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Well, under the laws that exist at the present time, the Government can use that patent; can use that invention, and the owner has recourse in the Court of Claims, and that is all that is left. The Government already has the right to use the invention.
The CHAIRMAN. Judge Patterson, according to my recollection, and it has just been called to my attention by Colonel Watt, made mention of the fact they are particularly interested in that section of the bill pertaining to patents, in reference to foreign patents.
Mr. DICKEY. Well, they can handle foreign patents, if they wish, entirely separate and apart from the patents belonging to citizens of the United States. They did in the last war. They seized and administered them and retained titled to them, I believe, even after the war; and granted licenses under that.
Senator Downey. I think they sold some of the foreign patents. Mr. DICKEY. Yes; they did.
There is no reason, if they are afraid of foreign patents, or patents owned by foreigners, for the confiscation or requisitioning of titles of patents owned by citizens. That places the citizen in the same class as an alien enemy.
Senator KILGORE. Mr. Chairman, may I ask a question. That is talking about foreign patents or inventions not patented in the United States but protected by treaty; is that what is meant?
Mr. DICKEY. No; I think what is meant there, Senator, is that patents owned by foreigners or alien enemies.
Senator KILGORE. We have a treaty covering patents owned by foreigners, for instance, Germany, to the effect that we will not infringe on their patents in consideration of their not infringing on the rights of the patentees in the United States? Mr. DICKEY. No; there is nothing like that that I know of. Senator KILGORE. We do not have any treaties on patents?
Mr. DICKEY. We have what are known as international conventions, which covers the filing of applications in different countries. That is, they provide the time within which they may be filed.
Senator KILGORE. In other words, a foreign invention to be protected as a patent in the United States would have to be patented in the Patent Office of the United States?
Mr. DICKEY. That is right.
Senator KILGORE. And if we had the idea of the invention in the United States-in other words, if we knew the formula or plan, for making whatever was covered by the patent, it would not be protected, and we could go ahead and make it with or without the consent of the inventor?
Mr. DICKEY. Yes; if it were not patented in the United States; assuming that there was a foreign patent, a British patent, or a German patent on a particular process or article, and there was no United States patent on that, the United States or anybody in the United States could use that foreign patent in the United States and the foreign government could do nothing about it, or the foreign owner could do nothing about it. He must have a United States patent to have protection.
Senator KÜLGORE. When the Secretary of War was talking about foreign patents, he mentioned patents owned by foreign nationals.
Mr. DICKEY. I think that is so; yes. I think that what he had in mind, and that is what they had in mind in the last war when they seized patents; that is, the Alien Property Custodian, I believe, took them over, and you can do the same thing in this war, if you wish, as to foreign-owned patents. I do not see any necessity for putting the citizen owner of a patent in the same category as possibly an alien enemy owner or treating his property in the same way. I think that is rather unjust procedure.
The CHAIRMAN. Do you object to the paragraph altogether?
The CHAIRMAN. You have stated that the Government has power sufficient under the law at the present time to cover any rights it wants then?
Mr. DICKEY. That is right, and I have listened to a good many arguments about the matter and a good many statements, and I have not seen anything yet, or heard described any situation yet, that requires the requisitioning of a patent owned by a citizen, that is, taking over the title of it.
Of course, the one thing of paramount interest is the condition that will obtain after this war is over, after the emergency is over.
Now, the title to a lot of these patents will get into the hands of the Government. They probably will not need them after the emergency is over. What is the Government going to do with them? They may have sold or disposed of them in the meantime. The owner can never get them back. He is lost. This gives the power and places the power in the President and in the agency which he may appoint, to transfer patents from one owner to another, completely without much, if any, recourse.
Now, the value of a patent is pretty difficult to determine; that is, the total value of it at any one given time. You can determine the value of its use for a period of time, perhaps; but you see a patent runs for 17 years from the date it is granted now and that patent may become valuable and it may be used by industry during the beginning of its life, or perhaps during the middle of its life, or perhaps nearing the end of its life, or may be during all of its life. It is impossible to say just how much use can be made of it.
Now, the effective life of the patent, most patent attorneys will agree, is not the full 17 years. It is a period considerably shorter than that, because industry comes along to a place where it can use the patent or the invention, and may use it for a year or two or three and drop it and that is all there is to it. That frequently happens.
So, as I said, it is pretty difficult to say what the value of the invention is at any one given period, avd unless there is some finding and clear necessity to deprive citizens of their title in that sort of property, we do not thing it should be done, and so far as we have been able to see there has not been anything presented yet that requires that that be done.
Senator DOWNEY. Mr. Chairman, may I ask a question there? The CHAIRMAN. Certainly.
Senator Downey. Did the chairman state that the language which he read on page 4 was prepared by a representatives of one of the patent associations?
The CHAIRMAN. Yes; a gentleman who appeared here the first day of the hearing from New York.
Senator Downey. What is his official position?
The CHAIRMAN. He is a member of the New York Patent Law Association, I think. That is my recollection. He made a suggestion in connection with that, at the time that Judge Patterson was here the other day, for the second time, and it is my recollection that we inquired of him as to whether or not he objected to that language of the proposed amendment and he said that he did not.
That was Mr. Byerly.
Senator Thomas, do you desire to ask any questions?
Senator KILGORE. I do have one more question I would like to ask on this section 2, Mr. Chairman. This section 2 as suggested says that if the Secretary of War, or the Secretary of the Navy shall, upon a written finding, find that such sale or disposition is necessary "to insure production in sufficient quantity of the patented commodity or articles for defense purposes," it may be sold.
Mr. DICKEY. The Government can make a contract to have it produced in whatever quantities it desires without this and without owning the patent.
Senator KILGORE. That is what I am trying to get at. Is there any condition under which it would be necessary in order to get a manufacturer to produce something that it would be necessary to give him a patent on it, or to sell the patent to him?
Mr. DICKEY. No, no; not that I conceive of, with the authority that the Government has at the present time. And, that does not help the situation a bit, you see, because the Secretary of War and the Secretary of the Navy apparently can make that recommendtion and finding without any hearing and just upon their own initialive, so far as that goes. That is of no protection.
Senator KILGORE. In other words, it could be an ex-party summary proceedings, without any evidence of any kind?
Mr. DICKEY. That is right.
STATEMENT OF KARL FENNING, CHAIRMAN OF THE COMMITTEE
ON PATENT LAWS OF THE NATIONAL COUNCIL OF PATENT LAW ASSOCIATIONS, WASHINGTON, D. C.
The CHAIRMAN. The next witness is Mr. Karl Fenning. Mr. Fenning, I believe that you represent the National Council of Patent Law Associations, with offices in the city of Washington.
Mr. FENNING. That is correct, Mr. Chairman. I am chairman of the committee on patent legislation of the National Council of Patent Law Associations, representing—it is a voluntary organization—representing all of the patent law associations in the country of which there are upward of a dozen in existence from Boston, across the country to Los Angeles and San Francisco.
The CHAIRMAN. Will you pardon me for just one moment, Mr. Fenning?
Mr. FENNING. Yes, sir.
The CHAIRMAN. In reference to the amendment that was mentioned by the witness, I think I should bring this to the attention of the members of the committee.
The other day when questioned about this proposed amendment, Secretary Patterson said:
What we have in mind particularly here are United States patents owned abroad. They are United States patents controlling the production and manufacture here in this country, but held and controlled or owned by foreigners. We do not plan, of course, any confiscation of those rights. That would be intolerable. They would have to be paid a value just the same as if they were American. Everything we propose here is, of course, to be taken with fair compensation. And so forth.
That ends the quotation in regard to the proposed amendment.
Mr. FENNING. All of the patent law associations have not notified me of the action they have taken. I want to report to you, however, the Cleveland Patent Law Association's action as follows:
Resolved, That the Cleveland Patent Law Association disapproves, as it disapproved the principle of the property seizure bill, S. 1579, and the equivalent bill, H. R. 4949. Present laws protect the Government's rights to use all patents during an emergency, section 68 of title 35 of the United States Code.
That is the statute which has been referred to here as the statute which authorizes the Government to proceed to use anything which it has patented.
In addition to that, the Philadelphia Patent Law Association suggests that the bill be limited to the present emergency.
If the Government can take a license, we see no reason why it should take the patent, excluding the owner from the continued use and from granting further licenses.
I would like to say a word, if I may, to you about the idea of not seizing a patent, but taking the license merely under that patent.
You asked here how the Government can use or can persuade someone else to make something for it. The present law says that if the Government wants something from a contractor. he may manufacture that and no injunction can be granted against him. He is not liable for any damages. The Government itself is liable for all damages for patent infringements; but many of the contracts which the Government issues to contractors say that the contractor must hold the Government harmless from patent infringements.
Now, of course, that means that if the contractor infringes a patent, the owner of the patent sues the Government and if he recovers, then the Government sues the contractor and gets the money back. Now, if that clause is not put in the contract, if the Government takes the responsibility, then there is no question but that the contractor can go ahead entirely free. I know if the contractor feels that he has got to take responsibility and wants to be relieved from that, naturally he is going to get a license first.
Now, let me say a word to you about what a patent is: A patent gives no man a right to make anything. The patent gives the man
merely the right to prevent someone else from making. It is a right to exclude others from manufacture. If a manufacturer has taken out a patent and is manufacturing the thing disclosed in that patent, the benefit of the patent to him is not that he can go ahead and make that thing, but that no one else can make that thing and compete with him.
Now, he purpose of the Government under this bill, as Judge Patterson says is, so far as patents are concerned, to have more things produced; have more people produce things.
Naturally, the Government does not need the right to exclude, which is all the patent gives, in order to get more things made. What the Government needs, if anything; what anyone needs is a license under the patent.
Now, if a patent is seized, if the manufacturer owns a patent and is manufacturing under his patent, and the Government seizes his patent, then that manufacturer must immediately stop manufacturing, because the Government has the right to exclude him from manufacturing. Therefore, the seizure of the patent, instead of increasing manufacture is going to stop manufacturing. The Government may ask someone else to make it, but the first man must stop, because he is infringing the patent which the Government has seized from him. Not only is he stopped immediately but he is stopped in the future, after the emergency. The Government still has his patent and his business is entirely gone. He is through.
If, on the other hand, the Government seizes merely a license or takes from him a license, then the owner of the patent, who is manufacturing, may continue his manufacturing, and if the Government takes a license, which is a distinguishable, transferable license, the Government may let anyone else that wants to manufacture, manufacture.
Now, the license, naturally, which is seized, which is given to someone else, should be limited to the emergency. There is no reason for the Government setting up a man in business after the emergency is over.
A license naturally can have the same limit put upon it, and if a license is seized by the Government, that is, if a desirable, transferable license is seized by the Government for the period of the emergency and the Government is limited to the use of that license, the license someone else has to merely manufacture something which is useful for national defense, then the Government has everything which it needs and the patent is, itself, not destroyed. The ownership to the patent itself is not destroyed.
Now, if you are going to seize anything, it seems to me that you certainly should limit it to seizing a license under the patent. It is difficult to see how the Government needs even that much, for most activities. All the Government needs to do at the present time is to go to anyone in the United States and say to him, "Here is a drawing. Here is a model. You make this for me." And, the contractor can then proceed to manufacture that article. If it is a patented device, the owner of the patent cannot touch the contractor. That was definitely established during the 1918 act, which was passed during the World War, but the owner of the patent can proceed later to go to the Government and get his compensation.