Check amazon for Triumphs & Trials of an Organ Builder
Today Japan is the preeminent force in the electronics industry including the electronic musical instrument business. Most of the prominent American companies in the field have either gone out of business or are now owned by the Japanese. The situation wasn't always so.
Back in the 1960s, the Japanese competed with many American companies in the electronic musical instrument business. The popular product then was the home organ; the technology used to design the organs was "analog." The digital organ, based on digital technology, was being developed behind closed doors in America by two American companies, North American Rockwell and Allen Organ Company.
Because the digital organ was such a revolutionary development in the art of electronic musical instrument design, the knowledge obtained by those working on the project was extremely valuable. As I indicated in an earlier chapter, situations involving valuable knowledge such as this led to the concept of intellectual property which, in turn, led to the laws governing such property. Obviously, one rule of good business management is to protect the valuable resources of the company rigorously, including intellectual property. Therefore, during the development of the digital organ, the knowledge obtained about how to actually build a practical digital organ was kept strictly confidential (as far as I know).
Of course, patents can be applied for and eventually may be issued. However, even after patents are issued, the owner of the related intellectual property must still rigorously defend against the ever-present, high-tech pirates. Three things which stack the cards in favor of the brigands are: the great cost of litigation, the difficulty of our courts to comprehend high-tech matters, and the great economic advantage of simply copying new developments after the development expense is paid for by someone else.
Another hazard faced by the owner of high-tech intellectual property is the temptation on the part of insiders to "sell out" to competitors for personal profit. When an insider sells "official," high-tech, national, secret information to another country and thereby jeopardizes the security of his own country, it is called treason. Furthermore, most people loathe the one who sells out. There is even a certain sensationalism associated with the story. When the same thing is done in the commercial world, most people are unconcerned. Thus, faced with these obstacles, the business manager trying to protect the intellectual property of his company has his work cut out for him.
The original contracts between Rockwell and Allen covering the joint digital organ venture go into some detail as to the rights of the two parties regarding the patents resulting from the development effort. As stated in the contracts:
NR, insofar as it has a right to do so, during the life of any patent which may issue on said Patent Application Serial No. 660,997 or if none issues, for a period of ten (10) years from the effective date hereof, hereby grants to Allen...a right of first refusal at a price and on terms and conditions to be agreed upon for an exclusive license, with the right to sublicense, within the Field in any patent or patent application filed by NR subsequent to the date of this agreement, in the United States, United Kingdom, Federal Republic of Germany, France, Italy, the Netherlands, Japan, Switzerland and Belgium, to make, use and sell items incorporating any of the following made by Autonetics personnel working in the Field:
Cutting through the legalese of the contract language, the essence of the above agreement between Rockwell (NR) and Allen was that Allen, who was paying for the development, had a "right of first refusal" to any technology developed by Rockwell (Autonetics) relating to the joint venture. The agreement, as stated, covered a very long period of time (at least ten years). Clearly, we expected the relationship between the two companies to go on for a long time. Rockwell would have developed the basic technology; Allen would convert the technology into viable musical products and market the products based on that technology.
The patent application No. 660,997 eventually resulted in a patent. In addition, several other key patents also eventually resulted from the development effort. All of these are the basic patents in the digital musical instrument field. These instruments could not be designed without infringing on some aspect covered by these basic patents. The good part about this situation for Allen was the fact that Allen "controlled" the digital musical instrument field by virtue of its "right of first refusal" as stipulated in the original contracts as described above. The bad part, in a sense, is that the dramatic success of the digital organ technology put Allen in the position of being a roadblock to Ralph Deutsch. Unwittingly, Allen was (and perhaps still is) the target of Deutsch's manifold meddling. The main consequences of this meddling to Allen has, so far, been lost revenue because of legal expenses, and possibly some lost sales. To a degree, his actions also gave the Japanese a head start in the digital musical instrument field. Let me elaborate on the Japanese connection.
The computer organ was shown at the National Association of Music Merchants (NAMM) Show in June of 1971, causing quite a stir. Early on in the show, Deutsch asked me whether I'd mind giving a private demonstration of the organ to the president of Yamaha. Since we had an open-door policy to any and all visitors to our showroom who wanted a demonstration, I agreed to Deutsch's request with some uneasiness. At the appointed time, after regular show hours, we were indeed visited not only by Deutsch and Genichi Kawakami, president of Yamaha, but also by Kawakami's overwhelming entourage of twenty-five-or-so Japanese associates. After observing what they could about the computer organ, the Japanese group had quite a spirited conversation in Japanese. As I recall it, Jim Kagawa, a Rockwell employee acting as interpreter, reported to us that Kawakami had berated his people for not coming up with something like the digital organ, saying something equivalent to, "If you guys can't give us what we want, we'll get the technology from someone else."
I didn't find out until several years later that shortly after the NAMM Show Deutsch disclosed the detailed workings of the computer organ to Yamaha's engineering management without Allen's knowledge and certainly without Allen's approval. Also, I must note that there is a vital difference between demonstrating the "operation" of one's product to the public and disclosing, in great detail, "how to build" the product. And I'm talking about a very complex, revolutionary new technology. Obviously, telling a competitor how to build such a product would be considered unthinkable. I must be clear about another thing. I bear no animosity towards Yamaha for taking something that was handed to them on a platter.
Going back to '71, right after the NAMM Show, I got a call from Deutsch indicating that Yamaha was interested in applying the new technology to a small organ. He requested that I have a conference with some Yamaha people whom he would accompany to our plant in Macungie. I hesitatingly agreed to hear what they had to say. On July 19, 1971, Deutsch along with a Rockwell vice president and the Japanese representatives arrived for the meeting. We discussed the subject as planned but were unable to come to terms. After the meeting, we heard no more from Deutsch or Yamaha aside from a follow-up letter from Genichi Kawakami.
Again, much later, I found out that following the July 19 meeting, Deutsch continued to court the Japanese and eventually engaged in secret negotiations with Yamaha about shifting his allegiance and talents to Japan. This took place while he was still on the Rockwell payroll. Of course, Allen knew nothing about Deutsch's maneuvering at the time; perhaps Rockwell didn't either. As is now well known, in the early 1970s, Japan was heavily engaged in the importation of high technology into their country with an eye towards the eventual exportation of products based on that technology. In the musical instrument field, Deutsch was a willing collaborator in this plan. For Yamaha, today the world's largest manufacturer of musical instruments, Deutsch provided the "fast track" route for getting into the new digital technology. Indeed, Deutsch visited Japan and Yamaha three or four times in the latter part of 1971.
Although the details are somewhat shrouded in mystery, Deutsch left Rockwell in early January, 1972, and entered into a three-year agreement with Yamaha on April 30, 1972, to be a digital musical instrument consultant. To top it off, he applied for a new digital organ patent on February 14, 1972, less than six weeks after leaving Rockwell; yet, he swore under oath that the new invention had no connection at all to his working for Rockwell (and Allen) just six weeks before applying for the patent. Anyone familiar with high-tech patents would doubt Deutsch's explanation. The final patent ran over fifteen pages of fine print including the required and detailed explanation of the system and how it works along with diagrams, lists of parts used in construction, precisely defined legal claims, etc. The carefully-worded pronouncements quoted previously from the original Allen-Rockwell contracts concerning a minimum ten-year commitment to Allen's rights to the new technology had apparently meant nothing to Deutsch either legally or morally. Capitalizing on his privileged position, he took payments from Yamaha for three years in return for his specialized knowledge. After the three-year contract expired, Deutsch tried to renew it, but Yamaha had learned enough to carry on with the new technology by themselves and bid Deutsch farewell. Since then Yamaha has applied for more United States' patents than any other company in the musical instrument field.