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class Mr. Hooper's patent is, the companies were given war contracts and kept busy to their full capacity so that except for the loss of royalty which they may have charged up they did not suffer businesswise. There was no civilian business anyway due to shortage of materials and other reasons.
Following the war it was expected, I believe, by both the Government and the companies involved that these contracts granting royaltyfree licenses would expire with the shooting war. Unfortunately, there was inept language used in them and they did not expire as expected, because the state of war still exists.
I was in the office of the Judge Advocate General of the Army and we received a number of these licenses, so I speak with some knowledge of the facts. It was thought that the end of the war would come within 6 months of the end of the shooting and that is why you find these clauses in there for the duration of the war and 6 months. So, these licenses have continued in force far beyond the time orginally intended.
In the Eighty-first Congress, last August, there was enacted Public Law 694, which gave the head of any department the right to cancel or revise any such royalty-free licenses in view of changed conditions. Mr. WILLIS. That originated before this committee.
Mr. ROSE. Yes, sir. This committee sponsored that bill although it happened to be a Senate bill which was approved; there was a House bill of similar language.
Mr. BRYSON. It was passed August 16, 1950.
Mr. ROSE. That is right, sir.
I say in my prepared statement it is probable that many of these licenses have been revised, but since writing my statement I was able to get a little more information on the subject and find that very few people who granted royalty-free licenses to the Government have applied for relief under Public Law 694.
Mr. BRYSON. They had a right to do so under the law?
Possibly because the license was not being exercised by the Government in many cases. I think Mr. Hooper mentioned that they did not recognize that the license was still in effect, therefore that may be the reason he did not apply. That is a matter of individual view and a matter for the individual in applying or not applying for relief.
Mr. BRYSON. Were his patents enforceable against his competitors? Mr. ROSE. His patents were enforceable against his competitors for civilian uses in the commercial field throughout the period of the shooting war if there was any production other than for the Government for war purposes. They have been enforceable every minute of the time that the royalty-free license to the Government has been in effect against any processor for civilian use other than those who may have specific license from the patent owner. His patents and all such licensed patents have been in force against the public except for production for the Government or by the Government.
However, the important fact to keep in mind as to such licenses is that only the Government and not the general public was relieved from the obligation to account to the patentee for production during the term of the license, so that to extend the term of any patent on this ground as proposed in H. R. 323 would result in extending the term of potential liability for infringement by the public for an addi
tional period, whereas the public has never been relieved of that liability for a commensurate period.
H. H. 323 further provides that no patent extended under the act will be enforceable against the Government for the extended period. Thus, if these provisions were adopted we would have the anomalous situation of the Government being the sole beneficiary under the license and the public and not the Government being solely liable for infringement during the extended term. This would be similar to providing that A's neighbor on the right should be liable for damage to A's property caused by his neighbor on the left in the exercise of a free easement given by A to the neighbor on the left.
If any relief is to be given to those patent owners who granted royalty-free licenses to the Government for the duration of the war, it is suggested that such relief should be by way of providing that the Government should be liable for infringement of such patents for the period following the end of hostilities, and that compensation should be paid for any use of such inventions by the Government during each period, regardless of the existence of such a royalty-free license, or from such a date and under such conditions as would be equitable. However, the public should not be saddled with additional periods of patent liability simply because these licenses to the Government remained in force longer than originally intended.
In view of the fact that the association is opposed to the entire principle of the bills under consideration, no detailed analysis of individual provisions has been made. However, it is noted that if the committee should decide that some extension of the terms of patents is warranted, substantial revision of the bills would be necessary to set up proper safeguards against wholesale extension of patents and to place a maximum limit on the duration of such extensions, as well as the number thereof which may be obtained in a given
In conclusion, it is reiterated that the American Patent Law Association is opposed to the principle of extension of the terms of patents as proposed in the bills under consideration, as such extensions are not believed to be in the public interest or in the interest of the patent system in this country, and as being contrary to the established policy of the Congress against extension of the term of the patent grant. It is felt that if any particular instance of such great loss or hardship is brought to the attention of the Congress as to demand remedy, the proper remedy should be by way of special legislation restricted to the individual patent or patents concerned, rather than general legislation of the character proposed in these bills.
Mr. BRYSON. Thank you, Mr. Rose.
They evidently have a quorum over there. Is there any other witness here who has not been heard?
Mr. Thomas H. Brown.
STATEMENT OF THOMAS HAYWARD BROWN, CHIEF OF THE PATENT LITIGATION UNIT, DEPARTMENT OF JUSTICE
Mr. BRYSON. You have not testified before?
Mr. BROWN. Not on this bill.
Mr. BRYSON. Maybe on the revision?
Mr. BROWN. Yes, sir.
Mr. BRYSON. All right, sir.
Mr. BROWN. I might say that the Department of Justice does not favor these bills.
Mr. Hoxie of the New York Patent Law Association and Mr. Rose have gone into the factors which have been set forth in the letters of the Deputy Attorney General to this committee so fully that I will only speak briefly to recapitulate.
The Department feels this is class legislation. It seeks out the manufacturer who has a patent and gives him benefits where a manufacturer equally as meritorious who has no patent is not going to benefit. We feel the 17-year patent grant provided for in our present law is a reasonable compliance with the constitutional provision for the grant of patents for a limited time to promote the progress of science and the useful arts.
As pointed out by Mr. Rogers, a patent does not give the patentee the right to make himself. In terms the patent grants this in that it gives to the patentee the right to exclude others from making, using, and selling or importing into this country. During the last war the patentee could stop importation even though he could not manufacture here. He could stop the importation of these vending machines and the like across the Mexican border or from South American factories where importation into this country should not be in accordance with his patent. He may not have a patent in the South American countries. He could stop the importation of that patented article to this country. He has always had the right to exclude. That right was never taken away from him and never lifted during the war.
The lack of materials fell on those who did not have patents as well as those who had patents.
Mr. WILLIS. During the war we had a great shortage of housing construction and, as a result, there were more houses constructed during 1 year than would have normally been the case. As a result of that the sale of the patented device might have assumed greater proportions than it would have if no interruption had occurred.
Mr. BROWN. It undoubtedly did. That is, there were more sales of refrigerators and automobiles. As quickly as the companies got into production there were more sales of radio, television, and a thousand and one other items after the war than there would have been had there been no war at all.
We would have had a gradual increase in manufacture. There would have been economic law in effect that would have kept down the market for many of these items during the 4-year period that we were engaged in hostilities.
Now, when due to lack of material for these devices during that period, when the war is finally terminated and material becomes available, they are manufactured with greater vengeance and greater rapidity and more sales. There is a question which cannot be answered with a direct yes or no. Perhaps the patentee that had a patent that did not expire in 1945 before VJ-day, if it went over for 2 or 3 years, he has perhaps made up on the latter end what he lost in the 4-year period.
Mr. WILLIS. Or certainly a portion of it.
Mr. BROWN. Yes.
The next item in considering these bills is that it would be difficult or, perhaps, even impossible to fairly administer. It calls upon the
Commissioner of Patents to go into an entirely new field as to the extension. He must determine whether or not the patentee was prevented or impaired and delayed in the normal use of his patent; and how much his damage was.
Heretofore the Patent Office had only to pass on whether or not an invention for which patent application was made met the standard of invention required by the law. Whether it was new and useful and had not been in public use or on sale in the period before the invention. These are quasi-legal questions and technical questions. But today we are to have all these questions plus the economic questions of the amount by which the value was impaired by the war.
It would be a guess in many cases.
It would be difficult and impossible to estimate. It would require an additional force in the Patent Office to consider this economic aspect and that is an additional reason. But the more basic reasons as I stated are, class legislation. We feel that already the 17 years is a fair compliance with the constitutional provision; that depression, war, flood, and fire are unfortunate. They are unfortunate for all of us that are hit the hardest but we cannot make whole one who lost as a result of the war by provision that will put him where he would have been had no war occurred. It seems to us a bad start to try to make one class whole as against so many other classes who cannot possibly be made whole.
Mr. BRYSON. As we used to say against injuries resulting from act of God or the public enemy.
Mr. BROWN. I do not know, sir. That would be a hard one to
Mr. BRYSON. Thank you, Mr. Brown.
We will now hear from Mr. Fritz Lanham who was a former Member of Congress and a former colleague.
STATEMENT OF FRITZ LANHAM, FORMER MEMBER OF CONGRESS
Mr. LANHAM. I am glad always, Mr. Chairman, to comply with the wishes of this committee. My remarks will be a personal and individual statement based upon my conclusions from the study of the subject matter through many years of legislative experience.
The proposal of the pending bills represents a radical departure from our long established patent policy. Such proposals have been opposed consistently and uniformly by the Department of Commerce, of which the Patent Office is a part; by the Department of Justice; by the Patent Law Associations and the patent fraternity generally. Now, I think there is some misunderstanding with regard to patents that have been extended. In that regard I believe my statement will be accurate. Let us look back to 1861 when the patent term was extended from 14 to 17 years, which was quite an advantage to patentees because in those early days of the Republic communications and the operations of business were necessarily greatly restricted.
What patent terms have been extended? We have extended design patents for certain patriotic societies and organizations in order that their emblems might not fall into the hands of those who do not belong to those respective organizations.
We have extended patents for the protection of the boys in the service in the two World Wars, and in World War I, by reason of that
legislation, I think I am correct in stating that only six patents were extended.
A reference has been made to the case of the Ronson lighter-the Arts Metal Co. I conducted the hearing with reference to that matter and it was not an extension of a patent. A Federal judge, subsequently removed, held the patent invalid and for 4 or 5 years other concerns used that patent which would have been an infringement if the patent had not been declared invalid. But, by reason of disclosures of certain unwarranted judicial action and after further research, the same court subsequently restored the validity of the patent and, consequently, the legislation with reference to the Ronson lighter was simply to give the company the 17-year period by restoring the right they had been improperly denied for a few years.
Now, insofar as incentive is concerned, I do not think that can be regarded as impaired. We have a great backlog of applications for patents now pending. We have carried on this policy of not extending patents through all these years, yet ours is the outstanding country of the world in expressing ingenuity as represented in these patents. I want in this brief statement to call attention to a statement I made 4 years ago before this committee when a somewhat similar bill was under consideration. I said:
Businessmen have to know when these various inventions are going into the public domain in order that they may plan for the conduct of their business upon that certainty; and this further is true in that regard, that most inventions are improvements upon former inventions and unless the industry which has planned to produce with reference to such improvements knows when it can begin its operations, without having to pay royalty to the underlying patent if extended, it makes for an uncertainty that would jeopardize our whole industrial structure.
And I note that in that same hearing there was a statement presented by Mr. William C. Foster, Acting Secretary of Commerce, setting out other reasons why extensions should not be granted. I call your attention in amplification of my former testimony to what the then Acting Secretary of Commerce had to say in that regard 4 years ago:
Considerable industrial activity is based on the certainty of the term of the patent monopoly, and of the date of expiration of the patent. Hence the extension of the patent term will tend to upset existing contractual relationships based upon the patent monopoly.
In many instances the terms of licensing agreements are based upon an amortization of investment which is to some extent predicated upon the existing statutory terms of patents. Moreover, it frequently happens that developments are undertaken and industries built up in anticipation of the expiration of a patent term when the teaching of the patent becomes freely available to everyone. Licenses, in the absence of contrary agreements, terminate with the expiration of the patent.
The Congress has shown by its actions in the past that it is reluctant to enlarge upon the grant of patents. Patents originally were granted for a term of 14 years. In 1836 provision was made for a conditional extension of 7 years, which proved unsatisfactory and was abolished in 1861, when the present 17-year term was set
So, it has been consistently contended by the Government departments and the patent law associations and the patent fraternity that you disturb and disrupt business by the extension of these patents.
Naturally, the patentee would like to have his patent, like Tennyson's brook, go on forever. But this would be very disturbing to American business and it is not in keeping with our patent policy