should not be a written contract, but that in lieu of such written contract there would be a memorandum of the understanding?
Mr. McNASH. I don't think your view is correct.
The CHAIRMAN. Thank you.
Mr. COX. I have one more question that I would like to ask about that which I was going to ask a moment ago and didn't get to, Mr. McNash, and after I have asked that I think we will be through so far as you are concerned. Do you have any opinion as to why it was considered desirable or necessary for Mr. F. Goodwin Smith to make a memorandum to put it in his files in these circumstances?
OUTPUT RESTRICTIONS
Mr. McNASH. The question is on the 300,000 gross per year restriction. If we exceeded that, I didn't want anybody coming to me telling me that we were not actually following a written contract, if I could justify it by conditions, repeating what happened in 1931 or what happened in 1930. In the fall of 1930 there was an unusual demand for fruit jars in the New England States. That happens to be the territory where our location of plants gives us an advantage. We can serve it much more rapidly. That demand didn't exist in any other part of the United States. We took advantage of it by making the jars that the trade required.
Now, a situation of that kind might put us over 300,000, but I wanted the modification of this 300,000 gross to be allowed if those conditions repeated themselves.
Mr. COX. Why was a modification necessary, if there was no restriction to 300,000 gross in the first place?
Mr. McNASH. I think as a result of this there actually is no restriction, but we were perfectly willing to sign a contract restricting ourselves to 300,000 gross per year.
Mr. COX. Mr. Ball, did you have any information or knowledge as to any agreement on the part of anyone else, or either Hazel-Atlas or Owens-Illinois, to restrict their production in connection with the granting of a license to you?
Mr. BALL. It was our understanding that they would not exceed the 300,000 gross which was recognized as being as much as they had produced before unless it was in some unusual year, when the demand was unusually large. That was talked about, and that was Mr. McNash's desire at that time, and we felt that if there was an unusual demand it would fall to all of the manufacturers and would not harm us particularly if the demand set in and they could supply more than that.
Mr. COX. In the absence of such unusual circumstances it was your understanding that their production of fruit jars would not exceed 300,000 gross?
Mr. BALL. It was our understanding that it would not, because it had not before that time even come up to that amount.
Mr. COX. Except in the one year Mr. McNash has mentioned. I think, Mr. McNash, that I have finished with you.
The CHAIRMAN. Did you certify to this memorandum?
Mr. McNASH. No, sir.
The CHAIRMAN. The concluding sentence is, "I am certifying to this record...""
Mr. McNASH. You asked me about your memorandum.
The CHAIRMAN. I am asking about the memorandum that was in the record.
Mr. McNASH. I am pretty sure I did.
The CHAIRMAN. Did you ever ask your attorney whether or not that signature made it a written contract?
Mr. McNASH. I did not. Does it?
The CHAIRMAN. I think so.
TESTIMONY OF WM. E. LEVIS
Mr. COX. I think, Mr. McNash, if you will move now, and let Mr. Levis take your place, we will proceed. Mr. Levis, I wanted to ask you about the attitude of your company with respect to the transactions between Hartford-Empire and Ball Brothers. Did you participate to any entent [sic] extent in the discussions which preceded the agreement between Hartford and Ball Brothers?
Mr. LEVIS. Yes, from time to time.
Mr. COX. And would it be an accurate statement to say that you, your company, too, was interested in seeing that Ball Brothers took a license from Hartford-Empire?
Mr. LEVIS. Yes, sir. We got half of the back damages and we got half of the royalty they paid, if any. We were trying to liquidate this unsatisfactory license business I explained yesterday, and I got everything I could.
Mr. COX. Was it your understanding that as a part of that transaction, Ball Brothers wanted your company to agree to limit its production of fruit jars to 100,000 gross per year?
Mr. LEVIS. That was discussed, and a form of agreement was submitted to us and we refused to enter into it.
Mr. COX. Is it your understanding now that there is no agreement on the part of your company, either oral or written, that your company, so long as that license between Hartford-Empire and Ball Brothers is in effect, will not produce in excess of 100,000 gross of fruit jars in any year?
Mr. LEVIS. I have testified under oath, Mr. Cox, in this proceeding, that we had no restrictions under our Hartford licenses.
Mr. COX. Of course you can make fruit jars on your own machines too, can't you, so this is a slightly different question than the one involved as to the restrictions under the Hartford license.
Mr. LEVIS. There is no restriction so far as our ability to make fruit jars is concerned.
Mr. COX. You feel your company is absolutely free to make as many fruit jars as you want to sell in any given year?
Mr. LEVIS. Yes, sir.
Mr. COX. Of course, since 1932 it is true, isn't it, Mr. Levis, that your company has never made or sold more than 100,000 gross of fruit jars?
Mr. LEVIS. They have tried to sell more,
Mr. COX. But you haven't made anymore than that.
Mr. LEVIS. It is pretty hard to sell more than that against Mr. Ball.
Mr. COX. Well, there were two years when you did it, Mr. Levis.
Mr. LEVIS. What years were they, sir?
Mr. COX. 1931 and 1932.
Mr. LEVIS. We had thrift then, and cheap sugar and cheap fruit. We will never have that for some time, and that is the only time fruit jars are used. We didn't have the re-use of packers' ware for jars, and all sorts of items of that kind.
Mr. COX . So, as far as your company is concerned, you are quite satisfied that, irrespective of exceptional conditions such as Mr. McNash was talking about, you are free to produce as many fruit jars as you like in any year.
Mr. LEVIS. As far as our company is concerned I have never signed an agreement not to restrict, and I am informed by our counsel that there are no agreements in existence.
Mr. COX. Quite apart from signing such agreements, you have reached no oral understandings with anyone with respect to the same thing?
Mr. LEVIS. I can't answer that, Mr. Cox.
Mr. COX. Why can't you answer that?
Mr. LEVIS. I don't consider that would be an agreement. I may have talked about it, but I have no agreement of any kind.
AGREEMENTS ON PRODUCTION
Mr. COX. What I am really trying to find out is whether you gave anyone an oral promise or assurance that you would not produce more than 100,000 gross in any given year.
Mr. LEVIS. I don't recall it.
Mr. COX. Would you say definitely that you never had done so?
Mr. LEVIS. No, I probably may have. I have given a lot of people assurances on matters of that kind in twenty-five years' business career.
Mr. COX. That is the kind of assurance you might be likely to remember, isn't it, Mr. Levis?
Mr. LEVIS. No, sir, I have forgotten a lot of them.
Mr. COX. Mr. Ball, at the time you signed this agreement, what was your understanding as to the position which Mr. Levis's company was to have as far as his production of fruit jars is concerned? Was it your understanding that they were not to produce more than 100,000 gross in any year?
Mr. BALL. You are referring to the agreement with the Hartford-Empire Company?
Mr. COX. That is right.
Mr. BALL. No, there was no understanding in that agreement as far as I know that they would not, but there was a general understanding that they would not. There is nothing in the contract to the effect that they were restricted from any quantity.
Mr. COX. I think that I have finished with both Mr. McNash and Mr. Levis on this particular subject matter, so perhaps it would be a good place for the committee to ask any questions it may have.
The CHAIRMAN. Do any members of the committee desire to propound questions to any of these witnesses?
Senator KING. Mr. Levis.
Mr. LEVIS. Yes, sir.
Senator KING. You would respect an oral agreement, would you not, where it was quid pro quo as quickly as you would a written one?
Mr. LEVIS. Yes, sir.
Senator KING. I would assume that. If you didn't do it, I wouldn't think it very ethical. Now, coming to that question which was propounded to you, did you make an oral agreement, bottomed upon matters of consideration or out of your own generosity, under the terms of which you limited the amount of production of glass fruit jars by your company?
Mr. LEVIS. Senator, I don't believe that I ever obligated the Owens-Illinois Company to restrict their business in any respect. I may have discussed these situations. I have known Mr. Ball for a great many years and have been in a great many negotiations with him, and I think he would understand anything I would say without an agreement.
Senator KING. Has there been any controversy between you and Mr. Ball, or between the Hartford Company and Mr. Ball and yourself, in a triangular way, which would call into question any alleged agreement which you had entered into restricting production?
Mr. LEVIS. Not that I know of, sir.
Senator KING. That is all.
Mr. COX. Mr. Levis, before you go, do you recall this memorandum which we discussed yesterday which Mr. Martin identified? I want to get you to identify this for the record. It is the one I read the paragraph from.
Mr. LEVIS. My comment in the record was that it was one of many memorandas from Mr. Carter. I didn't recall it specifically. I know if Mr. Martin turned it in, it was from our files.
Mr. COX. You are prepared to accept it as coming from your files. I'd like to offer it now as a memorandum which was discussed yesterday. I neglected to offer it at that time.
The CHAIRMAN. It may be received.
(The memorandum dated December 13, 1930, to Mr. W. E. Levis from Mr. Henry W. Carter was received in evidence and marked "Exhibit No. 146.")
Mr. COX. I think I am finished with Mr. Levis.
The CHAIRMAN. May I ask you whether you had in your own mind any understanding of a limitation to which you have expressed willingness to ad here, a limitation on production, to these other gentlemen?
Mr. LEVIS. Sir, I tried yesterday and the day before to point out to the Committee that from 1929 to 1935 we had many, many agreements, many participations, many memoranda; that from 1929 to 1935 I used my best efforts to saw it all off. In 1935 I sawed it all off, and, I then went on carrying on a business of manufacturing and selling containers of various types, and found in the clear vision of hindsight that that decision proved a more profitable transaction for the shareholders of our company. I had lots of trading talk from along about 1913.
The CHAIRMAN. That is not the subject to which I am directing your attention.
Mr. LEVIS. If I had any such understanding in 1935, I sawed it off.
The CHAIRMAN. You are speaking now, are you not, of having sawed off the patent business?
Mr. LEVIS. I cancelled all contracts.
The CHAIRMAN. Respecting patents?
Mr. LEVIS. Respecting licenses. I cancelled all of the contracts.
The CHAIRMAN. Very good. Now that of course is not my question. I understand that to be quite clearly your testimony, but this morning it has been developed here by the testimony of Mr. Ball and the testimony of Mr. McNash that the Hartford-Empire Company was seeking to induce Mr. Ball and his company to become licensees of the Hartford machines. The Hartford Company was very anxious to have that circumstance brought about.
In order to bring it about, Mr. Ball expressed the opinion that there should be a limitation on the amount of production by the Hazel-Atlas Company, and there was some discussion at this time with respect to the production of Owens-Illinois as well as by Hazel, and according to the memorandum of Mr. McNash, at this conference held in New York on February 3, Mr. Ball really wanted some restriction placed upon Owens-Illinois as well as Hazel.
Now we have before us a memorandum, acknowledged by Mr. McNash, in which he stated that there was a general understanding that there would be a limitation by Hazel to 300,000 gross in a year. Mr. McNash testifies that that was in excess of his production and it really didn't amount to anything.
Now what I am trying to develop is not whether you had any contract, not whether you made any promise, but whether you had any gentlemen's understanding similar to that which Mr. McNash has testified to upon which Mr. Ball can rely, that there is a figure above which you won't go in the production of these jars.
Mr. LEVIS. My answer to that is there is no contract and so far as I am concerned I have no such understanding.
The CHAIRMAN. Very good.
Senator KING. I think we might supplement the Senator's statement. I understand Mr. McNash's statement and also Mr. Ball assenting that notwithstanding the limitation of 300,000, in the event of some extraordinary situation, a large increase in the fruit crop and cheap sugar, then the 300,000 jars might be exceeded.
The CHAIRMAN. Yes.
Mr. McNASH. It is a restriction that isn't a restriction.
Senator KING. That is the limitation to 300,000 did not extend to extraordinary circumstances such as I have just indicated. That is all.
The CHAIRMAN. That is all.
Mr. COX. Are we going on now?
The CHAIRMAN. We will stand in recess until 2 o'clock.
(Mr. Levis was excused.)
(Whereupon, at 12:05 p.m., a recess was taken until 2 p. m. of the same day.)
AFTER RECESS
The Committee resumed at 2:15 p.m. on the expiration of the recess.
The CHAIRMAN. The Committee will please come to order. Mr. Cox, are you ready to proceed?
Mr. COX. I am. I should like to have another witness sworn in at this time. I think it would save time to have him take the stand now and answer questions.
The CHAIRMAN. Will you call the witness?
Mr. COX. Mr. Collins.
The CHAIRMAN. Mr. Collins, 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. COLLINS. Yes, sir.
TESTIMONY OF I. J. COLLINS,
PRESIDENT, ANCHOR HOCKING
GLASS COMPANY, LANCASTER,
OHIO,
TESTIMONY OF FRANK C.
BALL, PRESIDENT, BALL
BROTHERS, MUNCIE, IND.,
(Resumed)
TESTIMONY OF A. M. BRACKEN,
ASSISTANT TREASURER,
AND COUNSEL,BALL BROTHERS,
MUNCIE, IND., (Resumed)
AND
E. W. McCALLISTER, PATENT
ATTORNEY, PITTSBURGH,
PA. (Resumed)
Mr. COX. Mr. Collins, will you give the reporter your name and address and tell what your occupation is?
Mr. COLLINS. I. J. Collins, Lancaster, Ohio, President of the Anchor Hocking Glass Company.
Mr. COX. You are President of the Anchor Hocking Glass Company?
Mr. COLLINS. Yes.
Mr. COX. That is a company which is engaged in the manufacturing of a general line of glass containers. Is that right?
Mr. COLLINS. That is right.
Mr. COX. How long has that company been in existence, Mr. Collins?
Mr. COLLINS. January 1, 1938.
Mr. COX. It came into existence as the result of a merger of some other companies, including glass companies and companies engaged in the manufacturing of products used in connection with glass containers. Is that correct?
Mr. COLLINS. That is correct.
Mr. COX. What did you do before the organization of the Anchor Hocking Company?
Mr. COLLINS. I was president of the Hocking Glass Company and General Glass Company.
Mr. COX. General Glass Company? Will you tell us who owned the stock of the General Glass Company?
Mr. COLLINS. Hocking Glass Company.
Mr. COX. A wholly owned subsidiary?
Mr. COLLINS. Right.
GENERAL GLASS COMPANY
Mr. COX. At the end of 1932, it is true, isn't it, Mr. Collins, that the General Glass Company was a licensee of Hartford-Empire?
Mr. COLLINS. Right.
Mr. COX. And under its license it was permitted to manufacture fruit jars. Is that correct?
Mr. COLLINS. That is correct.
Mr. COX. Before I go into that, I want to ask you one more question about the Anchor Hocking Corporation. That, in point of size, is about the third largest in the industry, is it not?
Mr. COLLINS. I think that is correct.
Mr. COX. To return to the General Glass Company and the license it had from Hartford-Empire to manufacture fruit jars, at a date in the spring of 1933 that license, so far as it permitted the manufacture of fruit jars, was cancelled. Is that correct?
Mr. COLLINS. That's right.
Mr. COX. Can you tell us what the consideration for that cancellation was?
Mr. COLLINS. One hundred thousand dollars.
Senator KING. Was it cancelled while it was a subsidiary or after it had been absorbed, or did the absorption, if it was absorbed, have anything to do with the cancellation?
Mr. COLLINS. It had nothing to do with the cancellation. It was while it was a subsidiary of the Hocking Glass Company.
FRUIT JAR LICENSE
Mr. COX. Now, Mr. Ball, I would like to ask you a question. Do you recollect whether your discussions with Mr. Smith prior to the making of your license agreement with the Hartford-Empire touched upon the matter of the license which the General Glass Company had to make fruit jars? Was that matter discussed?
Mr. BALL. Yes, sir.
Mr. COX. Do you recall whether you requested Mr. Smith to arrange to have that license cancelled as a condition precedent to your taking a license from Hartford-Empire?
Mr. BALL. Yes, sir. That was one of the understandings, that some of those who had partial licenses and whole licenses would be cancelled, so that they could deliver to us as near as possible the exclusive use of the patents.
Mr. COX. Mr. Collins, was that license to the General Glass Company, so far as it related to fruit jars, a license which restricted the quantity that could be produced on the machines?
Mr. COLLINS. There were no restrictions, as I remember. I think that is true.
Mr. COX. Do you recall whether it was ever suggested to you, Mr. Collins, that that license should be cancelled without your receiving any consideration for it?
Mr. COLLINS. I don't think so. It might have been. We felt there was some value; naturally we wanted to get something for it if we were going to cancel it.
Mr. COX. That was a matter which you and Mr. Levis and Mr. McNash discussed, was it not?
Mr. COLLINS. No, I never discussed it with Mr. McNash.
Mr. COX. You don't remember discussing it with Mr. McNash and Mr. Levis while at White Sulphur Springs in the year 1933?
Mr. COLLINS. I don't think so.
Mr. COX. But at any event you did receive $100,000 in cancellation of that license?
Mr. COLLINS. Yes.
Senator KING. From whom?
Mr. COLLINS. From the Hartford-Empire Company.
PACKERS' WARE
Mr. COX. Mr. Collins, there is one more matter that I wish to ask you about. Thereafter, in 1933, do you recall some, correspondence with the Hartford-Empire Company with respect to sales of packers' ware by the General Glass Company in competition with fruit jars?
Mr. COLLINS. In what year?
Mr. COX. This would be in 1933, in August.
Mr. COLLINS. I don't recall it.
Mr. COX. I am going to show you a letter now. First, you might tell me this, Mr. Collins. As an experienced glass manufacturer, is it your opinion that a packers' ware jar might be sold and used for the same purposes as a fruit jar in certain situations?
Mr. COLLINS. I think so.
Mr. COX. They are enough alike in size and shape so that, as to use, they might be interchangeable?
Mr. COLLINS. That is right.
Mr. COX. Now, I am about to hand you a letter which reads as follows:
"August 17, 1933
"Mr. I. J. Collins, President, The Hocking Glass Company, Lancaster, Ohio.
"Dear Ike: I am enclosing copy of a letter just received from Mr. F. C. Ball relative to packers' jars sold into the domestic fruit jar field.
"We discussed this in New York and you assured me that you were using every effort to keep jars out of this field.
"I feel, therefore, that in fairness to you you should be advised about this complaint from Ball, as I know you won't misunderstand my sending it to you."
Mr. COX. The rest of the letter is not germane. Signed, "Sincerely yours, Roger Eldred.
"Will you look at that and see if you can identify it as a letter which you in effect received?
Mr. COLLINS. Evidently I received it. It is addressed to me.
Mr. COX. You are prepared to identify it as a letter you received?
Mr. COLLINS. Yes.
Senator KING. Who is the sender?
Mr. COX. The sender is Mr. Eldred. Can you tell us who Mr. Eldred is?
Mr. COLLINS. Mr. Eldred is, I think, the general manager of the Hartford-Empire Company.
Mr. COX. Vice-President, I believe.
I should like to have that letter marked and admitted in evidence.
The CHAIRMAN. It may be so admitted.
(The letter dated August 17, 1933, addressed to Mr. I. J. Collins, was received in evidence and marked "Exhibit No. 147".)
Mr. COX. Now, Mr. Ball, do you recall about in August, 1933, complaining to Mr. Eldred of the Hartford-Empire Company about sales of packers' ware in competition with fruit jars which your company was producing?
Mr. BALL. We did complain several times of their being sold in place of domestic jars. It was our understanding that we were to have the exclusive rights for domestic jars, and these so-called packers' jars were sold in place of domestic jars and we thought that it was an unfair practice.
Mr. COX. I am going to show you a photostatic copy of a letter that purports to be a letter addressed by you to Mr. Eldred, together with certain attachments, and ask whether you or Mr. Bracken can identify the letter as one which you in fact wrote.
Mr. BALL. Yes, sir, I think that is authentic.
Mr. COX. In order that the Committee may understand what kinds of ware are involved, we have some samples here. This, I believe, is a fruit jar produced by your company, is that correct?
Mr. BALL. That is correct.
Senator KING. Mark it "A" on the side.
Mr. COX. It is marked "A" on the side, Senator. And this is a packers' ware jar produced by your company, is it not?
Mr. BALL. I don't know that it was produced by our company, but it is a packers' jar, yes, sir. (Examining jar).Yes, sir, that was produced by our company. It has our company mark.
Mr. COX. The Committee will note the two jars are the same size and shape. In fact, the cap that normally goes on the fruit jar can be put on the packers' ware jar like that. (Demonstrating).
Then it was your understanding that as a result of your license agreement with Hartford-Empire, Mr. Ball, you were to have exclusive rights for the manufacture of fruit jars and that right carried with it the prevention of the kind of competition that you met from packers' ware jars when they were used for fruit jar purposes, is that right?
Mr. BALL. Yes, sir.
MANUFACTURE OF JARS
Senator KING. I understood the witness to testify this morning that two other companies had the right to manufacture the same commodity which Mr. Ball's company has a right to manufacture, so that his license, or the license of his company, was taken subject to licenses which had been granted to two other companies.
Mr. BRACKEN. If I may answer, Schedule C of the contract shows that there were four other companies which had the right to make jars.
Mr. COX. Can you tell us while we are on that subject how many companies there are today who are manufacturing fruit jars? It is true that Hazel-Atlas manufactures them.
Mr. BRACKEN. That is correct.
Mr. COX. And Owens-Illinois.
Mr. BRACKEN. That is correct.
Mr. COX. And the Kerr Glass Company.
Mr. BRACKEN. That is correct.
Mr. COX. And the Reed Glass Company, do you know whether they manufacture fruit jars?
Mr. BALL. If I may answer, they manufacture jars and have sold them to go into the domestic trade, but as we understand it, they have no license for manufacturing those jars from the Hartford Empire Company.
Mr. COX. Do you know of any other companies that are today manufacturing fruit jars?
Mr. BALL. There are several companies that have manufactured so-called packers' jars, but they are making them so that they will seal with the regular domestic fruit jar cap, and in that way they get them into the market and displace the regular domestic jars, and that we consider unfair practice. It was supposed that we would have exclusive right to make the jars used for domestic canning without being encroached upon by jars like these packers' jars.
Mr. COX. I would like to offer this letter.
(The letter dated August 15, 1937, addressed to Mr. Eldred ,was received in evidence and marked "Exhibit No. 148" and is included in the appendix of this issue.)
Senator KING. The gentleman on your left, Mr. Ball, has just stated, if I understood him correctly, that your license was subject to prior licenses to four companies, is that correct?
Mr. BALL. Yes, sir.
EXCLUSIVE RIGHTS
Senator KING. Then your statement now that you had the exclusive right is not quite accurate, is it, if there were four other companies?
Mr. BALL. The exclusive right beyond the licenses that had been granted prior.
Mr. BRACKEN. That was called, as I remember, the residual rights.
Mr. COX. That is correct, and the reason there is now a discrepancy between the four companies that Mr. Bracken spoke of as having been in contract and the ones I named a moment ago as having a license today, is because one of the licensees which existed as of the date of the contract I understand has since expired. Mr. Collins, one more question: Did you as a result of receiving a letter from Mr. Eldred take any steps to see that the General Glass Company ceased to sell and distribute packers' ware for use as domestic fruit jars?
Mr. COLLINS. The fact of the matter is that I don't think we ever made any effort to sell packers' jars as domestic fruit jars.
Senator KING. And you got the $100,000 without consideration.
Mr. COLLINS. Oh, no.
Senator KING. You surrendered the license to make those jars and I understood you just now that you didn't make any.
Mr. COLLINS. That's right, as domestic fruit jars. We made packers' jars, which is the thing Mr. Ball was com-plaining about in that letter.Mr. COX. You were making fruit jars before you gave up the right to make them?
Mr. COLLINS. No, we never made them.
Mr. COX. So you got the $100,000 forgiving up the right to make a thing which you had never exercised.
Mr. COLLINS. Right.
Senator KING. It was a good trade, wasn't it? There are lots of potentialities, aren't there?
Mr. COLLINS. Right.
Mr. COX. Mr. Collins, I think for the time being that is all I shall want from you, but I shall want some testimony on another subject later on.
Senator KING. Did you regard the license which your company held as of any value?
Mr. COLLINS. Yes, I certainly did, otherwise I wouldn't probably have asked$100,000 for it.
Senator KING. Although you never exercised the right the license gave?
Mr. COLLINS. Yes.
RESERVED LICENSES
Senator KING. What part of the li-censes, if there were more than one, or only one, that you held from the Hartford, did you reserve?
Mr. COLLINS. I reserved every thing that we had in our license excepting the fruit jars, which I sold for $100,000. It didn't affect any other part of my license.
Senator KING. By your disposing of that right did you diminish competition?
Mr. COLLINS. So far as I was concerned, there was no competition, because we had never made them.
Senator KING. Did you intend to?
Mr. COLLINS. Not at that time, no.
Senator KING. Were you in competition with any other licensees of the Hartford Company at the time that you parted with this right?
Mr. COLLINS. Do you mean of fruit jars?
Senator KING. On anything.
Mr. COLLINS. Oh, yes.
Senator KING. What were you making, aside from fruit jars?
Mr. COLLINS. We made a general line of packers' ware of all types, narrow neck and wide lots.
Senator KING. Does your company still continue in operation?
Mr. COLLINS. Right.
Senator KING. Making the same commodities?
Mr. COLLINS. Right.
Senator KING. Are you in competition with other companies?
Mr. COLLINS. Yes, with Owens-Illinois, Hazel-Atlas, and every company that is named on that board.
Senator KING. Is there competition among you?
Mr. COLLINS. Plenty.
Senator KING. No combinations in restraint of trade; no agreement to fix prices?
Mr. COLLINS. No, sir.
Senator KING. Has there ever been?
Mr. COLLINS. No, sir.
Senator KING. Do you believe in a competitive system?
Mr. COLLINS. That is what we have lived under all our lifetime.
Senator KING . Have you had fierce competition or any competition in the market?
Mr. COLLINS. Yes, plenty of competition.
Mr. PATTERSON. Mr. Collins, with regard to that $100,000, was there any other consideration besides that?
Mr. COLLINS. No.
Mr. PATTERSON. It wasn't $100,000 plus?
Mr. COLLINS. It was $100,000 for our fruit jars.
Mr. PATTERSON. And a clean bill of sale.
Mr. COX. Mr. Ball, I might ask you this. Was it your understanding when you paid the money which you paid to Hartford as consideration for the license agreement that part of that money was to be used to buy back the fruit jar rights of the General Glass Company?
Mr. BALL. We didn't know at that time what the Hartford-Empire would do with the amount that we paid. They exacted $100,000 for the rights that they proposed to grant to us and they were to eliminate the competition that might come from these factories that had licenses, and by that we supposed that they would in some way make settlement with those companies. We did not know at that time how they would make those settlements.
Mr. COX. You simply knew that with respect to the General Glass Company they were going to get that right back Hartford-Empire was going to get it back. You didn't know how or how much they were going to pay to get it back.
Mr. BALL. Yes, sir, that was our expectation, that they would have that license cancelled in some way.
Senator KING. Did you know that Mr. Collins' company had a license?
Mr. BALL. Well, the General Glass Company had a license at that time, yes.
Senator KING. Did you know it had not been producing under that license?
Mr. BALL. We knew they had not produced the domestic jars under that license, but we knew that they had the privilege of producing the jars, the domestic jars, under their license and we thought that we should have that cancelled if we were to take out the license that we were proposing to take out and pay the amount of money that they wanted us to pay.
Senator KING. You were not extinguishing, then, an active competitor in the product to which you referred but a possible potential competitor.
Mr. BALL. Yes, sir.
The CHAIRMAN. Who paid you the hundred thousand dollars, Mr. Collins?
Mr. COLLINS. Hartford-Empire.
The CHAIRMAN. This was for the right which you have just testified you had never exercised and never intended to exercise?
Mr. COLLINS. We at least never had.
The CHAIRMAN. But you might have exercised it.
Mr. COLLINS. That is right.
The CHAIRMAN. What did Hartford think it was getting for the hundred thousand?
Mr. COLLINS. Rights to make our fruit jars.
The CHAIRMAN. Sort of eliminating you for the period of the contract or for all time from this field. Is that right?
Mr. COLLINS. That is right.
Senator KING. How many years did the contract run from the date of your disposition of it, accepting the hundred thousand dollars?
Mr. COLLINS. Well, I think the contract or license would run the term of the patent of the Hartford-Empire.
Senator KING. You had obtained the license from the Hartford-Empire for the life of their patent in this particular commodity?
Mr. COLLINS. Yes.
Senator KING. And though you hadn't exercised the right granted under the license, you parted with that right, you surrendered the license which you had received for the hundred thousand dollars.
Mr. COLLINS. That is right.
Mr. COX. I have finished with Mr. Collins if all the members of the Committee have.
The CHAIRMAN. If there are no questions, Mr. Collins, you may be excused.
(Witness was excused .)
DOMESTIC FRUIT JARS
Mr. COX. I should like to ask either Mr. Ball or Mr. Bracken some questions about the price ranges for domestic fruitjars shown by your price list. Do you have a price list?
Mr. BRACKEN. Yes, sir.
Mr. COX. I wonder now if you will follow me while I ask you some questions about those price ranges. I am going to speak each time in terms of price per gross. You have a list there that shows the prices beginning in 1922?
Mr. BRACKEN. Yes.
Mr. BALL. On fruit jars?
Mr. COX. On fruit jars.
Mr. BALL. We quoted prices from year to year, making up our prices, based oncost and conditions and investments that we were making in the fruit jars, but we had no regular fruit jar price list to cover a term of years such as they have on some other bottles.
Mr. COX. Now, is it true from your material there that the price in 1922 for domestic fruit jars per gross was $7.50, the quart size jar?
Mr. BALL. Yes, sir.
Mr. COX. And it remains $7.50 in 1923 and in 1924?
Mr. BALL. We quoted what was called our base price, and at times when we wanted to urge shipments early in order to relieve our storage capacity, we made a reduction for earlier shipments, and some of these prices are quoted as a base price, F. O. B. factory, with the understanding that if they would take the jars out early, there would be a reduction from that price.
Mr. COX. I see. Well, now can we from this point on take the base price with the understanding that there were certain deviations from that price in the case of shipments made before the seasonal shipment period?
Mr. BALL. Yes.
Mr. COX. So that from 1922 to 1924 the price per gross for the perfect mason quart jars was $7.50. It that right?
Mr. BALL. What is the question?
Mr. COX. I asked you if the base price didn't remain the same from 1922 to 1924, the price being $7.50 per gross.
Mr. BALL. The net price for 1922, after the deductions were figured off, was $7.00 a gross; in 1923 it was $7.00 per gross; in 1924 it was $7.00 per gross; in 1925 it was $6.85 per gross; in 1926 it was $7.25 per gross; in 1927, $7.50 per gross.
Mr. COX. Perhaps just at that point, to speed this up, if you will stop there and examine those prices between 1927 and 1933 and tell me whether there was any change in that period, and, if so, what the change was and when it occurred.
Mr. BALL. In 1932 it was $7.27 per gross. No, $6.98 per gross. Then in 1930 it was $7.27 per gross; in 1933, $6.70 per gross.
Mr. COX. Now, for the sake of the record, you had better tell us what the price was from 1927 to 1930. Did it remain constant for that time?
Mr. BALL. In 1927, '28 and '29 it was $7.50 per gross. In 1931 it was no, 1930 it was $7.27 per gross; 1932, $6.70 per gross; 1934, $7.29 per gross.
Mr. COX. Do you want to take those prices down to the present time that you have them. Just have Mr. Bracken read them, if you will,
Mr. BRACKEN. In 1933, $6.70; 1934, $7.29; 1935, $7.05; 1936, $5.56; 1937, $6.79; and in 1938, $6.79.
Mr. COX. That is right.
Mr. BRACKEN. Those you understand are on the quart mason.
Mr. COX. That is the quart mason. Is that the base price you were speaking about before?
Mr. BALL. That is the net price after deducting the allowances for the earlier shipments.
Mr. COX. Now, can you tell us what the base price was for people who didn't get those deductions.
Mr. BRACKEN. That is the base price, after taking the 2 per cent cash discount.
PRICE CUTTING
Mr. COX. All right, that is as much as I want. Now, Mr. Ball, I want to ask you some more questions about licensing arrangements with the Hartford-Empire. Was it your belief that, when that contract was made, afterwards Hartford-Empire was to give you any protection against persons who were manufacturing fruit jars and selling them at cut prices? Do you understand my question?
Mr. BALL. No sir, not those who had the right to manufacture fruit jars at all. There was no agreement as to the price that the licensee should charge, but they did agree to restrict those who had no license for manufacturing jars and selling them at any price.
Mr. COX. And you from time to time, did you not, complain to Hartford-Empire about the manufacture of fruit jars by persons who had no license to do so, and the sale of those fruit jars at cut prices in competition with your own?
Mr. BALL. Yes, sir, we did.
Mr. BRACKEN. I think we should say not the making of fruit jars but the making of those plain jars which went into domestic trade.
Mr. BALL. Well, making jars that would sell with the regular domestic capacity, but calling them packers' jars when in reality they were sold in the fruit jar trade as domestic jars.
Mr. COX. Do you remember complaining to Mr. Goodwin Smith in 1935 that the Glenshaw Company was indulging in that practice?
Mr. BALL. I think we did.
Mr. COX. And do you remember complaining in 1935 to Mr. Smith that the Reed Company was also indulging in that practice?
Mr. BALL. I think we did.
Senator KING. Were they licensees?
Mr. BALL. No, sir.
Senator KING. You said they were operating in violation of the patent rights of the company and in violation of your contract with the company as a licensee.
Mr. BALL. Yes, in violation of our contract with the Hartford-Empire Company.
Mr. COX. Mr. Ball, I think perhaps your recollection may be at fault about the Glenshaw Company. It was a licensee.
Mr. McCALLISTER. Glenshaw was a licensee.
Mr. BALL. Not to make fruit jars.
Mr. COX. The Reed Company was not a licensee at all.
Mr. McCALLISTER. And isn't now.
Mr. COX. In the case of the Reed Company you offered to assist in suing them for infringement of the Hartford patents, did you not?
Mr. BALL. I am not sure about that, whether we offered to assist them or not.
Senator KING. Do you mean by a financial contribution or by furnishing evidence, or both?
Mr. COX. I will find that out, Senator. I will ask Mr. Ball to examine this copy of a letter which was written to him by Mr. R. D. Brown, of the Hartford Empire, dated May 13, 1935, and then I shall ask him if that refreshes his recollection.
Mr. BALL. Yes, sir, that is a letter addressed to me by Mr. Brown, and the Reed Glass Company was making jars that were going into the domestic trade, and as we understood it, in violation of the Harford Empire patent, and in view of the contract that we had with the Hartford Empire Company we considered that it was their duty to see that that violation of our contract with the Hartford Empire was discontinued.
Mr. COX. Mr. Ball, what I want to ask you particularly about this matter is this: The letter begins
"Dear Mr. Ball: On my return to Hartford Mr. Smith has handed me your letter of May 6 with regard to the Reed suit, in which you suggest that we discuss the situation with Mr. McAllister. We shall be very glad, indeed, to do this, and I appreciate very much your suggestion and your offer of cooperation in this matter."
In the hope that I can elicit the information which Senator King was asking for, I ask you whether that refreshes your recollection as to the general character of the assistance and cooperation which you offered to give Hartford-Empire in this connection.
Mr. BALL. We were willing to give them any assistance we could properly and within the law and reason.
Senator KING. Did you give them any assistance, and if so, what was the character of it?
Mr. BALL. If they wanted any information that we could give them we were glad to give it.
Mr. McCALLISTER. He asked you if you did give the assistance.
Mr. BALL. I doubt if we ever did.
Mr. BRACKEN. We did not.
Mr. BALL. I don't recall that we were called upon to give any assistance.
JARS AT CUT RATES
Mr. COX. Mr. Ball, I am going to read to you the first paragraph of a copy of a letter which purports to have been sent by you to Mr. Goodwin Smith, of the Hartford-Empire Company, dated May 3, 1933:
"Since writing to you yesterday regarding Three Rivers Glass Company I have been reliably informed that a Sherman, Texas, jobber is now offering to sell to the retail trade fruit jars for domestic use to be manufactured by the Three Rivers Glass Company under the brand name 'Crack Shot.' The price at which they are offering these jars is 65 cents per gross less than the same jobber is offering 'Ball Jars.' This is disturbing the other jobbing customers and they want to know what we are going to do about it."
I ask you if that is a letter which, in fact, you wrote to Mr. Goodwin Smith.
Mr. BALL. I believe it is.
Mr. COX. I should like to offer this letter.
The CHAIRMAN. The letter may be admitted.
(The letter, dated May 3, 1933, was received in evidence and marked "Exhibit No. 149" and is included in the appendix of this issue.)
Mr. COX. Mr. Ball, are you using any Hartford equipment in your plants today?
Mr. BALL. We are using the gob-feed feeders that we invented and built and installed, and under the Hartford-Empire license we have the right to either continue to use the feeders that we had in use at that time and installed, or the Hartford-Empire feeder, and so far we have not installed any of the Hartford-Empire feeders.
Mr. COX. You are using the feeder you always used, but you are paying royalties to Hartford-Empire on your production on those feeders?
Mr. BALL. On those feeders.
ROYALTY PAYMENTS SHARED
Mr. COX . One more question, Mr. Ball. This morning I asked you whether you knew, when you made your agreement with Hartford-Empire, that the royalties which you were paying were being divided with Owens-Illinois and Hazel-Atlas, and you answered that you did not. You know, of course, now, that royalties which you are paying now are still being divided with Hazel-Atlas, do you not?
Mr. BALL. So I understand, from the evidence that has been given.
Mr. COX. Now I want to ask you, Mr. Ball, whether in your opinion that situation is a healthy situation from the competitive point of view, so far as you are concerned? Do you like it?
Mr. BALL. We don't like it very well.
Mr. COX. I think I have finished with Mr. Ball.
GOB-FEEDER MACHINE
Senator KING. You mentioned that you were operating the gob machine. Is that the machine which the Hartford Company contended was an infringement upon their patent?
Mr. BALL. They contended that is was an infringement on their patent, but up to the time of the decision in the Hazel-Atlas suit, decided by Judge Buffington, we were advised by our patent attorneys and other attorneys that it was not an infringement in their opinion, but when that decision was made it seemed to cover the gob feed that we were using, and rather than face a law suit and the annoyance and trouble and expense connected with it, we decided to take out a license, provided we could get one on satisfactory terms, and in that way negotiated with the Hartford Empire Company.
Senator KING. At any rate the Hartford-Empire Company contended that you had infringed their patent and the litigation to which you refer culminated in the support of the contention of the Hartford Empire Company, and you accepted the decision of the court and took a license from the Empire Company?
Mr. McCALLISTER. They themselves were not sued.
Senator KING. I understand that. They were not party to that suit, but there was an adjudication sustaining the validity of the Empire patent.
Mr. BRACKEN. There were four suits in all.
PATENT LITIGATION
Mr. BALL. There were a number of suits that were pending at the same time. Some I guess had been decided, and this was one of them. It looked to us that it would be better and cheaper, perhaps, for us to take out a license than to fight a patent lawsuit and so we took it out.
Mr. McCALLISTER. You understand I was in favor of fighting.
The CHAIRMAN. The attorney wants it understood that he stood by his original opinion.
Mr. McCALLISTER. Absolutely.
Mr. BALL. I might say that Mr. McCallister was not in on the negotiations that we had with the Hartford-Empire Company. We had two of our regular attorneys, Mr. Hornbrok of Indianapolis, who has since died, and Mr. Brady, our regular attorney, who has since died. They two joined with me in going to New York to draw up the agreement with the Hartford-Empire Company.
Senator KING. I have nothing further.
The CHAIRMAN. This machine that you were using was of your own development?
Mr. BALL. Yes, sir.
The CHAIRMAN. What was the name of that machine?
Mr. BALL. The difference between that machine and the Hartford-Empire machine is the fact that they use what is known as the solid plunger that goes into the glass and pushes the glass through the aperture and then withdraws and draws the glass up. We had one that embodied a tube in which we inserted air pressure to force the glass down and then vaccum [sic] vacuum to draw the glass back, and in that way we got the same result that they gettingwith the solid plunger, but using air pressure in place of a solid plunger.
The CHAIRMAN. You had been using this device of yours
Mr. BALL. What is that?
The CHAIRMAN. You had been using this device of yours for how long a period?
Mr. BALL. Oh
Mr. McCALLISTER (interposing). I would say from 1920 on.
Mr. BALL. I think it was 1929, about there, we began using it. Before using the gob feed we had used a flowing stream. In fact, if you wish I will go back to the point that we started in the glass business, using the tools that were used by the Egyptians two thousand years ago.
The CHAIRMAN, I don't think that will be necessary.
Mr. BALL. The hand blow-pipe and the hand molds, and we used those up to 1886 when we invented the first practical press and blow machine for making glass jars.
AVOIDANCE OF LAW SUITS
The CHAIRMAN. I wanted to make clear in my own mind that I understood you correctly in that you paid this $400,000 not because you had any conviction that the process which you were using was an infringement upon the Hartford patent, but that you wanted to get rid of the nuisance of lawsuits and go on with the manufacturing of your glass product. Is that correct?
Mr. BALL. Well, taking into consideration the decision of the court, Judge Buffington, it would seem as though we did infringe, but that was something that we were not, of course, sure of.
The CHAIRMAN. And as a consideration for taking out the license, you wanted to be assured that no new licensees would be permitted to enter the field under the Hartford patent to compete with you.
Mr. BALL. Yes, sir.
COMPETITION IN JARS
Senator KING. I want to ask one question if I may. You gave in answer to questions by Mr. Cox the base prices for a number of years from '22 on. How did those base prices, or the prices which ultimately were paid by the consumer, compare with the prices paid by consumers for other fruit jars manufactured under similar patents? Did you charge more or did you charge less? Was there any competition between you and other manufacturers of the same kind of jars?
Mr. BALL. Really, I don't know what jars made by other manufacturers were sold at.
Senator KING. Didn't you try to find out when you were fixing your prices for the vending of your commodity what the market price was for a similar one?
Mr. BALL. We made our price on the Ball Perfect Mason jar. We began in 1880.
Senator KING. If you will pardon me, all I am interested in knowing is whether or not there was any effort by you and others making prices to combine for the fixing of prices, or was there competition between you and them?
THE BALL MASON JAR
Mr. BALL. Not so very much. Our prices were made on the Ball Perfect Mason jar. We started nearly 50 years ago to build up a demand for that particular brand, and by making jars and inspecting them as perfectly as possible, we had created a demand so that they were called for in practically all States of the Union.
Senator KING. So you had a clientele of your own and you fixed your own price without reference to anybody else.
Mr. BALL. Yes, sir. When it came time for us to quote prices, we took the cost and the investment and the risk and the conditions into consideration and made our price, and quoted it broadcast to all the jobbing customers of the United States.
Senator KING. Did the production of fruit in a given year, and the price of sugar, and the economic conditions have anything to do with the fixing of prices, or did you fix your base without reference to those considerations or factors?
Mr. BALL. We took into consideration more than anything else the cost and carrying charge and the investment.
Senator KING. Plus a reasonable profit.
Mr. BALL. With a reasonable profit.
The CHAIRMAN. If there are no other questions, the witnesses may be excused. We thank you, Mr. Ball and Mr. Bracken and Mr. McCallister.
(Mr. Ball, Mr. Bracken and Mr. McCallister were excused.)
Mr. COX. Mr. Underwood is going to be the next witness.
The CHAIRMAN. Mr. Underwood, 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. UNDERWOOD. I do.
TESTIMONY OF R. R. UNDERWOOD,
PRESIDENT, KNOX
GLASS ASSOCIATES, OIL
CITY, PENNSYLVANIA.
Mr. COX. Mr. Underwood, will you give the reporter your name and address and your present occupation.
Mr. UNDERWOOD. R. R. Underwood, President, Knox Glass Associates, Oil City, Pennsylvania; residence, Knox, Pennsylvania.
Mr. COX. Just briefly tell us what Knox Glass Associates is.
Mr. UNDERWOOD. Knox Glass Associates is a corporation held equally by five of our associated companies, located in Pennsylvania.
GLASS COMPANIES
Mr. COX. The five associated companies are companies which produce glass containers, is that right?
Mr. UNDERWOOD. Yes, sir.
Mr. COX. Can you tell what they are?
Mr. UNDERWOOD. Knox Glass Bottle Company, Wightman Bottle and Glass Manufacturing Company, Pennsylvania Bottle Company, Marionville Glass Company, and Oil City Glass Bottle Company.
Senator KING. All subsidiaries?
Mr. UNDERWOOD. No, they are rather associated companies.
Senator KING. How many in all?
Mr. UNDERWOOD. Five in Pennsylvania and we have two associated with us in Jersey City, New Jersey, known as the Metro Glass Bottle Company, and one in Jackson, Mississippi, known as the Knox Glass Bottle Company of Mississippi.
Mr. COX. Is Knox Glass Associates a licensee of Hartford-Empire?
Mr. UNDERWOOD. No, Knox Glass Associates is not a licensee of Hartford, but the other companies are.
Mr. COX. Each of what you call the associated companies is a licensee of Hartford-Empire.
Mr. UNDERWOOD. Yes, sir.
Mr. COX. Just tell us briefly what functions Knox Glass Associates perform for the associated companies, so the Committee will understand the nature of your business organization.
KNOX GLASS ASSOCIATES
Mr. UNDERWOOD. I formed the Knox Glass Associates, Inc., January 1, 1935, for the purpose of administering the sale as well as engineering, and so forth, and management for the five companies located in Pennsylvania, as well as the companies located in Jersey City and Jackson, Mississippi.
Senator KING. Is that a holding company, then?
Mr. UNDERWOOD. No, it not a holding company; rather it is held by the five companies.
Mr. COX. Stock of Knox Glass Associates is held by these companies which are engaged in producing glass containers.
Mr. UNDERWOOD. That is right.
Mr. COX. And it performs certain sales services and certain engineering services for the companies?
Mr. UNDERWOOD. And business administration.
Senator KING. Did it have any capital?
Mr. UNDERWOOD. None other than is held in equal amounts by the five companies, located in Pennsylvania, and a nominal capital.
Mr. COX. How long have you been in the glass business?
Mr. UNDERWOOD. Since 1914.
The CHAIRMAN. May I interrupt to inquire what common ownership there is among the five associated companies?
Mr. UNDERWOOD. The Knox Glass Bottle Company of Knox, formed sometime in 1917, has a stock interest in each one of these companies that I have named, ranging from possibly 35 per cent ownership to wholly owned subsidiary in the case of Knox Glass of Mississippi.
The CHAIRMAN. And how about the ownership in the Jersey companies?
Mr. UNDERWOOD. It has a stockownership in the Metro Glass of Jersey in the amount of 33 1/3 per cent.
The CHAIRMAN. So that the Knox Company of Knox is really the parent company of the various associated companies.
Mr. UNDERWOOD. That is right.
The CHAIRMAN. And the Knox Associates is the agency of all of the companies to perform these services which you have described.
Mr. UNDERWOOD. That is right, with the exception of the company in Jersey City who administers their own sale; likewise in the case of the Mississippi corporation.
The CHAIRMAN. With the exception of those two companies, all of the others are chiefly confined to the manufacturing of glass.
Mr. UNDERWOOD. That is right.
The CHAIRMAN. And they turn their product over to this other company for sale.
Mr. UNDERWOOD. That is right, sir.
Mr. COX. Mr. Underwood, is the Knox Glass Company the company that you first became connected with?
Mr. UNDERWOOD. Knox Glass Bottle Company.
Mr. COX. How long have these companies been licensees of Hartford-Empire.
Mr. UNDERWOOD. I should think since August, 1932.
Mr. COX. Before that time, what kind of glass making machinery were the companies using?
Mr. UNDERWOOD. We employed both what is known as the Miller feeder and the O'Neill feeder.
Mr. COX. Were those both gob feeders?
Mr. UNDERWOOD. Yes, sir.
MILLER GOB-FEEDER PATENT
Senator KING. Was not the Miller patent held to be invalid, or was not its validity challenged by some competing companies?
Mr. UNDERWOOD. That is right, sir. It was held to be invalid by Judge Buffington of the Third Circuit, Philadelphia.
Mr. COX. I believe that was not the Miller Patent that was held to be invalid in the Third Circuit; it was the Hazel Patent. I believe the Miller Patent was adjudicated in Cincinnati Circuit.
The CHAIRMAN. Wasn't it negotiated out?
Mr. COX. It never was declared invalid.
The CHAIRMAN. It was purchased out by the Hartford-Empire Company, because the testimony was given here that the attorney for Miller threatened the Hartford-Empire, and the Ball Company, as I recall, that the patent would be kept in the Patent Office by interference for five years, and it was to settle that litigation that an agreement was reached. Is that your recollection?
LAMB GLASS COMPANY
Mr. UNDERWOOD. I believe, Senator, that the Lamb Glass Company of Mount Vernon, Ohio, who operated what was known as the Miller feeder, was sued by the Hartford Company in the District Court of Columbus, and I believe that that patent was adjudicated in the Circuit Court in Cincinnati, that particular Miller Patent.
Senator KING. To be valid or invalid, which?
Mr. UNDERWOOD. I believe that was held, if I recall correctly, to be invalid as to what was known as phase changing in the patent.
MILLER USERS' DEFENSE ASSOCIATION
Mr. COX. Do you recall the purchase of the business of the William J. Miller Engineering Company or the patent rights of that company, I should say, by Hartford-Empire?
Mr. UNDERWOOD. Yes, by Hartford-Empire; I recall distinctly the taking of the patents of William J. Miller, who was the proprietor of the Miller Engineering Company, by the Hartford Company.
Mr. COX. At that time you were connected with the Knox Glass Bottle Company?
Mr. UNDERWOOD. Yes, sir.
Mr. COX. Was it using a William Miller feeder.
Mr. UNDERWOOD. Yes, sir.
Mr. COX. We from time to time in this hearing have had references to what has been called the Miller Users' Defense Association. Will you tell us briefly what that was and how it came into existence and what it did?
Mr. UNDERWOOD. At the time that the Hartford-Empire Company purchased the patents of William J. Miller, a number of we smaller manufacturers were employing the Miller feeding device.
Mr. COX. I beg your pardon, but you had both those feeders outright?
Mr. UNDERWOOD. That is right.
Mr. COX. Not under license; they were your property?
Mr. UNDERWOOD. Purchased them from the Miller Engineering Company specifically. After the purchase of the patents by the Hartford Company, we decided that possibly William J. Miller would not give a sufficient support to their defense, and not being able individually or at least a number of us individually able financially to prosecute the defense, we formed what was known as the Miller Users' organization and employed counsel and defended the patents to as great an extent as we thought it was practical to do, giving consideration to the financial obligations incurred thereby.
Mr. COX. I understand by that, then, that you did contribute financially to the defense of certain litigation.
Mr. UNDERWOOD. That is right.
Mr. COX. Which involved the question as to whether or not the use of those patents infringed the Hartford patents.
Mr. UNDERWOOD. That is right.
Senator KING. Hartford was the other side of the litigation.
Mr. UNDERWOOD. That is right.
Mr. COX. Could you tell us how long that litigation lasted?
Mr. UNDERWOOD. I believe that we conducted that litigation from somewhere around 1927 or '28 until the time that the Hazel settled their suit with the Hartford Company.
Mr. COX. And after the settlement of the Hazel-Atlas suit did the association continue to be active?
Mr. UNDERWOOD. Subsequent to the settlement of the Hazel-Atlas suit the association subsequently disintegrated, I believe.
Mr. COX. Some of the members took licenses of Hartford?
Mr. UNDERWOOD. That is right, and we were those who took the license.
Mr. COX. There is one more question I want to ask. Can you tell us approximately how expensive this litigation was, conducted with the Hartford-Empire? I am speaking now of the whole group which belonged to the Miller Users' Defense Association.
Mr. UNDERWOOD. Our records indicate that a total expenditure of some approximately $130,000 to $140,000 was expended in the defense or the prosecution of that defense.
Mr. COX. That was for the whole period of time?
Mr. UNDERWOOD. That was for the group.
Mr. COX. Most of those companies you said a moment ago were small companies, is that correct?
Mr. UNDERWOOD. Yes, I believe that most of them would be considered the minor companies of the industry.
Mr. COX. Now, I want you to tell us briefly
Senator KING (interposing). Could I ask one question? Were they manufacturing anything other than the kind of glass that has been referred to in these hearings?
Mr. UNDERWOOD. Most of them, Senator, were manufacturing a general line.
Senator KING. Not plate glass?
Mr. UNDERWOOD. No.
Senator KING. Window glass?
Mr. UNDERWOOD. All glass containers.
Senator KING. I see.
Mr. COX. Will you tell us, Mr. Underwood, the circumstances under which you took a license from Hartford-Empire? I am speaking now of you in your connection with the Knox Glass Bottle Company.
Mr. UNDERWOOD. Of course. We were notified by the Hartford Company that we were infringing their patents, and we were in hopes that we could continue defending until the patents would be adjudicated. We found, sometime late in 1929 or 1930, that it was impractical for our company on account of financial reasons to prosecute the defense further, and we were invited to discuss the matter with the Hartford Company early in 1932, I believe, and as a result of that discussion
Mr. COX (interposing). Tell us about that invitation, Mr. Underwood. You say you were invited. Tell us what happened.
Mr. UNDERWOOD. Mr. Goodwin Smith, President of the Hartford-Empire Company, invited me to Hartford early in August, 1932 to confer with him in connection with the patent situation. I met Mr. Smith in his office at Hartford in conjunction with some of his staff from his Legal Department.
Mr. COX. Did you have a lawyer?
Mr. UNDERWOOD. Yes. I beg your pardon?
Mr. COX. I said, did you have a lawyer?
Mr. UNDERWOOD. No, I didn't have a lawyer with me. I don't know whether that may be fortunate or unfortunate. Nevertheless, I met Mr. Smith and his staff, and, of course, he placed before me a proposition which it was impossible for us to accept at that time, and he was so advised that, on account of the financial obligation, our companies would be obliged to accept in the event we met his first thought on the subject
Mr. COX (interposing). What was that proposition?
Mr. UNDERWOOD. I believe that the Hartford Company requested us to compile a memorandum of royalties due them from the date of issue of the Peiler Patent sometime in 1925 to date. We did, and the result of that was simply that we were indebted to them on account of that record so compiled ΰ sum equal to about $630,000.
Mr. COX. What was the capitalization of your company at that time?
Mr. UNDERWOOD. Somewhere, possibly, at that time I believe at that particular time our company was probably capitalized at a million dollars, with probably half of that amount outstanding, or less. Of course, I advised Mr. Smith that we couldn't meet that situation, and then we reconvened at a subsequent conference, and as a result of that we did effect a settlement with the Hartford Company by paying them a certain amount and accepting licenses for twenty-five of their units.
Mr. COX. How much did you have to pay, Mr. Underwood?
Mr. UNDERWOOD. We paid Hartford one hundred thousand dollars.
Mr. COX. Now, was that license you were given an unrestricted license?
Mr. UNDERWOOD. No, we were restricted with respect to a limited number of milk bottles, I believe 75,000 gross.
Mr. COX. How many milk bottles had you been making before that?
Mr. UNDERWOOD. Approximately 100,000 to 150,000 per annum.
Mr. COX. You asked for more milk bottles?
Mr. UNDERWOOD. That's right.
Mr. COX. But you didn't get them?
Mr. UNDERWOOD. We didn't get them, and I believe the fruit jar was excluded from that particular license, and all carbonated beverage bottles.
Mr. COX. Were any other restrictions contained in the license so far as number and quantities is concerned?
Mr. UNDERWOOD. We were restricted to the use of twenty-five feeding devices.
Mr. COX. And that, of course, restrict-ed the amount of ware you could produce?
Mr. UNDERWOOD. That's right.
Mr. COX. Could you, Mr. Underwood, tell me whether at any time after that you attempted to develop any other kind of glass-making machinery that you could use free from license of the Hartford-Empire?
KNOX-O'NEILL MACHINE
Mr. UNDERWOOD. Yes. Some time in 1927 I joined hands with Frank O'Neill, of Toledo. Ohio, operating the O'Neill Ma-chine Company, and as a result of that we developed in our plant what was known as the Knox-O'Neill suction machine.
Mr. COX. What did you use that machine for?
Mr. UNDERWOOD. The manufacturing of a miscellaneous or general line of glass.
Mr. COX. I meant to ask you a moment ago, Mr. Underwood, whether, before you took a license from Hartford Empire, you manufactured any milk bottles and sold them.
Mr. UNDERWOOD. Yes, ranging from 100,000 to about 150,000 gross per annum.
Mr. COX. Was that a considerable part of your business?
Mr. UNDERWOOD. That was a very substantial part of our business, profit wise.
Senator KING. You are speaking of the four or five companies, now?
Mr. UNDERWOOD. Yes.
Mr. COX. Did you, before you took the license, manufacture any fruit jars?
Mr. UNDERWOOD. Yes, we manufactured what was known as the Knox fruit jar.
Mr. COX. And did you manufacture, before you took a license, any carbonated beverage bottles?
Mr. UNDERWOOD. Not to any great extent. Our manufacture of carbonated beverage bottles was very limited.
Mr. COX. You manufactured some, but not many?
Mr. UNDERWOOD. That's right.
Mr. COX. And after you took the license you ceased to manufacture carbonated beverage bottles and fruit jars altogether?
Mr. UNDERWOOD. We ceased manufacturing carbonated beverage bottles except that Hartford granted to us the right to manufacture a small quantity of carbonated beverage bottles for an account in Cleveland. We did not manufacture subsequent to our license with Hartford any more fruit jars on their equipment. We did, however, manufacture on the Knox suction machine.
Mr. COX. That was the machine you were speaking of a moment ago which you developed with Mr. O'Neill? Is that correct?
Mr. UNDERWOOD. That's right.
Mr. COX. You manufactured fruit jars on that machine, you say. How long did you continue to manufacture those fruit jars?
Mr. UNDERWOOD. I believe we continued manufacturing fruit jars on our Knox-O'Neill suction machine until sometime early in 1933.
Mr. COX. What happened then?
Mr. UNDERWOOD. We sold our fruit jar business to Ball Brothers.
Mr. COX. Why did you do that, Mr. Underwood? Hadn't it been profitable?
SALE TO BALL BROTHERS
Mr. UNDERWOOD. Yes, fruit jars were a very profitable line to us. However, we were approached by Hartford with respect to our Knox-O'Neill machine being a possible infringement on certain patents that had issued to them or for which they had applications filed, and in addition to that they questioned our position with reference to manufacturing fruit jars on any device that we had operating at that time. Rather than to develop a situation which we were not in position to defend, and didn't feel that we should at that time, we sold the business to the Ball Brothers for what we thought was a fair consideration.
Mr. COX. What was that?
Mr. UNDERWOOD. I think Ball Brothers paid us $100,000, if I remember rightly $85,000 to $100,000.
Mr. COX. Was this early in 1933?
Mr. UNDERWOOD. I believe it was. I believe it was some time during February or March, 1933.
The CHAIRMAN. How did you happen to sell to Ball Brothers.
Mr. UNDERWOOD. We were contacted by Mr. George Ball, I believe, in connection with the matter, or it was discussed in some manner or other that we came to know that they were interested in purchasing our fruit jar business.
The CHAIRMAN. Through whom did you come to know it?
Mr. UNDERWOOD. I don't recall distinctly whether it was a contract made by Mr. George Ball or the Hartford Company. I don't recall just how that contact was made.
The CHAIRMAN. When the Hartford Company approached you with respect to the manufacture of fruit jars, did it through its representative make any representation that you were competing with Ball Brothers?
Mr. UNDERWOOD. Yes, the Hartford Company, in their contact with me, advised that in their opinion the machine on which we were making these fruit jars infringed some of their patents.
The CHAIRMAN. Some of whose patents?
Mr. UNDERWOOD. Some of Hartford's patents, and they were particularly interested in the fact that we were manufacturing fruit jars on that machine, and of course sooner or later that matter would necessarily be adjudicated, I knew.
The CHAIRMAN. Then was it suggested by the emissary of Hartford that you should sell to Ball?
Mr. UNDERWOOD. No, I don't know that it was. I think Hartford simply notified me that in their opinion we were restricted with respect to our feeder rights that we had under them, that we shouldn't manufacure [sic] manufacture under our feeder rights, and in addition to that, that no doubt their patents read on our vacuum machine.
Mr. COX. Did you ask them for a license under their suction patents to manufacture fruit jars?
Mr. UNDERWOOD. No, I don't believe I did.
The CHAIRMAN. Did you seek out Ball yourself?
Mr. UNDERWOOD. I don't recall, Senator, how that contact was made, whether Hartford contacted me, whether it was by George Ball, or how the contact was made. I don't recall the incident as to how the situation was handled, but I know we were manufacturing a substantial quantity of fruit jars and we were very happy with the business.
Mr. COX. What happened to the suction machines? Did you continue to manufacture anything else on them after you stopped manufacturing fruit jars?
Mr. UNDERWOOD. We continued the Knox-O'Neill vacuum machine, I believe, about eight units in production, until some time during 1933, without license from the Hartford Empire.
INFRINGEMENT CLAIMS
Mr. COX. What happened then?
Mr. UNDERWOOD. Mr. Smith advised me, some time I believe during 1933, that the Knox-O'Neill machine had infringed certain of their patents, and it was now time that we should get together and discuss the situation. As a result of that I met Mr. Smith, I believe in June or possibly in July of 1933, my memory serves me correctly, to discuss that situation. And, of course, as a result of that discussion, we arranged to have our respective patent counsel get together, which they did, and our counsel advised us that it was possibly a fifty-fifty break as to whether we infringed the patents they alleged we were infringing, and then again as a result of that, of course, I thought it best not to involve our company further in defense, and we took a license for the suction machine from Hartford, and they purchased the equipment from us at some price satisfactory to both organizations.
Mr. ARNOLD. Did the greater resources of Hartford have anything to do with your making that decision not to take up the fifty-fifty fight?
Mr. UNDERWOOD. I would say that that has always been an influence in the life of our company, patent-wise.
Mr. ARNOLD. You felt that they could continue the fight longer than you could?
Mr. UNDERWOOD. That's right.
Mr. ARNOLD. And that resources and persistence and an army of experts and counsel are as important in a patent fight as they are in any other kind of war?
Mr. UNDERWOOD. That's right. My file indicates that.
Mr. COX. Mr. Underwood, did you continue to manufacture milk bottles after you took the Hartford license?
Mr. UNDERWOOD. Yes. I apprised Hartford of the fact that it would be impossible for us to discontinue forthwith the manufacture of milk bottles and they kindly consented to permit us to continue manufacturing our previous quantity for a period, I believe, of four or five months. Then they requested us, at the close of that period, to reduce our production to 75,000 gross per year, which was the amount they finally allotted to us under our license.
Mr. COX. Did you continue to produce thereafter 75,000 gross?
Mr. UNDERWOOD. For possibly a few months only. We found that that quantity, for our organization and our equipment, was impractical.
Mr. COX. In other words you could, from the point of view of profit, manufacture and sell successfully 100,000 or 150,000 gross, but if you were limited to 75,000 gross you couldn't do it?
Mr. UNDERWOOD. That is right.
Mr. COX. What did they do, then, with the milk bottle part of your business?
Mr. UNDERWOOD. Some time in December, 1932, when I realized that it was impractical for our company to continue manufacturing a limited quantity in the amount of 75,000 gross of milk bottles per annum I contacted Mr. Mandeville, of the Thatcher Manufacturing Company, and asked him if he would be interested in purchasing our milk bottle business; that is, the machinery, good will and so on and so forth, and in the event that he would make the purchase, that we would go out of the business. He told me promptly that they might be interested in that, and as a result of our conference we sold our milk bottle rights; that is, the right to make 75,000 gross of milk bottles, together with all machinery, molds and equipment incident to the manufacturing of milk bottles, to the Thatcher Manufacturing Company, and I believe that sale was made in late 1932, in December.
Mr. COX. How did you happen to go to Mr. Mandeville, of the Thatcher Company?
Mr. UNDERWOOD. Well, the reason I contacted Mr. Mandeville is because the Thatcher Manufacturing Company were the leaders in this particular field, and I thought that if anyone would be interested in handling our milk bottle the residue of our milk bottle rights, Mr. Mandeville would be interested, the Thatcher Company would be interested. It was a natural consequence of the situation.
Mr. COX. Because you knew it was probably the largest manufacturer of milk bottles in the country?
Mr. UNDERWOOD. That's right.
Senator KING. May I ask, did your company manufacture up to that time anything besides milk bottles? You have mentioned one product.
Mr. UNDERWOOD. We manufactured at that time a general line of all glass containers except the items that I referred to, such as carbonated beverage bottles, and so on.
DEMAND FOR FRUIT JARS
Mr. COX. Now, Mr. Underwood, in your opinion if today you had a right under your license to manufacture fruit jars could you manufacture and sell those fruit jars in the market at a profit?
Mr. UNDERWOOD. I would say, at the present market levels, volume-wise, in so far as fruit jars is concerned, no doubt a profit could be made on a limited quantity only.
Mr. COX. But you could sell a limited quantity of fruit jars, you think, at a profit?
Mr. UNDERWOOD. That's right.
The CHAIRMAN. Why do you say a "limited quantity"?
Mr. UNDERWOOD. Because the domestic fruit jar, the volume on the domestic fruit jar in our industry, is very small compared with some of our wide-mouth lines, such as Mr. Ball referred to some few moments ago.
The CHAIRMAN. What I had in mind was whether or not, in your judgment, you thought it would be a limited quantity because it would be limited to an area around your plants, or something of that kind.
Mr. UNDERWOOD. No, no. I am speaking nation-wide.
Senator KING. Has that industry increased in these last few years?
Mr. UNDERWOOD. No; rather it has decreased on account of the packer jar making inroads into that particular division, such as the peanut butter jar that is re-used, and so on and so forth.
Senator KING. There has been a diminishing market, then?
Mr. UNDERWOOD. Yes.
Senator KING. Has there been over-production?
Mr. UNDERWOOD. Well, I can't say that there has been over-production, because those who manufacture fruit jars are very well versed in the consumption, and I believe that they just simply wouldn't produce.
Senator KING. Has there been any decrease in price?
Mr. UNDERWOOD. I am not familiar with that, Senator, because haven't followed that particular phase of the situation since we passed out of the picture.
Mr. COX. You spoke a moment ago of the inroads the packers' ware was making in the fruit jar field. Do you have any opinion as to whether those inroads are caused at least in part by the fact that packers' ware sells at a lower price?
Mr. UNDERWOOD. Well, I can't say that that is the sole reason. Glass is being used by the consuming public in products not to such an extent as we have had heretofore. For instance, the housewife today will take a peanut butter jar with a finish, that "G" finish, and they will use the peanut butter from the jar and save the jar by going to the store and purchasing a cap that will accommodate it.
It seems that during the past few years that practice has become more popular.
Senator KING. That reduces consumption.
Mr. UNDERWOOD. Yes, in so far as the domestic jar.
STANDARD JAR CAPS
The CHAIRMAN. Do all of the companies manufacture jars in such fashion as to accommodate a standard cap?
Mr. UNDERWOOD. Yes, the quart jar, the quart packers' jar is pretty commonly manufactured with what we know as a "G" finish which will accommodate the zinc cap that Mr. Ball referred to this morning.
Mr. COX. Could you manufacture and sell carbonated beverage bottles?
Mr. UNDERWOOD. Yes, sir, we could do that very nicely.
Mr. COX. Could you do the same with milk bottles?
Mr. UNDERWOOD. Yes. The field is greater for profit I think volume-wise in the carbonated beverage bottle than it would be in the milk bottle.
Mr. COX. Did you ever apply to Hartford-Empire for permission to make carbonated beverage bottles?
Mr. UNDERWOOD. Yes, sir.
Mr. COX. Were you granted that privilege?
Mr. UNDERWOOD. No, sir.
Mr. COX. Did they tell you why you couldn't do it?
Mr. UNDERWOOD. I can't say that they ever gave us any detailed reply on that. They simply refused it.
Mr. ARNOLD. Did they say anything about stabilizing production of the industry or anything of that sort?
Mr. UNDERWOOD. In their reply to me on the subject I don't recall that they put it that way.
Senator KING. Are there licensees for the manufacture of those bottles?
Mr. UNDERWOOD. Yes.
Senator KING. How many licensees?
Mr. UNDERWOOD. I imagine that there are possibly ten or twelve manufacturers who are licensed to make carbonated beverage bottles.
BEVERAGE BOTTLES
Senator KING. Are there any other companies that hold patents under which carbonated beverage bottles might be made other than the patentee?
Mr. UNDERWOOD. No, not in our country. I believe that if you were to
Senator KING (interposing). I am speaking of the United States.
Mr. UNDERWOOD. That is right.
Mr. COX. Mr. Underwood, are you reasonably familiar with the provisions of your license agreements with the Hartford-Empire?
Mr. UNDERWOOD. Fairly well.
GLASS COMPANY LICENSE
Mr. COX. We have introduced here in evidence marked Exhibit 118 a license agreement between Hartford-Empire and four other glass companies. Section 8 of that agreement reads as follows:
"No changes and no additions other than reasonable and necessary repairs and other than necessary and proper safety appliances shall be made in or to said leased machinery except by consent of both parties to this license and lease, or except as provided in Section hereof for the event of injunction, and except as provided in this section for improvements, and all changes and additions when made shall become the property of the licensor."
I want to call your attention particularly to this sentence:
"Complete title to all patent rights at any time possessed during the term of this license and lease by the licensee, covering such changes and additions, shall be transferred to the licensor."
As I understand that provision, Mr. Underwood, it means that if you make any improvement on the machines you have in your establishment during the term of this license and obtain a patent on that improvement, that patent must be transferred to Hartford-Empire.
Mr. UNDERWOOD. That is right, as I understand it.
Mr. COX. Does that agreement serve as an incentive to you to do experimental and development work in an attempt to improve your machines?
Mr. UNDERWOOD. Well, to be frank about the matter, I would say no, not to an independent organization that is desirous of developing their own technic. They are loath to do so in view of the fact that it will extend to Hartford and as a result of that reach all of their other licensees who are your competitors.
HARTFORD RESEARCH WORK
Senator KING. Do you have a research organization?
Mr. UNDERWOOD. Small.
Mr. COX. Is that provision in your contract?
Mr. UNDERWOOD. I believe that it is.
Mr. COX. We have heard some testimony here about services, engineering and otherwise, which Hartford-Empire performs for its licensees. Do they perform those services for you and your company?
Mr. UNDERWOOD. I believe that under their contract they agree to furnish that service, and I believe they do to a greater or lesser extent to all their licensees. In our particular situation it is lesser.
Mr. COX. You don't find that you need that service.
Mr. UNDERWOOD. Not in all cases. We don't require their services or, in other words, we don't depend upon the Hartford-Empire people to operate our plants.
Senator KING. Have they refused when you asked?
Mr. UNDERWOOD . Not at all. They are always willing, on the other hand, to assist us.
Mr. COX. You don't find it necessary to ask them very often.
Mr. UNDERWOOD. That is right.
LICENSE FEES FOR MACHINES
Mr. COX. Mr. Underwood, do you recall what you had to pay for the Hartford machinery which you now have? I am not speaking about royalties you paid for producing ware, I am speaking about the license fees. Take the feeder, for example, and tell me what you paid for the Hartford feeder in the way of a license fee.
Mr. UNDERWOOD. If my memory serves me correctly in that connection I believe that we paid for a license fee approximately $2,000 and for the physical parts about $2,300 to $2,500, after which we pay the regular rate of royalty.
Mr. COX. To get that license you pay $4,500.
Mr. UNDERWOOD. That is right.
Mr. COX. Then you don't own it.
Mr. UNDERWOOD. The title rests in the Hartford Company.
The CHAIRMAN. What do these parts consist of?
Mr. UNDERWOOD. Cams to operate the plunger, and different mechanisms that are on the feeder, such as motors and shears.
The CHAIRMAN. That is ordinary repair parts.
Mr. UNDERWOOD. Yes, that will be necessary in the construction.
The CHAIRMAN. How about improvements?
Mr. UNDERWOOD. Any improvements that Hartford would bring out they pass along to us with their usual charge.
The CHAIRMAN. So that if Hartford Research or Engineering Bureau should develop improvements upon the machines which you have, you would be entitled to those.
Mr. UNDERWOOD. They extend to us under our license.
The CHAIRMAN. Have you received those in the past?
Mr. UNDERWOOD. I believe that any that they have developed they have passed along to us.
LIMIT ON MACHINE UNITS
The CHAIRMAN. I noticed that in the earlier part of your testimony you referred to having taken a license on twenty-five units.
Mr. UNDERWOOD. Yes, sir.
The CHAIRMAN. Is that a limitation?
Mr. UNDERWOOD. Yes.
The CHAIRMAN. Could you use thirty units if you wanted them?
Mr. UNDERWOOD. Well, sometimes we thought we could use sixty.
The CHAIRMAN. I don't mean that. I mean are you under your agreement permitted to use thirty or sixty units if you can.
Mr. UNDERWOOD. No.
The CHAIRMAN. Then you are limited to twenty-five units.
Mr. UNDERWOOD. We were at that time. That has since been increased.
The CHAIRMAN. What is it now?
Mr. UNDERWOOD. To a total of all our associated companies of thirty-nine units.
The CHAIRMAN. So that no matter what business you and your associated companies may develop, you may under this agreement use only this specific number of machines.
Mr. UNDERWOOD. That is right, sir.
The CHAIRMAN. And under this agreement you are also limited with respect to the output?
Mr. UNDERWOOD. That is right, sir.
DIVISION OF ROYALTIES
Mr. COX. Mr. Underwood, did you know, prior to these, hearings, that the royalty you were paying Hartford-Empire was being divided between them for a period with Hazel-Atlas and Owens-Illinois?
Mr. UNDERWOOD. I certainly did not.
Mr. COX. Do you think that situation places your company at a competitive disadvantage against a company like Hazel-Atlas which is receiving in turn a part of the royalty?
Mr. UNDERWOOD. In my opinion, at a great disadvantage.
Senator KING. May I ask about these machines? I saw a picture of these machines. They are rather complicated, are they not, with a great many parts?
Mr. UNDERWOOD. Yes, sir, undoubtedly.
Senator KING. What would be the cost to build a machine with dies and so on, if you didn't have the dies and forms?
Mr. UNDERWOOD. That is for a Hartford feeder?
Senator KING. Yes, for the machine which you use in making these milk bottles and these containers.
Mr. UNDERWOOD. Well, in the manufacturing of the container we have two units, one known as the feeder device, and under that the form machine. Which one do you refer to, the feeding device or the form machine? Or the complete unit?
Senator KING. The complete unit.
Mr. UNDERWOOD. Oh, I would say that for us to jig our machine shop up, drawings, patterns, and all the necessary work to make the first machine would be considerable, possibly three times the cost of the finished product as we can purchase it now.
FACTORY COSTS
Senator KING. Could you build one for $500,000, making your dies and jigs supposing you started from scratch, to use an expression, buy the material and steel and whatever products are necessary?
Mr. UNDERWOOD. On the equipment we use today, we feel that we could take a bottle-forming machine together with a feeder and build the unit ourselves, if we were permitted to use if we didn't meet patent interferences for possibly $40,000 to $50,000. That is our first unit. We have calculated that. However, we can purchase that same unit today from the Lynch Corporation and the Hartford-Empire Company for half that amount.
Senator KING. That is all.
Mr. COX. Have you ever made any computation as to what it would cost you thereafter to produce additional
Mr. UNDERWOOD (interposing). Well, I believe we could do just as good a job as they do after we are equipped and with the personnel and jigs to do it.
Mr. ARNOLD. Do you think there is any great superiority in brains in the organization in any one section of the glass industry which requires them to have any peculiar advantages in order for them to use those brains?
Mr. UNDERWOOD. Will you repeat that question?
Mr. ARNOLD. I will preface the question with an explanation. It has been suggested at various times in the hearing that in certain parts of the glass industry, organization and skills and techniques have been affected to such an extent that it might be a pretty good thing for the industry, since those people know the industry so well, to centralize power in their hands. That inference might be drawn. Do you feel that to be an effect?
Mr. UNDERWOOD. Not to such an extent as was brought out here yesterday.
The CHAIRMAN. If there are no other questions, Mr. Underwood may be excused.
Mr. COX. I'd like to put on one more witness, if I may, after Mr. Underwood.
Senator KING. Will that be long?
Mr. COX. I think we can be through in fifteen minutes.
The CHAIRMAN. Suppose we put him on. (Mr. Underwood was excused from the stand.)
Mr. COX. With the Chairman's permission, I am going to ask Mr. Hamilton to examine the next witness.
The CHAIRMAN. That is agreeable. Will you please call the next witness?
Mr. HAMILTON. Mr. Geer and Mr. Jaspert.
The CHAIRMAN. Do you and each of you solemnly swear that the testimony you are about to give in these proceedings shall be the truth, the whole truth and nothing but the truth?
Mr. GEER. I do.
Mr. JASPERT. I do.
TESTIMONY OF PAUL L.GEER,
TREASURER, AMSLER-MORTON
COMPANY, PITTSBURGH,
PENNSYLVANIA.
AND
TESTIMONY OF WILLIAM B.
JASPERT, PATENT ATTORNEY,
PITTSBURGH, PENNSYLVANIA.
Mr. HAMILTON. Now, Mr. Geer, will you please state your name and occupation to the reporter?
Mr. GEER. My name is Paul L. Geer. I am treasurer of the Amsler-Morton Company, located in Pittsburgh, Pennsylvania.
Senator KING. Which company is that?
Mr. HAMILTON. Amsler-Morton Company. Mr. Jaspert, will you please give the reporter your name and occupation.
Mr. JASPERT. I am a patent attorney in the City of Pittsburgh and I am representing, or have represented, the Amsler-Morton Company in litigation and advice on glass machine making equipment.
AMSLER-MORTON COMPANY
Mr. HAMILTON. Now, Mr. Geer, will you please describe briefly the business in which the Amsler-Morton Company is engaged.
Mr. GEER. We are in the engineering and contracting business for the purpose of supplying melting and annealing equipment for the glass industry.
Mr. HAMILTON. Is it true to say that the Hartford-Empire Company is also engaged in that business?
Mr. GEER. Yes, they are engaged in the same business, but, of course, we are one of the small business men compared to that concern.
Mr. HAMILTON. You say that you are engaged in the manufacture of glass machinery. Do you specialize in any particular type of glass machinery manufacturing?
Mr. GEER. We specialize in the glass annealing ware.
GLASS ANNEALING WARE
Mr. HAMILTON. Will you please de-scribe briefly what glass annealing ware is?
Mr. GEER. Well, the complete operation is comprised of a glass melting furnace, a feeder, a forming machine and a lehr.
Senator KING. What is a lehr?
Mr. GEER. It is a device for annealing the glassware after it is formed.
Mr. HAMILTON. Would you say that it is correct to describe a lehr as being a kind of oven into which the hot glass is put as it comes off the forming machine and in which the temperature of the glass is lowered until it finally comes out of the end definitely set and formed?
Mr. GEER. That is correct.
PATENTS ON LEHRS
Mr. Hamilton. Do you have any patents on lehrs?
Mr. GEER. We have a number of patents on lehrs, applying to our particular method of producing the result.
Mr. HAMILTON. Mr. Geer, I should like to ask you when you first began, that is when your company first began the manufacture of lehrs.
Mr. GEER. We first began the manufacture of lehrs in 1915.
Mr. HAMILTON. Have you been engaged in that business continuously since?
Mr. GEER. We have engaged in that business continuously and up to about 1934 we built approximately 400 lehrs for the industry. Since that time, of course
Mr. HAMILTON (interposing). I will get to that.
Senator KING. Could those lehrs be used independently of the mechanism necessary to reduce the sand and other ingredients to glass?
Mr. GEER. It is a composite part of the whole operation.
Mr. HAMILTON. But it would be used with any kind of feeder or any kind of tank or any kind of former.
Mr. GEER. Or even for annealing handware.
LEHR INFRINGEMENTS
Mr. HAMILTON. Now you say you have patents upon lehrs. Have you ever inaugurated an infringement suit upon your patents?
Mr. GEER. Never.
Mr. HAMILTON. Has anyone ever charged you with infringing their patents by your making your lehr?
Mr. GEER. We have been charged with infringing a number of times by the Hartford-Empire Company.
Mr. HAMILTON. When were you first charged?
Mr. GEER. As soon as we developed the unit lehr between '26 and '7, and especially when we placed them on the market in quantities in the early part of '28.They charged us with infringement and finally invited us to go to Hartford.
Mr. HAMILTON. Did you accept that invitation to go to Hartford?
Mr. GEER. Yes, we accepted it because there seemed to be some question in their minds as to the matter of infringement and they wanted to discuss the lehr in general, and some possible plan for getting together.
Mr. HAMILTON. With whom did you discuss the situation when you went to Hartford, at their invitation?
Mr. GEER. We discussed the matter with Mr. Smith and possibly eight or ten other engineers.
Mr. HAMILTON. What proposals were put forward either by you or Mr. Smith at that time?
Mr. GEER. The first thing they asked was whether we had brought the drawings along of our equipment, and when we told them we didn't bring them, they offered different suggestions for getting together. At that time the price of our lehr was $9,500 for the 4 by 75-foot lehr, which is the lehr used mostly in the hollow ware industry, and they suggested that we raise that price to $13,500, for which they would grant us a cross-license and we were to pay them the difference, or $4,000.
Mr. HAMILTON. Can you tell us what the comparable Hartford-Empire lehr was selling for at the time Mr. Smith made this proposal to you?
Mr. GEER. From the information we have been able to collect, they charged a price of $6,500 for the license. The purchaser was required to pay the cost of the erection and in addition, they were obliged to pay a license fee of $100 a month at that time.
Mr. HAMILTON. If you had accepted Mr. Smith's proposal, would that have placed you at a definite competitive disadvantage?
Mr. GEER. Definitely.
Mr. ARNOLD. In other words, you were competing with them and also paying part of your profits back to them.
Mr. GEER. Exactly.
Mr. HAMILTON. Well, now, you rejected the proposal, I take it.
Mr. GEER. Yes, sir.
Mr. HAMILTON. Then did Hartford-Empire take any further steps in regard to their claim that your lehr was infringing their patents.
ALLEGED COERCION
Mr. GEER. Well, after we rejected the proposal, we returned to Pittsburgh, attempting to go on as we had in the past, charging a fixed price for the lehr and selling it outright, with no royalties, and they of course got busy immediately to make the sale difficult by threatening suit to the customers and other means of coercion which I could explain.
Mr. HAMILTON. What I am interested in more particularly, Mr. Geer, is any particular negotiations you had with Hartford-Empire or anyone else regarding your lehr and Hartford-Empire's claim that it infringed their patents.
Mr. GEER. After we refused the agreement, they sent two members of the British Hartford-Empire Company to see us, at which time they offered us $10,000 for the British rights, agreeing to give us $2,000 cash for the drawing, which we rejected, and Mr. Amsler, a former member of our company who was then connected with the Hartford Company, made numerous visits to our office for the purpose of obtaining information as to the construction and
Mr. HAMILTON (interposing). I take it you didn't give him any information.
Mr. GEER. They finally submitted us a questionnaire and on advice of counsel we signed
Mr. HAMILTON (interposing). That was relating to your lehr?
Mr. GEER. Yes. We answered about thirty or forty questions.
PURCHASE NEGOTIATIONS
Mr. HAMILTON. Did anyone offer to purchase your lehr. business about this time or later?
Mr. GEER. Well, that wasn't until later.
Mr. HAMILTON. When was that?
Mr. GEER. We were approached by one Mr. Collin of the Collin-Norton Company, in Toledo, early in 1934. Mr. Collin made an appointment and came to see us the next day, making an offer of $200,000 for our glass business.
Mr. HAMILTON. That was just for your glass machinery manufacturing business?
Mr. GEER. That is right, and the patents.
Mr. HAMILTON. Did you accept that offer?
Mr. GEER. No, we didn't. We thought it was too low, and he raised the price to $260,000, and in fact he approached me privately because of my having a controlling interest in the company; he approached me on the basis of selling out for $200,000.
Mr. HAMILTON. That is your controlling stock interest.
Mr. GEER. Yes.
Mr. HAMILTON. Did you accept either his proposal to pay $260,000 altogether, or $200,000 for your controlling interest in the stock?
Mr. GEER. No, we didn't.
Mr. HAMILTON. Did he approach you again with any other proposition?
Mr. GEER. Yes, the first visit was in January, 1934, and
Mr. HAMILTON (interposing). Now you are referring to the original visit when he offered you $200,000?
Mr. GEER. Yes.
Mr. HAMILTON. That was January, 1934?
Mr. GEER. Yes, and in February he called up and made another appointment ,and this time he brought with him Mr. Hazelton, Vice-President of the Owens-Illinois Glass Company, and Mr. Frazier, President of the Simplex Engineering Company, a competitor and a licensee of the Hartford Company.
Mr. HAMILTON. That is a licensee of the Hartford Company to make lehrs.
Mr. GEER. That is right. This time he told us that his company, the Collin-Norton Company, of Toledo, were the people that combined the Owens Bottle Company and the Illinois Glass Company together, and that he was then a director in that company, and he also combined with Head-Miller Machine Company in Columbus, the O'Neill Machine Company in Toledo, and the Lynch Machinery Corporation of Anderson, Indiana, to operate and sell equipment under the Hartford license.
Mr. HAMILTON. What was his proposal to you at that time?
Mr. GEER. He proposed to combine the Simplex Engineering Company and the Amsler-Morton Company. He suggested that each of us be permitted to remove the cash from the corporation, that we would each receive one-third interest in the new corporation.
Mr. HAMILTON. By each? Whom do you mean?
Mr. GEER. Mr. Fraser and ourselves would each receive a third interest in the new corporation, and another party, whom he did not mention, would receive the other third.
Mr. HAMILTON. Did he make any reference to Hartford-Empire's claim that your lehr infringed its lehr patents?
Mr. GEER. Oh, that came up in the course of the conversation, but he went on to say that the person or interest obtaining the third interest in the combined corporations would put up half a million dollars to finance the combination; that he would guarantee us all of the construction work for the Owens-Illinois Glass Company and others that he did not mention; and he would also obtain a cross-license from the Hartford Company to build lehrs; and, in fact, we would be permitted to build all of their lehrs.
ALLEGED SUIT THREAT
Mr. HAMILTON. Did you accept the proposal?
Mr. GEER. No, we told him if he would give us 51 per cent of the proposition, we would consider it, but not otherwise. We, of course, discussed the thing for probably two hours after that. We didn't change our opinion, and as Mr. Hazelton got up to leave, he said, "Boys, we have made a good offer to you now. You can make a lot of money out of this. I will give you one month to consider it. If you don't go in with us on this thing, we will enter suit against you and we will continue to sue you until you are out of business."
And he made this statement, that "It is our plan that nobody in the glass industry should own one piece of glass-making equipment."
Mr. HAMILTON. At the end of one month after you had considered this proposition, did you accept Mr. Hazelton's proposal?
Mr. GEER. No, we didn't do anything about it, but the Hartford-Empire Company entered suit against the Swindell Company in Baltimore, one of our customers.
Mr. HAMILTON. Did you defend that suit?
Mr. GEER. We were obliged to defend it because we had written into the contract that we would defend and hold them harmless against any litigation.
CUSTOMER SUED
Mr. ARNOLD. Why do you think they sued your customer rather than yourselves?
Mr. GEER. That is very simple. If they had sued us, we would have entered a counter-suit against them because we owned the prior patent that we still believe would have them tied up, and, suing Swindell as they did, we were obliged to enter the suit with the situation, as we found it, in that Swindell had previously bought three lehrs from the Hartford Company in which they agreed, unbeknownst to us, to not contest the validity of the Hartford patents.
Entering that suit as we did, we had to defend it on the basis of non infringement and were unable to have a fair fight.
Mr. ARNOLD. In other words, because of that license to Swindell, you were unable in that suit by any means whatever to bring your counter-claims for infringement.
Mr. GEER. That is correct.
Mr. ARNOLD. If it hadn't been for that license, you might have done it.
Mr. GEER. We would have. We may yet.
Mr. HAMILTON. What was the result of that suit in the District Court? Who won it; that is what I want to know.
Mr. GEER. We won the suit in the lower court, principally because we proved that the Hartford patent was a reissue taken out two and one-half years after the original patent.
Mr. HAMILTON. Mr. Geer, then what happened when the case went up on appeal?
Mr. GEER. We received the favorable decision in the lower court, and when it went up on appeal the decision was reversed, and that is the way the decision stands today.
Mr. HAMILTON. You told us a while ago, I believe, that your company had made in all 400 lehrs.
Mr. GREER. That is correct.
Mr. HAMILTON. And that was over a period of approximately twenty years?
Mr. GREER. A little over twenty years.
Mr. HAMILTON. Do you recall how many lehrs you made and sold in 1934?
Mr. GREER. It dropped precipitously at that time.
Mr. HAMILTON. The Swindell suit was filed in 1934?
Mr. GREER. In '34. Now I am referring to the bottle industry. We had been selling approximately twenty lehrs per year up to that time, and in 1934 we sold five, and in 1935 I think four, and it has gradually gotten down to one at the present time.
Mr. HAMILTON. What do you mean by the present time 1938?
Mr. GEER. 1938.
Mr. HAMILTON. You have only sold one this year?
Mr. GEER. Only one this year.
Mr. HAMILTON. How many did you sell in 1937?
Mr. GEER. I don't believe we sold any in 1937.
Mr. HAMILTON. Can you tell me how much the Swindell litigation cost your company?
Mr. GEER. Well, it was tremendous for a small concern.
Mr. HAMILTON. How much was it?
Mr. GEER. It amounted to close to $50,000, and that doesn't take into consideration the expense of our organization.
Mr. HAMILTON. Is that litigation terminated, or is the case still pending?
Mr. GEER. No, the case is still pending.
Mr. ARNOLD. 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. ARNOLD. 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. ARNOLD. Can you give me the Can you give me the full name of Mr. Collin?
Mr. GEER. Harry Collin, I believe.
Mr. ARNOLD. You told us a while ago that you were offered $265,000 in the first part of 1934 for your glass manufacturing machine business.
Mr. GEER. That is correct.
Mr. ARNOLD. You say the litigation has cost you $50,000 already?
Mr. GEER. That is correct.
Mr. ARNOLD. 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. ARNOLD. That you sold no lehrs last year. What would you say the value of the glass manufacturing machinery 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. ARNOLD. 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 Company.
Senator KING. Is he still?
Mr. GEER. I can't answer that.
Mr. HAMILTON. Did the Hartford-Empire Company 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. COX. 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 Company versus Swindell Brothers, Inc., and the Amsler-Morton Company, 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 really all you want, isn't it?
Mr. GOODRICH. Coupled with the statement, Mr. Arnold, that there was are hearing 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 Fed. (2) 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.
Mr. GOODRICH. I didn't mean to start a controversy on that.
The CHAIRMAN. I understand that, Mr. Goodrich. 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 you 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 $2500, 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., and adjournment was taken until Friday, Dec. 16, 1938, at 10 a. m.)
Appendix
(Exhibit No. 148)
Correspondence between Ball
Brothers and the Hartford-Empire
Company anent packers
ware manufacture
(Received in evidence, Page 285)
BALL BROTHERS COMPANY
Muncie, Indiana
August 15, 1933
Mr. R. M. Eldred
Hartford-Empire Company
Hartford, Conn.
Dear Mr. Eldred:
Before Mr. G. A. Ball left for Europe he had some talk with you over the telephone regarding so called packers ware supplied by General Glass Company.
I enclose herewith copies of letters regarding plain, unlettered, so called packers jars, Mason fruit jar shape that fit the regular Mason fruit jar cap that are being sold for domestic use.
One of these letters is from a customer in Stevens Point regarding the so called packers jar sold from Green Bay, Wisconsin. We are informed that the General Glass Company are supplying quantities of these jars to a Green Bay jobber and that they are sold for domestic use.
Please let us know what you can do to stop this encroachment on your license agreement which prohibits the sale of these so called packers jars for domestic use.
Awaiting your reply, we remain, yours truly, F. C. Ball, president.
Gentlemen:
For your information, we find in our every day experience that we are unable to sell Mason Jars in competition with other jobbers.
They are selling Quart jars for instance at $6.65 complete, including caps and rubbers. They are getting in can after can. It is the jar the public wants.
What are we to do for the balance of the season?
We are duty bound to meet competition, ocmpelling [sic] compelling us to buy a car of the same jars.
We would like to hear from you with a suggestion so as to relieve the serious situation confronting us.
THE COPPS COMPANY, WHOLESALE
GROCERS
Stevens Point, Wisconsin
8-5-33
Refer answer to BDC:H
Ball Brothers, Muncie, Ind.
Gentlemen:
We are surely up against it on this "packer" jar situation.
We have had correspondence with you pertaining to it at various times during this season and now they are coming into Stevens Point with these jars, some of them from Green Bay, some from Milwaukee, and some from Chicago. Isn't there something that you can do to get a few, at least, to us at the right price?
Please let us know quick.
Yours truly,
THE COPPS COMPANY
(Exhibit No. 149)
Letter from Mr. F. C. Ball to
Hartford-Empire Company anent
alleged price cutting on fruit jars
by a Texas jobber.
(Received in evidence, Page 287)
May 3, 1933.
Mr. Goodwin Smith, President,
Hartford-Empire Company, Hartford, Conn.
Dear Mr. Smith:
Since writing to you yesterday regarding Three Rivers Glass Company I have been reliably informed that a Sherman, Texas jobber is now offering to sell to the retail trade Fruit Jars for domestic use to be manufactured by the Three Rivers Glass Company under the brand name "Crack Shot". The price at which they are offering these jars is 65c per gross less than the same Jobber is offering "Ball Jars". This is disturbing the other jobbing customers and they want to know what we are going to do about it.
I learned at the Owens-Illinois Dallas office this morning that Three Rivers Glass Company are operating under receivership and I presume they are intending to make these "Crack-Shot" Jars.
As I wrote you yesterday Three Rivers have in stock about fifteen carloads of plain Pint and Quart Jars that fit Mason P/L caps which they have been offering to the trade for domestic use. Probably these plain Jars are being sold in connection with the "Crack Shot" jars. At any rate I believe that you should notify them of the exclusive license rights with us and in form them that they have no right to manufacture Fruit Jars of any kind to be sold for domestic use.
This being the beginning of the Fruit Jar season these prices that are being offered by the Three Rivers Company will more than likely disturb market conditions and I trust that you will take steps at once to stop them from manufacturing jars for domestic use by the Three Rivers Company.
I am leaving Dallas this afternoon for home and will be in Muncie next Friday.
Kindly send me a copy of your letter to the Three Rivers Company and when you receive a reply from them please let me know what they have to say.
Very truly yours
Dictd. by Mr. F. C. Ball President
