The French Threat: Pathé Enters the American Market
The commercial threat that Méliès posed when he entered the American market in June 1903 never fully materialized. The opening of Star Films headquarters in New York coincided with Edison's distribution of A Daring Daylight Burglary and the waning of Méliès' dominant position in the international film industry. In England, James White still had a wide assortment of European subjects he could send to the United States for duping. Of the thirty-four pictures listed in Edison's January 1904 catalog, nineteen were dupes. In the September 1904 catalog thirty-six of fifty-two were dupes. Many of these were dramatic headliners and many also were made by Pathé Frères of Paris. The Edison Company's attitude toward this underhanded business was articulated by lawyer Frank Dyer. "I understand that personally you are averse to the copying of our competitors' films," he wrote Gilmore, "but at the same time there must be a good profit in that business as it does away with making an original negative."[113]
This profitable state of affairs began to unravel in mid July 1904, when Gilmore received a letter from Pathé announcing its intention to open a New York branch:
For more than a year we have watched the methods employed by your company, who copy all our Films which they think interesting, in defiance of our rights of ownership.
We know that under the present laws of your country, aside from the special precautions we have taken, we are unable to legally put a stop to same, but as we are about to establish an agency in New York for the sale of our products, and we desire to come to some agreement with you, in order to avoid that in return we will not copy your Films.[114]
Pathé's request was considered unacceptable. To stop duping would be to curtail a profitable venture, and such an arrangement might also be construed as an informal licensing arrangement under Edison's patents. More to the point, the establishment of a branch office in New York City posed a threat to Edison's position in the American industry. Pathé, like the Edison Company, but unlike Méliès, supplied exhibitors with a wide variety of subjects. It was a modern
business organization, with substantial working capital and experience accumulated from its phonograph operations. As a film producer, Pathé was growing rapidly and establishing an international network of offices that fostered maximum distribution of its product.
Frank Dyer formulated a response to the French company's letter, suggesting
that possibly a desirable solution of the difficulty might be secured by calling Pathe's attention to our patent on the moving picture film (reissued Jan. 12, 1904, No. 12192), stating that this patent covers all film now in use, and that in the event of their establishing an agency in New York that they contemplate, we will promptly bring suit for infringement. The suggestion might then be made that we would make an agreement with them under which they would give us the option of copyrighting and duplicating their films in this country, paying them a royalty per foot on all films which might be duplicated . . . . The advantages of the arrangement suggested are that we would keep Pathe Freres out of this country and would be in a position to legitimately copy their films, which, I understand from Mr. Moore are of excellent quality. If the arrangement is not made, and Pathe Freres establish themselves in New York, we would encounter a more active competition on their part and would have to undergo the uncertainty of a suit against them on our patent.[115]
Pathé ignored Edison's warning and opened its branch office with Jacques A. Berst as manager. Making all its prints in Paris, the French concern began to supply its New York office before London. By the time White's purchases arrived in the United States, Pathé had filled much of the demand.[116] Films still considered worth duping were purchased in New York City by Edison's industrial spy, Joseph McCoy.[117] Visiting the Pathé office in November 1904 and using information provided by Berst, McCoy reported that "they opened up for business in this country about two months ago and they have had so much business that they have been unable to supply the demand for their films."[118] Pathé had not only established itself as a major competitor, but had undermined one of Edison's major profit strategies—the making of inexpensive dupes.