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established through so many years, which has made this Nation of ours industrially and otherwise the outstanding nation of the world. Mr. BRYSON. Thank you, Mr. Lanham.
The committee will leave the record open for 10 days for you gentlemen to amplify your previous statements or to file supplementary statements if you would like to.
Mr. FOOTE. Mr. Chairman, I have come some distance and have been here 3 days waiting an opportunity to answer some of this opposition. Mr. BRYSON. You did not testify?
Mr. FOOTE. I did testify in favor of the bills, or in favor of H. R. 4054.
Mr. BRYSON. You may file a supplementary statement if you wish. Mr. FOOTE. There is no substitute for an oral presentation and I would like to have the opportunity to present briefly, orally, a rather brief statement I have here trying to answer this opposition.
Mr. BRYSON. Well, we will have to insist on it being brief and we will make this exception in your case. You are the only one who has asked for rebuttal.
Mr. FOOTE. Thank you, Mr. Chairman.
SUPPLEMENTARY STATEMENT OF FREDERICK D. FOOTE, ALLOYS DEVELOPMENT CO., PITTSBURGH, PA.
Mr. FOOTE. It is difficult, of course, to know precisely what to say in answer to such opposition as we have heard this morning because in some respects I have never heard more misinformation put into the record than I have heard in testimony presented here by the opposition. I think it is fair to say that you gentlemen should be very certain that the things that go into the record are factual. They are not factual with respect to what has happened abroad.
There has been no disturbing of business because of extensions made of foreign patents in all the large industrial countries, except our own country. There is no opposition here today on the part of business to the extension of patents. This is very significant.
The companies who have licenses under my patents are not here to oppose these extensions though they will have to continue to pay royalties. They recognize that what we have done gave great impetus to their industry just as invention is supposed to do and they are willing that our patents should be extended. They are willing to carry on paying the royalties and I might add that in this country, at least, anyone has been able to have a license under our patent who asked for it. Further, of the several companies who are interested with me in producing this patentable material, none is here to oppose it.
With reference to our extensions abroad, the companies who had licenses in Great Britain, have assisted us in getting our extensions in that country and not because they have used these patents as monopolies.
Mr. WILLIS. In the case of your patent, the manufacturer you speak of, does he have the exclusive right to manufacture?
Mr. FOOTE. He had the exclusive right but recognizing it was of benefit to the entire industry he let anyone make the product in the industry because it was introducing a new development in the industry. He had an exclusive right but he gave it up. So there is no monopoly.
Mr. WILLIS. Others are actually engaged in the production? Mr. FOOTE. Yes. And on an equal basis. I regret Congressman Walter was prevented from reading his statement for the record. That statement would have answered many arguments against the bill. Mr. BRYSON. We have his statement in the record and, of course, Congressman Walter stands in very high regard in this committee. He is one of the ranking members and we will give due regard to what he has said.
Mr. FOOTE. I think, perhaps, the members may be interested in what he has said.
Mr. BRYSON. They will have access to the testimony.
Mr. FOOTE. Do you prefer I should not quote from him?
Mr. BRYSON. I don't wish to object to quoting from one of our colleagues to us.
Mr. FOOTE. He outlines a statesmanlike approach to this whole matter. I am impressed with his statement.
Mr. BRYSON. All right. Proceed.
Mr. FOOTE. First, a highly legalistic argument was made by Mr. Hoxie which said in effect: "A patent is merely a right to exclude others, and that right is not impaired by material shortages."
If that legalistic concept truly expresses the philosophy of our vaunted patent system, then it has become a hollow mockery. Opposed to this, I would place the statesmanlike concept of Representative Walter. In his statement, he said:
* * *
No one seriously questions the wisdom of protecting the inventor through an effective patent system. We must not fall into the fallacy, however, of regarding the patent as a gratuitous grant from a generous sovereign. The inventor has bought his patent right by disclosing his invention, so that after 17 years of enjoyment by him, the invention can be freely enjoyed by the public. It is a basic principle of jurisprudence that he who grants a right, also impliedly covenants that he will not deprive the grantee of the enjoyment of that right. If a landlord grants a 17-year lease and then prevents the tenant from enjoying the last 4 years of the lease, the law requires restitution. This principle seems to prevail in all fields of law with which I am familiar.
I ask you, which expresses basic justice: the statesmanlike approach of Congressman Walter, or the highly legalistic approach of the opposition? If there were any question about it, the latter have rendered their whole opposition ridiculous when they argue that the bill proceeds on the theory that "a patent gives an assurance of profit." Nothing could be further from the truth. The bill merely says that, if the Government destroys 412 years of the 17-year right which it granted the patentee, then in all fairness the Government should extend the patent for 42 years. This is essential to preserve the integrity of our patent system.
Secondly, it was argued that the bill would be discriminatory because it singles out the patentee for relief and ignores all others who were injured by wartime restrictions. I believe that the fallacy of this argument has already been exposed. The difference is that the patentee in effect has an agreement with the Government in which he is given a 17-year right. The only question remaining is whether that limited right shall be an effective one or a nominal one. The answer to the question has been given emphatically by the 16 foreign countries which have said that justice requires that patents be extended when they have been impaired by the sovereign which granted them. Can it be that this sense of justice is alive only in foreign countries? In the words of Congressman Walter:
I believe that it is high time that the law in this country should do justice along similar lines.
Particularly is this true at the present time when the cry of our military advisers is "Invent or die.""
Thirdly, it is objected that the bill would present an "administrative problem" to determine the term of the extension. I believe that this objection is based either on shallow reasoning or on inadequate comprehension of the bill. In answer, I would quote the clear and precise analysis of Congressman Walter who says:
I wish to point out that the bill does not embarrass the Commissioner of Patents by asking him to exercise any discretion, a power which he has never sought. Once he has determined, as a fact, that the patentee's enjoyment of his patent has been "prevented, impaired, or delayed" by governmental restrictions, then the patentee is entitled, as a matter of law, to a commensurate extension of his patent. For example, if a patented composition or alloy could not be made during 4 years of World War II because some element essential to the manufacture was denied by Government priorities, then the patentee is entitled to a 4-year extension. Similarly, if the use of the patent was impaired to the extent of 50 percent during each of those 4 years, then the extension would be for 2 years. If the patent owner has not been injured, obviously he is entitled to no redress, and the bill provides for none.
But, it is further objected, the standard for determining the percentage of impairment is the "normal economic return" which would "require the Commissioner to estimate or speculate." This, gentlemen, is sheer nonsense. Again I quote Congressman Walter:
In determining the extent of the impairment, the "normal economic return" is adopted as the principal criterion. This is not a new or untried standard. It is borrowed from the provisions of section 722 of the 1940-45 excess-profits tax law, which permitted the taxpayer to reconstruct a normal standard of earnings if his actual base-period earnings were affected by certain specified abnormalities.
I submit, gentlemen, that if this formula was good enough for the exacting requirements of the tax law it is not too indefinite or too speculative for determining the period for which a patent should be extended.
Now, having disposed of the basic objections raised to the bill, let me say that I agree with two points made by the opposition.
First, H. R. 4054 may be too restrictive in that extensions should not be confined to those which would redress the effects of material shortages alone. I would favor the amendment proposed by the Patent Equity Association to amend lines 8, 9, and 10 of section 1 to read as follows:
1945, inclusive by reason of Government restrictions, prohibition, priorities or allocations.
There were cases where the manufacture of certain patented articles was prohibited during the war, not because of materials shortages but to conserve manpower.
Second, I agree that the "revival," as distinguished from an "extension," should be limited. I do not think, however, that revival should be completely ignored merely because Congress has delayed legislation in this important field. The only logical objection to revival is that a company may have begun manufacturing without notice that the patentee may be given relief. But from these bills and from the present hearings, there will be notice of pending legislation.
I suggest that revival be limited to patents unexpired at or about the present date. This can be accomplished by adding at the end of section 2 (e) of H. R. 4054 the following words:
or, if the subject patent had expired prior to July 1, 1951.
The Cor-Ten patents in which I am interested do not expire until July 1, 1952, about a year hence, but I do not believe I should be deprived of relief if, by chance, the legislative processes should require another year to elapse before the necessary relief can be enacted into law.
Thank you very much, Mr. Chairman, and thank you for the privilege of filing additional statements, which we shall do now we have had an opportunity to hear the opposition.
Mr. BRYSON. All right, sir. And that ruling applies to others similarly situated.
That closes the hearing.
(Whereupon, at 12:15 p. m., the hearing was closed.)
ADDITIONAL STATEMENT SUBMITTED BY FREDERICK D. FOOTE
The record should be corrected as to certain misstatements made by speakers opposing the bill.
As to the foreign laws, it was intimated (1) that few foreign countries have such laws, (2) that in those countries the original patent term may have been shorter than ours, (3) that their procedure for extensions is expensive, and (4) that they involve administrative difficulties. Each of such allegations is untrue within my own knowledge, and I have had considerable experience with the foreign patent-extension laws.
In the first place, such laws have existed in practically every foreign country which is important industrially. The schedule submitted with my original presentation lists 15 such foreign countries, including Great Britain. The outstanding exception is Canada, which traditionally follows the action of the United States.
Secondly, in most of those foreign countries the original term of the patent is as long or longer than the 17 years used by the United States. It is 20 years in France, Belgium, Spain, and Hungary; 18 years in Austria, Holland; and 17 years in Denmark, Norway, and Sweden. In Great Britain and most of the British Commonwealth, the original term is 16 years, just 1 year less than our own. Beyond these original terms, the patents may be extended for periods varying from 44 years to 10 years. These facts, too, are shown in the schedule which I submitted.
Thirdly, in none of the countries where I have applied for extension of my foreign patents was there any complicated or expensive procedure. In fact, the costs were quite nominal.
Fourthly, the foreign countries have not experienced any administrative difficulties. Some speakers before your committee mentioned the difficulties that would face our Patent Office if hundreds of thousands of applications should be made for patent extensions. Such estimates are obvious nonsense, because the great majority of patentees were not injured and many were positively benefited by the War. A proper index is the actual experience in these foreign countries. In Great Britain, 3,020 applications were filed, of which 1,678 were granted by the end of 1950. Even assuming that the United States has two times as many patents as Great Britain, it does not follow that two times as many patentees were injured here as compared with the more stringent war-economy of Great Britain. The probabilities would seem to be that, under a patent-extension law, our experience would approximately duplicate that in Great Britain.
As to the position of Government departments, it is significant that the Patent Office does not oppose the bill, and that the Departments of Commerce, Agriculture, and Interior do not take any position. Only the Department of Justice appeared in opposition, and reiterated the same legalistic arguments that had been heard before, including certain incorrect generalizations regarding the laws of foreign countries. The treatment accorded by some of the departments to patentees (see the Hooper case) should not lend much weight to their statements in opposition to the bill.
As opposed to these legalistic arguments, buttressed by incorrect data on foreign countries, I commend to the committee's careful attention the clearly reasoned and statesmanlike statement submitted by Representative Walter at the beginning of the hearings.