The Parking Meter Industry* GEORGE E, FROST, Principal Investigator S. CHESTERFIELD OPPENHEIM, Principal Consultant ; NEIL F. TWOMEY, Resaarch Astistont Sunmary ‘On March 28, 1944, Judge Leahy rendered decision in favor of the Gov- ernment and against Vehicular Parking, Ltd., a patent holding corpora- tion, and substantially all of the prewar members of the parking meter industry. The government complaint had alleged, and Judge Leahy found, that the patent licenses entered into by Vehicular Parking and the associated business activities of the defendants, gave rise to illegal price fixing and other violations of the Sherman Act. The decision indicated that the patents of Vehicular would be made subject to compulsory licenses. Later decrees so ordered. ‘There have been two major entries into the parking meter business since the decision and decrees. One was Magee-Hale Park-O-Meter Company. The other was International Meters, Incorporated, whose product did not involve features covered by any of the Vehicular patents and did not give rise to any patent infringement controversies. In 1952 the International meter business was sold to Mi-Co—a prewar meter concern which has since marketed the meter. Vehicular charged that the Magee-Hale Meter construction infringed four Vehicular patents. After some initial legal proceedings, Magee-Hale (organized by Carl Magee and others who had been instrumental in build- ing up Dual Parking Meter Company, the principal prewar concern) elected to take a license under the compulsory licensing decree provisions. ‘The principal stockholder of Magee-Hale finally purchased the Vehicular patents for $95,000, bringing the controversy to an end. There are six significant parking meter manufacturers at the present time, the same number as in the prewar period. Data indicate that Dun- can Parking Meter Corporation, the chief competitor to the Dual Parking Meter Company during the prewar period, is the leading concern in terms of sales, with substantially more than a third of the sales volume, followed by Magee-Hale with about a third of the total sales volume. The other © Mr. Frost prepared this research interim report on Project 4a, Effects of Certain Antitrast Decrees Involving Patents as a Major Factor. 376Parking Meter Industry 377 four concerns share the remaining portion of well under one third of the meter sales. ‘Vhe effects of the compulsory licensing decree provisions have been very mild. Activity on both the Magee-Hale meter and the International meter commenced well before the antitrust opinion and decrees and for this and other reasons cannot be credited to the compulsory licensing provisions. In addition, the patents in the industry during the postwar period have been of the detailed engineering improvement variety for which alterna- tive fully competitive structures are available. While the members of the dustry do have a lively interest in product improvement, attention is directed to improving existing meter designs and not to basically new forms of meters. The only recent meter design that can be classed as wholly new in terms of principle is the Duncan Automaton, which has not been stressed by Duncan in its sales effort and has not enjoyed any large sales volume. INTRODUCTION Ts naronr nzzares o tue szcoxo of two case studies selected as pilot projects on the effects of compulsory licensing decrees in antitrust cases. The first study was of the so-called Besser case, relating to the concrete block making machine industry. ‘This study is reported in Volume 2, Number 1 (March, 1958) of the Journal at pages 61 to 184. The second and present study is directed to the so- called Vehicular Parking case, involving the parking meter industry. The con- clusions of the present report, beginning at page 876, include a comparison of the results of the two studies and a discussion of their significance in relation to the conditions in other industries. The parking meter industry can be traced to the first commercial installation of such meters in Oklahoma City in 1985. When the war interrupted meter production, the importance of parking meters to municipalities was evident. By that time, some 150,000 meters had been sold by six major concerns. At the con- clusion of the war there was a tremendous accumulated demand for meters, with the consequent sellers’ market that prevailed until about 1950. The peak year for the industry as a whole was probably 1948, when about 195.000 meters were sold at a dollar volume of about $12 million. Meters are sold to municipalities for installation on street curbs and in parking lots to control parking. In most instances the price of the meter is paid to the manufacturer out of the revenues produced by the meter, a fixed percentage of such revenue—such as 50 or 75%,—being paid over to the manufacturer. Once paid for, the meters constitute a substantial source of revenue to the municipality. For example, Rochester, New York, in 1944 collected $90,017 from 1,855 meters, or about $50 per meter. The City of Chicago in 1956 collected $2,412,885 from378 Patent, Trademark, Copyright Journal of Research, Education 28,909 parking meters, or about $85 per meter.* This substantial revenue, coupled with the effectiveness of the meters as a policing device, accounts for the present wide popularity of the meters. PRE-WAR HISTORY OF THE PARKING METER INDUSTRY ‘The rudiments of the parking meter idea find expression in proposals made in the 1920's However, the first commercial parking meter installation was not made until 1985, when Dual Parking Meter Company installed 2,000 meters in Oklahoma City. This installation was largely the result of the efforts of Carl W. Magee, who was the first effective proponent of parking meters and remained an outstanding figure in the industry until his death in 1946. Magee's efforts began at least by 1932 and progressed in successive steps to the 1935 construction.® ‘The Oklahoma City installation was a well-publicized immediate success. Dual promptly engaged in the substantial manufacture of parking meters. As then manufactured, the Dual meter included all of the essential elements of the modern “manual” type meter. In this type meter, the user inserts a coin and turns a handle. Turning the handle winds the clock mechanism and sets the clock pointer to the paid-for number of minutes. The clock mechanism thereafter drives the pointer toward the zero time position as time passes, thus causing the pointer to indicate zero time and a parking violation upon expiration of the paid-for time. ‘The essen- tial elements of this mechanism—curb mounting, coin operation to set the paid-for time, manual setting, and indication of elapsed time—are shown in patents issued well prior to the 1985 Oklahoma City installation.« Chicago Daily Tribune, Part 4, p. 8 (Jan. 17, 1957). 1The early proposals are recorded in a series of patents issued on applications filed around 1980, They include Homan patent 1,620,098, filed in 1925 and directed to a “Parking Meter” in the form of a clock to be affixed to the automobile: Hutches patent 1,749,977, filed in 1928 and directed to a similar device; Doyle patent 1,752,071, filed in 1986 and directed ‘to a device carried by the automobile which was to be run (with an indicator showing that fact) while the auto vwas parked and was to be periodically recharged by the police upon payment of a prescribed charge; Ogilvie patent 1,879,488 filed in 1980 to a “Parking Device” consisting of a curb-mounted coin-operated timer in which a green disk showed during a passage of the time paid for and a sd disk appeared upon expiration of that time: and Babson patents 1,731,889 and 1,978,275, filed in 1929 and 1980, respectively, and. similarly directed to a eurbemosnted coin-operated timing device. Tn addition to the antecedent parking meter patents, the parking meter industry may also be traced to. coin-operated timers generally. Prior to 1930 these had been used to control coin- operated hotel radios, appliances, gas and electric supply, and other things. An example of such aipatent that became important in later parking meter patent Titigation is found in Miller patent 199,056, fled in 1980 and ultimately assigned to Duncan Parking Meter Corporation. 2-The history of the parking meter industry~and this initial installation by Dual—is discussed in Business Week, April 21, 1945, p. 44. See also Business Week, May 17, 1947, p. 31. 8 The Magee 1982 construction is shown in Magee patent 2,039,544, issued in 1936 to a “Parking Meter.” This unit consisted of a box similar in shape to a farm mail bos, mounted on a post. ‘The user inserted a coin and pulled a lever to actuate the timing mechanism and lower the signal flag. Upon expiration of the paid-for time, the timer in the device elevated the signal flag to “violation” position, No time: indication was otherwise provided. In 1988 Magee filed patent 2,088,900 to “Parking Device." ‘This patent related to the internal mechanism of the meter. In 1985 Magee filed patent 2,118,818 to a “Coin Controlled Parking Meter.” This patent is discussed in the text «The Ogilvie patent, sce note | supra, showed a parking meter with all of these features, except an indication of the time as it passes, All of these features, including the indication of time are in