University of Wisconsin Digital Collections
Link to University of Wisconsin Digital Collections
Link to University of Wisconsin Digital Collections
The University of Wisconsin Collection

Page View

Schoenfeld, Clay (ed.) / Wisconsin alumnus
Volume 49, Number 9 (June 1948)

Ross, Ward; Schoenfeld, Clay
W.A.R.F. report,   pp. 21-31


Page 27


were slight because the Supreme Court
rarely reviews decisions with respect to
the validity of a patent unless there is
a conflict of opinion between different
circuits. The Supreme Court in June,
1945, denied the Foundation's petition.
  In the meantime, after the first
opinion of the Court of Appeals in San
Francisco in June, 1943, the Founda-
tion looked about for other prospective
defendants against whom infringement
suits might be filed in other Federal
Circuits than the Ninth Circuit. The
purpose was to provide the opportu-
nity to secure the opinion of another
Court of Appeals upon the Steenbock
patents. By September, 1943, the Foun-
dation was able to find only two other
infringers of the Steenbock patents in
the whole United States. These were
both small concerns.
  In that month suits were filed in the
Federal District Court in C h i c a g o
against these two. In one of the suits,
the Department of Justice's Anti-Trust
Division approached the parties with
the suggestions that it might become a
party to the suit in order to present to
the Court for decision the question of
whether the Foundation and its lic-
ensees under the Steenbock patents had
violated the anti-trust laws of the
United States, as had previously been
charged by the Department of Justice
in testimony before a Senate commit-
tee, in press releases, in speeches by
its personnel, and even in a book writ-
ten by the then chief of the Anti-Trust
Division. The Foundation, believing
that it had been guilty of no such
violations, welcomed the opportunity
for a full hearing of the matter in
Court and actually assisted the Depart-
ment of Justice in becoming a party to
the suit.
  In August, 1945, the main Steenbock
patent expired. In October of that year,
when the Supreme Court finally refused
to review the a-re-notding o-fthe
California Court on the Steenbock pat-
ents, the infringement suit in Chicago,
in which the Department of Justice had
become a party, was still pending. Six-
teen of the Foundation's licensees had
been made parties to the suit at the
Department of Justice's insistence.
  The Foundation had years before
considered winding up its licensing
program under the Steenbock patents
upon the expiration of the main Steen-
bock patent in August, 1945. Certain
subsidiary and subservient Steenbock
patents had then a short period to run
before their expiration. Hence negotia-
tions were entered into between all
parties to the litigation in the fall of
1945 to determine whether the whole
matter might be disposed of by the
termination of the Foundation's license
agreements and the dedication of the
remaining Steenbock patents to the
public.
  Such an arrangement was worked
out and in December, 1945, all license
agreements under the Steenbock pat-
ents were terminated and the unexpired
patents dedicated to the public. In
January, 1946, all litigation on these
patents was likewise terminated.
  In deciding upon this course of action
the Trustees were motivated by the
following considerations:
      FICTION: Pediatricians com-
    plained'about the high retail
    prices of certain vitamin D
    preparations.
      FACT: The conclusion ar-
    rived at by a special committee
    of pediatricians was that the
    royalty paid to the Foundation
    on a small bottle of Viosterol
    (concentrated vitamin D) was
    not so great as the cost of the
    carton and the bottle in which
    the Viosterol was packaged.
    1. Carrying through the litigation to
  its ultimate outcome would have cost
  the Foundation an estimated $200,000.
  The Trustees felt it wiser and in their
  line of duty as Trustees to devote that
  money to scientific research at the Uni-
  versity of Wisconsin rather than spend
  it in litigation.
    2. As indicated above, the thought of
  winding up the Steenbock licensing
  program in 1945, after the expiration
  of the first Steenbock patent, was not
  new and had many times been dis-
  cussed; the main reason being that as
  of August, 1945, the Foundation had
  enjoyed a full 17 years of licensing life
  with respect to the Steenbock inven-
  tions.
    3. The Foundation did not consider
  it fair to its 16 licensees, who had paid
  it thousands of dollars in royalties dur-
  ing the lives of their respective licenses,
  to put those licensees to the heavy ex-
  pense of time, effort, and money in
  going through the litigation.
    4. The Foundation's own staff was
  small in size. In the view of the Trus-
  tees this staff should devote itself to
  the handling of other inventions as-
-gned to the-aFoundation-    nstead--of--
  tying up its key members to a probable
  aggregate of two years of litigation.
    In the words of Foundation President
  George I. Haight at the time:
      "Dedication of the patents and
    termination of the litigation does
    not carr3 with it any admission of
    any wrong doing by the Founda-
    tion or its licensees. These issues
    have not been adjudicated by the
    court".
    While anti-trust charges may have
  been made against the Foundation, they
  were never proved. The Trustees were
  of the unanimous opinion that these
  charges were baseless, and in this view
  were sustained by the opinion of emi-
  nent counsel wholly familiar with the
  facts. As a matter of principle from a
      FICTION: High WARF royal-
    ties denied irradiated evapo-
    rated milk to many babies.
      FACT: The WARF royalty on
    a case of irradiated evaporated
    milk was less than 11/2 cents,
    ranging from 1/32 to 1/48 cent
    a can.
selfish viewpoint the Trustees would
have liked to. have defended the
Foundation in the lawsuit, but the main
patent having expired, the Trustees
felt they had no right to try through
to a finish what in its effect on the
Foundation would be an expensive moot
case.
WARF and Oleomargarine
  As mentioned earlier in this story,
the Court of Appeals in San Francisco
criticised the Foundation for its failure
or refusal to license oleomargarine
manufacturers.
  Here are the facts:
  In 1925, when the Foundation was
organized, and today there is the strong
practical argument that oleomargarine,
if sold colored yellow to simulate butter,
will be fraudulently passed off upon the
public as butter. In those early days it
was recognized    that oleomargarine
lacked at least one important nutri-
tional factor found in butter-vitamin
A. It was the fear of Dr. Steenbock
and the Trustees of the Foundation
that if licenses were granted under the
Steenbock patents for the activation of
oleomargarine, ammunition would be
given the oleomargarine manufacturers
to make unsupported claims that their
product was equal to or even superior
to butter.
  For this reason Dr. Steenbock as-
signed his inventions to the Founda-
tion upon condition that no licenses
should be granted for the activation of
oleomargarine without the consent of
the President of the University of Wis-
consin and the dean of the College of
Agriculture. These officials, of course,
at all times had at their command, and
would be expected to rely upon the ad-
vice of leading nutritionists and dairy
experts.
  Until war exigencies in 1943 de-
m a n d e d oleomargarine fortification
with vitaminD only for export to cer-
tain foreign countries, the Foundation
during its administration of the Steen-
bock patents had not licensed the
activation of oleomargarine either
by direct irradiation with ultra-violet
rays or by fortification with Steenbock
vitamin D.
  In judging this procedure, the fol-
lowing facts are pertinent:
  1. During the 18-year period between
1925 and 1943, the Foundation received
one-and only one-application for a
license to activate oleomargarine; and
that was from an oleomargarine manu-
facturer which in about 1917 had been
indicted, prosecuted, and convicted of
violating Federal statutes with respect
to oleomargarine manufacture and sale
in defrauding the United States gov-
ernment of lawful taxes on oleomar-
garine. The comliany had been fined
and some of its officers were sentenced
to imprisonment in a Federal peniten-
tiary.
  2. The American Medical Association
never has approved of or accepted the
addition of vitamin D to oleomargarine.
  3. From 1943 until the end of 1945,
several licensees of the Foundation
under the Steenbock patents were per-
mitted to market Steenbock vitamin D
for the fortification of oleomargarine,
and they vigorously attempted to de-
                                   27


Go up to Top of Page