THE PATENT LAW ASSOCIATION OF CHICAGO, Hon. EMANUEL CELLER, House of Representatives, Washington, D. C. DEAR SIR: As you doubtless know, the Patent Law Association of Chicago studies and makes reports on proposed legislation affecting the patent system. H. R. 4054 was introduced by Congressman Walter on May 10, 1951, and we are informed that hearings before your Patents Subcommittee of the House Judiciary Committee have been set for June 20, 1951. Neither the bill nor the hearings came to our attention until June 4, when I ordered copies of the bill. Upon their receipt I referred the bill to a subcommittee of our legislative committee which, together with the board of managers, will make a report on June 26, 1951. I am writing to request that the record on your hearings be kept open about 10 days so that our report may be made a part thereof. At the present time it is not known whether the Patent Law Association of Chicago will be for or against the bill; but whatever position is decided upon should be brought to your attention before final action is taken. Very truly yours, ALBIN C. AHLBERG, Vice President and Chairman of the Legislative Committee. Mr. HARRIS. We also have a statement from the Patent Equity Association of New York on both bills. Mr. WILLIS. Generally what is their position? Mr. HARRIS. The position of the Chicago Patent Law Association is opposed to H. R. 323. The position of the Patent Equity Association is in favor of extension. As a matter of fact that, apparently, is one of the policies of that particular association. Mr. WILLIS. What is that association? Mr. HARRIS. It is an association organized to protect and revive the American patent system. I believe they are a fairly recent association, and they have a policy statement attached to the letter to the chairman in which they state the reason they have banded together. Mr. BRYSON. As would be implied from their title they seek equity. Mr. HARRIS. That is right, sir. Hon. EMANUEL CELLER, PATENT EQUITY ASSOCIATION, INC., Chairman of Judiciary Committee, House of Representatives, Washington, D. C. DEAR SIR: It is our understanding that a hearing will be had on Wednesday, June 20, on the bill H. R. 4054, before the Committee on the Judiciary. The board of directors of our association has had considerable discussion on this bill, and I have been requested, as secretary, to inform your committee that this bill has the complete endorsement of our association so far as the principles involved are concerned. We wish to call to your attention what we consider one weakness in the bill as presented, and that is that it makes no provision for the extension of patents wherein the manufacture of the invention was specifically prohibited by Government order. During the war period, the Government issued certain specific orders directly prohibiting the manufacture of certain articles, and therefore, even if materials could have been obtained it was still against the law to manufacture these prohibited articles. A patent is a contract between an inventor and the Government, in which the Government grants the inventor the exclusive control of his own invention for a period of 17 years in return for a full disclosure by the inventor and the dedica tion of his invention to the public at the expiration of this 17-year period. When during the stress of war, the Government found it necessary to prohibit the manufacture of certain patented articles, they therefore reduced the 17-year control of the man's own invention to a period of approximately 13 years. This, without any compensation to the inventor. If, as we believe, a patent is a contract and the terms of this contract are arbitrarily changed by one party without the consent of the other and also without compensation, then this becomes an arbitrary exercise of power. We respectfully submit that our Government should honor its contracts on the same high ethical standards that are expected from private citizens. We fully recognize the right during an emergency for the Government to take such steps and issue such regulations as may be necessary for the protection of the country, but in any other transactions pertaining to property other than patents, the Government has always paid a proper consideration when it took possession and control of an individual's private property. If a man owned a warehouse and the Government felt it was necessary to prohibit his use of same, we recognize that in the emergency the Government has the full right and power to do so, but wherever this was done the Government paid the owner proper compensation. When the Government deprived the owner of a patent of his right to use same for a period of 4 years, the owner should be compensated. This is a moral obligation. Because of the varying situations surrounding different patents, it would be an impossible task to set a financial standard for compensation, and therefore, a simple, direct, and practical solution is for the Government to extend the life of such patents for such period as Government edict prohibited their manufacture. This principle has already been recognized by bill H. R. 4692, passed by the Eighty-first Congress, wherein such extensions were granted to "any person who served honorably in the military or naval forces of the United States at any time between December 7, 1941, and September 2, 1945." This was an honorable thing for our Government to do, but why should the Government honor its obligation to those who served in our Armed Forces and fail to honor its obligations to those who, through disability or over-age limitations, were unable to serve in the Armed Forces? We believe that a basic principle is involved and that the Government should stand on the principle of fairness to all. We recognize a debt to those who served in the Armed Forces which passes anyone's ability to repay, nevertheless, those who by force of circumstances did not actively serve in the Armed Forces but contributed their full share toward winning the war in their civilian capacities, likewise deserve to receive equity and justice. In conclusion, the Patent Equity Association is a nonprofit membership organization, organized for the purposes of protecting our patent system and the rights of inventors under this system, which rights of late have been sadly curtailed. The directors of this association are all responsible and experienced men whose opinion we believe, should carry considerable weight on matters such as this. For your further information, we are enclosing a copy of this association's Statement of Policy, printed some time ago. You will note that paragraph 5, page 3, directly bears on the subject we are writing you about. Very truly yours, PATENT EQUITY ASSOCIATION, INC., A STATEMENT OF POLICY BY THE PATENT EQUITY ASSOCIATION, INC., NEW YORK, N. Y. This association offers a common ground for the cooperative effort of those who desire to revitalize our patent system and prevent its further destruction What the Patent Equity Association believes 1. The United States patent system has been a large contributing factor to the industrial growth of America and to our high standards of living. 2. It has in the past through the protection it afforded inventors, given them and their financial backers the incentive to risk their time, abilities, and capital in the creation and marketing of new and improved machines and products and processes. Evils that need correcting 1. The record shows that in 5 years from January 1945 to December 1949 the second circuit Federal court of appeals held only 4.65 percent of the patents coming before it valid and infringed, while the fifth court of appeals in that same period held 76.92 percent of the patents coming before it valid and infringed. This erratic condition should not be. 2. The record shows that of the total number of patents coming before all the circuit courts of appeals in that period only 19.13 percent were held valid and infringed. This is a clear indication that either the Patent Office, the courts, or both are wrong. This should not be. 3. The above record indicates that our patent system as now conducted is breaking down, if indeed it has not already broken down. This should not be. 4. In a patent suit under present conditions, only those of great wealth have a reasonable chance of properly presenting their cases to the courts. The expense is so grotesquely large that it usually precludes the independent inventor or the small manufacturer from protecting his patent rights. This should not be. 5. Even for the wealthy, the outcome of a patent lawsuit is a gamble, largely because the personnel in our Federal courts handling these cases is untrained in mechanics or science, and therefore, is not adequately equipped to understand the problems involved. This should not be. 6. The great majority of manufacturers in this country are fundamentally honest, but there are too many who have lost respect for our patent system and who are perfectly willing to pirate any invention which seems attractive to them, knowing that on the average, if they spend enough money to employ skillful defense counsel, they have a good chance of knocking out the patent. This piracy is prevalent in our industrial system and is a great discouragement to the independent inventor and the small manufacturer. This should not be. 7. Largely as a result of all the above, many independent inventors have become discouraged and in many cases have either ceased their activities or have sought employment with large corporations. The organized research departments of our large corporations are of unquestioned value to industry, but they are not and never can be a substitute for that spark of originality so often supplied by the independent inventor. Further inroads on the independent inventors are a threat to the technological future of America. This should not be. 8. With the circuit courts of appeals vitiating such a large percentage of the patents coming before them, the once strong Patent Office has become largely a glorified registration bureau. It is further hampered by limited personnel many of whom, considering their responsibilities, are underpaid. This should not be. What the Patent Equity Association advocates 1. A militant campaign to remedy the conditions outlined above is necessary both in educating the general public and the Congress. It must start by exposing to public gaze the evils which now prevail. 2. Necessary legislation should be passed creating patent courts manned by judges educated not only in law, but also in either mechanics, or electricity, or chemistry. Lawyers with such qualifications are available. 3. A single court of patent appeals should be created manned by judges who believe in the principles of our patent system and who are selected for their legal and scientific training and ability. 4. Government-owned patents should be open to all. The Government of the United States represents its citizens; it is not an independent entity apart from the citizens; therefore, any patent owned by the Government belongs to all the citizens, each one of whom should have the full and unabridged right to use same, unless curtailed for security reasons. This is not now the case. 5. The life of war-curtailed patents should be extended. During wartimes our Government has the unquestioned right to appropriate private property, but only upon proper payment for same. During World War II numbers of patent owners were deprived of 4 years of the life of their patents through Government action prohibiting their manufacture, this without any compensation of any kind or character. This should be remedied through the extension of the life of any such patents for a period equal to that during which the Government prevented their use. 6. Patent Equity Association is opposed to the compulsory licensing of patents. Patent Equity Association recognizes that there are some individuals and some organizations which blindly oppose any change in our patent system, even though it bids fair to bring about improvement. Patent Equity Association believes in a patent system which will give adequate and proper protection to inventors, manufacturers and patent owners; it will, therefore, meet in a militant manner all those who oppose appropriate changes calculated to eliminate the evils which now beset the patent system. By resolution of the board of directors: APRIL 6, 1951. PATENT EQUITY ASSOCIATION, INC., Mr. HARRIS. Here is a statement of the Aircraft Industries Association of America, which was handed to me this morning. They are opposed to extension. (The matter referred to is as follows:) STATEMENT OF AIRCRAFT INDUSTRIES ASSOCIATION OF AMERICA, INC. WASHINGTON, D. C., RE H. R. 323, H. R. 3231, AND H. R. 4054 The consensus of our industry, as represented by the AIA Patent Advisory Committee, has been generally that such bills are unnecessary, for the reasons usually given when all of the equities of the situation are examined. There was reason enough in the facts and circumstances surrounding the act entitled "An act to provide for the extension of the term of certain patents of persons who served in the military or naval forces of the United States during World War II," approved June 30, 1950 (Public Law 598, 81st Cong.). These were the patents or property of persons actually serving in the Armed Forces of the United States. The single qualifying reason, about which there can be no question of fact, was their service in the Armed Forces of the United States. H. R. 323, H. R. 3231, and H. R. 4054 are very broad in their scope as they are apparently intended to extend the terms of patents of persons, firms, corporations or other organizations who did not receive any income, or whose income from the patents was substantially reduced by reason of discontinuance or curtailment of the manufacture, use or sale of any article covered by such patent, by reason of prohibition or restrictions in the use of material in the manufacture or by reason of shortages of materials. Amidst widespread material shortages, it is not inconceivable for the Patent Office to receive requests for extensions from the owners of the majority of patents issued during the period that would qualify them for such extension. Apart from the impossibility of administering such bills, we do not see why the owners of patent rights should have the patents extended for the brief period, and for the reasons set forth in the bills. It would, in effect, be extending the term of an almost expired patent for a short period of time. It is not likely that the few years extension would amount to very much insofar as exploiting such a patent is concerned. It will place additional burdens upon the manufacturers in ascertaining the true expiration dates of patents. Management decisions may be made, based upon the status of a patent which may at some time subsequent be altered if the proposed bills become law. There does not seem to be any reason for singling out the owners of patents as a group to be entitled to extra rewards or opportunity for profit, when, outside the scope of these bills, many other groups of citizens whose businesses and lives were materially altered by reason of the war effort were also deprived of property or property rights or opportunity for profit, for the same reasons that are furnished for the extension of the expiration dates of certain patents. It would seem that under the provisions of the bills, it would be a very difficult task to administer such bills. There would be a tremendous burden on the part of the applicant to satisfy the requirements of the bills, and since the extension would not be operative for use by the United States Government during the period of such extension, the repercussions and confusion would be borne entirely by American industry. Mr. HARRIS. We also have the statement of the Department of Agriculture. They are neither opposed to nor in favor of the bills, but they have a sentence at the very end of their letter addressed to the chairman which is quite pertinent and informative: The Bureau of the Budget advises that enactment of the proposed legislation would not be in accord with the program of the President. (The matter referred to is as follows:) Hon. EMANUEL CELLER, DEPARTMENT OF AGRICULTURE, Chairman, Committee on the Judiciary, House of Representatives. DEAR MR. CELLER: This is in reply to your requests of March 9 and May 22, 1951, for reports on H. R. 323 and H. R. 4054, respectively, bills to provide for extension of terms of patents under certain conditions. Although enactment of the proposed legislation would have no apparent adverse effect on public service patents, this Department would not be sufficiently affected by the proposals to make a specific recommendation as to whether such legislation should be passed. Therefore, we are not requesting an opportunity to testify at the hearings on these bills. The Bureau of the Budget advises that enactment of the proposed legislation would not be in accord with the program of the President. Sincerely yours, CHARLES F. BRANNAN, Secretary. Mr. HARRIS. The Federal Security Agency appears not to be opposed to the principle of extensions but opposed to the type of extension in H. R. 323 and 4054. However, in the next to last paragraph of their statement they say, "we do not believe that the work of this Agency would be impaired or otherwise be affected by the enactment of these bills." Mr. WILLIS. Did we seek the official comments of these agencies? Mr. HARRIS. We did, sir. Mr. BRYSON. They write mighty long letters not to be affected. Mr. HARRIS. They discuss certain aspects of the two bills rather thoroughly. (The letter referred to is as follows:) Hon. EMANUEL CELLER, FEDERAL SECURITY AGENCY, Chairman, Committee on the Judiciary, DEAR MR. CHAIRMAN: This letter is in response to your requests of March 9 and May 22, 1951, respectively, for a report on H. R. 323, a bill to provide for extension of terms of patents where the use, exploitation, or promotion thereof was prevented, impaired, or delayed by causes due to war, national emergency, or other causes, and on H. R. 4054, a bill to provide for the extension of terms of patents, and for other purposes. The two bills are similar in many respects. They would authorize the Commissioner of Patents, subject to notice and hearing and in accordance with regulations and procedures to be established with the approval of the Secretary of Commerce, to grant an extension of a patent where it is found that the normal use, exploitation, promotion, or development of the patent has been prevented, impaired or delayed by reason of specified circumstances. In the case of H. R. 323, these circumstances include the granting of a license to the United States without royalty or at a nominal royalty, restrictions or prohibitions imposed by the United States due to a war or other national emergency, circumstances resulting from the existence in the United States of a state of war or other national emergency, or any circumstance beyond the control of the owner or holder of the patent. Only one type of circumstance is specified in H. R. 4054, i.e., inability to obtain materials, because of Government priorities or allocations, during the period from May 27, 1941, through November 4, 1945. Such extensions would be granted only upon application in writing filed within 1 year after the enactment of the act, for a period of time "commensurate with the extent to which the normal economic return from such patent was prevented, impaired, or delayed" by reason of such circumstances. The Commissioner of Patents would be authorized to establish a board to hear and determine such applications. |