The CHAIRMAN. At the present moment the War Department is not being hindered in any way by any industry using patents in the manufacture of any devices that the War Department finds it is necessary to have?

Major VANDERWERKER. At the present time there is no situation in the War Department which would require legislation of this type.

The CHAIRMAN. I might ask you, Major Vanderwerker-that is, if you know-in the Bausch & Lomb situation there, had the War Department any interference there, or were Bausch & Lomb at all times assisting in every way with the production and manufacture of their articles so that the War Department was getting all of the benefits of the needs of their bomb sight and whatever other articles that they manufacured?

Major VANDERWERKER. From all of the inquiries that I was able to make in the War Department with respect to the Bausch & Lomb situation I failed to find that we had any trouble at all, sir.

The CHAIRMAN. In fact, as I understand it, there were officials of the War Department there at all times; what do you call them? Major VANDERWERKER. You mean inspectors.

The CHAIRMAN. And anything that went out of there went out under the direction and supervision of the War Department, as far as they had any connection with it.

Major VANDERWERKER. I cannot speak personally with reference to that. I do know that when we have contracts that it is the normal procedure to have plant inspectors in the plants to inspect the material and the finished products and the products in the course of production as they go along, and I assume that we did in this case that you refer to.

It is the normal and usual procedure to do that.

The CHAIRMAN. Do you want to ask any questions? If there are no further questions, we will excuse the witness, and we will call on Lt. Comdr. K. C. Caldwell, of the Navy.

STATEMENT OF LT. COMMDR. K. C. CALDWELL, PATENT SECTION, OFFICE OF JUDGE ADVOCATE GENERAL, NAVY DEPARTMENT

Lieutenant Commander CALDWELL. Mr. Chairman and members of the committee, I have already made a statement and testified before this committee on H. R. 3360, and I think that statement is in substance as far as I am in a position to go this morning. H. R. 3360 has been referred to us by you for our official comment and study, and I think, looking toward, or in connection with that study, the Under Secretary, Mr. Forrestal, is personally interested in that study.

Mr. LANHAM. May I repeat there the question that was asked of the major by the chairman? To what extent, if any, has the present patent situation interfered with the procurement by the Navy Department of the things that it needs for national defense?

Lieutenant Commander CALDWELL. Mr. Lanham, that question I am not in a position to answer for you. I would like to very much, and I think in an amplification of my statement, or a continuation of my statement, you will see my stand in this.

The Navy Department is going into this question very thoroughly, because they are very much interested in its purpose and its consequences. I repeat again that the Under Secretary, Mr. Forrestal, is

personally interested in this study, and this study is being made to determine specifically instances which would call for this legislation as a remedy.

At a later date, I think, if those instances are available, they will be made available to this committee. They haven't been made available to me as the representative or the delegate here. I am not a representative this morning; I am, rather, a delegate from the Navy Department; and I am not in a position to tell you whether we have or we haven't specific instances which relate to this need for this legislation. Mr. LANHAM. Are you an attorney at law? Lieutenant Commander CALDWELL. Yes.

Mr. LANHAM. May I ask this question: Is it not true that under existing law, the Government has all necessary authority with reference to taking control of the manufacture of things under patents, in times of national emergency?

Lieutenant Commander CALDWELL. We feel that we have; yes, sir. The CHAIRMAN. And you exercise that right, too, do you not?

Lieutenant Commander CALDWELL. As occasion demands, it has been exercised.

The CHAIRMAN. You found no difficulty with anyone, when you asked for that cooperation, have you, as far as you know? I know that your predecessor was more familiar with that.

Lieutenant Commander CALDWELL. I do not like to make a statement that may be binding on the Navy Department, and which may not go to the meat of this bill in the light of other representations by other representatives before this committee.

I would like to support them, if I can, and the need for them, because here is something that may be needed for national defense, and the Navy Department wants to study this thing, and if there is that need, and there may be, then we want to support it, because it is from a national defense angle.

But right now, sir, I am not in a position to state whether there are those vital instances, or what those vital instances in the Navy Department are.

Now, this study is being made by the Navy Department with the idea of getting the specific instances for presentation to this committee, and if necessary Mr. Forrestal, the Under Secretary of the Navy, is, I think, amenable to any of the wishes of the committee, or any wishes that the committee might want to make to him with regard to it.

I am not in a position to state as to the specific instances, because what I might state here would not go far enough, and might defeat the very purposes of the bill, in view of the fact that there are those in the Navy Department who will be at a later date, if such is necessary, as the need is felt by the committee, to make representations.

Mr. LANHAM. Insofar as your personal knowledge is concerned, do you know of any situations with reference to the Navy Department, that have been hampered because of the patent situation? If that is a question that you should not answer, I do not wish to press it.

Lieutenant Commander CALDWELL. I understand, and I appreciate that, and I will answer it to the best of my ability, sir. I think I would be safe in saying, yes; there are instances, I would not be in a position to say how vital they are, or as to the question as to how extensive it is, or how important these instances are, or these items are.

Mr. LANHAM. The next question naturally would be, is there a law upon which a remedy for such conditions might be predicated?

Lieutenant Commander CALDWELL. To that I would say that under normal situations, that is the average situation that confronts us in the Navy Department, that is Government contracts, and the field of Government contracts, there is adequate legislation, with one proviso, and that is that the act of 1910 as amended by the act of 1918, might be further amended to assure, if it is not already assured, that the subcontractor will be free from the injunctions in connection with any contracts that he may have entered into, in national defense work.

There may be that need; personally I think that there isn't the need for that, even.

Mr. LANHAM. If he was working under Government direction he would still come within the provisions of the law, would he not? Lieutenant Commander CALDWELL. We do not know, we think that he would. I think that he would.

The CHAIRMAN. Are there any further questions?

Lieutenant Commander CALDWELL. I have a further statement. Now, as I say, the Navy Department is studying this bill very carefully, and they are interested in it.

The CHAIRMAN. That is what we want them to do.

Lieutenant Commander CALDWELL. And if you indicate your wishes, other representatives will come.

Now, there may be, or since there may be other agencies that have felt the immediate urgent need for this legislation, and since the Navy Department has knowledge that this need may exist in other agencies for such legislation, the Navy Department does not want it understood that we are opposing the bill. That is not the case.

Mr. LANHAM. May I ask this question there?

Lieutenant Commander CALDWELL. We would like to go along with the committee.

Mr. LANHAM. May I ask this question there, if it is proper?

From the standpoint of practical operation of these national-defense matters, what other agencies than the Army or the Navy would be involved, not as a matter of law, but as a matter of practical operation?

Lieutenant Commander CALDWELL. Mr. Lanham, I am not in a position fully to go into that, but it would appear to me that there are other agencies in the Government, and maybe other agencies, procurement agencies, or agencies associated with procurement in the future who will feel these needs; that is, need for this legislation. That is a conjecture; that is a surmise on my part. I am looking for something that may arise, and a need that may arise in those agencies. If they do, and if there are those agencies-I do not say that there are-if there are those agencies, and I can see that there may well be, and then if they have a need, the Navy Department, being a part of that agency, being a part of that national program, would like to be in a position to say: "Yes; for national defense; this is something that we need for national defense."

Mr. LANHAM. I understand that, but let those agencies appear, and let us know about that. We cannot very well anticipate that need. Lieutenant Commander CALDWELL. I am not in a position to state who they are. That is for them to state.

Mr. LANHAM. I appreciate that.

Lieutenant Commander CALDWELL. But I do want to state that so far as the Navy Department is concerned we feel that if there is that need that is in a defense agency we want to be in a position not to oppose it but to support it.

Mr. LANHAM. My question was simply directed to the present necessity for legislation, what necessity may exist.

Lieutenant Commander CALDWELL. As I said in the first part of my statement, I am not in a position to object, because I think what you want is testimony based on specific instances, and based on the specific need. That will be an outcome of the study going on in the Navy Department; and, as I say, the Under Secretary, or his representative, will gladly make themselves available to you and this committee if this need develops as a result of these hearings.

The CHAIRMAN. Did I understand you to say that you think that the Navy Department had not been invited to attend the hearings? Lieutenant Commander CALDWELL. No, indeed. We feel that we have been invited profusely and very nicely, Mr. Chairman, but this is something which

The CHAIRMAN. You want to make a little further study before you are in a position to go further.

Lieutenant Commander CALDWELL. I believe it is necessary, because you want specific instances, and this is something that does not lie in the ready record, and it lies behind those records.

The CHAIRMAN. We want to know what specific instances there are of hindrances, and we want to know if there are any.

Lieutenant Commander CALDWELL. We must go more fully afield than the Navy Department. We must go beyond that.

The CHAIRMAN. We have been at this for 8 months, and we have not been able to disclose any.

Lieutenant Commander CALDWELL. I am not in a position to disclose any, either.

The CHAIRMAN. Do you have any further statement?
Lieutenant Commander CALDWELL. No.

The CHAIRMAN. I understand Mr. Arnold will be here a little later. He phoned me about a quarter of 10 and said that he had an engagement over on the other side of the legislative body, for half an hour, and he said that he would send over some of the representatives of his Department, outside of Mr. Shea.

Is there anyone outside of Mr. Shea and Mr. Mothershead?

Mr. SHEA. Mr. Arnold is, as you know, from the Antitrust Division, and I am from the Claims Division.

The CHAIRMAN. There has been a lot of reference made here to Mr. Arnold, in connection with this. I have written him especially to be here, and he said that he would.

Mr. SHEA. I understand that he will be.

Mr. LANHAM. Mr. Chairman, unless you have a set program there, unless you have some others that are ready to testify here from these departments about this——

Mr. SHEA. I am ready to testify.

Mr. LANHAM. I was wondering, from the standpoint of practical operation, if some of these witnesses who are here, who are engaged in manufacturing, from out of town-that is merely a suggestion; I do not want to interfere with your program.

The CHAIRMAN. I was going to come to that, Mr. Lanham. I understand that Mr. Carlson is here from Chicago, and I assured him that I would give him an opportunity to appear.

STATEMENT OF EARL C. CARLSON, OF PARKER, CARLSON, PITZNER & HUBBARD, CHICAGO, ILL.

The CHAIRMAN. Will you give your name to the reporter, please? Mr. CARLSON. Earl C. Carlson, No. 1 North La Salle Street, Chicago. The CHAIRMAN. Whom do you represent?

Mr. CARLSON. I represent myself, Mr. Kramer.

The CHAIRMAN. Are you an attorney?

Mr. CARLSON. Yes; I am a patent lawyer. I have been a patent lawyer for over 20 years. I say that I represent myself, and that I am here in my own interests, so to speak. However, I have discussed this bill with a number of clients, clients who are in the class of, perhaps, the smaller corporations.

Mr. LANHAM. Are they clients who are manufacturing articles for the national defense, Mr. Carlson?

Mr. CARLSON. One of these clients that is particularly interested is now negotiating with the Government for the manufacture of an apparatus for national-defense purposes. They have, however, many other lines of manufacture which are used directly or indirectly in connection with the national defense.

They feel that this particular bill represents a very substantial change in the patentee's fundamental rights; that the right of injunction which the patentee now has is his primary right, the right to recover compensation is secondary; that in practically all cases, in their experience, and they have had a great deal of experience in patent litigation, the recovery is of no importance; the primary object is to restrain infringement.

Mr. LANHAM. May I ask you a question in that regard? This has been running through my mind since I have been giving some study to this measure. What reason is there for any interference on the part of the Government if a manufacturing concern operating under one or more patents is producing all of the articles of the character it manufactures, that are necessary for national defense.

Now, I can understand that if articles are necessary for national defense, and the production is not sufficient to meet the need, that there is very good reason. I think the Government now has that authority, to provide supplementary manufacture by someone else, but urgency usually arises in national-defense matters, and why would it not, when the production is not sufficient, be entirely fair and just and equitable to give the patentee a royalty upon the additional production?

Mr. CARLSON. I think that it would be entirely fair, provided the patentee was properly safeguarded. I think that this bill as proposed does not adequately safeguard the patentee. He might have his patent declared, or an invention covered by his patent declared or certified to be necessary for the national defense, without any hearing on his part, and then an injunction granted, which prevents him from restraining infringement but which does not assure him that he will be compensated for that invention.