Edison assembled representatives of the nation’s biggest movie companies—Biograph, Vitagraph, American Mutoscope, and seven others—and invited them to sign a monopolistic peace treaty. Since 1891, when the Wizard of Menlo Park filed his first patent on a motion picture camera/film system, his lawyers had launched 23 aggressive infringement suits against other production outfits.

Sometimes Edison won. Sometimes he lost. But the costs of these battles overwhelmed his rivals, and that was the intent.

“The expense of these suits would have financially ruined any inventor who did not have the large resources of Edison,” one of his lawyers boasted, “and it could hardly be expected that he would be able to prosecute simultaneously every infringement as it arose.”

Thus his victims sold their patents, making the Edison movie empire ever larger.

But the old man wanted it all, so he assembled his rivals and proposed that they join his Motion Picture Patents Company. It would function as a holding operation for the participants’ collective patents — sixteen all told, covering projectors, cameras, and film stock. MPPC would issue licenses and collect royalties from movie producers, distributors, and exhibitors.

To top it all off, MPPC convinced the Eastman Kodak company to refuse to sell raw film stock to anyone but Patent Company licensees, a move designed to shut French and German footage out of the country.

“The negotiations were finalized in December,” Gabler notes, and by early January, “the company made its announcement that the old laissez faire of the movie business was being abruptly terminated.”

Take heed, tech giants of today. Some of your companies or services aren’t much older than the Edison Trust Studios was when it collapsed. How much of your current business strategy is based on offering new and original products, and how much of it is based on laws, courts, and the fact that you got there first?

Make no mistake, had Thomas Edison succeeded in this scheme, he would have killed the motion picture industry or at least delayed its flowering by a generation. The good news is that the Patents Company foundered for a couple of years, then was declared in violation of the Sherman Anti-Trust Act by a federal court.

But why did MPCC fail even before its legal demise? We have here an object lesson that the Internet empires of our time ought to consider. In essence, Edison’s forces thought that they could dominate their industry via legal control over technology, in tandem with a cynical alliance with morals groups. Giving the public the kind of movies that it really wanted came last on their list of priorities—which was the cause of the Edison Trust’s downfall.

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Authors: Matthew Lasar

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