tetra-ethyl-lead gasoline. And Mr. Arnold says, "What else could you do with it? You couldn't put it in coffee." The CHAIRMAN. And he said you couldn't put it in liquor either in answer to my question. Mr. LANGNER. It may interest you gentlemen to know Mr. Midgely after coming here was stricken with infantile paralysis and is lying on his back now at this moment. While in that condition the American Chemical Society gave him the Priestly medal, the highest award in chemistry in the United States, for the invention of ethyl gasoline which Mr. Arnold says, "You can't put in coffee." Mr. EDELSTEIN. Is that an argument-merely because he made a facetious statement ? Mr. LANGNER. Gentlemen, it is an indication of the dozens of attacks on the patent system which are coming from that quarter and which are found in the newspapers of the United States which I think at this moment are extremely dangerous because this is a time when we should be boosting our inventors. This is the time to get behind our inventors and urge them to invent for the future of the United States both from the standpoint of defense and from the standpoint of industrial supremacy when the war is over. I feel very strongly about it: it is not rhetoric with me; it is a conviction. Mr. FOGARTY. That is not the first time Mr. Arnold made a statement that he didn't know what he was talking about. The CHAIRMAN. He indicated here very definitely in response to questions, I do not know if you or the other members of the committee were here, that he wanted to make good boys out of the industries, and so on. This is not the time to go out and look for trouble. In these days we want to cooperate and see how we can avoid trouble. That would not seem to be the intention of Mr. Arnold, as I understood him. He is out with an axe to chop anyone's head off that gets in his way. Mr. EDELSTEIN. Personally I think he is doing a good job in connection with the investigation of monopolies and patents. The CHAIRMAN. I do not agree. Mr. FOGARTY. Isn't it a fact Mr. Arnold himself made it very clear he was not a patent lawyer and had no knowledge of patent law except incidentlly in connection with antitrust suits? The CHAIRMAN. Well, perhaps he should broaden his knowledge on the subject of patents. Mr. FOGARTY. He says on page 127 that he is not engaged in patent law and then he goes on to say what he is engaged in. The CHAIRMAN. He may be a good prosecutor. I do not question his ability as a prosecutor but I think he is on the wrong track with reference to the patent system. Mr. COFFEE. Is it not the concern of Mr. Arnold that patentees would be permitted to sue on the patent and not to deny the Government the use of it in national defense? The CHAIRMAN. No; that is not the idea. Mr. LANGNER. Gentlemen, you cannot deny the United States Government the use of it. Mr. COFFEE. Let me get this straight. You say the Government has the right to make use of a patent; isn't that correct? Mr. LANGNER. Yes. Mr. COFFEE. And then sue afterward in the Court of Claims? Mr. LANGNER. And you can sue the Government. Not only the Government has that right to use but the contractors or anybody who gets an order for the Government, no matter what it is. They can just ignore the patent. Which is the right way to handle it. Go right ahead and ignore them. Mr. COFFEE. But you said you were worried about the transfer of the licenses and patents of Henry Ford and that the Government may take it and transfer them to some rival concern. Wasn't that one of your worries? Mr. LANGNER. That is the actual patent monopoly itself. That does not deal with the use of it. Anybody can use it, or rather the Government can use it for itself. But they want to take the actual patent document, the monopoly which the Constitution granted that inventor, and take that monopoly and transfer it to somebody else, not only during the emergency but to continue after the emergency. Mr. COFFEE. To vest in the new patentee the property rights? Mr. LANGNER. Yes; the property rights. Mr. COFFEE. The use exists right now in the emergency. That is the use the Government can make of it even through some other licensee? Mr. LANGNER. Not only the Government but companies that get orders from the Government. The CHAIRMAN. Section 68 of title 35 gives that right at all times. Mr. SCOTT. May I ask this question for my own information. In what is known as H. R. 1776 what are the rights of the Government as regards patents, referring to them now as defense articles which might be transferred to friendly nations? What power would the Government have as to patents under that bill? Mr. LANGNER. Well, there is a clause in there, gentleman, I am testifying from memory and perhaps some of the gentlemen, I think, can check me, there is a clause there which says patent rights are to be respected. I think there is some general phraseology of that kind. Which indicates there will be respect paid to patent rights. The principle of respecting patent rights is contained in that bill. Mr. SCOTT. What I was getting at was whether or not the Government might not now have the power to seize patents and transfer them to a foreign country rather than to an individual, or transfer the use of them to a foreign country. Did you know whether they had that right or not? Mr. LANGNER. It is stated there, as I understand, that the operation of that bill, the United States Government purchases these goods and then lends them or leases them to the foreign country. So they would be protected from infringements as Mr. Eyre pointed out. Do you imagine any court in the United States that would give an injunction to stop a manufacturer from manufacturing for England at the present time? I don't believe it. Mr. PLAUCHÉ. It is possible. Mr. LANGNER. It might be possible. Mr. EDELSTEIN. They would have every legal right to do so. Mr. LANGNER. But years of experience have shown those things don't happen. Mr. EDELSTEIN. I would rather give the courts an opportunity of following the law rather than arbitrarily rule on a question of this kind. Mr. HARRIS. Somebody put in the hearings heretofore that the fear is, so far as the industries are concerned, that if they would go ahead with these contracts for the Government under the present law and use those patent rights, that hereafter they would suffer a penalty and probably be subject to treble damages under a suit and because of that fear they are more or less inclined to shirk or stay away or not go forward with the program. I would like to know what you have to say about that? Mr. LANGNER. Well, that treble damage thing: It is rather difficult for me to understand that. Perhaps somebody else who knows may tell about that. I specialize in foreign law rather than American patent law. Mr. SCOTT. That is treble damages as was ruled on in the Supreme Court in the suit of the Apex Co. Mr. HARRIS. It is not a question of what you know about treble damages. Are the industries excited or do they fear such an injunction suit being placed on them because of that and they are hesitant of going forward? Mr. LANGNER. I have not heard of any such instance of an industry being afraid to manufacture or being afraid to go forward, because as long as they are manufacturing for the Government, or as this lease-lend bill shows, as long as they are manufacturing for another country which itself is operating under the lease-lend provisions, they are protected from any suit for infringement. You cannot sue them for infringement. They might be frightened because they do not know the law. That can happen. But the law protects them. They do not need to be frightened." Mr. EYRE. Will you read section 7 of the Lease-Lend Act? Mr. LANGNER. It is suggested that I read section 7 of the lease-lend bill. It is as follows: SEC. 7. The Secretary of War, the Secretary of the Navy, and the head of the department or agency shall in all contracts or agreements for the disposition of any defense article or defense information fully protect the rights of all citizens of the United States who have patent rights in and to any such article or information which is hereby authorized to be disposed of and the payments collected for royalties on such patents shall be paid to the owners and holders of such patents. So you see the disposition there is to take care of the rights of inventors and to receive the royalties and turn them over by the Government to those inventors. The CHAIRMAN. Have you concluded, Mr. Langner? Mr. HARRIS. I believe you testified a little bit ago that for every German or foreign patent, I believe you mentioned German patent, there were 10 American patents that were equally as good. Now, under these provisions, had this law been in effect in 1931, that we would not have had the opportunity to have certain patent rights we have now. Perhaps the same thing would apply so far as our patent rights are concerned in Germany, is that true? Mr. LANGNER. Yes; I think it is true. In some instances some American inventors do not take out patents in foreign countries because of the compulsory license clauses in those foreign countries. I have sometimes had people say they did not want to take out patents. I might tell you, if it is not digressing, I think there will be a considerable change in the world patent situation after this war is over; or it may even begin during the war. Mr. HARRIS. The point I am trying to get next is: What is the attitude so far as the Germans are concerned now? The German Government is concerned with reference to our patent rights or inventions as to our attitude toward theirs. Mr. LANGNER. Well, you mean, what are they doing with patents now in Germany? That is a matter which I believe is also before this committee in connection with another bill. I have myself been trying to gather some evidence on that subject. In one instance one of my clients told me the other day they had received within the last few months a payment of $60,000 in royalties from the German licensee. Another condition I know of another client complains he is not getting any money from the German licensee and the German licensee complains the government does not allow him to send that money over here. Therefore, it is not possible for me to give you an out and out straight rule on that. In some instances they seem to be allowing money to go out of Germany to come over here, and in other instances they do not allow money to go out of Germany. Mr. HARRIS. Then you do not know whether the German Government has taken over all these patent rights? Mr. LANGNER. I have looked over every decree in Germany since the war started and they have not any decree taking over patent rights of Americans or any other foreigners or belligerents. Likewise the International Convention which is a treaty between 40 countries-that International Convention is still in force and effect and in Germany is being given effect at this moment and it is in England, too, at the present time. The CHAIRMAN. Thank you very much, Mr. Langner. We will now hear from Mr. Schmidt, representing the American Chemical Society. STATEMENT OF WALTER SCHMIDT, LOS ANGELES, CALIF., CHAIRMAN OF THE PATENT COMMITTEE OF THE AMERICAN CHEMICAL SOCIETY Mr. SCHMIDT. My name is Walter A. Schmidt. I reside in Los Angeles, Calif. I am president and general manager of the Western Precipitation Corporation, which is a relatively small concern specializing in chemical-engineering equipment. I also am chairman of the patent committee of the American Chemical Society, and likewise am a member of your National Advisory Council. I had intended saying a few things about this proposed bill, substitute bill, which has been submitted by Mr. Eyre, but both Mr. Eyre and Mr. Langner have discussed the subject to such length I think it is unnecessary for me to add anything there, and I will merely make a brief statement in behalf of the American Chemical Society. It may interest you to know that the patent committee of the American Chemical Society is composed of 10 members who are carefully selected so as to give a cross-section of the opinion of the membership as a whole. And the membership amounts to 25,000 individual chemists. The patent committee of the American Chemical Society has carefully considered H. R. 3360 and the substitute bill submitted by Mr. Shea, of the Department of Justice. In our opinion both of these bills were loosely drawn and could easily do more damage than good. Furthermore, we believe that much of the testimony which has been submitted may be misleading. Unfortunately the subject of patents has been too much in the limelight of late. And there seems to be a growing conviction there. must be something very bad about them. Some even view patents as a sinister force working toward the destruction of our social economy. How far that differs from the truth can probably only be realized by those who are actually engaged in the conduct of technical enterprises. The creative work which lead to the existence of our current patents represents an enormous contribution to society. Such patent rights should be safeguarded and not endangered if our society intends to encourage further progress. Furthermore, it is constructive to encourage the exchange of patent rights with foreign nationals if foreign trade of any kind is to be maintained. Obviously isolated cases can be found where unwise agreements were entered into or where patents were unwisely administered. But if any such unwise procedures have run counter to the public interest the remedy lies in our general laws and not in destroying our patent property. All who have intimate acquaintance with the interplay between creative research work, patents, and the commercialization of inventions know how futile and unproductive it is to dedicate a patent to the public. Without the incentive of patent protection inventions of the more important types simply lie dormant and are not commercially developed. The great danger which lies in the bills under consideration today, as our committee interprets them, is that they open the door to abuses which in the long run will destroy the program of constructive inventive effort which more than anything else has built up our Nation and has given us the strength and the power that we now possess. For example, H. R. 3360 is so broadly drawn that it would suspend injunctive relief under a patent regardless of the character of the infringement. This would prevent a patent owner from enjoining an infringement by someone which was not in fact engaged in supplying defense materials or manufacturers to the Government. A substitute bill submitted by Mr. Shea places no limitations upon what patents may be infringed upon or what patents may be condemned. The grave defects of the entire proposed legislation is that it opens the door to those parties who might wish to get into a patented field by the mere payment of a reasonable royalty without doing any of the creative work or taking the financial risk on either or both of which patent rights, as we have known them, are built. While the promotion of national defense is essential to our existence and must be fostered and aided in every way, yet legislation should go no further than is needed to achieve this end. The patent committee of the American Chemical Society has studied the proposed substitute bill which was submitted to it by Mr. Eyre in behalf of the National Advisory Council to your committee, and in our opinion this proposed measure will give every necessary safeguard to our program of national defense without doing injustice to inventors and patent owners and without upsetting or depressing our much needed |