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Until 1964, like most other manufacturers of keyboard instruments, Allen Organ Company purchased complete keyboards from a supplier who specialized in the production and supply of such items. These were considered difficult to manufacture. In fact, up to that time, Allen had purchased thousands of these keyboards mainly from Pratt Reed & Company, located in Ivoryton, Connecticut.
I suppose there was a connection between the name of the town and the Pratt Reed keyboard operation because for many years, before conservationists called the world's attention to the possible extinction of elephants, most keyboards of pianos and organs consisted of wooden sticks divided into white "naturals" and black "sharps" with the naturals covered with ivory.
We considered the keyboards to be a relatively expensive component in our products; therefore, during 1964, we applied considerable effort to the thought of manufacturing keyboards "in-house." Over the years, aside from the cost problem, we had grown uncomfortable with the "one-of-a-kind" nature of the keyboards manufactured in those days. This quirk of the keyboards was due to the method of manufacture. All the keys of a particular keyboard, which for an organ consists of a set of 61 wooden keysticks, were cut from a single slab of wood in many passes through a bandsaw. No two keyboards were cut identically. Often, a given key of one keyboard was not interchangeable with the corresponding key of another keyboard. This led to some problems at our end relating to the replacement of individual, defective keys. For example, there was occasional spoilage of keys during our manufacturing processes. Also, occasionally an owner of one of our instruments would suffer damage to a given key or keys and would approach us for a replacement. The hand-tailoring of a replacement key to make it fit into an existing keyboard was a real problem.
Finally, in 1964, we came up with an idea for a new type of keyboard in which the wooden part of each key was identical to the wooden part of every other key. Let me elaborate.
A keyboard is divided into octaves of twelve keys each. If we look closely at the front part of a keyboard, we see that the pattern of key shapes repeats for each octave. Also, there are only seven different white-key shapes; all the black keys have the same shape. Our idea was to use molded plastic "caps" to create the front part of each key. Only seven different shapes in white caps and one shape in black caps were needed. Before the caps were installed, all the short wooden keysticks looked identical in shape and spacing. Attaching the appropriate cap to each keystick gave each key its required shape, color, and feel from the viewpoint of the performer. Manufacturing cost was reduced; replacement of individual defective keys became trivial. Eureka! As the idea evolved, we became enthused enough to buy expensive plastic injection molds from an injection molding company for the mass production of the key caps.
As the project proceeded, I became even more excited as I realized that we had probably come upon a patentable idea. We instructed our patent attorneys to make a "search." This is a procedure involving the examination of all previous inventions to make sure that we had not been preempted by an earlier inventor. Well, lo and behold, we found that we had indeed reinvented the wheel! In fact, the inventor turned out to be an employee of Pratt Reed Company, with the patent assigned to that company. Obviously, we now had no chance to patent the idea. Yet, having already committed a substantial investment to our project, we were reluctant to abandon it.
I communicated with Stan Renehan, our sales contact with Pratt Reed, and he invited me to come up to their plant for a discussion. This occurred toward the end of 1964. I found Pratt Reed was quite reasonable about the matter and suggested that we pay them a royalty on each key that we would manufacture in return for which they would license us to freely produce these keys for our products. The cost of manufacturing each key, including the royalty that we were to pay Pratt Reed, would amount to substantially less than what we were previously paying them. It seemed like an excellent solution.
So, on January 1, 1965, our licensing agreement with Pratt Reed went into effect; during that year, for the first time, we began producing our own keyboards. The original royalty arrangement remained in effect until 1976. The patent was not due to expire until 1981. However, during 1976, we suggested to Pratt Reed that we pay them a single, final lump sum so that we could discard the record keeping that was involved in submitting royalty reports and the like. They agreed.
During 1974, we had a somewhat similar experience. One of our employees came up with the idea of producing a new kind of tremolo unit. This unit would provide an effect that was quite desirable when used in conjunction with our instruments, as well as those of other manufacturers. Again, we thought we had a patentable idea and ordered our patent attorneys to make a search. Once again we were faced with the same situation. An employee of a subsidiary of CBS—CBS had begun to acquire musical instrument manufacturers—beat us to the punch.
By the time we became fully aware of the existence of a patent situation, we had already committed resources to manufacturing the device. In 1975, I was able to work out a license with CBS. Once again we were in a position to produce a device that we needed. Even though we had to pay a royalty to the owner of the patent, the total cost was still more economical than any other method.
At least based upon these two experiences, it is clear that patent problems between companies can be solved by licensing agreements that are mutually advantageous. On the other hand, had Pratt Reed or CBS made outrageous demands upon us, or had they simply refused to let us use their patents, or had we ignored their intellectual property rights, we would have been faced with a far different set of problems. The lesson I learned was that a reasonable royalty demand by a patent owner can help to avoid the unpleasantries and expense of litigation. The other essential ingredient to avoiding litigation is a patent user who honors the intellectual property of others. Later on, I applied this lesson to patents which we owned and wanted to license. I always sought simple, business-like agreements. However, my strategy only worked if the other party was also seeking a simple, business-like agreement — one honoring our intellectual property.