printed herein as an appendix and shows the fields covered by the patents which have been made available for licensing under such judgments. These judgments, the first of which was entered in August 1941, involved a total of over 300 defendants ranging from some of the largest corporations in the United States such as General Electric, International Business Machines, Du Pont, and RCA, down to relatively small concerns. Since certain of these judgments require licensing of future acquired patents, 10 and since no one can accurately predict the number of patents subject to these judgments which will be issued by the Patent Office, it is impossible to determine the number of patents which have been or will be subject to licensing or other forms of relief under these judgments. Based upon the best estimates, it would appear that the total number of issued patents directly affected may be between 40,000 and 50,000. In recent years the number of unexpired patents existing at any given time has exceeded 600,000.11 There are definite signs that the antitrust enforcement program may also have had an indirect effect on the licensing of patents generally. Judging from the number of patents voluntarily being offered for licensing, it would appear that the antitrust enforcement program has resulted in several companies adopting a more liberal licensing policy than was the case prior to the initiation of the program. Consequently, it is safe to say that aside from any other results, antitrust enforcement has had a far-reaching impact upon the licensing of patents generally. A mere listing of some of the products directly affected by these judgments will indicate their importance and the broad range of patents involved. They include milling machines (spindle and tool), petroleum and petroleum products, magnesium and magnesium products, incandescent and fluorescent lamps and machinery, airconditioning equipment, titanium pigments, chemicals and pharmaceutical products, aircraft and marine instruments, flat and safety glass, cash registers and other registering devices, fire alarm systems, stainless steel, ophthalmic goods, chemical products, barbasco root and synthetic steroid hormones, and radio and television equipment. IV. THE EFFECTIVENESS OF COMPULSORY LICENSING PROVISIONS IN ANTITRUST JUDGMENTS The subcommittee's survey reflected mixed results concerning the importance and effectiveness of compulsory licensing provisions. In some cases compulsory licensing has proved beneficial to licensees, particularly small business, and thus stimulated competition, while in others it has resulted in no discernible benefits. The number of licenses issued under a particular judgment ranges from zero to over 300. In those cases where licenses have been issued, licensees have reported varying degrees of success in their utilization of the licensed patents. In some cases they have stated that the patents have not contributed significantly to their operations. In others, however, licensees have indicated that the licensed patents have been very 10 See the Western Electric judgment of Jan. 24, 1956, in which all patents of the defendants, both present and future, are made subject to compulsory license to all domestic applicants, with no limit as to time or the use to which they may be put. See vol. 738, Official Gazette of the U.S. Patent Office, No. 1, January 1959. important to them, and have enabled them to make a product or expand into a field that otherwise might have been closed to them. The survey disclosed that among the companies which have benefited from compulsory licensing are a large number that might be classified as "small business," whose own research facilities are limited by comparison with those of large antitrust defendants. This comment is particularly applicable in those situations where utilization of the licensed patents did not require large capital expenditures. There are discussed below, first, illustrative cases in which compulsory licensing decrees have been effective; and, second, cases in which such compulsory licensing requirements have had no discernible effects, since little if any interest has been displayed in the patents available for licensing. Finally, a few cases are discussed where there was licensing activity under a judgment which apparently would have occurred without the judgment. A. Examples of cases in which compulsory licensing decrees have been effective 1. United States v. Phillips Screw Co., Civil No. 47-C-147, N.D. Ill. This action was filed in January 1947 and alleged price fixing, patent pooling, and territorial agreements with respect to crossrecessed head screws and screwdrivers. A consent judgment was entered on March 28, 1949, which among other things required the licensing of patents on a reasonable royalty basis and the furnishing of technical information to licensees under the patents. Prior to the entry of the consent judgment there were 39 licensees under the screw patents and 10 licensees under the screwdriver patents. By August 15, 1958, the numbers of screw licensees had increased to 133, more than three times the predecree number, and the number of screwdriver licensees had increased to 21, more than double the predecree number. The rates of royalties with respect to screwdrivers were reduced on March 28, 1949, and with respect to screws on July 1, 1949. A number of licensees attributed substantial business advantages to the licenses and technical information obtained under the patents covered by the decree. The following comments from licensees are typical: (a) "While there is no way of measuring the cash value of our production under the license, we do know that it has been of considerable value to us. It has enabled us to secure other desirable business which we could not have had without the license." (b) "It is the undersigned's belief that we would have made some expansion in our facilities and plant; however, it is an undeniable fact that our ability to produce Phillips screws has made our expansion, sales, etc., more rapid." (c) "However, we can say that the Phillips screw product has contributed to the growth of our company and has enabled us to strengthen our position in small screw production." (d) "Our opinion is that the manufacture of Phillips products has contributed very materially to our growth in the past 10 years. It is quite certain that without this product, we could not have hoped to increase our sales and production nearly as much." (e) "We believe that increases would have been made in manufacture of products, employment, and investment whether or not we had a license. However, there is no question in our minds that having a license accelerated the increase." (f) We have spent on new machinery from 1950 to 1955, inclusive, $251,155.31. Probably 50 percent of this amount was purchased to aid in the manufacture of Phillips head screws. ***These increases would not have been made except for the license." 2. United States v. Eastman Kodak Co., Civil Action No. 6450, W.D.N.Y. On December 21, 1954, a case was instituted against Eastman Kodak alleging violations of the Sherman Act. According to the complaint, Eastman had achieved and maintained a monopoly of the amateur color film processing field through distribution practices by which it controlled prices and conditions of film sales to prevent competing photo finishers from entering this market. The complaint alleged that Eastman sold Kodachrome and Kodacolor film on the understanding that it obtain all of the processing business in connection with such film and that it marketed film at prices which included charges for the subsequent processing of the film by Eastman. It was alleged that these practices foreclosed competitors from processing such film. On the same day the complaint was filed a consent judgment was entered which among other things required Eastman to grant reasonable royalty licenses under applicable patents; to make available manuals describing its commercial color film processing technology; and to lend technical assistance in connection with applying the methods described in the manuals. Eastman has advised that the procedures with respect to the granting of licenses under the decree have been quite routine and simple and that there have been no refusals of requests for licenses nor any negotiations as to the terms of the licenses which have been granted. Eastman prepared simple license forms which did not provide for continuing royalties or royalty reports, as a nominal sum of $100 was fixed as the paid-up royalty for each license granted under the decree. When an inquiry is received concerning the availability of a license under the decree, Eastman immediately sends forms of its license agreement. In no case have there been negotiations looking toward the execution of the license which did not result in the actual issuance of a license. Some prospective licensees to whom the license forms were forwarded did not thereafter respond. Eastman assumes that these prospective licensees were not interested as licenses would have been granted had they followed up. As of the middle of August 1958, less than 3 years after the entry of the decree, Eastman had granted approximately 43 licenses to processors who may be classed as small businessmen. While it is still too early to assess finally the results of the compulsory licensing features of this decree, it would appear that these licenses have created some competition in a field which, according to the complaint, was securely in the hands of one company. Former Assistant Attorney General Victor R. Hansen, testifying on October 21, 1957, before the Antitrust Subcommittee of the House Committee on the Judiciary, stated (p. 24): Eighteen months after the judgment, eight companies had invested $650,000 and two firms had invested more than 3. United States v. Merck & Co., Civil No. 3159, D.N.J. On October 28, 1943, a complaint was filed against Merck & Co., Inc., and others, charging a conspiracy to restrain trade in chemical and pharmaceutical products by entering into an agreement with a German company which provided for a division of world territory into noncompetitive areas. A consent decree was entered in the case in October 1945, which, among other things, required Merck to issue licenses under certain patents on a royalty-free basis. Licenses have been issued under this judgment to 10 applicants. Some of these were large companies who advised that the rights which they received under the license were not very important insofar as the operations of the particular companies were concerned. However, in responding to a request concerning the importance of the licensed patents to it, one of the smaller licensees advised: The royalty-free license granted to us by Merck & Co., Inc., has been extremely important to us. It has enabled us to experiment and to clinically test a new product without fear of infringement upon the Merck patent. We have, through this knowledge gained, managed to improve our formulation. Through this we have been able to employ the facilities of other small companies to aid in development and manufacture. * * * Unfortunately, we have been a very small company and have had to work very slowly in our development. However, through being able to freely operate with Merck rights we have enhanced our possibilities to be able to compete in the commercial products field. The results of gaining these rights and the ability to "put it over" still remain to be seen. 4. United States v. Technicolor, Inc., Civil No. 7507-M, S.D. Calif.12 A case was filed in August 1947 alleging conspiracy to restrain trade and to monopolize the business of professional color cinematography. In November 1948, a consent judgment was entered against Eastman Kodak Co. and in February 1950, a consent judgment was entered against Technicolor, Inc., and Technicolor Motion Picture Corp. The consent judgment against Eastman Kodak required Eastman to license certain patents on a royalty-free basis and others on a reasonable royalty basis. As of the middle of August 1958, Eastman had granted approximately 15 licenses under the decree, all of them of the royalty-free variety. One licensee in commenting on its license from Eastman stated as follows: We were issued a license by Eastman Kodak Co. on April 27, 1949, to process color motion picture film. Not long after the issuance of this license, we began processing color motion picture film, and are still processing. 12 This is one of the decrees included in the Frost-Oppenheim research project and a discussion of its competitive effects appears in the Patent, Trademark, and Copyright Journal of Research and Education, vol. 3, No. 3. Our arrangement with Eastman Kodak Co. has been entirely satisfactory from our standpoint, and we have no suggestions for improvement in our relationship with them. The Eastman Kodak Co. maintains processing laboratories in several large cities, but do not have one near Kansas City, Mo. Without the license, which led to the establishment of our own laboratory for processing color film, it would have been necessary for us to send all film printed to the nearest Eastman laboratory, Chicago, Ill. Although it is very doubtful that we could have built our volume of motion picture printing up to the point where it now is, without the license to process color film, we cannot say that it would have been impossible for us to do so. * Our employment of labor in our manufacturing process has increased substantially since we received the license, but we actually employ only 15 people in the processing laboratory. The employment of these people can definitely be attributed to the license. In reply to your question about the investment of our company in plant and equipment as a result of the license. Here again we have a difficult question to answer, since we would have undoubtedly needed much of the equipment we have purchased after receiving the license, whether or not the license had been granted. We can definitely say that approximately $100,000 has been invested in equipment used for the purpose of processing motion picture film under the license we were granted. We feel confident that our sale of products would have increased through the years without the license, but we are certain that this increase has been much more substantial than it would have been, if we had not been granted a license to process color film. Without that license, we would not have made an investment in the purchase of equipment, nor be employing the additional people that we now employ for the purpose of processing color film. We are hesitant to place any estimate on the value of the license to us. The value to us comes primarily from the time we save by processing color film here in our own laboratory, rather than ship it to Chicago and back. The establishment of our own color processing laboratory has improved our competitive position in this way. We can give equally as quick service as other laboratories located in cities where an Eastman laboratory is operated. 5. United States v. General Cable Corp., et al., Civil No. 40-76, S.D.N.Y. This case charged four defendants, including the General Electric Co., with participation in a Sherman Act conspiracy relating to high tension cable and accessories through price fixing, patent pooling, cartel arrangements, and buying up all patent rights relating to fluidfilled cable for their own use and to the exclusion of all others. A consent judgment was entered in August 1948 which required defendants, |