Abstract
On 12 November 1975, ten lawyers from nine different law firms appeared in U.S. District Court, Southern District of New York. They represented twenty clients - nineteen of the largest aerospace firms in the United States and a curious legal and business entity known as the Manufacturers Aircraft Association, Inc. (MAA). All the aerospace firms were members of the MAA; some had been members since the MAA was founded in 1917. All ten lawyers agreed with the court’s finding that the MAA violated Section One of the Sherman Anti-Trust Act of 1890. The MAA was, in short, “a contract, combination… or conspiracy in restraint of trade or commerce.”1 On behalf of their clients, the assembled lawyers agreed to “wind up the affairs and terminate the existence” of the MAA.2 They further agreed to “terminate and cancel the Amended Cross License Agreement,” the legal instrument defining the purpose and operation of the MAA.3
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Notes
The Sherman Anti-Trust Act, July 2, 1890 U.S. Statutes at Large(, Vol. XXVI, p. 209); reprinted in Documents of American History,ed. by Henry Steel Commager (5th ed.; New York: Appleton-CenturyCrofts, 1949)p. 136.
U.S. v Manufacturers Aircraft Assn.Inc., 1976–1 Trade Cases, &60,810,Trade Regulation Reports(Chicago: Commerce Clearing House, Inc., 1976)p. 68,506.
Ibid. The consent decree addressed “The Amended Cross-License Agreement of 1928.” This document revised the original cross-licensing agreement of 1917.
“Engine Charlie” Wilson, President of General Motors and President Eisenhower’s Secretary of Defense, became famous, or notorious, for observing that “what is good for General Motors business is good for America.” William H. Chafe, The Unfinished Journey: American since World War II (New York: Oxford University Press, 1986), p. 139.
John Newhouse,The Sporty Game (New York: Knopf, 1988), p. 95.
See section 2 below.
Alex Roland, Model Research: The National Advisory Committee for Aeronautics, 1915–1958(2 vols.; Washington: NASA, 1985).
Thomas D. Crouch, The Bishop’s Boys: A Life of Wilbur and Orville Wright (New York: Norton, 1989), p. 460.
Roland, Model Research, I, p. 38.
The following account of the Wright brothers’ achievement follows Pete Jakab, Visions of a Flying Machine: The Wright Brothers and the Process of Invention (Washington: Smithsonian Institution Press, 1990); and Crouch, The Bishop’s Boys.
Alfred North Whitehead, Science and the Modern World (New York: Free Press, [1925] 1953), p. 96.
Patent #821393, 22 May 1906. U. S. Congress, House, Pooling of Patents, Appendix to Hearings before the Committee on Patents on H.R. 4523, (74th Cong.) 4 Parts (Washington: GPO, 1936). [Hereafter Pooling of Patents.]
Vander Meulen,Politics of Aircrafl,p. 16.
The following account is derived from Roland,Model Research,I, 37–43; and Vander Meulen,Politics of Aircraft,pp. 21–22.
Naval Act, 1918, Public Law 391, 64th Cong., 2d Sess., 4 March 1917.
Multiple copies of the agreement appear inPooling of Patents;see for example, Part III, pp. 30653070.
The list comes from Bittlingmayer, “Property Rights,” p. 230. He cites Cecil R. Roseberry, Glenn Curtiss: Pioneer of Flight, p. 475, n 2. The exact names of the companies comes from Roland, Model Research, II, p. 604. One attendee at the 12 July meeting with the NACA was identified as Benjamin F. Foss, Assistant Treasurer, B.F. Sturtevant Company. I am not sure if this is the same as the Sturtevant Aeroplane Company.
Welman A. Shrader,Fifty Years of Flight.: A Chronicle of the Aviation Industry 1903–1953(Cleveland: Eaton Manufacturing Company, 1953), pp. 7–19.
Pooling of Patents,Part II, p. 1792.
Bittlingmayer, p. 235.
Frederick W. Barker to William 1. Sirovich, 4 Dec. 1935,Pooling of Patents, Part II, p. 1792.
Elsbeth E. Freudenthal,The Aviation Business: From Kitty Hawk to Wall Street (New York: Vanguard Press, 1940), p. 42.
Bilstein,American Aerospace Industry,p. 16.
Freudenthal,Aviation Business, p. 34. This merger climaxes the section of her book entitled “The Automobile Industry Takes Hold.”
T. W. Gregory to Secretary of War, 6 Oct. 1917, reprinted fromOpinions of the Attorney General, vol. 31, p. 166, inPooling of Patents, Part III, pp. 3002–3005.
Roland,Model Research, I, p. 42.
“The Amended Cross-License Agreement of December 31, 1928,” inPooling of Patents, Part III, pp. 3073–79. The two supplementary agreements are reprinted on pp. 3070–73.
Freudenthal,Aviation Business, p. 88.
Richard Hallion, Legacy of Flight: The Guggenheim Contribution to American Aviation(Seattle: University of Washington Press, 1977);Paul A. Hanle, Bringing Aerodynamics to America(Cambridge, MA: MIT Press, 1982).
Roland,Model Research.
Ibid.,vol. I, pp. 115–17.
U.S. Bureau of the Census,Historical Statistics of the United States, Colonial Times to 1957 (Washington: GPO, 1961), p. 466.
Holley,Buying Aircraft, p. 308.
Robert Gerard Ferguson, “Technology and Cooperation in American Aircraft Manufacture during World War II,” PhD dissertation, University of Minnesota, 1996, p. 4.
Ibid., p. 34.
U.S. Department of Commerce, Bureau of the Census,United States Census of Manufacturers: 1958, Vol. II, Part 2, Industry Statistics(Washington: GPO, 1961),p. 37B-4; U. S. Department of Commerce, Economics and Statistics Administration, Bureau of the Census,1992 Census of Manufacturers (Washington: GPO, 1995), MC92-I-37B, p. 37B-9.
David C. Mowrey and Nathan Rosenberg,Technology and the Pursuit of Economic Growth (Cambridge: Cambridge University Press, 1991), pp. 184–86.
1994 International Trade Statistics Yearbook, 2 vols. (New York: United Nations, 1995), vol. 2, pp. 734, 792.
Maximilian Frumkin, :“Early History of Patents”, Transactions of the Newcomen Society 26 (1947): 5051. The term of the typical English patent, seven years, derives from the normal term of apprenticeship.
“What is important here,” says law professor and patent expert Robert Patrick Merges, “is the juxtaposition of individual interest and the good of the community.” Merges, Patent Law and Policy: Cases and Materials (Charlottesville, VA: Michie Company, 1992), p. 2.
“The Constitution of the United States,” in Commager, ed., Documents of American History, p. 141.
Floyd L. Vaughan, The United States Patent System: Legal and Economic Conflicts in American Patent History (Norman: University of Oklahoma Press, 1956), p. 19. More recent interpretations add nonobviousness and patentability of subject matter to this list, but these are refinements of the same general principles. Bittlingmayer, “Property Rights,” p. 230.
See, for example, the controversy surrounding the electric light and radio industries in Pooling of Patents.
L. Owens, “Patents, the `Frontiers’ of American Invention, and the Monopoly Committee of 1939: Anatomy of a Discourse,” Technology and Culture 32 (1991): 1076–93.
Merges, Patent Law and policy, pp. 8–9.
Robert P. Merges, “Commercial Success and Patent Standards: Economic Perspectives on Innovation,” California Law Review 76 (1988): 818, reports that between 1931 and 1973, the Supreme Court invalidated 83% of the patents that came before it.
S.C. Gillian, The Sociology of Invention (Chicago: Follett Publishing Company, 1935). Unfortunately, his often brilliant ideas about the history of technology were accompanied by eccentric and occasionally racist notions that undermined his credibility and influence. In this book, for example, he observed without evidence that “the native ability of the American people has been declining, through dysgenics, and immigration latterly chiefly of the poorer classes… The stupid have been breeding at a much higher rate than those with native intelligence.” (p. 112)
S.C. Gilfillan, Invention and the Patent System (Washington: GPO, 1964).
Jacob Schmookler, “An Economist Takes Issue,” Technology and Culture 1 (1960): 215.
Jacob Schmookler, “The Interpretation of Patent Statistics,” Journal of the Patent Office Society 32 (1950): 123–46; and “Patent Application Statistics as an Index of Inventive Activity,” loc. cit. 35 (1953): 539–50.
“Controversy,” Technology and Culture 1 (1960): 201–34.
I. Jordan Kunik, “A Patent Attorney Takes Issue,” ibid., p. 223. A classic study of invention came to just the opposite conclusion, i.e., that “each new invention multiplies the possible combinations of existing ideas and thereby widens the scope for originality.” John Jewkes, David Sawers, and Richard Stillerman, The Source of Invention 2d ed. (New York: Norton, 1969), p. 100.
“Organizational Notes,” Technology and Culture 2 (1961): 213.
“Organizational Notes,” Technology and Culture 13 (1972), p. 449.
Carolyn C. Cooper, “Making Inventions Patent,” Technology and Culture 32 (1991): 837–45, at 842; italics in original. See also Robert C. Post, “‘Liberalizers’ versus ‘Scientific Men’ in the Antebellum Patent Office,” Technology and Culture 17 (1976): 24–54.
Robert P. Merges and Richard R. Nelson, “On the Complex Economics of Patent Scope,”Columbia Law Review 90 (1990): 835–915.
Vaughan, United States Patent System, pp. 39–68.
Merges and Nelson, “Complex Economics,” pp. 87–75; and Merges, Patent Law and Policy, p. 93. Merges specifically cites the MAA as an example.
George L. Priest, “Cartels and Patent License Arrangements,” Journal of Law and Economics 20 (October 1977): 309–77.
Roger B. Andewelt, “Analysis of Patent Pools under the Antitrust Laws,” Antitrust Law Journal 53 (1984): 611–39. Andewelt cites the MAA and the Automobile Manufacturer’s Association as examples.
F. H. Russell, Second Supplemental Statement,Pooling of Patents, Part III, p. 2977, cited in Bittlingmayer, “Property Rights, Progress, and the Aircraft Patent Agreement”, p. 234.
(New York: Praeger, 1970).
Jewkes, Sawers, Stillerman, The Sources of Invention.
See note 53 above.
They include a brief overview of nineteenth-century precursors to the Wright brothers, but this offers no insight into the subsequent role of patents in this field in the twentieth century. Ibid., pp. 58–60.
The title of Miller and Sawers’ book implies that they studied all of aviation; in fact their study concentrates on “commercial airplane design,” primarily of airframes. P. 4. I am indebted to I.B. Holley for suggesting this clarification.
Miller and Sawers, Technical Development, pp. 248–49.
It must be noted that the greatest single contributor to airplane efficiency is the engine, a technology outside the scope of this study and of the cross-licensing agreement. Miller and Sawers, Technical Development, p. 47.
Miller and Sawers, Technical Development, pp. 8, 253.
Ibid., p. 253n. They allow that a study of patent statistics, which they did not undertake, might alter this conclusion.
Ibid., pp. 255–56.
Newhouse, The Sporty Game.
Ferguson, “Technology and Cooperation in American Aircraft Manufacture during World War II,” pp. 129–30.
Ferguson notes, for example, that employees usually received an award of $5–10 for a patent suggestion, an additional $25–50 if the idea was patented, and 10 to 30 percent of royalties. Ibid., p. 109.
Ibid., pp. 105–107; quotes at 264 and 109 respectively. See also Holley, Buying Aircraft, pp. 541–45.
Walter G. Vincenti, What Engineers Know and How They Know It: Analytical Studies from Aeronautical History (Baltimore: The Johns Hopkins University Press, 1990).
Ibid., 170–99.
Ibid., pp. 16–50.
Ibid, p. 31.
Seymour Chapin, “Patent Interferences and the History of Technology: A High-Flying Example,” Technology and Culture 12 (1971): 414–46.
Kelly Johnson’s famous “Skunk Works” at Lockheed is the exception that proves this rule.
Jacob Schmookler, Patents, Invention,and Economic Change: Data and Selected Essays, ed. by Zvi Griliches and Leonid Hurwicz (Cambridge, MA: Harvard University Press, 1972).
George Lewis, the NACA Director of Research, said in 1922 that he could not think of any aeronautical investigation that would not apply equally to military and civilian aircraft. Roland, Model Research, Vol. I, p. 119.
Roland, Model Research.
Vincenti, What Engineers Know, pp. 51–111.
Compare Eric von Hipel, “Cooperation between Rivals: Informal Know-how Trading,” Research Policy 16 (1987): 291–302.
Ferguson, “Technology and Cooperation in American Aircraft Manufacture during World War 11, p. 264.
This is true in spite of the pioneering work in numerically-controlled machine tools sponsored by the Air Force. See David Noble, Forces of Production: A Social History of Industrial Automation (New York: Knopf, 1984).
The government sector of the market is, of course, a monopoly. See Sidney L. Carroll, “Profits in the Airframe Industry,” Quarterly Journal of Economics 4 (November 1972): 545–62.
Bruce B. Wilson, “Department of Justice Luncheon Speech Law on Licensing Practices: Myth or Reality? or Straight Talk from `Alice in Wonderland,”’ [sic] remarks before the American Patent Law Association, Washington, 21 January 1975, copy provided by Department of Justice, Antitrust Division, Office of Legal Procedure, 26 March 1997.
Andewelt, “Analysis of Patent Pools,” p. 620. See also Bittlingmayer, “Property Rights,”, p. 228.
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Roland, A. (2000). Pools of Invention: The Role of Patents in the Development of American Aircraft, 1917–1997. In: Galison, P., Roland, A. (eds) Atmospheric Flight in the Twentieth Century. Archimedes, vol 3. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-4379-0_13
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