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Admiral, this person building the ship and the subcontracts resulting therefrom-that, of course, follows where a ship is built on a competitive-bid basis. It becomes the duty of the general contractor then to assure himself of the supply of materials and parts necessary to build this ship even before he makes any bid. Isn't that right?
Admiral ROBERTSON. That is true; yes, sir.
Senator KILGORE. That is on the competitive basis. However, on a large part of your work now being done it is on a cost-plusfixed-fee basis, is it not?
Admiral ROBINSON. Not a large part. No, sir. The Navy Department business—I don't know the exact figure—but we have about $8,000,000,000 worth of contracts already. I think probably about six billion of those are on the fixed-price basis.
Senator KILGORE. Not competitive?
Admiral ROBINSON. Not competitive. No, sir. We fix the price by negotiation. But it is not on the fee basis. It is a fixed price.
Senator KilGORE. Where you are using the cost-plus-fixed-fee basis it rather puts the department that is using that on the spot rather than the contractor in the proposition of getting his parts if he fails to get them. Isn't that right?
Admiral ROBINSON. No, sir. We hold bim responsible for getting the material. In order, however, that he may not unnecessarily run the cost of the ship up, we make him get bids on all the material that he uses himself.
As a matter of fact, every man does the same thing. All these shipbuilders get bids, just as the Navy Department does, for their materials.
Senator KilGORE. Do they submit bids to you before they accept the contract?
Admiral ROBINSON. They do not submit them to us. It is decentralized in every one of these concerns.
Senator KILGORE. The subcontractor submits bids before he gets the contract?
Admiral ROBINSON. That is true. There are exceptions to that, but generally speaking that is the case.
Senator KILGORE. Of course, you rely on him for the responsibility of his subcontractors as to whether or not they can produce?
Admiral ROBINSON. Oh, yes. Of course, the people who are supplying ships as a rule are people that have been doing so for many, many years, and we know perfectly well what their capacities are, and they know what shops they have, and they know whether they can meet the date of delivery or not.
These bids are informal to the extent that very often they won't contain a great deal in the way of specifications. They may just say “To be to the satisfaction of the Navy Department." But the other man knows just exactly what he is bidding on, because he is all the time speaking of those things to the people who have the fixed-price contract.
Senator KilGORE. That is all the questions that I have of this particular witness.
The CHAIRMAN. We are very much obliged to you, Admiral.
Senator Hill. Admiral, I don't suppose that you have had an opportunity to go back, as did General Rutherford, to see how this
power or a similar power was exercised during the World War so far as the Navy was concerned?
Admiral ROBINSON. No, sir. I have not. But generally speaking the War and Navy Departments got together during the last war, just as they are doing now.
Senator Hill. In other words, your illustrations would be very much the same as General Rutherford's?
Admiral ROBINSON. They would be just the same.
The CHAIRMAN. Gentlemen of the committee, I have before me a letter from Mr. Harold T. Stowell, chairman of the laws and rules committee of the American Patent Law Association, 898 National Press Building, Washington, D. C., in which Mr. Stowell asks that he may be given permission to appear before the committee and make a brief statement.
He said that he would contact the clerk of the committee to ascertain a convenient time for his appearance.
Mr. Stowell is here now, and we will be glad to hear from him.
STATEMENT OF HAROLD T. STOWELL, CHAIRMAN, LAWS AND
RULES COMMITTEE, AMERICAN PATENT LAW ASSOCIATION, WASHINGTON, D. C.
Mr. STOWELL. My name is Harold T. Stowell. I am here representing the American Patent Law Association, which is an association of some 680 practitioners of patent law throughout the United States. I am authorized by the board of managers of the association to appear for them.
I want to say that our primary interest is to assist the committee in working out the solving of the problems that are before it as far as they relate to patent matters.
I think it might be well at the start to emphasize the distinction between patents and inventions, which laymen frequently do not recognize.
With a few possible exceptions it is hard to conceive what the Government wants of patents, what use the Government could make of patents. What the Government wants to use is inventions.
A patent is a right given by the Government to prevent other people from using your invention. The Government does not want in general to stop other people from using the invention. They want the invention to use.
Now, with that distinction in mind, I want to call attention to the act of June 25, 1910, as amended July 1, 1918, which reads in part as follows:
Whenever an invention described in a patent of the United States shall hereafter be used or manufactured by or for the United States without the license of the owner thereof or lawful right to use or manufacture the same, such owner's remedy shall be by suit against the United States in the Court of Claims for recovery of his reasonable and entire compensation for said use and manufacture.
Under this statute, which has been on the books as amended since 1918, the Government can use or have used for it any invention covered by a United States patent.
There may be no injunction against such government use or against use by a contractor of the Government because of the provision for recovery of the entire compensation in this suit in the Court of Claims. And I say that on the basis of actual decisions of the court refusing such injunctions.
So that as far as the use of inventions covered by the United States patents are concerned, this statute gives the Government at the present time—and it makes full use of it—the right to use or have used for it those inventions.
There has been a reference by Secretary Patterson, and, I believe, in the President's letter as it appeared in the newspapers, to possible interference with defense production by virtue of foreign-owned patents.
To the extent that that is true and to the extent that that might prevent production, it might be necessary to take title to patents. It is recommended that the committee, if it is convinced that that is necessary, restrict the right to take title to patents or patent rights owned or controlled by aliens, which would cover clearly anything that has been suggested before this committee, and it has only been suggested.
The CHAIRMAN. You heard here a moment ago about these two suggestions by Mr. Byerly, who was here the other day representing the New York Patent Law Association?
Mr. STOWELL. Yes. The association has had no opportunity to consider that amendment. I would say personally that it sounds to me like a very helpful suggestion to this committee, and it might well be adopted with very good results.
The CHAIRMAN. We thank you very much.
Are there any other witnesses here who desire to make a statement in regard to this?
STATEMENT OF EDMUND C. FLETCHER Mr. FLETCHER. Mr. Chairman and Senators, I represent myself purely as a citizen.
I have been a practicing lawyer for about 40 years. In 1923 and 1925, as Special Assistant Attorney General, I have defended the Government in a good many suits in the Court of Claims, and became familiar with these various war powers and war acts, and the taking of property under eminent domain, and so forth, under the acts as drawn then. Since that time I have had considerable experience through the study of such acts in my litigations against the Government.
So, in order to aid the committee, I have drawn up a little memorandum brief here, which contains pertinent matters, especially decisions of the Supreme Court of the United States in regard to these questions. I will not burden the committee with reading it. I will just leave the memorandum.
(The brief referred to was filed with the committee.)
Mr. FLETCHER. Here is what I want to emphasize before the committee. And, by the way, this brief is mainly devoted to land.
This bill is an eminent domain proceeding strictly. That power lies dormant in the Government until it is put into effect by an act
of Congress. The Congress forces the exercise of the power of eminent domain.
Congress itself can take for public use not only privately owned land or privately owned personal property. Eminent domain covers personal property of every kind and description. Judge Patterson is wrong in thinking that it refers only to real estate. That is not so.
So we have here in the very beginning a bill which authorizes the President to requisition all types of property, real and personal, wherever it is situated; and also asks authority of this Congress to give the President the right to delegate the exercise of that to others. And in that event, of course, the power would be executed by his nominees—War Department employees, lawyers, and captains, and generals, and in the Navy the same thing-admirals, law clerks, and so forth.
So it is a very serious thing here that we are concerned with.
Now, to begin with, it is the fifth amendment to the Constitution of the United States, which protects every citizen in regard to his property. First it says:
No person shall be deprived of his property without due process of law.
The laws are those made by Congress that are in force and effect. If compliance is made with those laws, that would be due process. If noncompliance, it is not due process.
Now, the fifth amendment in the same paragraph says this:
There is a guaranty that the citizen has by the fifth amendment, and no power on earth, no branch of this Government, can interfere with its operation; and of course Congress in all of its acts gives due regard to that.
We have the general Federal condemnation law in this country, enacted on August 1, 1888, which is quoted here in this memorandum brief.
That says in every case that where land is authorized by Congress to be taken for public use, proceedings in condemnation shall be instituted in the proper court in the manner provided by that act.
This bill disposes of that. The acts of Congress passed in 1917 and 1918 disposed of those things. And the reason for that is because some law clerk in the Navy Department by the name of W. H. Martin conceived the idea and so expressed in the act of March 4, 1917, that the President may take property, real or personal; and, when done, he or his nominees shall determine the just compensation.
That means a lot of trouble for property owners to go and collect their muniments of title, their evidence of title, plus lawyers, and be called somewhere at some time in this country to appear before a board of the Navy Department or the War Department.
Such board will be composed-I am speaking of the Navy—of a lawyer, of a captain, and of a private citizen. They would sit in some courtroom as though they were a court-and I speak from experience--and attempt to impart the oath of office to all the witnesses coming before them.
Testimony is taken, written down, transcribed, and then in about a year or 2 years that board determines the reasonable value of the property as of 2 or 3 years before.
A report of that is made to the owner; and he in the event of his refusal to accept the judgment of the board or the President, if you please, elects to receive 75 percent of the amount so determined, and then he with his lawyer goes to the Court of Claims or the proper district court and sues for such additional sum as added to the amount heretofore paid would make up just compensation.
Now, that takes 7 or 8 or 10 years to do that very thing, and during the interim, Senator, interest on the value of the property is piling up at 6 percent per annum from the date of the supposed taking.
So in the event of the taking of $100,000,000 worth of property by such proceeding, it would cost this Government $200,000,000 in interest as a part of the just compensation.
I will give the specific items if you want to know them.
You are going to leave that with us?
Mr. FLETCHER. Yes: I will.
The CHAIRMAN. Then it is not necessary to repeat it. We have another meeting at 12:30, so I assume that we will have to go soon. I don't want to shut you off.
Mr. FLETCHER. I am willing to be shut off, because I have expressed what I wanted to say to you.
The CHAIRMAN. I thought perhaps you had, if you are going to leave that with us.
Mr. FLETCHER. Yes; I will.
You will find in there, Senators, that there is a provision there on requisition.
Now, the word “requisition" means “request" or "demand.”'
Gentlemen, you do not find in that bill a single word of purchase or lease or acquiring by contract. It is not there. Simply the word "requisition.”
The private owner or the owner of private property is not given an opportunity to make a contract or a lease or anything. You don't give the agents of this Government an opportunity to first purchase or first lease. It is not there.
They simply want the word“ requisition” and the word“requisition" means merely a request or a demand. That is all it means demnation. °A requisition is always used in regard to personal property; never in regard to real estate.
Šo I think that is the substance of what I have to say.
The CHAIRMAN. Before the committee adjourns, I want to ask the reporter to embody in the record section 902, paragraphs (a) and (b), in Public, No. 835, Seventy-fourth Congress, H. R. 8555, approved June 20, 1936.