terests, and they do it very well. But on the whole, they are decent guys; and we think that if you vote against them because you are sincerely convinced that they are wrong, sometimes they secretly agree with you. And my guess is that if you bring out legislation here that carefully protects the public interest, those fellows will be right in there asking for contracts, and they will still be performing the research. The only difference is they will be communicating this information to one another as they should be doing it; and when they develop something, it will benefit 190 million people instead of somebody sitting down to figure out how can he make the greatest advantage on it.

I don't want to quarrel with patent lawyers. If I were a member of the Patent Law Association I would be outraged at Senator Long for trying to keep me from getting rich at the public expense.

I don't quarrel a darn bit that they protect their interests and I am through speaking before their associations. I think they have been most kind, even letting me get out of the hall with my hat when I address them, considering the tremendous financial interests those folks have in preserving the tremendous costs for a completely unnecessary operation.

Imagine, here we spend a fortune to find how to get into outer space. We can't use it for 4 or 5 years. We have got to turn it over to a patent lawyer and let him figure out what we can do.

Here you have something that is great. Wait a minute. You haven't fenced that patent in. Do you understand what "fencing in" of a patent is? "Fencing in" means that you have something great but somebody else might be able to do something similar and save the public a fantastic amount of money. For example, what is this thing that does the same thing as quinine? Atabrine. Suppose you had developed quinine. It is good for malaria. Now, atabrine will do the same thing. If you had discovered quinine, you don't want to let the public know about this until you have also discovered atabrine because otherwise the public might not pay you a fantastic price for quinine. They might buy_atabrine. So don't let the public know you have found quinine. Keep that secret and go to work and see if you can't find atabrine.

So once you have found a satisfactory way to answer the technical problem, you have to find every other way including many inferior answers to that problem. So that there is no way they can go by you.

It is similar to that old bandit who erected his castle right there at the mountain path. Nobody could go by without paying at the castle, and that is what you would have to do with these patents. You discover something, but you can't let the Nation have the benefit even though they pay for it. You have to turn it over to a patent lawyer. He has to be satisfied that there is no way they can bypass this before the invention is ever permitted to be known at all. I do say the fact that we are just 5 years behind the Russians in space is a miracle to me, the way we are doing it. But imagine us handicapping ourselves just to give some fellow a hammerhold on the public interest.

As a matter of fact, this same business developed before. I am not the first man to tell you about this. In the Hartford Empire case this thing was discussed at considerable length. The TNEC Committee headed by the late Joe O'Mahoney, of Wyoming, brought out to a very

-considerable degree how these folks go about fencing in patents. It is kind of cute how they do some of this. If you discover something that is good, it is not always good to patent it. Our patent law is such that the patent runs 17 years from the date that it is granted and the guy who gets the reward is a fellow who discovered it first.

Look here. Here are two people. Let's say one of them discovers a new drug that would cure heart disease. He figures he wants to fence this thing in to make sure nobody discovers something parallel to it that might bypass his patent. So he is keeping it a secret. He can keep that in his bosom for 20 years or forever and when he gets ready to apply for the patent, he has got 17 years to exploit that because he was the first man to get the idea.

Now, here is another character who might be like Dr. Guthrie who is complaining about Miles Laboratory raping the public interest. This fellow perhaps discovers the same thing but he discovered it 5 hours later. He goes ahead and makes it available to the public and applies for the patent so the public can have the benefit of this.

Who do you think gets the reward? The man who wanted to benefit the public or the guy who wanted to hold it back forever to guarantee that when he really finally filed this thing for application, he could really reap the harvest.

Well, naturally, it is the guy who thought of the idea first who wanted to reap the harvest.

It seems to me we ought to do something about that. But these are the kinds of problems you get into once you start trying to compromise between right and wrong. The right of it is very simple.

In the first year of the administration of President George Washington, even before we had a patent law, this Government signed a contract with Eli Whitney to see if he couldn't develop interchangeable parts for firearms so if they had a bunch of fellows out in the woods and one would break the hammer off his rifle, he would take a hammer off another. If one had a barrel busted, he would take the hammer off that one and put it on a good barrel and go right on fighting. At least you had one good rifle instead of none.

Eli Whitney did a good job of this and made the results of his work free and available to all the people. That was the whole idea of the

contract.

Now, from that date up until 1942, whenever the Department of Defense would let a contract with some fellows to do research, it would retain for the Government the patent rights on that research.

But in 1942 we were fighting for our lives in a war with Germany and Japan. Some of these large concerns had heard that President Roosevelt had called in Mr. Win-the-War and sent home Mr. New Deal. What that meant was that the war business was the most important. He wanted to get along with these fellows, try to be friendly and let them make some money out of this war while he was going on trying to win it. The large concerns were to make a profit and at the same time disputes were settled in their favor. The President didn't want to quarrel too much but wanted to get on with the war.

They came down here in 1942 and said, "Now, look, we want to change these contracts to say we retain private patent rights and they said that industry was not very much interested in doing Government research unless they could keep those private patents on Government research."

In my judgment, gentlemen, that was a bluff. You try to find out who it was that would do it. Who were these big corporations? While the American boys-you had sons yourself out there fighting, Mr. Chairman, and while your sons were out there fighting these Germans and Japanese, giving their lives fighting those people as your sons did-while they were doing that, here these companies were telling the public that "We won't even do research, not even to protect our own hide from those Germans and Japanese. No, sir. We won't do research for you unless we can have private patents on all the research we do."

Well, you say, they said it. Who was that? And then they all duck for cover and pretend "it wasn't me.'

Well, I have made some effort to find out who it was. The best I can make out of it seems that General Electric was the bell cow of that crowd.

Now, General Electric, you may recall, just a short time ago was one of the 10 electrical equipment contractors who had to go before the U.S. court and pleaded guilty in 7 cases including the turbine case and pleaded nolo contendere in 13 of the cases, that that company had been systematically engaging in price fixing with 9 other contractors in supplying electrical equipment to this Government. It was such a serious offense, such a serious violation of the antitrust laws, and such a horrible conspiracy that it was necessary that somebody from each company go to the penitentiary.

Now, for the record, just one guy was guilty, but don't you think about the same way that judge thought? The whole company knew about all that. They would get together, make all this profit, and act so sanctimonious as if they didn't know about it. When this was found out, these concerns found that they were going to have to pay damages to their customers because there is an antitrust law that says if you engage in a conspiracy to violate these antitrust laws, you owe treble damages to the guy that got hurt. So, these private customers, when they saw that General Electric and these boys had to plead guilty, then proceeded to file claims against them for the fact that they, too, had been overcharged and they asked for treble damages. I don't think the court ever finally got around to adjusting just what it was. By the time they got through agreeing they owed $300 million in treble damages.

So they got in touch with their tax lawyers, came down here to Washington, and got a decision that they could deduct that $300 million against taxes as a necessary and ordinary business expense. And that was done with the Justice Department advising against it. It was done with them agreeing firmly they would never let our joint committee look at this, the Internal Revenue and Taxation Committee, not before they did it, because if they had been exposed on something like that, there would have been an uproar in the Congress and they wouldn't be able to get away with it.

How did they get away with that? Imagine, here, if you defraud somebody out of $100 million, you owe him $300 million. Now, you give the first $100 million back. That is just giving back what you stole. The other $200 million is the profit you made, is the penalty for doing that, and the Government picks up the tab for 75 percent of that $200 million penalty that you had to pay for defrauding your private customers.

How did they get away with that? It couldn't be but one reason, in my judgment, and, of course, I couldn't prove this and I don't pretend I can. I am just expressing my opinion and you are privileged to have yours. Influence. Influence. And how did they get all those big contracts that company has? Don't you think that has got something to do with influence, and they make a fortune at

it.

But having done so, why should you let that corporation that already has 15,000 patents-15,000-why let them hog up all the Government's money and then erect a private monopoly on top of it and make people pay anywhere from 10 to 100 times the cost of producing something that we developed with Government money? It doesn't make a lot of sense to me and over a period of time if this issue is going to continue to be resolved in favor of the private concerns continuing to take advantage of the public, there are going to be more and more examples where we, as elected representatives of the people, are going to be criticized, and some of us are going to criticize others, until this issue is resolved.

I thank the Chair and members of the committee for permitting me to present my views on this matter and I will be glad to answer any questions the gentlemen might have to ask.

Senator MCCLELLAN. Thank you very much, Senator. I appreciate your appearance and the very constructive statement you have given the committee.

I got interested, though, when you said you were down talking to the Solicitor General about Tidelands. Did he agree that the State should own oil and not the Federal Government?

Senator LONG. No, he didn't, Mr. Chairman.

Senator MCCLELLAN. I think he is wrong, don't you?

Senator LONG. About the same experience I have had with all Solicitors. There hasn't been much difference.

Senator MCCLELLAN. Any questions, Senator Burdick?

Senator BURDICK. I want to thank you, Senator Long, for your very fine testimony. I have two or three questions here that I have gleaned from your opposition.

Senator LONG. I might say to you, Senator Burdick, I may be wrong but I am not in doubt. [Laughter.]

Senator BURDICK. Well, one of the objections that has been made to your bill is that it would discourage the development at private expense of commercial applications for Government-sponsored inventions.

Senator LONG. Well, here is what Admiral Rickover said about that. He is over on the Atomic Energy Commission. Let's face it. Here are two commissioners. When this space act passed the Congress, the Senate put an amendment on it that was patterned after the Atomic Energy Act because this was just a new Government program. These people had no experience. No one had any experience in this space business. The Government was the initiator of it. And it was felt this atomic energy should be almost exclusively a Government industry, all in the Government, no private patents.

So the House held out for something where they could give away patent rights and we wound up with this mess we have over at NASA. In atomic energy we are preeminent. They don't give away patents

there.

Admiral Rickover testifies to us that there is no problem, he didn't even know there was a problem. He said, "I don't have any difficulty in finding enough contractors to do work for me." He said, "My problem is that I don't have enough contracts to go around. I have got so many folks wanting these contracts that I just don't have enough contracts to go around."

Now, there may be somebody who, for his own selfish reasons, may not want to do research for the Government. If he doesn't want to, great. We have all the contractors we have any use for anyway apply ing, and you will find that some of the same people who make that statement to you have contracts over in Atomic Energy.

Why do they go apply for them? They are over there doing research. There is just no shortage of these people. As a practical matter, if they indicated they didn't want to do research for the Government, there is always somebody else who would be glad to do it and hire the same scientists that they would have hired. So if they say it, it is just not true.

Here is General Electric, the bell cow, saying unless National Aeronautics and Space Administration could give them patent rights in the original contract, without waiting to see what they were going to discover under the contract, they would not want to do the research.

We turned them down. What did they do? They rushed right in there and tried to hog it all up again in NASA where they couldn't get advance patents at that time. They say it, but the very guys that say it by their own actions prove themselves to be liars.

Senator BURDICK. All right, Senator. The next question is this. If your bill was passed, became law, could we use a crossflow of ideas between Government and commercial research?

Senator LONG. Well, would you mind explaining why it would not do that?

Senator BURDICK. I didn't say it.

Senator LONG. Well, I think I have indicated that it would be just the other way around. I told you about this study the General Accounting Office made on Lockheed and Thompson Ramo Wooldridge. Now, that was done out of the Department of Defense. Here Government contractors won't tell one another what they are discovering even though the contract says they have to tell one another. It requires them to do it and they won't because they are hoping they will get rich by not doing it. They are violating their own contracts.

Now, I asked the General Accounting Office if they proposed to make similar studies of other contractors and they said they thought it would be a waste of Government money because so far as they could determine, this was the prevailing practice. This is how it is. So you see. the crossflow of ideas in Government research does not exist wherever these folks hope they are going to get rich by keeping to their bosom information that should be made available the minute they discover it. It is just the other way around and the studies by the General Accounting Office show it. These people don't debate this. They can't. They would be caught at it. And anybody who wants to get investigated, he might come clean but the odds are you will find that he has every incentive under the sun, and he is using those incentives, to hold this information up until he can get some special advantage out of it. Senator BURDICK. Well, the next question is this. The contention of the