Book Review: The Fall of the U.S. Consumer Electronics Industry: An American Trade Tragedy

McGee, Robert W | January 1, 1994

This book tells the story of Matsushita et aL v. Zenith.’ The title, plus the fact that the author is one of the attorneys who represented Zenith, quickly alerts the reader that the book makes no pretense about being objective. The author does not hide the fact that he is arguing Zenith’s position, and for that he is to be commended. Lesser authors would have wrapped their arguments in language that appears unbiased on the surface, yet subtly supports Zenith’s side of this trade controversy. Curtis does a commendable job of presenting Zenith’s side of the story. He is a good advocate for his client’s position. However, he is representing the wrong client, in this reviewer’s opinion. Curtis begins his dramatic story by relating some of Zenith’s business history. When David Sarnoff, a ruthless Russian emigre, came to the United States, he seized control of RCA’s radio patent pool by negotiating a consent decree separating RCA from GE and Westinghouse, its parent companies.2 He then locked up the radio manufacturing business all over the world and, with the help of some friends, was able to control the industry for more than three decades by using a scurrilous patent package-licensing scheme. Scrappy young Zenith managed to break the cartel after an eleven-year antitrust suit, but its victory was short-lived. Sarnoff then helped organize and license the Japanese electronics industry and built it into a vast cartel. Within twenty years this cartel would decimate the American radio and television manufacturing industry.