Antitrust Policies and the Motion Picture Industry
Simon N. Whitney
The first decade of picture making was a period of chaotic competition. Entry was easy, since little capital was needed to make or to exhibit the early films of street scenes and similar subjects. Edison's Kinetoscope Company held the camera patents; but many cameras were imported, or patented as "improvements," or made in clear violation of the patent rights. The rights on projectors were in confusion.
Ten leading firms attempted to escape from this chaos at the end of 1908 by forming the Motion Picture Patents Company, to which they assigned any patents they owned.1 They attempted, through the license provisions used by this pool, through the terms on which pictures made by its members were rented (not sold) to film exchanges, and through an exclusive contract with Eastman Kodak Company, to control the entire business in cameras, film, pictures, and projectors. Royalties and rentals were agreed upon. Exchanges and exhibitors that did not conform were denied films made by the members.
Independents were not minded to give in to the "trust." Patents were violated freely, and contracts of distributors and exhibitors were broken. In 1910 the trust attempted to meet this situation by organizing the General Film Company, which purchased control of sixty-eight film exchanges and many more of all sizes folded up or were driven out of business.2 The owner of the sole remaining exchange, William Fox, began making his own pictures and purchased theaters to secure an outlet-- thereby pioneering the integration pattern of the next four decades. "Outlaw" producers emerged in great numbers and successfully "bootlegged" their films.
The government filed an antitrust suit against the Motion Picture Patents Company in 1912. Three years later District Judge Oliver B. Dickin