Radio Pool Suit

To counter Britain's wireless monopoly in 1919, Radio Corp. of America was formed. Patents owned by General Electric, Westinghouse, American Tel. & Tel. were pooled for Radio's development of receiving sets, were later "licensed" (for a royalty) to 34 receiving set manufacturers, 14 tube manufacturers. Almost immediately, the U. S. Government looked askance at these practices as possible violations of the Sherman Anti-Trust Act. Although in 1928, after prolonged investigation, the Federal Trade Commission dismissed a complaint against Radio on this score, the Department of Justice continued to hear protests from "independent" producers.

Last week, the Department filed suit under the Sherman Act against RCA in the U. S. District Court at Wilmington, Del. It charged a nationwide monopoly, asked that Radio, its affiliates and subsidiaries, be disbanded. This action followed closely on a reorganization of Radio under which 51.3% of its stock would be voted by General Electric and Westinghouse, denounced by Washington's Senator Clarence Cleveland Dill as a "$6,000,000,000 worldwide trust" (TIME, April 28):

Declared Oswald F. Schuette, executive secretary of Radio Protective Association (composed of independents) : ". . . The end of the reign of terror ... !" Said Bertram James Grigsby, of Grigsby-Grunow Co. (Majestic Radio): "Extremely gratified. . . ." Press headlines proclaimed: ADMINISTRATION STARTS TRUST-BUSTING CAMPAIGN! But prompt was Attorney General William DeWitt Mitchell to deny that there was "occasion for any such campaign." Indeed, the Government's petition in the Radio suit stated: "The defendants . have earnestly contended that they are doing nothing more than . . . authorized."

However, the case was a test of major industrial importance to clarify the Sherman Act. Many an industry using complicated machinery pools patents is uncertain if it is inside or outside the law. Recently the Oil Industry was restrained in U. S. court from pooling its "cracking" patents.

Declared Owen D. Young, Radio's executive committee chairman: "Certainly if there be anything illegal in the set-up of the Radio Corp., its officers, directors and stockholders are more deeply interested in that question than either the Government or any other group. ... It is very glad, therefore, that a test case has been brought. It prefers to have such a question out of politics."

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