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History of Communications-Electronics in the United States Navy, Captain Linwood S. Howeth, USN (Retired), 1963, pages 371-378:


The  Navy  and  the  Patent  Situation


The advent of radio in the United States was accompanied by a patent dispute.1 Such disputes were to continue for more than a quarter of a century and, combined with the stock manipulations engineered to force rivals from the radio communication field, did much to deter the growth of the new communication medium. The Navy, the largest single American user of radio during this period, immediately felt the impact of these disputes and manipulations and was forced to evolve policies to cope with the situations.
    The Marconi interests, feeling that only they had legal rights in the field of radio communication, established a policy of leasing equipment and providing Marconi-controlled operators to shipowners. One of the clauses of the standard contract included a prohibition against intercommunication with ships or stations fitted with equipment not owned by the Marconi interests. In this manner they hoped they could eliminate competition and establish a worldwide monopoly without the necessity of resorting to expensive and uncertain litigation.
    In December 1899 the Navy Department was informed by the newly formed American Marconi Wireless Telegraph Co. that Marconi equipment would not be sold to the Navy. In lieu of outright sale, they proposed the standard lease. This offer was immediately and positively rejected. After the failure of negotiations with Marconi, the Navy Department procured and installed Slaby-Arco equipments of German manufacture in many of its major ships and shore stations during 1903. This action was the cause of considerable criticism by the Marconi and National Electric Signaling companies.
    About the time the foreign equipments were delivered, several American companies entered the field and commenced the manufacture and sale of radio equipment equally as good or better than that which could be purchased abroad. The Navy Department, not desirous of being dependent upon a foreign country for supplies which might become unavailable during war, adopted the policy of supporting these manufacturers to the fullest extent possible. This increased the clamors and claims of the Marconi and Fessenden interests to such an extent that the Navy was forced to include a proviso in all radio apparatus procurement contracts requiring supplying contractors to defend the Government against infringement suits which might be brought against it because of its use of the purchased apparatus. This contract clause, combined with a limited market, resulted in constant demands by contractors for the elimination of certain specifications in order either to avoid patent suits or better to fit their own manufacturing capabilities without incurring expensive retooling costs.
    The Navy Department was constantly plagued by interests claiming basic patents. The National Electric Co. claimed, among numerous other things, the patent rights on the use of the 500-cycle note and the electrolytic detector. The first was later to be held invalid on proof that Woberton and other naval personnel had modified the Slaby-Arco equipment to utilize it prior to Fessenden's patent application. The Marconi Co. quickly protested the sale of any equipment which they considered infringing the four-circuit tuning patent or the utilization of inductive coupling. Considering the many claims, no firm could possibly meet Navy specifications without facing the possibility of patent litigation.
    In 1906 the Marconi interests modified their sales policies and entered bids for Navy contracts. At this time small quantities of equipments were purchased from the Marconi, Fessenden, Stone, Massie, Shoemaker, and De Forest companies. In 1908 the Navy commenced procurement of most of its receivers from the Wireless Specialty Apparatus Co. which held the unassailable Pickard patents.


In May 1910 the Navy promulgated two statements of policy: (1) That only such patents as had been established as valid by the highest courts of the United States could be considered as adjudicated; and (2) the liability for supplying the Navy any device protected by patent must be borne by the contractor. The first printed specifications for radio equipment contained the following clause:
The contractor shall protect, defend, and save harmless the Navy Department against any demand for patent fees or other claims of any description for any patented invention, article or arrangement that may be used in the construction or form any part of the articles delivered under the contract of the methods necessitated by their use.2
    A few months later Congress enacted legislation, approved 25 June 1910, which contained the proviso:
That whenever any invention described in and covered by a patent of the United States shall hereafter be used by the United States without license of the owner thereof or lawful right to use the same, such owner may recover reasonable compensation for such use by suit in the Court of Claims.
    The unsatisfactory situation caused Todd, Head of the Radio Division of the Bureau of Steam Engineering, to write John Firth, of the Wireless Specialty Apparatus Co., on 11 December 1911:
The Bureau cannot take cognizance of patents. We must have certain apparatus and we must go on buying it from whomever can or will supply it until we are informed by the Department of Justice or some other authority that we must stop it.3
    By 1913, procurement of radio equipment was limited to seven firms, many of whom provided only specific items; e.g., the Wireless Specialty Apparatus Co. sold receivers and accessories but remained out of the transmitter field because of lack of basic patents; the Radio Telephone & Telegraph Co. provided only amplifiers and associated equipment; the Federal Telegraph Co. built arc transmitters, but their position in the receiver field was unsatisfactory; Fritz Lowenstein and the Atlantic Communications Co. (Telefunken) provided quenched-spark transmitters. With the exception of the Atlantic Communication Co., none of these firms could or would provide equipment to meet naval specifications. Under the existing international situation it was not deemed advisable to purchase equipment from foreign sources; therefore, purchases from that firm were made only in cases of necessity. Marconi equipment had undergone little basic improvement in design or circuitry over the decade and was considered by most engineers to be obsolescent. Research had been performed under the supervision of Marconi in England, but he had been more inclined toward the improvement of his existent system than to the development of a better one. The American Marconi Co. had operated under a deficit until 1911 and was not in the position to finance costly research. In 1912 the National Electric Signaling Co. discharged Fessenden, who by that time had developed the heterodyne method of reception, but had achieved no success in developing a satisfactory high-power means of generating continuous waves. According to George H. Clark, senior naval expert radio aid:
There was much dissatisfaction in naval circles with the commercial receivers which were still its standard. For one thing, the thin-wire connections from apparatus to binding posts were constantly breaking off due to vibration of destroyer, or submarine and despite specifications, despite personal pleas, American manufacturers would not adopt the stiff solid-wire leads which navy men required. (This is not true of Telefunken receivers; their leads were made according to best military standards.) Again, the variable tuning condensers supplied did not stand up under vibration, under heavy handling; the plates were too thin, too close together, and short-circuits and changes of calibration were common. Still a third objection; the coils used in these receivers were of high resistance, which meant that the receivers would not buckle down to the job of receiving one station and eliminating all others of slightly different time. Dr. Austin had pointed the way toward the design of low-loss coils but commercial manufacturing standards apparently did not permit of using these. So in the early part of 1913 the Bureau began to consider designing and building its own receiving instruments.4


Finally, it was decided early in 1913 that the Navy would proceed, design and manufacture radio equipment for its own use. From the patent standpoint the Navy was in no different position than any other contractor and the Marconi and other interests would have been quick to claim infringement of their basic patents. At this time Dr. Louis Cohen, famed for his work with Dr. Austin in developing the empirical formula for the determination of signal strength at specific distance from transmitting source, completed the development of a receiver utilizing a new method of coupling, using condensers instead of inductance coils. In February 1913 the Bureau of Steam Engineering obtained rights from Cohen and procured his services to assist in the designs of receivers.
    Receiver designs were completed prior to February 1915 but, during the interim, many things occurred which improved radio reception, among them the development of the three-element tube as an oscillator and amplifier and the feedback circuit as a means of controlling oscillations. The heterodyne method of reception became more feasible because better regulation of this circuit could be obtained by use of the feedback circuit. The use of the three-element tube in stage amplifiers provided better means of bringing in weak signals. All of these developments were incorporated in the naval receiver designs and the utilization of some of these were definite infringements. The increased requirements for radio equipment, brought about by the preparedness program and our later entry into the war, were too large for naval manufacturing facilities, and necessitated continued contracting with commercial manufacturing concerns for equipments based on naval designs.


In September 1915 the Marconi Wireless Telegraph Co. of America sought an injunction against Emil J. Simon, claiming he was supplying the Navy with equipment which they claimed infringed the four-circuit tuning patent. Simon's defense, based on the act of 5 June 1910 and the "right of eminent domain," claimed that the owners of any patents involved were limited to the recovery of damages from the United States. His contentions were sustained by Judge Hough, presiding over the U.S. District Court for the Southern District of New York. This decision was upheld by the U.S. Circuit Court of Appeals for the Second Circuit. As a result of this, the military departments were able to intensify their defense preparations, and manufacturers, believing themselves secure from litigation, began to supply apparatus based on naval design and specifications.
    For a year there was comparative quiet in this battle of radio patents when, suddenly, the storm broke. In September 1916 a decision was rendered in favor of the complainants in the suits brought about by American Marconi vs. De Forest, wherein the complainant claimed infringement of the Fleming two-element tube, and in the countersuit whereby De Forest, as complainant, claimed infringement of his three-element tube. Neither Marconi nor De Forest nor any other company could legally manufacture the badly needed three-element tube without the mutual consent of the two interested companies.
    On 4 March 1918 the Supreme Court reversed the decision previously rendered in the above-mentioned Marconi vs. Simon case. This decision of the High Court held the manufacturers liable for infringements and, by this time, there had been many, including numerous new manufacturers who had, at the Navy's request, supplied infringing apparatus. The Navy Department found itself confronted by the threats of the manufacturers to cease production unless some way could be found to afford them protection. As a result, on 29 March 1918, Acting Secretary of the Navy Franklin D. Roosevelt addressed the so-called "Farragut letter" to the De Forest Co. accepting certain responsibilities on the part of the Government for the protection of patent claims and, on 3 April 1918, he advised the Bureau of Supplies and Accounts that similar letters would be sent to other contractors when and if such action appeared to be necessary.5
    Following the failure, in 1915, of the Marconi interests to procure the Alexanderson alternator, an unconfirmed statement was made by the representatives of the Federal Telegraph Co., who were anxious to sell their stations, that the Marconi interests were endeavoring to purchase their stations and patent rights. They stated that they considered it their patriotic duty to inform the Navy prior to entering negotiations with the Marconi interests. In order to protect American national and naval interests the Navy purchased the Federal stations and patents for $1,600,000 on 15 May 1918.
    Upon the entry of the United States in World War I, the Alien Enemy Property Custodian seized all German-owned radio patents issued by the United States. These patents were purchased for the Government by the Navy Department.
    As a result of these actions the Government, at the end of World War I, was in possession of a considerable number of patents. Many of these were of little value, but among them were valuable patent rights such as those on the Poulsen arc transmitter and the Meissner feedback circuit. Rights over this circuit were in four-way battle between the Government; the General Electric Co., which owned Langmuir's claim; the American Telephone & Telegraph Co., which had purchased the De Forest patent in 1917; and Edwin Armstrong, who at that time still retained his patent rights. This legal struggle was not finally settled until 1934 when the Supreme Court of the United States decided in favor of De Forest. Additionally, the Navy was licensed under the Cohen coupling patent and the Hazeltine neutrodyne circuits.
    Congress, by an act approved 1 July 1918, reiterated the intentions contained in the invalidated act of 25 June 1910, and legalized the action of the Acting Secretary of the Navy. This act stated:
Whenever an invention described in and covered by a patent of the United States shall hereafter be used or manufactured by or for the United States without license of the owners thereof or lawful right to use the same, such owners' remedy shall be by suit against the United States in the Court of Claims for the recovery of his reasonable and entire compensation for such use and manufacture.


In compliance with the spirit of this legislation, and in an effort to avoid multiple compensations for infringements by various departments, the Government established the Munitions Patent Board to determine its liabilities. Because of the highly complex and confused situation existing in the radio patent field, the Government additionally established the Interdepartmental Radio Board to hear radio patent claims and to make recommendations for settlement.
    The members of this Board were Comdr. S. C. Hooper and Lt. Comdr. Edwin H Loftin, USN, representing the Navy Department; Capt. Guy H. Hill, USA; Mr. Robert H. Young, representing the War Department; and Mr. Harry E. Knight, representing the Department of Juctice.6 Loftin was elected Chairman, and his entire duties for over 2 years were devoted to the work of this Board. In this he was principally assisted by Mr. Knight.
    The Board made a complete study of the diversified patents, with Loftin passing upon technical considerations and Knight upon the legal aspects.7 Fourteen hundred contracts covering the period from 29 July 1910 to 1 January 1920 were examined.8 These contracts included apparatus manufactured by commercial firms and by the Government, and also included parts purchased to modernize old equipments or to assemble new ones. Two-thirds of the apparatus under consideration had been purchased or manufactured by the Navy. Ninety percent of the equipment had been purchased since 1916, and much of it was still in its original cratings. All the claims were considered for adjudicated patents, while only those considered valid in view of the prior art were considered in the case of unadjudicated ones.9
The work done by the board, and more particularly by its Chairman, involved a tremendous amount of detail. It called for the equivalent of a detailed examination of the entire radio patent situation in the United States and to some extent abroad; it required decisions as to whether a specific invention was general in character and hence involved operation of the entire system, or whether it could be replaced without material loss or effect; it had to consider several prior decisions of the Court of Claims, from which an idea of 'fair amount of royalty' could be obtained; it paid careful attention to commercial practice in these matters as to fair royalty payments; finally it had to determine the life and usefulness of each specific apparatus. This last factor, however, proved unsolvable; the criterion finally established was to recommend award on the basis of purchase price alone, independent of the time and actuality of use.10
    The following firms either submitted no claims or stated they had none:
American Radio & Research Corp.
Cooper Hewitt Electrical Co.
Cutting & Washington
Federal Telegraph Co.
General Radio Co.
Kilbourne & Clark Manufacturing Co.
Liberty Electric Corp.
Wireless Improvement Co.
Stone Telegraph & Telephone Co.
    Seven firms submitted claims totaling $14,860,000 and 17 others demanded monetary awards without fixing the amounts of their claims.
    The number of patents considered was greatly reduced due to the zeal, tact, and integrity of Loftin. The Marconi Co. originally submitted a list containing 350 patents which they considered infringed, but they reduced this to 4 upon obtaining a clear idea of the Board's fair and impartial method of evaluation.11 Other companies also reduced the numbers they had submitted as infringed, so that the final number of patents considered was 209.12
    The total cost of radio apparatus purchased by the Government during the period of accounting covered by the board amounted to $40,425,404.36.13
    The Interdepartmental Radio Board report, dated 31 May 1921,14 was addressed to the Secretaries of War and Navy and to the Attorney General of the United States and recommended awards totaling $2,869,700.27, divided among the following:
Marconi Wireless Telegraph Co. of America    $1,253,389.02
International Radio Telegraph Co.
    (National Electric Signaling Co.)
American Telephone & Telegraph Co.    615,333.57
E. H. Armstrong    89,624.74
H. M. Horton    75,000.00
E. J. Simon    30,273.31
Lowenstein Radio Co.    22,892.80
Wireless Specialty Apparatus Co.    22,449.69
Dubilier Condenser Co.    18,194.31
John Firth    15,560.93
National Electric Supply Co.    8,875.00
Sperry Gyroscope Co.    5,000.00
Louis Cohen    1,271.25
American Mechanical Improvement Co.    383.80

Of the total, $1,819,520.69 was apportioned to the Navy Department and the remainder to the War Department.
    The Wireless Specialty Apparatus Co. disregarded the recommendations of the Board and brought suit in the U.S. Court of Claims, averring a claim of $6 million. The case was dropped.15 The claims of the American Telephone & Telegraph Co. and the Dubilier Condenser Co. were repeased to the Government under special agreements. Maj. Harry Horton, USA (retired), received a special grant of $75,000 for the infringement of his patent on the use of a trailing wire as an antenna for aircraft.16 Two House resolutions (Nos. 6501 and 7111) were introduced in the 1st session of the 67th Congress to authorize payments as adjudicated. Congress, feeling that such matters were rightfully within the province of the Court of Claims, tabled both bills. The work of the Board, although not carried through to the end for which it was established, did do much to prove the sincerity of the Executive Branch of our Government in its efforts to discharge indebtedness incurred at a time when the personal rights of a few necessarily were subjugated to the necessities of war. Practically all claims were eventually settled by the Government through due processes of the Court of Claims.


Following the termination of hostilities the patent situation was so confused that no manufacturer could safely sell his equipment for either amateur or commercial purposes. Military requirements were virtually nonexistent, as large quantities of surplus apparatus were on hand. Armstrong declared, in testimony taken by the Federal Trade Commission:
It was absolutely impossible to manufacture any kind of workable apparatus without using practically all the inventions which were then known.17
    In 1919, Loftin stated:
That there was not a single company among those making radio sets for the Navy which possessed basic patents sufficient to enable them to supply without infringement . . . a complete transmitter or receiver.18
    The situation was of vital concern to the Navy. Although the surplus equipment was available, it was rapidly becoming obsolescent. New equipment soon would be required to modernize the radio installations as all indications pointed to the possibility of electronic transmitters becoming available early in the future.
    On 3 January 1920 the Acting Chief of the Bureau of Steam Engineering, Rear Adm. A. J. Hepburn, USN, addressed similar letters19 to the American Telephone & Telegraph & Co. and the General Electric Co. with a copy to the Western Electric Co. These letters stated in part:
Referring to numerous recent conferences in connection with the radio patent situation and particularly that phase involving vacuum tubes, the Bureau has consistently held the point of view that all interests will be best served through some agreement between the several holders of pertinent patents whereby the market can be freely supplied with tubes, and has endeavored to point this out with concrete examples for practical consideration.
    In this connection the Bureau wishes to invite your attention to the recent tendency of the Merchant Marine to adopt continuous wave apparatus in their ship installations, the Bureau itself having arranged for equipping many vessels of the Shipping Board with arc sets. Such installations will create a demand for vacuum tubes in receivers, and this Bureau believes it particularly desirable, especially from a point of view of safety at sea, that all ships be able to procure without difficulty vacuum tubes, these being the only satisfactory detectors for continuous waves.
    Today, ships are cruising on the high seas with only continuous wave transmitting equipment except for short ranges when interrupted continuous waves are used. Due to the peculiar patent conditions which have prevented the marketing of tubes to the public, such vessels are not able to communicate with greatest efficiency except with shore, and therefore, in cases of distress it inevitably follows that the lives of crews and passengers are imperiled beyond reasonable necessity.
    In the past the reasons for desiring some arrangement have been largely because of monetary consideration. Now, the situation has become such that it is a public necessity that such arrangement be made without further delay, and this letter may be considered as an appeal, for the good of the public, for a remedy to the situation. It is hoped this additional information will have its weight in bringing about a speedy understanding in the patent situation which the Bureau considers so desirable.
    In anticipation of the signing of a satisfactory cross-licensing agreement by the General Electric Co. and the American Telephone & Telegraph Co., the Bureau of Steam Engineering on 14 January 1920 addressed the following letter20 to the Radio Corp., the Western Electric Co., the Westinghouse Electric & Manufacturing Co., the De Forest Radio Telephone & Telegraph Co., and the American Radio & Research Corp.:
In the present transition from the use of spark radio transmitters to the use of continuous wave transmitters, it is a well-established fact that apparatus of the vacuum tube type is far more desirable, from most points of consideration, then apparatus of the arc type. The maintenance cost of tube equipment, however, is at present prohibitive, due largely to the high cost of tubes.
    The annual maintenance cost for a low-power (2-kw. input) arc transmitter is $100.00, whereas for a tube set of equal power input, this cost is $1,000.00. It is, therefore, evident that the introduction of tube apparatus into the service must await, except in exceptional cases, the very material reduction in the price of transmitting tubes.
    The Bureau will extend all of its facilities to the end of assisting in this price reduction. A very definite standardization policy is being formulated which should also be of material assistance in this regard.
    On January 20, 1920, the Bureau will forward an outline of the proposed standardization policy. On Friday, January 30, 1920, there will be held at the Bureau a conference at which suggestions and comments from manufacturers will be heard and the matter generally discussed. It is requested that you be represented at this conference.


By early 1921, as a result of mergers and cross-licensing agreements, the Radio Corp. either owned or possessed license rights to use more than 2,000 patents. These included the most important patents of the time and provided the Radio Corp. and its affiliated companies with a monopoly in the manufacture and sale of radio equipment. This permitted the Radio Corp. to control the sale of apparatus for commercial radio communication purposes.21
    The Radio Corp. utilized its patent position in controlling commercial radio communications and in forcing shipowners to lease or purchase RCA equipment and to seek RCA assistance for maintenance. With the companies not associated with the Radio Corp. holding insufficient patents to legally manufacture radio equipment, it was not possible for the Government to obtain the modern equipment it required through the usual process of competitive bidding. The situation engendered the growing distrust of Navy officials in this company it had sincerely fostered.
    The agreement made between the General Electric and American Telephone & Telegraph Cos. on 1 July 1920 permitted the former company and its licenses the unrestricted right to manufacture the three-element tube.22 These tubes could only be sold through the Radio Corp. which, despite pleas of naval officials, they refused to sell to companies in competition with them in the merchant marine radio field.
    On 25 April 1921 the Chief of the Bureau of Engineering again addressed similar letters23 to the General Electric and Telephone Cos., reiterating the statements contained in his letter of 3 January 1920, and criticizing both companies for failing to supply the merchant-marine market with tubes excepting in those ships having contracts with the Radio Corp. He closed his letter with this paragraph:
It is feared that unless the market is supplied with the necessary tubes to equip ships at least, the existing agreement may take on the appearance of furthering a monopoly rather than breaking it.
        The situation remained unaltered until about August 1922 when, as reported by the issue of World-Wide Wireless of that month, the Radio Corp. "responding to the call of humanitarianism for the first time permitted the use of its vacuum tubes on competing ship stations." However, the restrictions on the use of the vacuum were very stringent and no competing company which accepted the terms could long survive.
    Competition did exist, however, in the sale of receiving sets, complete except for tubes, particularly from the seventeen firms Armstrong had licensed prior to the sale of his feedback patent to the Westinghouse Electric & Manufacturing Co. The Radio Corp. considered the manufacture and sale of the receivers for use with separately purchased "amateur-use only" vacuum tubes to be an infringement on its tube patents. In an endeavor to test the validity of their contentions, in May 1923 they brought suit against A. H. Grebe Co. Inc., one of the Armstrong licensees, claiming infringement. The significance of this suit was unquestionable. Radio publications joined the hue and cry raised by the public against the Radio Corp. Congressional investigation ensued, and House Resolution 548 directed the Federal Trade Commission to investigate and report upon the status of the radio industry in the United States. The findings of the Commission ultimately brought about a satisfactory licensing program but, for over half an important decade, the development of radio had been slowed by the patent policy of the largest manufacturers.

    1 "Radioana," Massachusetts Institute of Technology, Cambridge, Mass., SRM 137-009.
    Upon Marconi's first arrival in this country in September 1899, he was informed by Prof. Amos Dolbear, of Tufts College, holder of basic patents covering an induction system of communications, that he would be restrained from using his system in this country. Later, as a matter of courtesy, Dolbear agreed to take no action to prevent the radio reporting of the International Yacht races. However, after the Marconi Wireless Telegraph Co. of America was incorporated, the professor instituted legal action, which he later withdrew when he became convinced that Marconi's methods were not covered by his patents.
    2 Naval Specification 16 T 5, p. 31, par. 114-10, May 1910, files, Bureau of Equipment, National Archives, Washington, D.C.
    3 "Radioana," op. cit., files, Wireless Specialty Apparatus Co.
    4 "Radioana," op. cit., Clark, "Radio in War and Peace," p. 96.
    5 Hearings before the Military Affairs Committee, House of Representatives, 67th Cong., 1st sess., 1921, "Settlement of Claims Against the United States Government for Use of Radio Patents During World War I" (Washington, Government Printing Office, 1921).
    6 Report of Interdepartmental Radio Board; orders dated 12 Feb. 1921; files, Bureau of Engineering, National Archives, Washington, D.C.
    7 Testimony of E. H. Loftin before War Claims Arbiter, docket 778, Telefunken vs. U.S.
    8 "Radioana," op. cit., report of J. J. Cosgrove, of Sheffield & Betts, to the Radio Corp. of America re Interdepartmental Radio Board accounting, SRM 100-420.
    9 Report of the Interdepartmental Radio Board, op. cit.
    10 "Radioana," op. cit., Clark, "Radio in War and Peace," p. 366; Cosgrove report, SRM 100-420.
    11 Loftin testimony, docket 778.
    12 Interdepartmental Radio Board report, op. cit.
    13 Ibid.
    14 Files, Bureau of Engineering, National Archives, Washington, D.C.
    15 Loftin testimony, docket 778.
    16 "Radioana," op. cit., Clark, "Radio in War and Peace," p. 367.
    17 W. Rupert Maclaurin, "Invention and Innovation in the Radio Industry" (Macmillan Co. New York, 1949), p. 99.
    18 "Radioana," op. cit., SRM 100.
    19 Files, Bureau of Engineering, National Archives, Washington, D.C.
    20 Ibid.
    21 "Report of the Federal Trade Commission on the Radio Industry" (Washington, Government Printing Office, 1924), p. 69.
    22 License agreement, General Electric Co. and American Telephone & Telegraph Co., dated 1 July 1920.
    23 Files, Bureau of Engineering, National Archives, Washington, D.C.
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