Sunday, May 11, 2014

Post 6. Zenith’s Second War, second installment

     At the close of the first installment, we left Phil Curtis and Frank Crotty in that "fleabag" room  sorting through the “wallpaper’ that RCA had produced to obfuscate Zenith’s  search for the RCA documents needed to prove its case.  But now the affair turned a corner in favor of Zenith.
     Zenith reported the matter to Judge Igoe, who quickly ordered RCA to produce all the documents.
     Europe was another consideration.  The patent pools of European co-conspirators were counterparts to the RCA patent pool in the United States.  It was thought that English, French, Dutch, German and Scandinavian patent pools had files on the overall conspiracy.  Zenith requested that letters rogatory [i] be issued to the appropriate courts in the countries cited so that Zenith could pursue its pretrial discoveries in Europe; in short, to enable Zenith to examine the participants and the documents relating to the patent pools of the conspirators.
     Judge Igoe issued the order to the High Court of Justice in London and the appropriate courts in the countries cited.  To proceed before the High Court in London, Zenith attorneys had to hire a British solicitor and a British barrister to present its case.  Wright, McConnell, and Curtis arrived in London to find that before they even started, their efforts had been violently opposed in the High Court by RCA patent cartel and the English companies who were members of the cartel.
     “When the judges assembled in their wigs and robes and were seated, we could look up at them, it seemed, as if we were in an orchestra pit staring up at a stage high above us where a collection of impressively robed and white-wigged, seemingly supernatural jurists sat in divine judgment on our cause.”
     Curtis Describes the High Court Proceedings
     Zenith’s British barrister briefly presented its case, and the impressive and eminent barrister for the opposition, Sir Hartley Shawcross, rose and presented the RCA-GE case.  He declared that British companies were being attached by a “Chicago company” and their “Chicago lawyers,” and declared that the pretrial discovery process was entirely foreign to the British system of justice.  Curtis noted that Capone wasn’t mentioned, but it wasn’t necessary to make his point, and observed:
     “As I looked up at the judges, their faces wrinkled by years of judicial service, they appeared to be pained and horrified by the revelations of our opponent’s barrister.  With saddened eyes, the judges seemed to be staring down at us as if we were Chicago gangsters boldly intent on attacking the cream of Britain’s peerage in the very capitol of the Empire.  Tom McConnell facetiously whispered to Wright and me, ‘We’ll be lucky if we escape from here without being put in a dungeon at the Tower in chains’.”
     But if recourse to British justice had failed, RCA executives in London were still subject to the authority of the Chicago court under Judge Igoe.  RCA’s European representative, Cornelius Mayer, was summoned for examination conducted by Tom McConnell.  The result was 244 pages of “arrogant, evasive testimony’; in other words, RCA’s minion was stonewalling.  McConnell suspended the deposition until Mayer’s files could be examined.
     But Mayer had transferred his records from RCA offices in London to a newly formed subsidiary in Switzerland where RCA thought that, under Swiss law as in British law, the records would be immune from examination.  The flagrant attempt to hid the Mayer files was brought before Judge Igoe, who ruled that the files must be returned to London forthwith.  After a clumsy attempt by RCA to withhold the files and to conceal those harmful to RCA’s case, Zenith attorneys were able to examine them.  What the found was evidence of a patent pool in gross violation of U.S. antitrust laws.
     Mayer was again examined.  This time he was faced with the actual documents which clearly showed RCA’s involvement in the attempt to bar Zenith from the European market.  Further evidence was obtained that showed the cartel had blocked Zenith’s efforts to export to Norway, Denmark and Sweden as well as the entire European continent. [Tom McConnell’s examination of Mayer is set forth in Appendix III of the Curtis book, and it is where “Bulldog” McConnell really showed his teeth.]
     Alarmed by Zenith’s progress in discovery, RCA tried to get Judge Igoe removed from the case on the basis that he had displayed “personal bias and prejudice” toward the defendants.  The obvious intent was to get another judge who would rule in favor of RCA – in short, another Judge Leahy.  Judge Igoe refused, and the federal appeals court supported the refusal.  So desperate was the RCA cartel to avoid the antitrust charges that it even appealed to the Supreme Court, which denied the appeal.
     [Note:  RCA’s attempt to replace a judge that is providing unfavorable rulings is a classic tactic in court practice. Zenith’s case was saved when Judge Igoe refused to step down.  But Zenith was not so fortunate in the Second War, as we shall see.]
Zenith wins!
     The Zenith case against RCA and the cartel was scheduled for trial in September of 1957.  RCA however avoided trial by agreeing to settle out of court, paying Zenith $10 million in damages; also, Zenith was awarded a worldwide, five-year, royalty-free license under all the patents in the cartel’s pool
     However, Zenith  intended to hold RCA’s feet to the fire by insisting that the courts address the antitrust issue.  A New York federal grand jury indicted RCA for criminal violation of the Sherman Antitrust Act.  Slippery as ever, RCA avoided a criminal trial by not contesting the case.  A fine of $100,000 was imposed – the tiniest slap on the wrist considering the hundreds of millions of dollars the RCA cartel had reaped in the 30 years it had imposed its criminal cartel, and the American companies it had destroyed. The fine  should have been more like $10 million or even a $100 million.
     In closing, Curtis noted that “we were grateful that the government did not fight us on behalf of the conspirators.”  That statement proved to be a self-fulfilling prophecy for--as incredible as it may seem--the U.S. government did just that in the second war, a war in which Zenith and hundreds and thousands of American workers were the tragic losers.

[i] A letter rogatory, “or letter of request,”  is a formal request from a court to a foreign court for some type of judicial assistance. (Wikipedia)
    So the First War ended in a triumph for Zenith. But that triumph was short-lived, for a more formidable cartel had been formed--the RCA-Japanese cartel.  The story of the Second War will be told in three forthcoming Posts comprising three installments.
McDonald's daughter, Marianne, wrote that if you mentioned David Sarnoff's name to her father, you would get instant anger.  And it is said that the name "Zenith" was was never allowed  in the offices of RCA.
                                                                   * * * * *
A Tribute!  To Michael Lambert Igoe was a federal judge to the United States District Court for the Northern District of Illinois. He served as a federal judge from 1939 to 1965.   He ensured that Zenith got justice in its suit against RCA (You can learn more about Judge Igoe in Wikipedia.)  

Two  Notes:  
1. Previous Posts of this blog, which are Post 1 through Post 5, can be found and opened by clicking in a location to the right of the first paragraphs at the front of the blog, where the Posts are listed.
2. I haven't been able to get photos and other images into the blog, but am working on it. (Google blog is fighting me, and winning. So off the computer goes to the Geek Squad.) 
Two questions:   If I may venture to ask:  How many of you wonderful readers knew the story of the Zenith's two wars?  How many of you have read the Curtis book?  
    Commenting as an author:  If it turns out that only a few of you knew about the Curtis book and its contents, it is an incentive for The Author to write a "popular" edition of the book, for it is a story that should be told for its implications both then and now--especially now in view of the fact that the U.S. government  seems to get ever more powerful, and hence more dangerous to our liberties. What it did to Zenith with regard to the Second War  is  inexcusable and the crime should be revealed to posterity by means of a special  book written for that purpose. 


1 comment:

  1. Interesting reading. Would like to read more.