Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-01-17
B. J. Grigsby Describes Pat
ent Situation as "IntoIer-
able" Before Committee.
SAYS ROYALTY METHOD
COST PUBLIC MILLIONS
Asserts Merits Not Considered in
Fixing Costs Manufacturers
Are Forced to Pay.
Ry the Associated Press.

BY the Associated Press.
B. j. Grigsby, president of the Grigs-
by-Grunow Co. of Chicago, testified be-
fore the Senate interstate commerce
committee today that the patent situa-
ton in the radio industry was becoming
intolerable and that a combine was
seeking to dominate the industry and
create a monopoly.
Telling the committee as it continued
hearings on the Couzens communica-
tons bill that his company, which pro-
duces Majestic sets, was licensed under
patents of the Radio Corporation of
America, the General Electric Co., the
Westinghouse Co. and the American
Telephone 81 Telegraph Co., Grigsby
said:
In the year and half in which we
have made radio sets, we have paid that
monopoly S., 302, 879.15 in royalties" He
added that If his company had not been
compelled to add this royalty to the
manufacturing cost, the retail pur-
chasers of its sets would have been
saved millions of dollars.
Intimidation Charged.
I'VE did not pay this royalty because
a royalty" he continued, I'VE did not
believe we needed these patents, and
none of them had been adjudicated
But the radio combine had so terrorized
the industry and had SO inundated
the dealers and jobbers everywhere,
that they were afraid to handle what
they called unlicensed sets.
Our bankers said they would not
finance us unless we took out license.
Il 1nf AV1o a
patent fight against such a monopoly
and there was nothing left for us to
do but to sign the license agreement.
The merits of the patents were never
examined by the bankers. The merits
of the patents had nothing to do with
the case"
Grigsby also told the committee that
his company had paid royalties of III
per cent on gross receipts, which in
and packing cases, but that the royal
ties on cabinets had been discontinued
by the radio corporation.
Serve Notice on Trust.
'If the royalty on cabinets had been
continued" he said, lit would have
forced us out of the cabinet business"
He asserted his firm had served notice
on the radio trust that unless it changed
cabinets through separate company.
so that 1t would not be able to collect
these royalties"
The Radio Corporation of America
changed its policy and abandoned the
royalty on cabinets, he said.
Even with this deduction" he con-
tinued, mo industry can long pay 7I2
per cent royalty to it's competitor. The
combine could sell its products and
make profit of ia per cent, at a
price that would represent only our cost,
and therefore eventually bankrupt U.S.
If there were merit in any Of the COM
bine's patents, we would have no OBJ
lection to dealing with the individual
companies that owned these patents,
but we do protest that 1t is a violation
of the anti-monopoly laws to compel
us to deal with all of them as one
group. and to take all of their patents.
and to pay royalty not on the merit
Of patent. but solely on the power of
the combination to destroy us unless
We surrender"
Situation IntOIerabIe.
The patent situation in the radio in
dustry Is becoming intolerable, he re-
iterated. When the Radio Corporation
fixed its royalty rate at 7l2 per cent, it
did so on the pretense that it had a
complete monopoly OF the radio patents
situation and that its patents covered
every part of the receiving set. That is
not true. We are now paying royalties
to three other patent owners, and have
been sued by five additional companies,
claiming infringement of seven patents.
In no case has the Radio Corporation
protected us against these patents or
helped us in the suits which have been
filed against U.S."
Senator Brookhart, Republican. Iowa,
inquired whether he had called the at
tention of the Department of Justice to
the situation, and Grigsby replied that
he had.
Questioned by Chairman Couzens and
Senator Wheeler, Democrat, Montana,
Grigsby said that he did not believe 1t
was necessary for the Radio Corporation
to assemble the patents after the World
War in order to insure development of
the industry. as has been claimed by the
corporation witnesses.
He asserted the only solution Of the
patent situation would be ap inter-
change of rights by the various radio
companies as was done by the automo-
bile industry.