Mr. BARNES. I don't know whether I have had a gusher in any one of them. Mr. WILLIS. You said out of 21 patents 8 were successful. Mr. BARNES. They have earned me a living. Mr. WILLIS. If you drilled 21 oil wells and got 8 producers you are all right. Mr. BARNES. But hazards in the invention business are generally much worse than in the oil business. Many American boys dream of making millions through inventions, but very few of them actually ever do. Referring to the exploitation history of these particular devices, we have had the story of a substantial business worked up, then 4 years' interruption, and about the time it is really established, the 17-year limitation of the patent's life comes in, giving effectively less than 17 years' protection. Mr. BRYSON. Won't you address yourself to this type of legislation-these two bills providing for the extension of patents. Do you favor them? Mr. BARNES. Yes, sir; I favor them, for the reasons that I am outlining now. The purposes of the founding fathers who formulated this provision of the Constitution was not, primarily, to reward inventors at all. It was primarily to benefit society at large by appealing to the self-interest of inventors. Mr. WILLIS. They gave them 17 years' reward. Mr. BARNES. Yes sir; And if I could just get that full 17 years, I would not be here. Mr. BRYSON. That is what you are here before us for? Mr. BARNES. Yes sir; I am seeking all of the 17 years the Constitution provides that I should have. These particular inventions of mine have served society well. Aside from improvements in performance and increased comfort in these millions of motor cars, the overdrive itself may save perhaps as much as half a billion gallons of gasoline in 1951. I have no accurate way of estimating the commercial and social advantages that have come into being by virtue of my having conceived these things and taken them to a manufacturing organization and persuaded them to manufacture and market them. I have no idea what they have contributed in State and Federal taxes, but there is a general saying in the automobile industry that the average car today contributes about $400, or 20 percent of its total cost, to taxes. When you gentlemen buy a car, you pay taxes on everything that goes into it, all the way back to the mines. On that basis, the 1950 sales of these devices-$150 million at the retail level-have contributed some $25 or $30 million to the general uses of society, in line with what the automobile as a whole contributes. All concerned have benefited from this enterprise-the various manufacturers, the purchasers of the finished products, and society as a whole. As the inventor who brought them into being, I will enjoy some, but not nearly all, of my intended share of the benefits before the normal lives of the patents expire. The others will continue to reap their benefits indefinitely into the future, and although the manufacturer acknowledges-with concrete evidence of royalty payments-that without my contributions, these benefits could not have materialized, my share of the total returns will be limited to what I can get in only 13 of those intended 17 years. In the normal course of events, those returns are chopped off when at their best, by the operation of the 17-year limitation of the patent life; but every inventor who goes into the business realizes that he must face this possibility; but he does expect a full, useful 17-year patent life. My plea is that the opportunity for returns be equalized among inventors. This may sound like class legislation, but, isn't all patent legislation class legislation? All I ask is that my opportunities be brought up to the level of my class. Mr. WILLIS. Do you think that the royalties during the war period may have deterred inventors from their best efforts? Mr. BARNES. It is pretty hard to appraise that. A lot of people feel that inventors will always invent if they have got it in them. I do not feel so. I think that inventors invent principally because they expect to make a return and they always expect to make a handsome return. Every American boy has a dream to be an inventor and millionaire but the records of the Patent Office and Internal Revenue do not indicate that many inventors become millionaires. But as long as that possibility is there the fire of self-interest will continue to benefit society at large which is the purpose of the patent system. Mr. BRYSON. Is that what the Supreme Court called the flash of genius? Mr. BARNES. Lincoln said, "The American patent system added the fuel of self-interest to the fire of genius." I think Judge Learned Hand first said "the flash of genius." Mr. WILLIS. That was the Supreme Court. Mr. BARNES. I know the patent attorneys still wrangle over whether invention really requires the "flash of genius," if there is a little spark of it, some place; it is hard to pull something out of nothing. Mr. BRYSON. I do not think we will have time this morningMr. BARNES. Thank you. And may I have the privilege of extending my remarks and furnishing them to the committee later? Mr. BRYSON. You may. Thank you Mr. Barnes. (Further statement of Mr. Barnes is as follows:) STATEMENT OF WILLIAM B. BARNES This country has grown great and rich through the opening up of new frontiers. For well over a century, these were the familiar geographical frontiers of new and undeveloped lands but it has been a long time since the last of these was opened. Many years ago the concept began taking form, of a new type of frontier, beckoning with dazzling new treasures, richer than anything yet discovered. These new frontiers have materialized immeasurably beyond the brightest hopes of 50 years ago, and each one opened has revealed others yet beyond. By their very nature, they are without limit in either time or space, for these are the frontiers opened and yet to be opened by discoveries in the elusive and boundless worlds of the applied sciences-conquests in the minds of men. No one will deny that Americans are the richest men on earth, individually as well as collectively, and the major portion of the material good things in their lives have come within the memories of living men: the comforts, conveniences, and luxuries of daily life, the further easing of the burdens of human toil, the shrinking of space by new methods of communication and transportation. Vast industries that had no counterparts 50 years ago give highly paid employment to literally millions. From these industries and their employees, an almost infiinite variety of taxes to a fantastic total amount make their annual contribution to the general uses of society. Everyone concedes these benefits, and yet, freemen even when working under the American system of free enterprise would probably have been unable to produce most of them excepting for the contributions of a relatively small segment of our population. All of the forces and materials of nature were there, available for use, for many years. Almost the only new ingredients that have been added in the past 50 years have been those of new concepts for the utilization of these forces and materials of naturethe contribution of the faculty of invention. The faculty of invention is difficult to describe, and impossible to understand fully. There are some things about it that are established beyond all doubt: 1. Not everyone is endowed with it. Many engineers and scientists, with impressive formal training and grasp of the basic natural laws, do not, and evidently cannot, invent, and yet there is an impressive record of contributions by men with little or no formal preparation for such a career. Heredity apparently has little or nothing to do with it; the sons of inventors are not noteworthy for their possession of the faculty. About the only certainty in regard to its distribution is that very, very few men have it, and that the distribution thereof favors no social, economic, or intellectual strata. It is almost inescapable that the inventive faculty is a special endowment of the Creator Himself, and the processes of its distribution will never be understood. 2. Its exercise cannot be forced. A man can be forced to do almost any physical act, and also many mental ones, under various forms of compulsion. Acts of inventing are haphazard in occurrence at best; they certainly do not occur under duress. They are not likely to occur prolifically in an atmosphere of discrimination or unfair treatment, or even of irritations. 3. It flourishes only in an atmosphere of enthusiasm. The greatest inspiration to invention is that of hope for better-than-average economic attainments and of personal achievement. A lively enthusiasm is outstanding in everyone who has accomplished, or expects to accomplish, anything in the way of invention. No stimulus to human endeavor can ever compare to that of self-interest-fired by enthusiasm and fed with hope. The foresight of the framers of our Constitution is remarkable in that they recognized, at that early date, the fact that the larger interests of society were best served by providing, through self-interest, the inducement of the patent grant to stimulate activity, by relatively few men with special endowments, to the benefit of our society as a whole. No one will deny that their broad planning of these inducements has paid off on a magnificent scale for the public good. The provision for the patent grant was not intended to guarantee to the owner of the patent any return whatever; it merely grants to him the opportunity to exploit the invention advantageously, in return for his public disclosure thereof, for a limited time before its final and certain surrender to the public domain. In other words, this is about the only method whereby society can implement its inducement to the inventor in any manner that will assure to him the opportunity of a reward in proportion to his contribution, and to his own successful efforts in exploiting it. The only quantitative element in such inducement that society offers for effort is that of time; the owner of the patent is offered an intended 17-year period in which to make the most of it, before its inevitable dedication to the public. In his efforts to make the most of it, the owner of the patent is faced with certain peculiar and often heartbreaking hurdles which he must overcome: 1. The invention must be marketable. No matter how useful it may be to its creator, or how novel it may be, unless it meets the demands of others, and does it better, or at less cost than competitive devices, or has some other compelling attraction, the possibility that it will bring to him any substantial return is remote. 2. The timing must be good. The innovation must arrive on the scene when the market is ready for it, or when other circumstances are favorable. Others had the concept of the essentials of the airplane, and some actually made many flights, by gliding, before the Wright brothers-but they came upon the scene after the arrival of the internal combustion engine which enabled sustained flight. Few people have even heard of the others preceding them in human flight. 3. Commercial arrangements must be made to advantage. Few inventors are able to exploit properly their own inventions without outside help, above the familiar can-opener and mouse-trap level. Proper exploitation of most worthwhile inventions today requires physical facilities and frequently special talents, for their experimental development and manufacture, and also suitable organization for their sale. This usually involves the assistance of the capital of others, and regardless of how this assistance is obtained, the patent owner faces the obstacles and special hazards of business arrangements which he must surmount if he is to achieve any measure of success. 4. It must avoid domination by prior patents. Even though all of the preceding obstacles have been surmounted, the exploitation will be stopped cold if any essential element of the invention is dominated by the prior patent of another. Issuance of a patent does not guarantee the right to practice the invention, but merely the right to exclude others from so doing. It is entirely possible for a new combination of elements to include some essential that has been previously covered by an unexpired patent, and it sometimes does happen, that no one can practice the invention, including its creator. In the face of these special and often difficult hurdles, the surprising thing is that a man is still willing to take his chances in the field of invention. He does it only because society makes with him a bargain. In return for the full disclosure of a new and useful invention, society grants to him the right to practice it (if he can also overcome these hurdles) and exclude others from so doing, for an intended period of 17 years. He delivers his part of the contract; he naturally expects society to do the same. Having overcome these hurdles he has the right to expect that society itself will not interpose unexpected hurdles of its own, to interfere with what returns he can derive from his efforts at invention. If, however, society itself does interfere with his exploitation of the invention for any portion of that 17-year period, the inventor is in the position of one who has delivered his part of a contract and finds himself short-changed by the other party to the bargain. For many years my living has come from inventions. In the depths of the depression, with a full realization of the above hazards of such a career, I made the election of opportunity with its risks, rather than security without special opportunity. Since 1931, I have been on no one's payroll. I am not a "kept" inventor employed by some corporation to which he assigns the too frequently uninspired product of his inventive effort without hope of substantial further recompense. Through the inducements offered by the American patent system, the American system of free enterprise has operated to give me a good return for my efforts. My work has been in automotive engineering, and all of my productive inventions have been confined to the narrow complex, and highly competitive field of automatic transmission devices for automobiles. These relate to the familiar automatic overdrive, and one type of automatic transmission. In one form or another, devices embodying these inventions are available on the products of all American passenger car manufacturers, excepting one of the so-called Big Three. The devices have always been sold as special equipment at extra cost, and any sales have therefore reflected special public acceptance. After a 2-year development period, production of these devices started modestly in 1934, rising to a substantial annual production by the end of 1941. Then, all automobile production having stopped shortly after Pearl Harbor, a 4-year period of substantially no production followed. Beginning again in 1946 at about where it left off in 1942, increasing public acceptance was reflected in a production rise out of all proportion to the postwar rise in automobile production, and now, another national emergency is curtailing production again. At this rate, it is apparent that my return from my bargain with society will be considerably less than what society itself intended, unless equitable adjustments are made. The buyers of the product have enjoyed improved performance, increased comfort, and reduced maintenance and operating expenses to the extent of many millions of dollars per year. The overdrive alone may save for our dwindling and irreplaceable natural resources almost one-half billion gallons of gasoline in 1951. From the manufacture and sale of these devices, combined, it may be estimated that perhaps as much as $30 million in Federal and State excise, income, and other taxes has been set aside for the general uses of society during the year 1950 alone. It is submitted that these inventions have served society well. I do not question the wisdom of these stoppages and curtailments in the larger and more urgent interests of society. I merely point out that after the expiration of these patents, the other parties to this enterprise-manufacurers, workers, buyers, and society at large-will continue to enjoy their respective profits, wages, economies, and taxes on into the indefinite future, but as matters now stand, the one conceded to be most uniquely responsible for very existence of these benefits will come up short on his final returns, through the operation of circumstances imposed by society itself, the effect of which society should, in all fairness, remedy. It is also submitted that these services to society are merely examples of what is typical and widespread in connection with the results of the inducements offered by our patent system. Many able men, urged by these inducements, have dedicated the best years of their lives to a highly speculative activity. Despite the endless publicity releases suggesting that all present worth-while inventions are made in the vast laboratories of great corporations, by their "kept" inventors, with economic cushions under them (and ceilings over them), the facts are that such relatively uninspiring surroundings simply do not produce either all of our inventions or necessarily the best of them. A surprising number of our most productive inventions have come from men who are on their own, men who in seeking the assistance of capital may work with the great corporations, but not for them-men who have much to gain and everything to lose. Society's stake in their efforts is a hundredfold greater. These independent inventors are the ones most adversely affected by any reduction in the inducements offered by our patent system. As it becomes more difficult to secure patents, and more and more difficult to enforce them in the courts, and as other obstacles appear, these men will tend to turn their efforts toward more promising enterprises, and society will be the loser. These are the men to whose interests the attention of your committee is respectfully directed. They do not, as a rule, interest themselves in public affairs, even when they are vitally concerned. They may be so involved in their work that they are unaware of this legislation now before you. They are not effectively organized as a group. Unlike manufacturers' groups who may be anticipating a free ride on expiring patents, they will not have their numerous causes ably presented here by skilled professional advocates. They are not vocal in supporting them, but in our country's larger interests, their causes deserve your closest attention. There may be those who will oppose this proposed legislation on the ground that it provides for the extension of a monopoly, attempting to fasten the ancient stigma of evil general monopolies upon a special benign form which enjoys the special blessing of the Constitution. It is here submitted that this is not, effectively, an extension; it is merely an equalization, of the strict time limitations imposed upon a type of monopoly of which society itself has been the inevitable beneficiary. It may be argued that the loss of useful years from the life of a patent by the occurrence of a national emergency is another one of the casualties of war, and that remedies to any such casualties are contrary to public policy. As a matter of fact, public policy appears to be well established toward the relief of economic losses where possible or feasible. Witness the accelerated depreciation allowed business for war production facilities. Witness, also, the extension of the terms of patents of those who served in the armed services, and the operation of the GI bill, giving college educations in at least partial compensation for loss of time. It may be objected, also, that this proposed legislation is directed to the benefit of a certain class of our citizens. It is hardly a benefit in a. broad sense; it is more of an equalization of benefits. If it is class legislation, it is so in exactly the same manner as the extension of patent terms to veteran-inventors is class legislation. As veterans, the latter got all the usual benefits to which they were entitled as veterans; the patent term extensions were something special to which they were entitled as inventors in addition to being veterans. The administration of the proposed legislation, if enacted, may present some difficulties, but they need not be insurmountable. The amount of any restoration should be determined from comparing the exploitation history of the patent in question, during the four war years, to that during the two preceding and two succeeding years, and from these comparisons determining the effective number of "loss" years to be restored. No consideration should be given to exploitation history in years remote from the four war years. It should be possible to arrive at formulas for restorations that are fair to both inventor and the public, and not subject to unreasonable interpretations. In any event, it is submitted that the legislation under consideration is fair and reasonable in its intention that, where society has reaped all of its benefits from a bargain, the other party to that bargain should have at least the opportunity to enjoy his own full share of the returns. The spirit of the constitutional provision implies as much, and its framers probably so intended. Mr. BRYSON. Our next witness will be Mr. Pierson. |