Motion Picture Patents Company

The Motion Picture Patents Company (MPPC, also known as the Edison Trust), founded in December 1908 and effectively terminated in 1915 after it lost a federal antitrust suit, was a trust of all the major American film companies and local foreign-branches (Edison, Biograph, Vitagraph, Essanay, Selig Polyscope, Lubin Manufacturing, Kalem Company, Star Film Paris, American Pathé), the leading film distributor (George Kleine) and the biggest supplier of raw film stock, Eastman Kodak. The MPPC ended the domination of foreign films on American screens, standardized the manner in which films were distributed and exhibited within the United States, and improved the quality of American motion pictures by internal competition. It also discouraged its members' entry into feature film production, and the use of outside financing, both to its members' eventual detriment.

The MPPC was preceded by the Edison licensing system, in effect in 1907–1908, on which the MPPC was modeled. During the 1890s, Thomas Edison owned most of the major US patents relating to motion picture cameras. The Edison Manufacturing Company's patent lawsuits against each of its domestic competitors crippled the US film industry, reducing production mainly to two companies: Edison and Biograph, which used a different camera design. This left Edison's other rivals with little recourse but to import French and British films.

Since 1902, Edison had also been notifying distributors and exhibitors that if they did not use Edison machines and films exclusively, they would be subject to litigation for supporting filmmaking that infringed Edison's patents. Exhausted by the lawsuits, Edison's competitors — Essanay, Kalem, Pathé Frères, Selig, and Vitagraph — approached him in 1907 to negotiate a licensing agreement, which Lubin was also invited to join. The one notable filmmaker excluded from the licensing agreement was Biograph, which Edison hoped to squeeze out of the market. No further applicants could become licensees. The purpose of the licensing agreement, according to an Edison lawyer, was to "preserve the business of present manufacturers and not to throw the field open to all competitors."

In February 1909, major European producers held the Paris Film Congress in an attempt to create a similar European organisation. This group also included MPPC members Pathé and Vitagraph, which had extensive European production and distribution interests. This proposed European cartel ultimately failed when Pathé, then still the largest company in the world, withdrew in April.

Biograph retaliated for being frozen out of the trust agreement by purchasing the patent to the Latham film loop, a key feature of virtually all motion picture cameras then in use. Edison sued to gain control of the patent. After a federal court upheld the validity of the patent in 1907, Edison began negotiation with Biograph in May 1908 to reorganize the Edison licensing system. The resulting trust pooled 16 motion picture patents. Ten were considered of minor importance. The remaining six pertained one each to films, cameras, and the Latham loop, and three to projectors.

The MPPC eliminated the outright sale of films to distributors and exhibitors, replacing it with rentals, which allowed quality control over prints that had formerly been exhibited long past their prime. The trust also established a uniform rental rate for all licensed films, thereby removing price as a factor for the exhibitor in film selection, in favor of selection made on quality, which in turn encouraged the upgrading of production values.

The MPPC also established a monopoly on all aspects of filmmaking. Eastman Kodak owned the patent on raw film stock, and the company was a member of the trust and thus agreed to sell stock only to other members. Likewise, the trust's control of patents on motion picture cameras ensured that only MPPC studios were able to film, and the projector patents allowed the trust to make licensing agreements with distributors and theaters – and thus determine who screened their films and where.

The patents owned by the MPPC allowed them to use federal law enforcement officials to enforce their licensing agreements and to prevent unauthorized use of their cameras, films, projectors, and other equipment. In some cases, the MPPC made use of hired thugs and mob connections to violently disrupt productions that were not licensed by the trust.