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PATENT EXTENSION

WEDNESDAY, JUNE 20, 1951

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE No. 3 OF THE
COMMITTEE ON THE JUDICIARY,

Washington, D. C. The subcommittee met, pursuant to notice, at 10 a. m., the Honorable Joseph R. Bryson (subcommittee chairman) presiding, for consideration of H. R. 323 and H. R. 4054, which are as follows:

[H. R. 323, 82d Cong., 1st sess. ] 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 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That it is the policy and purpose of this Act that the term of any patent shall be extended to such extent as the normal use, exploitation, promotion, or development of such patent has been prevented, impaired, or delayed by reason of

(a) the granting of a license to the United States without payment of royalty or at a nominal royalty;

(b) any restrictions or prohibitions imposed by the United States by reason of a war or other national emergency; or

(c) any circumstance beyond the control of such owner or holder or resulting from the existence in the United States of a state of war or

other national emergency. SEC. 2. (a) The application for such extension of a patent shall be in writing, duly verified, and shall be filed with the Commissioner of Patents, accompanied by a fee of $30, within one year after the date of the enactment of this Act.

(b) There shall be set forth in the application for an extension the grounds upon which it is made, together with a statement of the essential facts in support thereof. The application shall also include a statement of the names and addresses, insofar as known to the applicant, of all persons, firms, or corporations, if any, who at the time of the making of such application have any right or interest in or under the patent the term of which is sought to be extended.

(c) Such application for extension may be made by (1) the then owner or owners of the patent, or (2) any person who, during the period when there existed the circumstances mentioned in section 1 hereof, was the sole or joint owner with others of such patent and who also, at the time of the filing of the application for such extension, has a right or interest, legal or beneficial, in or under such patent.

(d) The Commissioner of Patents, subject to the approval of the Secretary of Commerce may, from time to time, establish regulations, not inconsistent with law, for the conduct of proceedings in the Patent Office for extensions of patents under this act, and shall have the power to establish a board, acting under his direction and supervision, to hear and determine applications for extensions of patents hereunder.

SEC, 3. On the filing of an application for extension of the term of a patent hereunder, the Commissioner of Patents shall (a) publish a notice of the filing of such application in the Official Gazette of the Patent Office, (b) set the earliest practicable date for a hearing on such application, and (c) give at least thirty

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days' prior written notice of such hearing date to the applicant and to each of the persons, firms, or corporations having any right or interest in or under the patent as shown by the application for the extension.

SEC. 4. (a) For the purpose of establishing a right to an extension, the applicant shall present evidence as to the existence and the duration of the circumstances specified in section 1 hereof.

SEC. 5. (a) If, from all the evidence presented before him, the Commissioner of Patents shall be satisfied that a patent should be extended in accordance with the policy of this act, he shall grant such extension for a period commensurate with the extent to which the normal economic return from such patent was prevented, impaired, or delayed during the period specified in section 1 hereof and by reason of the circumstances mentioned therein.

(b) If any applicant for an extension is dissatisfied with the decision of the Commissioner of Patents or any board which may be established by the Commissioner of Patents for the determination of applications for extensions, he may appeal to the United States Court of Customs and Patent Anpeals within thirty days of the decision from which the appeal is taken. When an appeal is taken to the United States Court of Customs and Patent Appeals, the appellant shall give notice thereof to the Commissioner and shall file in the Patent Office, within said thirty-day period, his reason for appeal, specifically, set forth in writing. The Court of Customs and Patent Appeals, on petition, shall hear and determine such appeal in the same manner and with the same force and effect as other appeals from the Patent Office tribunals.

(c) A certificate evidencing the granting of an extension pursuant to a decision by the Commissioner of Patents or the Court of Customs and Patent Appeals shall be issued by the Commissioner of Patents and a notice of the granting of an extension shall appear in the Official Gazette of the Patent Office.

SEC. 6. (a) Upon the issuance of the certificate of extension, said patent shall have the same force and effect in law as though it had been originally granted for seventeen years plus the term of such extension, except as otherwise provided herein.

(b) No patent extended under the provisions of this Act shall in any way serve as a basis for any claim by reason of manufacture, use, or sale by or for the United States during the period of extension, and the rights of the United States shall remain in all respects as if such patent had not been extended.

(c) No extension granted under the provisions of this Act shall impair the right of anyone who before the passage of this Act was bona fide in possession of any rights in patents or applications for patents conflicting with the rights in any patent extended under the Act, nor shall any extension granted under this Act impair the right of anyone who was lawfully manufacturing before the passage of this Act the invention covered by the extended patent, but any such person shall have the right to make, use, and vend the invention covered by such conflicting patent or application for patent, or to continue or resume such manufacturing, during the extension of the patent, subject to the payment of a reasonable royalty for any period subsequent to the date on which the extension of the patent was granted : Provided, however, That any licensee under a patent which is extended shall have the option of continuing the license for the period of the extension or any part thereof on the same terms and conditions as contained in the existing license or of discontinuing said license on the expiration of the original term of the patent: Provided further, That in the event an extension is not issued until after the date of expiration of the original term of the patent, any article or device made after said date and before the issuance of the extension, which would have infringed the patent had the patent been in force, may be sold or used after the issuance of the extension without any liability for infringement of the patent during the extended term by reason of such making, using, or vending.

(d) In any action, for infringement after the expiration of seventeen years from the grant of the patent and during the period of such extension, the defendant may plead and prove that any material statement of the application for extension required by this Act is not true in fact; and if any one or more of such statements shall be found untrue in fact, judgment shall be rendered for the defendant, with costs.

(H. R. 4054, 82d Cong., 1st sess.) A BILL To provide for the extension of terms of patents, 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 term of any patent may be extended in accordance with the provisions of this Act if the normal return from the use, exploitation, promotion, or development of the patented invention has been prevented, impaired, or delayed, during the period beginning May 27, 1941, through November 4, 1945, inclusive, by reason of inability to obtain materials due to the fact that materials required were subject to Government priorities or allocations.

SEC. 2. (a) The application for an extension of a patent hereunder shall be in writing, duly verified, and shall be filed with the Commissioner of Patents, accompanied by a fee of $30, within one year after the date of the enactment of this Act.

(b) The application shall state the grounds upon which it is made, together with the essential facts in support thereof; and the names and addresses, insofar as known to the applicant, of all persons, firms, or corporations, who at the time of the making of such application have any right or interest in or under the patent the term of which is sought to be extended.

(c) Such application for extension may be made by a person or his legal representative, (1) who is the owner of the patent, or (2) who, during the period when there existed the circumstances mentioned in section 1 hereof, was the sole owner of or had a substantial interest in such patent, directly or indirectly, and who, at the time of the filing of the application for such extension, has a right or interest, directly or indirectly, in such patent. No extension may be granted unless the principal beneficiaries thereof are persons who suffered the loss specified in section 1, or their legal representatives.

(d) The Commissioner, subject to the approval of the Secretary of Commerce, may establish regulations, not inconsistent with law, for the conduct of proceedings in the Patent (ffice for extensions of patents under this Act. The Commissioner may establish a board, under his supervision, to hear and determine applications for extensions of patents hereunder.

SEC. 3. On the filing of an application for extension of the term of a patent hereunder, the Commissioner shall publish a notice thereof in the Official Gazette of the Patent Office. Any person may within sixty days from such publication oppose the extension stating the grounds therefor. If a notice of opposition is filed the Commissioner shall set a day for hearing upon thirty days' notice to the applicant.

Sec. 4. (a) Upon the hearing the applicant shall present evidence as to the existence and the duration of the circumstances specified in section 1 hereof, and such other evidence as may be required by the Commissioner.

Sec. 5. (a) If, from all the evidence presented before him, the Commissioner is satisfied that a patent should be extended in accordance with this Act, he shall grant such extension for a period commensurate with the extent to which the normal economic return from such patent was so prevented, impaired, or delayed.

(b) If any applicant for an extension is dissatisfied with the decision of the Commissioner or of any board established by the Commissioner for the determination of applications for extensions, he shall have the same remedy by appeal to the United States Court of Customs and Patent Appeals as provided in the case of applications for patent.

(c) The Commissioner shall issue a certificate evidencing the granting of an extension hereunder. A notice of the granting of an extension shall appear in the Official Gazette of the Patent Office.

SEC. 6. Upon the issuance of the certificate of extension, said patent shall have the same force and effect in law as though it had been originally granted for seventeen years plus the term of such extension, except as otherwise provided herein.

Sec. 7. No patent extended under the provisions of this Act shall serve as a basis for any claim by reason of manufacture, use, or sale by or for the United States during the period of extension, and the rights of the United States shall remain in all respects as if such patent had not been extended.

SEC. 8. No extension granted under the provisions of this Act shall impair the right of anyone who, before the passage of this Act, (1) was bona fide in possession of any rights in patents or applications for patents conflicting with the rights in any patent extended under the Act, or (2) was lawfully manufacturing the invention covered by the extended patent; but any such person shall have the right to make, use, and vend the invention covered by such conflicting patent or application for patent, or to continue or resume such manufacturing, during the extension of the patent, subject to the payment of a reasonable royalty for any period subsequent to the date on which the extension of the patent was granted.

Sec. 9. Any licensee under a patent which is extended shall have the option of continuing the license for the period of the extension or any part thereof on the same terms and conditions as contained in the existing license or of discontinuing said license on the expiration of the original term of the patent.

SEC. 10. In the event an extension is not issued until after the date of expiration of the original term of the patent, any article or device made after said date and before the issuance of the extension, which would have infringed the patent had the patent been in force, may be sold or used after the issuance of the extension without any liability for infringement of the patent during the extended term by reason of such making, using, or vending.

SEC. 11. In any action, for infringement after the expiration of seventeen years from the grant of the patent and during the period of such extension, the defendant may plead and prove that any material statement of the application for extension required by this Act is not true in fact; and if any one or more of such statements shall be found untrue in fact, judgment shall be rendered for the defendant, with costs.

Mr. Bryson. Gentlemen, the hour has arrived for our meeting. I am sorry we have to be crowded in this manner.

Mr. Walter, the author of H. R. 4054 has an important meeting this morning of the Committee on Un-American Activities, and in order to make it possible for him to go to that meeting we will recognize Mr. Walter first.

You may proceed, Mr. Walter.

STATEMENT OF HON. FRANCIS E. WALTER, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF PENNSYLVANIA

Mr. WALTER. Mr. Chairman, I appreciate very much your indulgence.

I am glad of the opportunity to present some observations regarding the so-called patent extension bills which you have under consideration. Particularly, I wish to speak regarding H. R. 4054, which I introduced on May 10, 1951, which bill is similar to one I introduced at the last Congress, but was not acted on because time did not permit.

I believe that everyone admits that America's inventive genius has helped to make this country great. 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. Meanwhile, the patent is a property right, of which the owner cannot be legally deprived, even by the Government without the payment of just compensation. But, what of the deprivations that result when the Government, through restrictions, priorities and allocations, has effectively prevented use of a patent during 4 or 5 of those 17 years?

After these general remarks, I shall ask the subcommittee to bear with me while I discuss some technical considerations, the recognition of which are essential to a clear understanding of the bill, its purpose and intent.

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. Even in the field of patents, this committee and Congress have repeatedly recognized this essential justice in particular cases.

The trouble is that heretofore we have attempted to deal with the matter piecemeal, by private bills for relief of individuals or special groups. As the law now provides no machinery for granting justice to injured patentees, this subcommittee frequently has been called upon to consider individual cases through the instrumentality of private bills. It is no disparagement of this subcommittee to say that it is not equipped to pass on the merits of individual claims. That is a burden which should not be thrust on any congressional committee.

In most foreign countries, I understand, the law provides for prolongation of patents, when their enjoyment has been frustrated by governmental restrictions.

I believe it is high time that the law in this country should do justice along similar lines. Congress should lay down a general rule and permit its application to individual cases through administrative or quasi-judicial channels. That is the purpose of H. R. 4054. It provides that a patent may be extended “for a period commensurate with the extent to which the normal economic return” has been "prevented, impaired, or delayed” by Government restrictions imposed during World War II. This lays down a sound rule and leaves the Commissioner of Patents to determine the facts and to apply the rule to the facts.

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 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.

In determining the extent of any 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 a taxpayer to reconstruct a normal standard of earnings, if his actual base period earnings were affected by certain specified abnormalities.

One important observation is necessary at this point. Because the standard is a norm which was prevented by governmental restrictions

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