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.2A 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.3By 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
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.
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.10The following firms either submitted no claims or stated they had none:
American Radio & Research Corp.Seven firms submitted claims totaling $14,860,000 and 17 others demanded monetary awards without fixing the amounts of their claims.
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.
|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|
|National Electric Supply Co.||8,875.00|
|Sperry Gyroscope Co.||5,000.00|
|American Mechanical Improvement Co.||383.80|
It was absolutely impossible to manufacture any kind of workable apparatus without using practically all the inventions which were then known.17In 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.18The 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.
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 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 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 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.
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.