NYQMPA Form 545, dated April 1, 1950, and entitled "Additional General Provisions (Supply Contract)," paragraph 21 of which reads as follows: "21. Patent idemnity: The contractor agrees to idemnify the Government and its officers, agents, and employees against liability, including costs and expenses, for infringement upon any letters patent of the United States (except letters patent issued upon an application which is now or may hereafter be, for reasons of national security, ordered by the Government to be kept secret or otherwise withheld from issue) arising out of the performance of this contract or out of the use or disposal by or for the account of the Government of supplies furnished or construction work performed hereunder. The foregoing idemnity shall not apply unless the contractor shall have been informed as soon as practicable by the Government of the suit or action alleging such infringement, and shall have been given an opportunity to present recommendations as to the defense thereof; and further, such indemnity shall not apply in any one of the following situations: (i) any infringement resulting from the addition to any such supplies of other supplies not furnished by the contractor for the purpose of such addition; (ii) any settlement of a claim of infringement made without the consent of the contractor, unless required by final decree of a court of competent jurisdiction; (iii) any claim of infringement arising from use or disposal outside the scope of any license limitation under which the contractor is bound, provided that the contractor has notified the Government of the limitation prior to first delivery under this contract; (iv) any infringement necessarily resulting from changes (other than the substitution of another standard commercial part or component manufactured or supplied by the contractor) ordered pursuant to this contract, or from specific written instructions given by the contracting officer directing a manner of performing the contract not normally utilized by the contractor." However, annexed to and made a part of the same request and proposal form is a form bearing the legend, "DD Form 351-1," dated June 1, 1950, which form contains the following provision: "Additional General Provision No. 21. (NYQM Form 545) to include the following: "(V) Any claim for infringement of any of the following patents assigned to Wm. E. Hooper & Sons Co., or of any reissues, divisions, or extensions of such patents as they relate to contracts for the procurement of fire, water, mildew and/or weather-resistant fabrics and to contracts for the application of fire, water, mildew, and/or weather-resistant finishes to fabrics: 2,044, 176 2, 172, 698 2, 178, 625 Provided that the contractor, prior to commencing work under this contract, requests Wm. E. Hooper & Sons Co. in writing to grant the contractor a royaltyfree nonexclusive license for the period of the war and 6 months thereafter to finish fabrics for the Government in accordance with any of the above patents, and further provided that the contractor certifies that the contract price includes no cost factor to cover the contingency of liability for infringement of any of the above patents owned by Wm. E. Hooper & Sons Co. This subparagraph V applies whether or not Wm. E. Hooper & Sons Co. grants the above license upon request of the contractor.'" The Hooper Co. is informed that similar or identical patent indemnity provisions and so-called Hooper Co. clauses are currently being made a part of every Request and Proposal issued by the military authorities for goods which require the use of the Hooper Co. patents. It will thus be seen that the United States military authorities, assuming the function of a court, have proceeded to adopt a construction of the royalty-free license agreement of February 20, 1943, which is unsound and contrary to the decided weight of authority, and having adopted this construction of the agreement, the military authorities have proceeded to ride roughshod over the rights of the Hooper Co. and to encourage and urge contractors and producers of goods for the Government to do likewise, even to the extent of assuming and placing on the Government the responsibility or liability for their action in so doing if the Hooper Co.'s position should be sustained by a court of competent jurisdiction. In other words, the military authorities have, in effect, confiscated the Hooper Co.'s patents, thereby forcing the Hooper Co. into a position where the Hooper Co. will be compelled to institute and prosecute an appropriate legal proceeding to establish its rights and avoid what amounts to a confiscation of its patents. VI. The United States, and contractors producing goods for the United States requiring the use of the Hooper Co.'s patents, have made substantial use of the Hooper Co.'s patents during 1950 and 1951, and will probably continue to do so The Hooper Co. does not know, and does not have access to the records from which it could determine, the extent to which the United States, and contractors producing goods for the United States requiring the use of the Hooper Co.'s patents, have made use of the said patents during 1950 and 1951. However, it is a fact that during the years 1950 and 1951 the military Departments of the United States have issued orders for very large quantities of goods under specifications which would require the contractor or producer of the goods to use a compound covered by the Hooper Co.'s patents. Some indication of the extent to which the Hooper Co.'s patents are being used by the United States, and contractors producing goods for the United States, is to be found in the fact that some 11 contractors or producers, undoubtedly at the instance of the military authorities, have written to the Hooper Co. requesting royalty-free license agreements to use the Hooper Co.'s patents. Moreover, the United States military authorities, and contractors producing goods requiring the use of the Hooper Co.'s patents, will undoubtedly continue to make use of such patents in 1952, and thereafter during the period of rearmament, as they have been doing in 1950 and 1951. VII. Legislation should be enacted under which the owner of any patent who granted the United States, and contractors producing goods for the United States, a royalty-free license to use his patent, can obtain an extension of the life of his patent for a period equal to the period during which such royalty-free license was in effect, particularly where the United States, and contractors producing goods for the United States, have made substantial use of the patent pursuant to the royalty-free license agreement The Hooper Co. does not propose to belabor this point, because it would seem to be unnecessary. It is submitted that the fundamental principles of common decency, fair play, justice, and equity clearly indicate that a patent owner who voluntarily granted the United States, and contractors producing goods for the United States, a royalty-free license to use his patent during the period of World War II is justly entitled to have his patent extended for a period equal to a period during which the royalty-free license was in effect, and especially where the patent owner can show that the Government, and contractors producing goods for the Government, made substantial use of his patent during the period the royalty-free license was in effect. In such situations, the patent owner has supplied or furnished the quid pro quo or the consideration which should be sufficient to support his claim for such an extension of his patent. There are of course many additional arguments which could be advanced in support of legislation under which a patent owner who granted the United States a royalty-free license to use his patent during World War II could obtain an extension of the term of his patent. For example, the enactment of such legislation by the Congres, indicating its adoption of the policy of extending relief to patent owners in such situations, would certainly encourage patent owners to grant the United States royalty-free licenses to use their patents in the present or future periods of emergency, and in the long run the adoption of such a policy by the Congress might well result in very substantial savings to the United States. Furthermore, there are many who believe that the rights of patent owners should be protected and fostered, not only to encourage inventors but to encourage inventors to patent their inventions rather than conceal them, thus assuring the general public of the use of the patent after the expiration of its term. The enactment of the legislation suggested above would be in line with this school of thought. However, the Hooper Co. rests its case on the facts of its own situation. The Hooper Co. permitted the United States to use its patents from February 20, 1943, to March 2, 1946, a period of 3 years, and released and forgave the United States of any claim which the Hooper Co. had for past infringements of its parents, which claim would have been substantial. The United States continued to make use of the Hooper Co.'s patents during the years 1950 and 1951, and will probably continue to use said patents throughout the period of rearmament. Thus, the Hooper Co. had practically lost the use of its patents during a period of 5 years because, during these years, substantially all of the goods finished or treated with a compound covered by the Hooper Co.'s patents was for the United States military forces, and there was practically no industrial, commercial, or domestic production of goods on which the Hooper Co.'s Fire Chief compound was used, because the War Production Board would not permit the use of the chemicals required in the prduction of the Hooper Co.'s Fire Chief compound except on goods carrying the highest-priority rating. For example, several months before the disastrous fire which destroyed a Barnum & Bailey, Ringling Bros. Circus Co. tent in Connecticut, with a heavy loss of life, the circus company approached the Hooper Co. and wanted to place an order for its circus tents, the material in which would be treated with the Hooper Co.'s Fire Chief compound. However, the Hooper Co. was compelled to decline the order because the War Production Board would not allocate the required chemicals for this purpose, and did not do so until after the fire had occurred. Since the Hooper Co. has already given the Government 3 years out of the life of its patents, and since the Government has taken 2 more years (although the Hooper Co. believes it had no right to do so), the net result is that the Hooper Co. has contributed 5 years out of the lives of its patents for the benefit of the United States, and it believes that it is only fair that the Government should extend the same consideration to the Hooper Co. by enacting legislation under which the Hooper Co. can obtain a 5-year extension of its patents to compensate it for its loss. VIII. Suggestion as to legislation Of the three bills now pending in this committee providing for the extension of the terms of patents-viz H. R. 323 (the Reed bill), H. R. 3231 (the Davis bill), and H. R. 4054 (the Walter bill)-only H. R. 323 covers the situation of the Hooper Co.; i. e., H. R. 323 is the only bill which provides for the extension of the term of a patent where "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; * However, if the committee should determine to recommend the enactment of legislation providing for the extension of the term of a patent in certain circumstances, and should determine to use H. R. 323 to express the policy agreed upon by the committee, the Hooper Co. respectfully suggests that this bill should be amended as follows: A. Section 1 (a) should be amended by inserting therein the words which are underscored in the following quotation of said section: "Be it enacted * 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, or to manufacturers, producers, or contractors furnishing goods or services to the United States, without payment of royalty or at a nominal royalty; * * Reason for amendment: In the agreement of February 20, 1943, the Hooper Co. granted the United States a royalty-free license to use the Hooper Co.'s patents, and also agreed to grant a similar license to any contractor manufacturing or producing goods for the United States. The United States did not directly make use of its license, but its contractors made substantial use of the Hooper Co.'s patents, some with, but a great many more without, a license from the Hooper Co. The suggested amendment would seem to be necessary to make it entirely clear that direct use of the license by the United States is not a prerequisite for obtaining an extension where the United States has obtained the benefit of the use of the patents by its contractors. B. Section 5 (a) of H. R. 323 should be amended by inserting therein the words which are italicized in the following quotation of said section: "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. In the case of the granting of a license to the United States or to manufacturers, producers, or contractors furnishing goods or services to the United States, without payment of royalty or at a nominal royalty, the normal economic return from such * * * * * patent' shall include an allowance equivalent to the royalty which the owner of such patent would reasonably have been entitled to charge for such license." Reason for amendment: Section 1 of H. R. 323 provides for the extension of the term of a patent "* to such extent as the normal use, exploitation, promotion, or development has been prevented, impaired, or delayed These words, and the words "normal economic return," in section 5 (a) of the bill, might be construed to exclude the royalty which a patent owner might have realized from the use of an invention in time of war or national emergency, on the ground that such times are not "normal." However, in the case of any invention which would normally be used by the military forces in time of war, or preparation for war, it would seem to be only fair that "normal economic return" should include the royalty which the owner of such a patent could have realized if he had not granted the Government a royalty-free license. If the committee should determine to recommend the enactment of legislation providing for the extension of the term of a patent in certain circumstances, and should determine to use H. R. 4054 to express the policy agreed upon by the committee, the Hooper Co. suggests that this bill should be amended as follows: A. Section 1 of 4054 should be amended by striking out the words indicated in the following quotation, and inserting the words which are italicized: "Be it enacted * * * 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— "(a) inability to obtain materials during the period beginning May 27, 1941, through November 4, 1945, inclusive, due to the fact that materials required were subject to Government priorities or allocations; "(b) the granting of a license to the United States, or to manufacturers, producers or contractors furnishing goods or services to the United States, without payment of royalty or at a nominal royalty." Reason for amendment: The purpose of this amendment is to cover the case of a patent owner who granted the United States, or contractors furnishing goods or services to the United States, a license without payment of royalty or at a nominal royalty, and to include the specific reference to the granting of a royalty free license to Government contractors for the reason explained above. B. Section 5 (a) should be amended to read as follows; "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. In the case of the granting of a license to the United States or to manufacturers, producers or contractors furnishing goods or services to the United States, without payment of royalty or at a nominal royalty, the normal economic return from such patent' shall include an allowance equivalent to the royalty which the owner of such patent would reasonably have been entitled to charge for such license." Reason for amendment: This amendment is identical with the amendment suggested above to section 5 (a) of H. R. 323, and is for the same purposes. If the committee should determine to recommend the enactment of legislation providing for the extension of the term of a patent in certain circumstances, and should determine to use H. R. 3231 to express the policy agreed upon by the committee, the Hooper Co. respectfully suggests that this bill would be amended as follows: A. Section 1, subsection (3) should be amended by inserting or adding thereto the words which are italicized in the following quotation of said subsection: "(3) such person or such firm, corporation or other organization, in either of the aforementioned periods, or both, as the case may be, did not receive or is not receiving any income, or received or is receiving a substantially reduced income, from such patent or patented invention or discovery, by reason of the discontinuance or curtailment by order of the United States Government of the manufacture, use, or sale of any article covered by such patent, or by reason of a prohibition or restriction by order of the United States Government on the use of materials in the manufacture of any article covered by such patent or by reason of a shortage of materials, or by reason of the granting of a license to the United States, or to manufacturers, producers or contractors furnishing goods or services to the United States, without payment of royalty or at a nominal royalty." Reason for amendment: The purpose of this amendment is simply to make this bill cover the case of a patent owner who granted the United States, or manufacturers, producers or contractors furnishing goods or services to the United States, a license to use such patent without payment of royalty or at a nominal royalty. CONCLUSION For the reasons herein set forth, the Hooper Co. respectfully submits that the committee should recommend the enactment of legislation providing for the extension of the terms of any patent, the owner of which granted the United States, or manufacturers or contractors furnishing goods or services to the United States, a license to use such patent without the payment of royalty or at a nominal royalty. Respectfully submitted. By Wм. E. HOOPER & SONS Co., CERTIFICATE OF J. WARREN BROCK I, J. Warren Brock, of Edmonds, Obermayer & Rebmann, attorneys at law, 1418 Packard Building, Philadelphia 2, Pa., hereby certify that I am general counsel for Wm. E. Hooper & Sons Co., and that I prepared the foregoing statement in behalf of said company. I further certify that the facts set forth in said statement of which I have personal knowledge are true and correct, and that other facts set forth therein were supplied to me by the officers and employees of Wm. E. Hooper & Sons Co., and that I believe such other facts to be true and correct. J. WARREN BROCK. EXHIBIT No. 1-LICENSE Whereas the Wm. E. Hooper & Sons Co., Woodberry, Baltimore, Md., a corporation of Maryland, hereinafter called the "Licensor", is the owner of a new and useful improvement for a fire resistant composition and fabric, for which United States Letters Patent No. 2,299,616 was granted on October 20, 1942; and of Patents Nos. 2,118,787; 2,172,698; 2,178,625; 2,194,690; 2,299,612 and 2,044,176 all of which pertain to fire, water, mildew, or weather resistant finishing of fabrics; and Whereas to further the interests of the United States and to promote the war effort, Licensor desires to grant to the Government of the United States of America an unrestricted right and license to finish and to use or to finish and/or sell for use, or otherwise dispose of in accordance with law for governmental purposes, the subject matter of said inventions when used in connection with the finishing of fabrics to render them fire, water, mildew, and weather resistant, for the duration of the war and 6 months thereafter; and Whereas Licensor warrants that it has the right to grant such a license; Now, therefore, in consideration of the premises and of the sum of $1., receipt of which is hereby acknowledged, Licensor hereby grants to the United States of America, as represented by the Secretary of War, an irrevocable, nonexclusive, royalty-free license to finish or have finished for it by contractors licensed by said Hooper Co., as hereafter provided, and to use and/or sell any fire, water, mildew, and weather-resistant fabrics finished or processed for governmental purposes, in accordance with any of the following patents: Nos. 2,299,616; 2,118,787; 2,172,698; 2,178,625; 2,194,690; 2,229,612 and 2,044,176, said right and license to extend throughout the United States, its Territories and possessions, and to all said fabrics as may be processed for and sold to or otherwise disposed of to the so-called lend-lease countries, and to last for the duration of the war and 6 months thereafter, reserving to the Licensor the unrestricted use and enjoyment of all other rights not hereby expressly granted to the United States of America. Licensor further agrees that if the Quartermaster Corps will advise contractors they must ask the company for the right to use any Hooper patents, if they intend to use any of the above patents, the Licensor will grant to such contractors a royalty-free license during the period of the war and 6 months thereafter. Licensor hereby releases the Government from any and all claims Licensor may have by reason of infringement by the Government of any of Licensor's patents prior to the date of execution hereof. |