Motion Picture Patents Company (MPPC)


The Motion Picture Patents Company (also known as the Edison Trust) was founded in December 1908. The MPPC was a trust (a combination of firms or corporations for the purpose of reducing competition and controlling prices throughout a business or an industry)[1] headed by the Edison company and American Mutoscope & Biograph. Other film production companies that belonged to the MPPC included Vitagraph, Selig, Essanay, Lubin, and Kalem.

The purpose of the MPPC was to control all three phases of the film industry: production, distribution, and exhibition. The MPPC did this by requiring producers and distributors to pay licensing fees for all patented equipment and materials that the MPPC claimed to control.[2]

Although it enjoyed initial success, the MPPC soon encountered problems from independent producers that refused to pay licensing fees. Between 1909 and 1911, the MPPC began filing lawsuits, with many of the decisions in favor of the independents.[3] In 1912 the U.S. government began proceedings against the MPPC and in 1915 ruled that the business practices of the MPPC made it a trust, meaning that the company put an unfair constraint on trade. The MPPC officially disbanded in 1918. [4]

Origins of the MPPC


US Film Industry (late 1890s - early 1900s)

As the film industry began to grow in the last decade of the 19th century, there was no clearly dominant production firm or group of firms. The business was understood to be significantly independent with no economic restraints. There was open competition amongst all, including international producers, whose films could easily be imported to the United States. Funding came from many different sources, and American film companies stayed relatively small. For the most part, distribution was regional. Films were sold to large cities and surrounding areas. Exhibition also stayed regional, for the most part, and films were shown in a large variety of settings including amusement parks, opera houses, vaudeville theatres, and early nickelodeons.

However, this era of open competition did not last for long. Those in power of the biggest firms began to realize that they could use patents to consolidate power and create a monopoly over the industry. Taking after the business model of John D. Rockefeller and the Standard Oil Corporation, production firms began to attempt to pool patents. However, just as Rockefeller would eventually experience, this attempt at a monopoly in the film industry would be brought to an end by anti-trust lawsuits under the Sherman Anti-Trust Act. [5]

The US patent wars

As wide-open competition in the industry began to disapear and production firms looked to take control over the film industry, companies used patents and lawsuits to attempt to develop their power. This time in US film history is commonly referred to as the patent wars. As early as 1897, the Edison company began suing its competitors for copyright infringement to either force them out of business or get them to pay royalties. In many cases this worked, and as court cases continued to go in the Edison company’s favor, more smaller firms began paying the company royalties. However, some companies still refused to pay them, one the most significant being American Mutoscope & Biograph. [6]

AM&B claimed that the cameras and equipment they were using differed enough from Edison’s designs and did not infringe on his patents.[7] Despite this, the Edison company filed multiple lawsuits against AM&B, which were sometimes met with countersuits. In 1908, AM&B purchased the patent for the Latham loop[8] and sued the Edison company for its use in their cameras. By now, the two firms had developed rival licensing agreements and were sending the US film industry into a crisis. [9]

Formation and Practices of the MPPC


Industry Consolidation

As the Edison company and AM&B continued to feud over patent rights, business declined throughout the entire film industry. Motion pictures were growing in popularity and demand for new films was ever increasing. However, production firms were so busy battling each other over patent rights, that new films could not be created quickly enough. Some in the industry began to realize that the situation would not improve as long as the Edison company and AM&B continued to fight. Chicago film distributor George Kleine.[10] and AM&B president Jeremiah J. Kennedy.[11] were instrumental in starting negotiations between the two firms. As a result, in December of 1908, the Motion Picture Patents Company was created.[12]

Strategy and Enforcement

The MPPC was not a merger of the existing companies, but a completely separate, new company that would hold control of all the existing patents of the companies involved. Aside from the Edison company and AM&B dominating the company, other firms involved were Vitagraph, Selig, Essanay, Lubin, Kalem, Pathé, Méliès, and Kleine. By pooling the patents of all the firms involved, the MPPC hoped to control all competitors by charging licensing fees on all key patents.[13] Collecting the largest share of these loyalties and licensing fees, Edison received about $1 million every year between 1909 and 1914.[14]

The goal of the MPPC was to form an oligopoly, a small number of firms cooperating to dominate a market, that would control all three aspects of the industry: production, distribution, and exhibition. The MPPC gained control of production by owning key patents on cameras and equipment designs. Edison had also made an agreement with Eastman Kodak, one of the chief suppliers of raw film stock at the time. Eastman Kodak would sell its stock exclusively to members of the MPPC, and in return those members would only buy from them. In these ways, the MPPC claimed considerable control over film production. Any firms who infringed on MPPC patents or refused to pay loyalties and licensing fees were threatened with lawsuits, many of which were carried out.[15]

The MPPC also developed ways to gain control over the distribution and exhibition portions of the industry. Distributors and exhibitors were issued special MPPC licenses, requiring them to regularly pay royalties in exchange for use of MPPC patented films and equipment, including the projectors used by exhibitors. In addition to this, distributors and exhibitors were also given regulations for how they conducted business. The MPPC developed a strict plan for how to release and show films. Exhibitors had to follow all the official release dates, run films on a specific schedule, and retire prints after a certain amount of time. [16] The MPPC eventually bought out all its affiliated distributors and on May 18, 1910 created the General Film Company as a consolidated and more organized distribution arm for the MPPC. The General Film Company developed some important strategies of distribution including pricing based on a film's age and block booking.[17]

Opposition


Initial Resistance

Almost as soon as the MPPC was formed, opposition began to arise from the ranks of filmmakers, distributors, and exhibitors who did not agree with the MPPC’s practices. One of the first major figures to declare independence from the MPPC was William H. Swanson who owned a chain of film exchanges based in Chicago.[18] Swanson and many others began to look for alternative sources of films, mostly through foreign imports, but they could not keep up with the MPPC or public demands with foreign films alone. This is when the film industry saw the rise of the “independents.”[19]

Against threats of lawsuits, many filmmakers began to declare their independence form the MPPC. Unwilling or unable to pay licensing fees, these independents produced film without the assistance of the firms involved in the MPPC. As a result, many of these independents started off small, with little success. An example is David Horsley, who created the Centaur Film Manufacturing Company in 1908. This was the first company to create films without a MPPC license. The company folded in 1910, but Horsley reorganized his business as the Nestor Film Company and saw some success.[20]

In an attempt to avoid lawsuits from the MPPC, many independents tried to develop new designs for cameras that would not infringe on the MPPC’s patents, but they were largely unsuccessful. However, as the MPPC did begin filing lawsuits against independents, the existing patents proved to be very difficult to hold up in court. Many cases continued to go in favor of the independents. Despite this fact, the MPPC continued to file more lawsuits, attempting to gain some ground against the independents.[21]

Organization

As lawsuits against the independents continued to end in failure, the only real advantage the MPPC had was its quality of films. Since most of the firms involved in the MPPC were well-established companies and had a steady stream of revenue, they were naturally able to create quality films more efficiently.[22] However, as independents realized this, they began to organize themselves so that they would have a chance at competing with the MPPC.

One of the first independent alliances was the Motion Picture Distributing Sales Company, formed in 1910. Its members included many individuals and companies, including the New York Motion Picture Company, Carl Laemmle’s Independent Moving Pictures, and David Horsley’s Centaur/Nestor.[23] The company was created not only to handle sales and distribution of independent films, but also aided in legal defense for independents against the MPPC. [24]

The Motion Picture Distributing and Sales Company split up in 1912, with many of its members, along with new companies, going on the form the Universal Film Manufacturing Company and the Mutual Film Corporation. Under these organizations, the independents would eventually overcome the MPPC’s dominance.[25]

Decline and Disbandment

Once the independents were organized under Universal and Mutual, they saw a great increase in success. By 1913, the independents and the MPPC were virtually equal. Films between the two groups had similar production value, and both sides were producing films at nearly the same rate.[26] As the quality of independent films increased so to did their popularity, and since independents led a more uncertain existence, they tended to be more aggressive in their approaches to competition and filmmaking. Thanks to these strategies, many actors and other creative personnel defected from the MPPC into the ranks of the independents, further undermining the MPPC’s success.[27]

In 1912, the same year the independents organized into the Universal Film Manufacturing Company and the Mutual Film Corporation, the US federal government began its first significant proceedings against the MPPC.[28] In 1915, the Supreme Court decided that the MPPC was in violation of the Sherman Anti-Trust Act in its exclusive use of Eastman Kodak film stock with specific cameras and projectors.[29] As a result, the company could no longer control the market as they had intended and the already failing MPPC officially disbanded.

Impact on the Film Industry


Although the MPPC did not succeed in its attempts to control the film industry, it did leave some lasting effects. The Eastman Kodak film format that the company had tried to control was becoming more and more popular and eventually became the 35mm professional standard.[30] The fierce competition between the independents the MPPC also lead to an era of great development for filmmaking.[31] The MPPC brought order to the chaos of the US industry, raising the standard for quality of films and allowing for competition with European filmmakers.[32] While the formation MPPC did not achieve their goal of a successful consolidated market, the organization of the independents essentially did, creating a model for what we now know as the Hollywood film industry.


External Links


Wikipedia:
http://en.wikipedia.org/wiki/Motion_Picture_Patents_Company

Websites:
Britannica.com


References


Books:
Birchard, Robert S. (2005). "George Kleine," in Abel, Richard (ed.), Encyclopedia of Early Cinema. New York: Routledge. ISBN: 0-415-23440-9

Birchard, Robert S. (2005). "William H. Swanson," in Abel, Richard (ed.), Encyclopedia of Early Cinema. New York: Routledge. ISBN: 0-415-23440-9

Bowser, Eileen (1990). The transformation of cinema, 1907-1915. New York, Scribner. ISBN: 0684184141

Enticknap, Leo (2005). Moving Image Technology: from Zoetrope to Digital. New York: Wallflower Press. ISBN: 1-904764-07-X

Gomery, Douglas (2005). "monopoly capitalism: USA" in Abel, Richard (ed.), Encyclopedia of Early Cinema. New York: Routledge. ISBN: 0-415-23440-9

Gunning, Tom (2005). "Jeremiah J. Kennedy," in Abel, Richard (ed.), Encyclopedia of Early Cinema. New York: Routledge. ISBN: 0-415-23440-9

Gunning, Tom (2005). "Motion Picture Distributing and Sales Company (Sales)," in Abel, Richard (ed.), Encyclopedia of Early Cinema. New York: Routledge. ISBN: 0-415-23440-9

Gunning, Tom (2005). "Motion Picture Patents Company (MPPC)," in Abel, Richard (ed.), Encyclopedia of Early Cinema. New York: Routledge. ISBN: 0-415-23440-9

Higgins, Steven (2005). "Centaur/Nestor," in Abel, Richard (ed.), Encyclopedia of Early Cinema. New York: Routledge. ISBN: 0-415-23440-9

Keil, Charlie (2001). Early American Cinema in Transition. Madison: University of Wisconsin Press. ISBN: 0-299-17360-7

Koszarski, Richard (2005). "Carl Laemmle," in Abel, Richard (ed.), Encyclopedia of Early Cinema. New York: Routledge. ISBN: 0-415-23440-9

Millard, Andre (1990). Edison and the Business of Innovation. Baltimore: The Johns Hopkins University Press. ISBN: 0-8018-3306-X

Morey, Anne (2003). Hollywood Outsiders. Minneapolis: University of Minnesota Press. ISBN: 0-8166-3732-6

Musser, Charles (1990). The emergence of cinema : the American screen to 1907. New York, Scribner. ISBN: 0684184133

Quinn, Michael (2005). "General Film Company," in Abel, Richard (ed.), Encyclopedia of Early Cinema. New York: Routledge. ISBN: 0-415-23440-9

Singer, Ben and Charlie Keil (2005). "USA," in Abel, Richard (ed.), Encyclopedia of Early Cinema. New York: Routledge. ISBN: 0-415-23440-9

Spehr, Paul (2005). "American Mutoscope and Biograph (AM&B)," in Abel, Richard (ed.), Encyclopedia of Early Cinema. New York: Routledge. ISBN: 0-415-23440-9

Thompson, Kristin and David Bordwell (2003). Film History: An Introduction. New York: The McGraw-Hill Companies, Inc. ISBN: 0-07-038429-0

Uricchio, William (2005). "US patent wars," in Abel, Richard (ed.), Encyclopedia of Early Cinema. New York: Routledge. ISBN: 0-415-23440-9

Websites:
"Motion Picture Patents Company/General Film Company." Academy of Motion Picture Arts and Sciences. Academy of Motion Picture Arts and Sciences official website. 28 Oct 2008.


Notes


  1. ^ "trust." The American Heritage Dictionary of the English Language, Fourth Edition. Houghton Mifflin Company, 2004. Retrieved 12/04/08.
  2. ^ Thompson & Bordwell, Film History: An Introduction, pp. 39.
  3. ^ Thompson & Bordwell, Film History: An Introduction, pp. 40.
  4. ^ Motion Picture Patents Company/General Film Company. Academy of Motion Pictures Arts and Sciences official website. Retrieved 10/28/08.
  5. ^ Gomery, "monopoly capitalism: USA," pp. 445.
  6. ^ Uricchio, "US patent wars," pp. 654-655.
  7. ^ Spehr, "American Mutoscope and Biograph (AM&B)," pp. 21.
  8. ^ The Latham loop was a camera design invented by Woodville Latham and his sons Otway and Gray. Because of the tension created by heavier rolls of film, most cameras of the time could only handle small rolls. The Lathams added a loop inside their camera that helped relieve tension, allowing for longer films to be made. The design has been a standard in most cameras ever since. Thompson & Bordwell, Film History: An Introduction, pp. 20.
  9. ^ Thompson & Bordwell, Film History: An Introduction, pp. 39.
  10. ^ Birchard, "George Kleine," pp. 361.
  11. ^ Gunning, "Jeremiah J. Kennedy," pp. 355.
  12. ^ Enticknap, Moving Image Technology, pp. 48.
  13. ^ Gunning, "Motion Picture Patents Company (MPPC)," pp. 448.
  14. ^ Millard, Edison and the Business of Innovation, pp. 222-223.
  15. ^ Thompson & Bordwell, Film History: An Introduction, pp. 39.
  16. ^ Gunning, "Motion Picture Patents Company (MPPC)," pp. 448.
  17. ^ Quinn, "General Film Company," pp. 269-270.
  18. ^ Birchard, "William H. Swanson," pp. 614.
  19. ^ Gunning, "Motion Picture Patents Company (MPPC)," pp. 448.
  20. ^ Higgins, "Centaur/Nestor," pp. 108.
  21. ^ Thompson & Bordwell, Film History: An Introduction, pp. 40.
  22. ^ Keil, Early American Cinema in Transition, pp. 24.
  23. ^ Gunning, "Motion Picture Distributing and Sales Company (Sales)," pp. 447.
  24. ^ Koszarski, "Carl Laemmle," pp. 370.
  25. ^ Singer and Keil, "USA," pp. 659.
  26. ^ Keil, Early American Cinema in Transition, pp. 23.
  27. ^ Keil, Early American Cinema in Transition, pp. 25.
  28. ^ Gunning, "Motion Picture Patents Company (MPPC)," pp. 448.
  29. ^ Enticknap, Moving Image Technology, pp. 49.
  30. ^ Enticknap, Moving Image Technology, pp. 49.
  31. ^ Keil, Early American Cinema in Transition, pp. 23-24.
  32. ^ Millard, Edison and the Business of Innovation, pp. 223.