Radio Telephone Company officials had engaged in some of the same stock-selling excesses that had taken place at American DeForest, and as part of the U.S. government's crackdown on stock fraud, in March 1912, de Forest aand four other company officials were arrested and charged with "use of the mails to defraud". Their trials took place in late 1913, and while three of the defendants were found guilty, de Forest was acquitted. With the legal problems behind him, de Forest reorganized his company as the DeForest Radio Telephone Company and established a laboratory at 1391 Sedgewick Avenue in the Highbridge section of the Bronx in New York City. The company's limited finances were boosted by the sale, in October 1914, of the commercial Audion patent rights for radio signaling to AT&T for $90,000, with de Forest retaining the rights for sales for "amateur and experimental use". In October 1915, AT&T conducted test radio transmissions from the Navy's station in Arlington, Virginia, that were heard as far away as Paris and Hawaii. The Radio Telephone Company began selling "Oscillion" power tubes to amateurs, suitable for radio transmissions. The company wanted to keep a tight hold on the tube business, and originally maintained a policy that retailers had to require their customers to return a worn-out tube before they could get a replacement. This style of business encouraged others to make and sell unlicensed vacuum tubes, which did not impose a return policy. One of the boldest was Audio Tron Sales Company founded in 1915 by
Elmer T. Cunningham of San Francisco, whose Audio Tron tubes cost less, but were of equal or higher quality. The de Forest company sued Audio Tron Sales, eventually settling out of court. In April 1917, the company's remaining commercial radio patent rights were sold to AT&T's Western Electric subsidiary for $250,000. During World War I, the Radio Telephone Company prospered from sales of radio equipment to the military, but it also became known for the poor quality of its vacuum tubes, especially compared to those produced by major industrial manufacturers such as General Electric and Western Electric.
Regeneration controversy Beginning in 1912, investigation of vacuum-tube capabilities increased, simultaneously by numerous inventors in multiple countries, who identified additional important uses for the device. These overlapping discoveries led to complicated
legal disputes over priority, perhaps the most bitter being one in the United States between de Forest and
Edwin Howard Armstrong over the discovery of
regeneration (also known as the "feedback circuit" and, by de Forest, as the "ultra-audion"). Beginning in 1913, Armstrong prepared papers and gave demonstrations that comprehensively documented how to employ three-element vacuum tubes in circuits that amplified signals to stronger levels than previously thought possible, and that could also generate high-power oscillations usable for radio transmission. In late 1913, Armstrong applied for patents covering the
regenerative circuit, and on October 6, 1914 was issued for his discovery. U.S. patent law included a provision for challenging grants if another inventor could prove prior discovery. With an eye to increasing the value of the patent portfolio that would be sold to Western Electric in 1917, beginning in 1915, de Forest filed a series of patent applications that largely copied Armstrong's claims, in the hopes of having the priority of the competing applications upheld by an interference hearing at the patent office. Based on a notebook entry recorded at the time, de Forest asserted that while working on the cascade amplifier, he had stumbled on August 6, 1912, across the feedback principle, which was then used in the spring of 1913 to operate a low-powered transmitter for
heterodyne reception of Federal Telegraph arc transmissions. However, strong evidence also showed that de Forest was unaware of the full significance of this discovery, as shown by his lack of follow-up and continuing misunderstanding of the physics involved. In particular, he apparently was unaware of the potential for further development until he became familiar with Armstrong's research. De Forest was not alone in the interference determination—the patent office identified four competing claimants for its hearings, consisting of Armstrong, de Forest, General Electric's Langmuir, and a German, Alexander Meissner, whose application was seized by the
Office of Alien Property Custodian during World War I. The subsequent legal proceedings become divided between two groups of court cases. The first court action began in January 1920, when Armstrong, with Westinghouse, which purchased his patent, sued the De Forest Company in district court for infringement of patent 1,113,149. On May 17, 1921, the court ruled that the lack of awareness and understanding on de Forest's part, in addition to the fact that he had made no immediate advances beyond his initial observation, made implausible his attempt to prevail as inventor. However, a second series of court cases, which were the result of the patent office interference proceeding, had a different outcome. The interference board had also sided with Armstrong, and de Forest appealed its decision to the District of Columbia district court. On May 8, 1924, that court concluded that the evidence, beginning with the 1912 notebook entry, was sufficient to establish de Forest's priority. Now on the defensive, Armstrong's side tried to overturn the decision, but these efforts, which twice went before the U.S. Supreme Court, in 1928 and 1934, were unsuccessful. This judicial ruling meant that Lee de Forest was now legally recognized in the United States as the inventor of regeneration. However, much of the engineering community continued to consider Armstrong to be the actual developer, with de Forest viewed as someone who skillfully used the patent system to get credit for an invention to which he had barely contributed. Following the 1934 Supreme Court decision, Armstrong attempted to return his
Institute of Radio Engineers (present-day
Institute of Electrical and Electronics Engineers) Medal of Honor, which had been awarded to him in 1917 "in recognition of his work and publications dealing with the action of the oscillating and nonoscillating audion", but the organization's board refused to let him, stating that it "strongly affirms the original award". The practical effect of de Forest's victory was that his company was free to sell products that used regeneration, for during the controversy, which became more a personal feud than a business dispute, Armstrong tried to block the company from even being licensed to sell equipment under his patent. De Forest regularly responded to articles that he thought exaggerated Armstrong's contributions with animosity that continued even after Armstrong's 1954 suicide. Following the publication of
Carl Dreher's "E. H. Armstrong, the Hero as Inventor" in the August 1956 ''Harper's'' magazine, de Forest wrote the author, describing Armstrong as "exceedingly arrogant, brow beating, even brutal", and defending the Supreme Court decision in his favor.
Oscillator transmitter suit De Forest's patents were eventually inherited by the
Radio Corporation of America (RCA), which aggressively used the legal system against companies it considered to be infringing on its holdings. In 1938,
Arthur A. Collins mounted a successful defense against an RCA claim that Collins Radio transmitters infringed on a de Forest patent, by showing that the vacuum tubes it was using were based on an earlier patent issued to
Robert Goddard.
Renewed broadcasting activities In the summer of 1915, the company received an experimental license for station
2XG, located at its Highbridge laboratory. In late 1916, de Forest renewed the entertainment broadcasts he had suspended in 1910, now using the superior capabilities of vacuum-tube equipment. 2XG's debut program aired on October 26, 1916, Beginning November 1, the "Highbridge Station" offered a nightly schedule featuring the Columbia recordings. These broadcasts were also used to advertise "the products of the DeForest Radio Co., mostly the radio parts, with all the zeal of our catalogue and price list", until comments by Western Electric engineers caused de Forest enough embarrassment to make him decide to eliminate the direct advertising. The station also made the first audio broadcast of election reports—in earlier elections, stations that broadcast results had used Morse code—providing news of the November 1916
Wilson-Hughes presidential election. The
New York American installed a private wire and bulletins were sent out every hour. About 2,000 listeners heard
The Star-Spangled Banner and other anthems, songs, and hymns. With the entry of the United States into World War I on April 6, 1917, all civilian radio stations were ordered to shut down, so 2XG was silenced for the duration of the war. The ban on civilian stations was lifted on October 1, 1919, and 2XG soon renewed operation, with the Brunswick-Balke-Collender company now supplying the phonograph records. In early 1920, de Forest moved the station's transmitter from the Bronx to Manhattan, but did not have permission to do so, so district Radio Inspector
Arthur Batcheller ordered the station off the air. De Forest's response was to return to San Francisco in March, taking 2XG's transmitter with him. A new station,
6XC, was established as "The California Theater station", which de Forest later stated was the "first radio-telephone station devoted solely" to broadcasting to the public. Later that year, a de Forest associate, Clarence "C.S." Thompson, established Radio News & Music, Inc., to lease de Forest radio transmitters to newspapers interested in setting up their own broadcasting stations. In August 1920, the
Detroit News began operation of the Detroit News Radiophone, initially with the callsign
8MK, which later became broadcasting station
WWJ. ==Phonofilm sound-on-film process==