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production of the patent, instead of the anticipated 10 years. You can appreciate what this means, after the investment of time and money which had been made during the experimental period covering the first 7 years (1935-41).
I say to you frankly that, unless the patentee so injured can receive relief, neither the inventor nor the investor who provides the necessary capital can afford to develop and bring into fruition the inventions on which this country has depended so largely for its industrial supremacy. For example, a brilliant young inventor recently came to me with an invention, which he wanted me to help him patent and develop. It deals with the continuous casting of steel slabs, which when perfected could revolutionize important operations in the making of steel. He wanted me to invest my time and knowledge in association with him and to obtain for him the necessary backing of capital during the long experimental and development period. I would be glad to do this, and so would the steel companies, if we could be assured that we would not be frustrated by governmental restrictions. The equipment for his process requires the use of copper plate, and copper is already becoming one of our critical alloys. If the original term of a patent cannot be extended to compensate for the period that Government restrictions necessarily carve out of the life of the patent, the inventor cannot be compensated and the investors cannot afford to risk the capital necessary for the development and promotion. If the inventions are to become mere speculations by being so stified, the Nation is bound to suffer. That this is not an isolated example is demonstrated by an article in the June 9 issue of the Saturday Evening Post entitled "Are We Stifling Our Inventors?" The author of that article is a Navy officer, who is concerned with the effect on national defense.
What we urge, and what the subject bill now before the committee proposes, is that a patent shall be prolonged in proportion as its enjoyment has been prevented by reason of governmental restritions. This is necessary both to do justice to the patent owner and to keep this Nation supreme, industrially and militarily.
Why, may it be asked, should the patent owner be treated differently from any other citizen whose business has been restricted by war measures?
It is odd that I have used exactly the same example that was used in opposition here a few minutes ago.
John Jones, who owned a filling station and whose business was curtailed by gasoline rationing during the war, was also injured. Is the patent owner in a different position from that of the butcher, the baker, or the candlestick maker? The answer is "Yes." Definitely, yes. A business man has no 17-year restriction on the conduct of his business. After a wartime restriction, he is free to resume his business indefinitely, and to pass it on to his son and grandson. He did not give up any future rights to the public, as did the patentee, in exchange for a definite period of enjoyment. But, if the inventor's patent period is curtailed by Government action, then he is not receiving what the Government agreed to give in exchange for the disclosure of his ininvention.
This proposal regarding patent extension is based on a principle of elemental justice, namely, that the party which grants a right, impliedly covenants that he will not prevent the enjoyment of that right.
As you undoubtedly know and have already heard, it is a principle which seems to be well-nigh universal in its application. Even in the field of patent law, this committee has sponsored such relief through favorable action in individual cases. But so far as I know, this is the first time that a bill has proposed a sound principle for the general relief of injured patentees.
Practically all foreign countries have laws which grant prolongations of patents, the use of which has been impaired by the action of the Government which granted them. In those countries which were occupied by the enemy during the war, automatic extensions have been granted for a term commensurate with the period of occupation. In most other countries, the laws permit extensions of any patent to the extent that Government restrictions have prevented the enjoyment of the original term of the patent. I have prepared and submit herewith a schedule showing the principal provisions of the laws of the most important countries of the world. I request that this schedule be incorporated in the record. From it, you will note that practically every important industrial country has laws permitting what we now propose for the United States. The schedule shows the name of the country, the original term of the patent, the authorized period of prolongation, and the conditions under which the prolongation is granted. I am familiar with these foreign laws, because the Cor-Ten patents have been extended already in Great Britain (7 years), France (5 years), Belgium (5 years), India (6 years), and Australia (5 years). In Japan, under the guidance of SCAP or our own Government, a law has been promulgated to grant extensions of patents which were rendered ineffective during the war period, and in that country we will enjoy a period of 11 more years. With the principle of patent prolongation established so universally in other countries, it seems strange that the United States, which prides itself on its inventive genius, should lag so far behind in giving incentive and equitable treatment to its inventors. Furthermore, our failure to do this justice to the holders of United States patents, has resulted in injustice to American holders of foreign patents. Some countries grant prolongations only to foreigners whose country grants a reciprocal right to their own nationals. For the lack of such legislation in the United States, I am unable to obtain an extension of the Cor-Ten patents in such countries.
Even in the United States, Congress has not been insensitive to the hardships visited on patent owners when the Government has in effect taken away part of the period of protection which it purported to give. In this country, such hardship cases have been dealt with largely through private bills and occasionally in bills slightly broader, such as the veterans' bill recently passed. I believe that the fact that this subcommittee has from time to time considered and entertained such private bills, is itself a recognition that hardship cases exist, to which relief should be given. Unfortunately, however, such treatment has in effect made of this committee a sort of tribunal to pass on the merits of individual cases. I believe the time has come when this country should deal impartially with all meritorious cases, just as foreign countries have done. What is needed is a general law, sound in concept and practical in administration, which delegates to an administrative or quasijudicial body the duty to hear and determine the merits of individual cases. In the bills now under consideration, I think we
have for the first time sound proposals for such a general law. H. R. 4054 authorizes the Commissioner of Patents to hear and determine the facts, and then to apply a just formula prescribed by the bill, for determining the period to be authorized for the prolongation of the patent affected.
Section 5 (a) of H. R. 4054 expresses the formula in this manner, that the extension shall be for a "period commensurate with the extent to which the normal, economic return from such patent was so prevented, impaired, or delayed" by Government restrictions during World War II. I believe that no one will challenge the merits of such formula. From the standpoint of administration, it does not place unwanted discretion in the hands of the Patent Bureau. The Commissioner has only to determine the facts and then apply to those facts a sound formula prescribed by the bill itself.
I wish to call your attention to another essential provision of this bill introduced by Congressman Walter. Section 2 (c) thereof does not limit the applicant to a person who is the owner of the patent, but permits the application to be made by anyone who had an interest in the patent at the time of its impairment and who still has an interest. at the time of application. This latitude is necessary, because some patent owners (like myself) were obliged to sell a part or the whole of the patent in order to survive the wartime period of restrictions. Where, however, they have retained a right or interest in the patent, they can make the application for extension. This would be so, for example, where the inventor had sold his patent to the manufacturer, but retained a right to be paid on a production basis. In this situation, the inventor could qualify as an applicant under the provision of section 2 (c) that no extension may be granted unless the principal beneficiaries thereof (of the extension) are the persons who suffered the loss.
I therefore submit that the enactment of H. R. 4054 would be desirable and, in fact is necessary, in order to alleviate the hardships that presently exist. It is not class legislation; it merely gives to the holders of American patents a forum before which they can plead their cases, and in that respect will fill a long-felt need which will place the law of this country in line with that of other countries. I also believe that it will answer the traditional objections that have been made in respect of private bills or class bills to prolong patents in merited cases.
1 Applications made for extension, 130 (since 1943); applications granted, 38 (some applications withdrawn others not yet acted upon); 4 refused.
Applications made for extension, 3,020; applications granted, 1,678 (to end of 1950).
ENACTMENT OF LEGISLATION FOR PATENT EXTENSIONS CLAIMED REASONABLE AND JUST-VICTIM OF WAR RESTRICTIONS DEBATES ISSUES 1
(By F. D. Foote)
There is a body of opinion among members of the patent bar against legislation which would provide a means of extending the life of patents under any conditions whatsoever, regardless of their nature. The most surprising thing about this traditional point of view is its disregard of the basic fundamental of justice that provision of some kind should be made for hearing the pleas of a patent owner who was deprived of the full use of his invention by its
1 Reprinted from Journal of the Patent Office Society, August 1950.
grantor, the Government, during a period of war or other national emergency. It is admitted that everyone is entitled to his day in court, but no such court exists in this country and to say that recourse may be had to Congress, has no practical significance except to emphasize this fact. Other countries-notably Great Britain, France, Belgium, Italy, India, Australia, and some others-have recognized the need for such a court and have provided legislation under which patents may be extended, where it can be shown that a substantial loss of income was suffered on account of war and certain other contingencies. In Great Britain the patent in which the writer is chiefly interested has been extended for a term of 7 years to compensate for its restricted use during the war. Likewise an extension of 6 years has been granted in India, and similar extensions are anticipated in some of the other countries mentioned. Moreover, compensatory patent extensions are being granted to foreign nationals in both Germany and Japan to offset the effects of their confiscation by those countries during the war.
Some concern has been felt in certain quarters that a flood of applications would follow the enactment of patent extension legislation. However, a survey made by a nationally known firm of auditors, with offices in 19 of our largest cities, uncovered only two patent owners whose inventions were adversely affected by the war and who expressed a desire for patent extension. A similar result has followed the writer's inquiries through other channels.
In the writer's opinion there should be no extension of patents except upon a showing of injury. Blanket extensions of patents owned by veterans and of those under which royalty free licenses were granted the Government during war periods should not be excepted under this rule. A showing of injury should still be the criterion.
Legislation was passed by Congress following World War I extending the patents of veterans. At the present time a bill (H. R. 4692) introduced by Congressman O'Hara of Minnesota, has passed both Houses of Congress, providing for the extension of patents owned by veterans of World War II. It is believed that this bill will soon become law.2
A second bill (H. R. 6607), introduced by Congressman Walter, of Pennsylvania, would extend all patents with respect to which royalty-free licenses were granted the Government during the war years; the extension to cover the period during which the free licenses were in effect.3
Should the bills referred to become law, two groups of patent owners will obtain extensions under the conditions defined, but the bills, as proposed, are inadequate to provide a sound and wholly fair solution of the problem. There would remain patent owners who were deprived of the use of their inventions during the war, and who suffered substantial loses on this account. Whether or not patent owners fall within the two groups affected does not seem to be a comprehensive, fair basis for granting extensions in cases where losses were realized during the war years. Not all American citizens could serve in the Armed Forces, much as they may have desired to do so. Aside from age limitations, physical disabilities, etc., there was needed a vast army of workers in those industries which provided the equipment essential to the war effort.
No question of the reasonableness of extending the patents of veterans or of patent owners granting free licenses to the Government during the war period is raised where injury can be shown, but is it not equitable to ask whether these groups of patent owners, only, are to be considered, when it has been so well recognized by Congress and the War Department that great assistance was rendered in prosecuting the war by large segments of our entire population, as evidenced by the citations awarded to many industries, and to civilians engaged in innumerable occupations. The determination of which American citizen should
2 H. R. 4692 has been signed by the President since this article was written, and has become Public Law 598, 81st Cong. (ch. 444, 2d sess.).
3 Congressman Walter has now introduced a second bill (H. R. 8884) including the provisions of his bill H. R. 4692 and several additional sections of a more general character. 87811-51-ser. 10-4