The present law (sec. 42b) is the same. However, in 1946, some time after section 42b became law, 35 U.S.C. 106 was passed, giving the Commissioner authority to give subsequent authorization to a foreign filing and thereby waive the requirement that a person who files an application without permission be debarred from receiving a patent.

Section 6.- The penalty for failure to comply with the preceding sections is a fine of not more than $10,000, or imprisonment for not more than 2 years, or both. This is the same as section 42c in the present law.

Section 7.--This covers definitions, the first two paragraphs being the same as the existing law section 42c. The third paragraph defines use to include manufacture, sale, or other disposition of the invention by the Government. During the time that an application is held in secrecy and after it is in condition for allow ance, the applicant may make a compromise monetary settlement with the Government for its use as set forth in section 5. However, during this same time in which the application is held secret the applicant is provided with no way to recover for the use of the invention by anyone else.

Section 8.-Officers and agents of the United States are exempt from the act. This section is the same as 42f in the present law.

Section 9.-The Atomic Energy Commission, the Secretaries of the Ariny, Navy, and Air Force and the department heads may issue rules and regulations to carry out the provisions of the act within their respective departments. Sections 10, 11, and 12 deal with formal matters.

COMMENTS

These bills, as above stated, constitute an apparent effort to write into the permanent law of the United States, the secrecy provisions of the Trading With the Enemy Act of World War I and the similar legislation in World War II, in respect of patents and patentable inventions. It is the opinion of your committee that the requirements of the act are unnecessarily severe; that they constitute a most unreasonable and arbitrary restriction of the rights of inventors; that the legislation is unnecessary, and that it fails to accomplish its supposed

purpose.

Among the outstandingly objectionable provisions of these bills are those sections which provide that the head of any governmental agency classified as a defense agency may prevent the issuance of a patent in any field designated by the President for an indefinite period and the only right of appeal from a secrecy order so issued is to such agency and under such rules as may be prescribed by the President.

The idea of preventing a foreign country from obtaining useful information by way of patent applications sounds good, but it appears to your committee that the only way to make such a procedure really effective is to erect an iron curtain through which no information whatsoever can pass. Information regarding anything has a bearing on national defense. It is almost the same idea as passing a law to prevent automobile accidents by stopping the manufacture and use of automobiles. There are certain risks which people and nations must undertake as an incident to living, and it is believed that the risks involved in the transfer or information by patents are of that general nature. If we want to live in a civilized world, we must expect to give some information to other people.

Independently of the foregoing general considerations, it is the belief of your committee that the bill is unnecessary and ineffective. The bill has one basic objective; that is the prevention of the transmittal abroad of information detrimental to the national defense. It purports to accomplish this objective by (a) maintaining patent applications on inventions coming within this classification in a secrecy status, and (b) by providing penalties for the disclosure of information contained in such applications, whether by the filing of corresponding applications in foreign countries, or otherwise.

Insofar as applications on inventions owned by the Government are concerned, or which result from Government-financed developments, there is no reason why the Government cannot, by administrative action or by suitable contractual provisions, prevent the filing or the issuance of any U.S. applications and the filing of any foreign applications, in any instance which the Government may consider advisable. Furthermore, the provisions of the Espionage Act, which is a permanent part of the United States Code (title 50, arts. 31, 32, etc.) make possible the establishment of much more effective and much more comprehensive and adequate rules for the protection of information developed in any Government agency or in any Government-financed research project, than is possible by the proposed bills.

As to non-government inventions, the bills are wholly ineffective. Under existing law, tot changed by these bills, an inventor can make, use, and sell the subject matter of a patent application for a year prior to filing his application for C.S. patent. A law providing for the placing of patent applications under an order of secrecy, while permitting manufacture, use, and sale of the subject matter of such application for a year prior to the filing of the application would be, in the opinion of your committee, absurd. From a practical viewpoint, the provisions of title 50, noted above, make possible adequate control of the dissemination to foreign countries of information of real importance to the national defense by way of patent applications or otherwise, without the need of any legislation such as the proposed bill. Moreover, it is evident that the issuance by these defense agencies, of regulations and specific requests as to matters which are regarded by that agency as of significant importance in connection with the national defense would practically eliminate the willful disclosure of such information.

CONCLUSIONS AND RECOMMENDATIONS

It is the opinion of your committee that:

Insofar as Government-owned inventions, or inventions in which the Government has an interest, are concerned, the bills are unnecessary;

the Insofar as privately owned inventions are concerned, the bills are also unnecessary and, of greater importance, they are ineffective for their apparent purpose: For the reasons stated, your subcommittee recommends that these bills be disapproved.

Paul J. GLAISTER.
ARTHUR W. NELSON.
Chas. M. CANDY, Chairman.

The above report was approved by the legislative committee December 15, 1949, and by the board of managers of the Patent Law Association of Chicago, December 21, 1949.

ARTHUR A. OLSON. President of the Association.

STATEMENT IN BEHALF OF AIRCRAFT INDUSTRIES ASSOCIATION OF AMERICA, INC.

The stated objective of the act is to prevent the publication of inventions in the national interest. In the sense that "the national interest" in this regard relates to defense and security, we sympathize with and subscribe to the aims of this proposed legislation.

While supporting the overall purposes of the proposed act, the patent committee of this association after due and careful study, has prepared certain recommendations which it believes would improve the legislation to better accomplish its aims. Broadly, these recommendations are as follows:

1. The power to cause a withholding order on the issue of a patent should be limited to the executive officers of only those commissions and departments that are directly charged with the national defense.

In addition to the Atomic Energy Commission, and the Departments of the Army, Navy, and Air Force, the act as presently written gives the power to cause a restraining order to the issue of a patent to "the Chief Officer of any (other) departient or agency of the Government designated by the President as a defense agency of the United States", We are strongly of the opinion that the delegation of powers so broadly is not only unnecessary from the standpoint of offering the purposes of the act, but could lead to the exercise of such powers unjustifiably or without due caution, thus needlessly depriving individuals of the rights and the incentive to invention. On the other hand, the officers of the Atomic Energy Commission and the Departments of Army, Navy, and Air Foter comprehend all of the agencies of the Government directly charged with the national defense and security and it is believed that if the control contemplated by the act is limited to these offices, it would be adequate and much less susceptible to misuse than as presently proposed.

2. The owner of a patent application which has been placed under a scerecy order should have broader appellate remedy than to the chief officer of the commission or department causing the order,

As presently written, the act provides that the owner of a patent application which has been placed under a secrecy order would have the right to appeal from

such order only to the same agency which caused the order. This merely amounts to a right of review and provides no higher remedy in the case of injustice or inequity. Since the practice does not follow American jurisprudence, we are of the opinion that broader remedies should be provided, as to a board of appeals consisting of the chief officers of the Atomic Energy Commission, and the Secretaries of the Army, Navy, and Air Force, or their respective authorized representatives. 3. The owner of a patent application held under secrecy order should not only be entitled to compensation based upon the use of the invention by the Government, but also for losses occasioned otherwise by the delay in issuance of the patent.

The issue of a secrecy order not only deprives an applicant of income that he might normally expect from the use of the invention by the Government, but also might and probably would result in a loss of the enjoyment of his rights otherwise. Since the power to restrain is entirely with the Government, it follows in all justice that an applicant so restrained for the benefit of the Government, should be entitled to a full accounting of the losses of his privileges that have resulted from the order, not only through uncompensated Government use but otherwise. Modification of the proposed act in this respect, would also impose a heavier responsibility on the Government officials causing an order of this kind, and result in a stronger check against the needless use of such power.

While the foregoing recommendations do not go to the substance or fundamentals of the proposed act, we are strongly of the opinion that they are important to its proper operation and earnestly request their consideration. A copy of the proposed act modified to accomplish the foregoing is appended, in which struck portions indicate deletions; underlined portions indicate additions or substitutions.

(Revised to incorporate suggestions of the Patent Committee of the Aircraft Industries Association of America, Inc.) H.R. 6389

81ST CONGRESS 1ST SESSION

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 13, 1949

Mr. CELLER introduced the following bill; which was referred to the Committee on the Judietary [Omit the part struck through and insert the part printed in italic]

A BILL

To amend the Act relating to preventing the publication of inventions in the national interest, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Act of Congress approved October 6, 1917 (40 Stat. 394, ch. 95; 35 U.S.C. 42), and Acts amendatory thereof, are further amended to read as follows:

"Whenever publication or disclosure by the grant of a patent on an invention in which the Government has a property interest might, in the opinion of the head of the interested Government agency, be detrimental to the national security, the Commissioner of Patents upon being so notified shall order that such invention be kept secret and shall withhold the grant of a patent therefor under the conditions set forth hereinbelow.

"Whenever the publication or disclosure of an invention by the granting of a patent, within categories prescribed by the President and in which the Governe ment does not have a property interest, might, in the opinion of the Commissioner of Patents, be detrimental to the national security, he shall make the application for patent in which such invention is disclosed available for inspection to the Atomic Energy Commission, the Secretary of the Army, the Secretary of the Navy, or the Secretary of the Air Force nuil the chief officer of aus ollier depatitment or ngener of the Government designated by the President as a deferre agener of the Fnited States: If in the opinion of the Atomic Energy Commission, the Secretary of the Army, the Secretary of the Navy, or the Secretary of the Air Force, er the chief officer of such aiher department or agency sa desismuted: the publication or disclosure of such invention by the granting of a patent therefor would be detrimental to the national security, the Atomic Energy Commission, the Secretary of the Army, the Secretary of the Navy, or the Sectetary of the Air Force, ↔ such other chief etlines shall notify the Comtoi iner

of Patents to that effect, and the Commissioner of Patents, upon being so notified, shall order that such invention be kept secret and shall withhold the grant of a patent therefor for such period or periods as the national interest requires: Provided, That the owner of a patent application which has been placed under a secrecy order shall have a right to appeal from such order to a Board of Appeals consisting of the head of the Atomic Energy Commission, the Secretary of the Army, the Secretary of the Navy, and the Secretary of the Air Force, or their respective authorized representatives, and under such rules as may be prescribed by the President: Provided further, That no invention shall be ordered kept secret and the grant of a patent withheld for a period of more than one year: Provided further, That the Commissioner of Patents shall renew any such order at the end thereof, or at the end of any renewal period, for additional periods of one year upon notification by the head of the Commission or department or the chief aflicer of He ngeney who caused the order to be issued that an affirmative determination has been made that the national interest continues so to require, excepting, however, that any such order in effect, or issued, during a time when the United States is at war, shall be and remain in effect for the duration of actual hostilities during such the war unless sooner specifically rescinded: And provided further, That the Commissioner of Patents is authorized to rescind any order upon notification by the heads of all departments and the head of the Commission chief oflicem of all ngeneies who caused the order to be issued that the publication or disclosure of the invention is no longer deemed to be detrimental to the national security.

"SEC. 2. The invention disclosed in an application for patent subject to an order made pursuant to section 1 hereof shall be held abandoned upon its being estabblished before or by the Commissioner of Patents that in violation of said order said invention has been published or disclosed or that an application for a patent therefor has been filed in a foreign country by the inventor, his successors, assigns, or legal representatives, or anyone in privity with him or them, without the consent or approval of the Commissioner of Patents, and such abandonment shall be held to have occurred as of the time of such violation: Provided, That in no case shall the consent or approval of the Commissioner of Patents be given without the concurrence of the heads of all departments and the head of the Commission ehief officers of all agencies who caused the order to be issued: Provided further, That any such holding of abandonment shall constitute forfeiture by the applicant, his successors, assigns, or legal representatives, or anyone in privity with him or them, of all claims against the United States based upon such invention.

"SEC. 3. Any applicant, his successors, assigns, or legal representatives, whose patent is withheld as herein provided, shall, if the order of the Commissioner of Patents above referred to shall have been faithfully obeyed, have the right, during a period beginning at the date the applicant is notified that, except for such order, his application is otherwise in condition for allowance, or beginning at the effective date of this Art, whichever is later, and ending two years after the date a patent is issued on such application, to apply for fair and just compensation based upon the use, if any, of the invention by the Government, or for withholding of the issuance of the patent if there has been no use of the invention by the Government, such right to compensation to begin from the date of the first use of the invention by the Government, or the date of such order if there has been no use of the invention by the Government. The head of the Commission or the any department or agency who caused the order to be issued is authorized, if any such claim is presented within the periods above specified, to enter into an agreement with said applicant, his successors, assigns, or legal representatives, in full settlement and compromise for such use, if any, or for such withholding of the issuance of the patent, and any such settlement agreement entered into shall be final and conclusive for all purposes, notwithstanding any other provision of law to the contrary. If full copromise and settlement of any such claim cannot be effected, the head of the Commission or the any department or ageney who caused the order to be issued, may, in his discretion, administratively award and pay to such applicant, his successors, assigns, or legal representatives, a sum not exceeding 75 per centum of the maximum sum, if any, which in the opinion of the head of the Commission or such department » #gener would constitute fair and just compensation for such use, if any, or for the withholding of the issuance of the patent as herein provided. Within two years after issuance of the patent, any claimant who fails to secure an award satisfactory to him shall have the right to bring suit against the United States in the Court of Claims for such amount which, when added to such award, if any shall constitute fair and just compensation for the use, if any, of the invention by the Government, or for the withholding of the issuance of the patent. The

owner of any patent issued upon an application that was subject to a secrocy order issued pursuant to section 1 hereof, and who faithfully obeyed the order, who did not apply for compensation as above provided, shall have the right, within two years after the date of issuance of such patent, to bring suit in the Court of Claims for fair and just compensation for the use by the Government of the patented invention, or for the withholding of the issuance of the patent if there has been no use of the invention by the Government, such right to compensation to begin at the first date of such use or the date of the secrecy order: Provided, That in any suit under the provisions of this section, and in any negotiations looking toward settlement and compromise of any such claim, the United States may avail itself of any and all defenses that may be pleaded by it in an action under page 28, United States Code, section 1498 (revised), as amended: Provided further, That no compensation under the Act shall be paid for use by the Government of an invention made while the inventor thereof was employed by the Government.

"SEC. 4. No person shall file or cause or authorize to be filed in any foreign country an application for patent or for the registration of a utility model, industrial design, or model in respect of any invention made in the United States prior to ninety days after filing in the United States an application covering such invention except when authorized in each case by a license obtained from the Commissioner of Patents under such rules and regulations as he shall prescribe: Provided, That no such license shall be granted with respect to any invention which is the subject matter of a subsisting order issued by the Commissioner of Patents pursuant to section 1 hereof without the concurrence of the head of the Atomic Energy Commission or the heads of all the departments or the chief officers of all agencies who caused the order to be issued.

"SEC. 5. Notwithstanding the provisions of sections 4SS6 and 4887 of the Revised Statutes (35 U.S.A., sccs. 31 and 32), any person and the successors, assigns, or legal representatives of any such person, shall be debarred from receiving a United States patent for an invention if such person, or such successors, assigns, or legal representatives shall, without procuring the authorization prescribed in section 4 hereof, have made, or consented to or assisted another's making, application in a foreign country for a patent or for the registration of a utility model, industrial design, or model in respect of such invention where authorization for such application is required by the provisions of section 4 hereof, and any such United States patent actually issued to any such person, his successors, assigns, or legal representatives so debarred or becoming debarred shall be invalid

"SEC. 6. Whoever, during the period or periods of time an invention has been ordered to be kept secret and the grant of a patent thereon withheld pursuant to section hereof, shall, with knowledge of such order and without due authorization, willfully publish or disclose or authorize or cause to be published or disclosed such invention, or any material information with respect thereto, or whoever, in violation of the provisions of section 4 hereof, shall file or cause or authorize to be filed in any foreign country an application for patent or for the registration of a utility model, industrial design, or model in respect of any invention made in the United States, shall, upon conviction, be fined not more than $10,000 or imprisoned for not more than two years, or both.

"SEC. 7. As used in this Act

"The term 'person' includes any individual, trustee, corporation, partnership, association, firm, or any other combination of individuals.

"The term 'application' includes applications, and any modifications, amendments, or supplements thereto, or continuances thereof.

"The term 'use' includes manufacture, sale, or other disposition of the invention by the Government, or for the Government with its authorization or consent. "SEC. S. The prohibitions and penalties of this Act shall not apply to any officer or agent of the United States acting within the scope of his authority.

"SEC. 9. The Atomic Energy Commission, the Secretary of the Army, the Secretary of the Navy, or the Secretary of the Air Force, the ebief efficer of any other department or agency of the Government designated by the President on a defense geney of the United States, and the Commissioner of Patents, may separately issue such rules and regulations as may be necessary and proper to enable the Commission or the respective department or geney to carry out the provisions of this Act, and in addition are authorized, under such rules and regulations as each may prescribe, to delegate and provide for the redelegation within the Commission or the their respective departments or mercim of any power or authority conferred by this Act to such responsible officers, boards, agents, or persons as each may designate or appoint.