Motion Picture Patents Company - Backlash and Decline

Backlash and Decline

Many independent filmmakers, who controlled from one-quarter to one-third of the domestic marketplace, responded to the creation of the MPPC by moving their operations to Hollywood, whose distance from Edison's home base of New Jersey made it more difficult for the MPPC to enforce its patents. The Ninth Circuit Court of Appeals, which is headquartered in San Francisco, California, and covers the area, was averse to enforcing patent claims. Southern California was also chosen because of its beautiful year-round weather and varied countryside; its topography, semi-arid climate and widespread irrigation gave its landscapes the ability to offer motion picture shooting scenes set in deserts, jungles and great mountains.

The reasons for The MPPC's decline are many fold. The first blow came in 1911, when Eastman Kodak modified its exclusive contract with the MPPC, to allow Kodak to sell its raw film stock, which led the industry in quality and price, to unlicensed independents. The number of theaters exhibiting independent films grew by 33 percent within twelve months, to half of all houses.

Another reason was the MPPC's overestimation of the efficiency of controlling the motion picture industry through patent litigation and the exclusion of independents from licensing. The slow process of using detectives to investigate patent infringements, and of obtaining injunctions against the infringers, was outpaced by the dynamic rise of new companies in diverse locations.

Despite the rise in popularity of feature films in 1912–1913 from independent producers and foreign imports, the MPPC was very reluctant to make the changes necessary to distribute such longer films. Edison, Biograph, Essanay, and Vitagraph did not release their first features until 1914, after dozens, if not hundreds, of feature films had been released by independents.

Patent royalties to the MPPC ended in September 1913 with the expiration of the last of the patents filed in the mid-1890s at the dawn of commercial film production and exhibition. Thus the MPPC lost the ability to control the American film industry through patent licensing, and had to rely instead on its subsidiary, the General Film Company, formed in 1910, which monopolized film distribution in America.

The outbreak of World War I in 1914 cut off most of the European market, which played a much more significant part of the revenue and profit for MPPC members than for the independents, who concentrated on Westerns produced for a primarily American market.

The end came with a federal court decision in United States v. Motion Picture Patents Co. on October 1, 1915, which ruled that the MPPC's acts went "far beyond what was necessary to protect the use of patents or the monopoly which went with them" and was therefore an illegal restraint of trade under the Sherman Antitrust Act. An appellate court dismissed the Patent Company's appeal, and officially terminated the MPPC in 1918.