between the right to condemn land if it is necessary and the right to condemn and take over a patent during this emergency.

Mr. EYRE. Neither do I, if it is necessary; and to the extent it is necessary; but land is taken over for Government use. Patents today are freely used by the Government whenever they want to under the presently existing laws.

It does not condemn it in order to give it or lease it to other private interests. Nor does it condemn land on the mere say-so of some ap pointed executive officer, and effect the acquisition by a mere notice. Nor does it take the land away without due proceedings to determine its value and without payment to the owner for that value. It does not tell the owner to sue it to recover

compensation to which he may be entitled under the Constitution

whatever that clause may mean. Nor does it tell the landowner that when he brings action for such compensation the Government reserves the right to defend on the ground that its own original patent for the land was invalid.

There is no analogy.

No one feels more strongly than I do that every private interest should yield wherever it may tend to materially interfere with the fullest development and efficiency of our national defense, or with the giving of the promptest and most efficient aid to other nations who are defending civilizaiton itself. To these ends we must accept the necessity of giving unusual temporary powers to the Executive and must be prepared for individual sacrifices of all kinds. But it is trite to say that our fundamental institutions and democratic methods should not be weakened on the plea of national defense, when there is no real need for any such weakening for that purpose. In this instance I can find no necessity, and we think the bills heretofore proposed injure the patent system far more drastically than the supposed necessity requires.

Just one little interpolation at this point. I want you to realize, too, that any bill of this type always is felt by the small, not the big, corporation. And curiously enough one of General Shea's instances indicates a very good example of that type. He says that in the future the Navy will need a development of certain special patented filaments for precision instruments and radio tubes, and that he would like a bill of this kind so that the General Electric may add that to its manifold activities. Of course, it is interesting that the Government now has a suit against the General Electric for monopolizing the lamp industry. While this filament is not applicable to lamps it is quite analogous and tends to spread the monopoly at the expense of some smaller company.

If this committee nevertheless determines that some new law is necessary, as a precaution against the possibility that patent injunctions may cripple national defense, then we present as a substitute for the bills heretofore proposed one which would meet that assumed danger with as little interference with the rights of patent owners as possible. In draughting this substitute we have sought not to make the bill less effective in preventing rights from being exercised adversely to the furtherance of national defense; but to make it more effective to that end; but we have also sought to avoid the causing of any entirely unnecessary sacrifice of patent rights.

I produce copies of the substitute bill that we propose. I ask that a copy be read into the record as a part of my testimony.

PROPOSAL PREPARED BY RICHARD EYRE

IN THE HOUSE OF REPRESENTATIVES

A BILL To extend the use of patented inventions for national defense

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled:

SEC. 1. Certificates of Necessity.-Whenever during the emergency declared by the President of the United States to exist on September 8, 1939, the Secretary of War or the Secretary of the Navy or the Office of Production Management determines that production of any defense article is inadequate for the national defense and that it is necessary to the national defense that a particular producer should continue or commence the manufacture or production of such defense article or the use of any specified machine or process in its production, he may issue a certificate of necessity specifying therein the precise activities of such producer that are deemed necessary in furtherance of the national defense. The term "national defense," for the purposes of this Act, includes aid to foreign countries under the provisions of the Act to Promote the Defense of the United States, approved March 11, 1941, and the term "defense article," as used in this Act, has the same meaning as that specified in section 2 of that Act.

SEC. 2. Injunctions under patents during the emergency.—In any action involving the alleged violation of a patent right in which an injunction affecting the production of a defense article has been issued or may be issued during the emergency declared by the President of the United States to exist on September 8, 1939, the alleged infringing party may make application to the court having jurisdiction of the action for a suspension of the injunction during the period of such emergency insofar as the injunction would enjoin any act which is declared to be necessary to national defense by a certificate of necessity issued to the applicant under section 1 of this Act. A certificate of necessity, issued after the adverse party to the action has been afforded opportunity to be heard by the officer issuing the certificate, shall be accepted by the court as conclusive of the necessity specified therein; when such opportunity has not been afforded, it shall constitute presumptive evidence thereof.

SEC. 3. Protection of the patent owner.-In any action wherein the court suspends any injunction in compliance with the terms of this Act, it shall require that the defendant shall file a bond, or other assurance satisfactory to the court, that payment will be made to the patent owner of reasonable and adequate compensation for past infringement, and that like compensation will be paid thereafter under conditions prescribed by the court. The compensation awarded by the court shall not be less than an amount corresponding to what would be, in the opinion of the court, a fair royalty for the use of the patented invention or inventions, and the court shall take into account any existing patent licenses and the royalties payable thereunder. No failure or delay of any patent owner in asserting rights under his patent by bringing action or otherwise, against the manufacture, use, or sale of defense articles during the said emergency shall create any estoppel or prejudice against him in any action he may bring for infringement of such patent.

SEC. 4. License agreements containing restrictive clauses. Any producer or manufacturer of defense articles who is manufacturing or producing under a license contract with a patent owner and whose manufacture or production is limited by reason of restrictive provisions in such license, may make application in accordance with the provisions of section 1 of this act for a certificate of necessity, and if such certificate of necessity be issued after the patent owner has had opportunity to be heard, then such restrictive provision shall be null and void as to all production covered by said certificate. No court shall hold that any such license is subject to termination by the licensor because of any breach of the restrictive provisions thereof made under such certificate. In the event that the license contract is on a royalty basis, the licensee shall be obligated to pay royalties on all the defense articles is produces or manufactures on the same terms as those set forth in the license contract, unless a court of competent jurisdiction shall award different compensation as being reasonable under all the circumstances.

SEC. 5. This Act shall take effect on approval and shall remain in force until the expiration of the emergency declared by the President of the United States to exist, on September 8, 1939. Nothing in this act shall be construed to repeal or modify section 68 of title 35 of the United States Code.

This bill differs from H. R. 3360 mainly in the following respects: 1. It defines "national defense" broadly to include production of defense articles for the aid of other nations under the provisions of the Lease-Lend Act, and defines "defense articles" broadly by adopting the definition of that Act.

2. To make the certificate of the executive officer effective, it is not necessary for him to ascertain what patent or patents may be involved. He certifies to the producing activities required in furtherance of national defense rather than to the patented inventions which may be necessary to such activities. In this respect we have adopted the form of the Department of Justice's proposed substitute rather than H. R. 3360. We think that this method better furthers the general objective of the bill. What the executive officer of the Government wants is that some production be undertaken or continued, whether or not such production may necessitate the use of patented inventions. The producer might thereafter be sued under some patent that had not been called to his attention. The executive officer of the Government should not be required to make a patent investigation.

3. Our substitute expressly requires that such a certificate to be effective should specify the particular producers whose activities are necessary to the furtherance of national defense and the particular activities of that producer which are deemed necessary. The point here is that no such certificate should be effective if production by the patentee or his licensees or other existing production is adequate, or if a particular producer is not in a position to contribute any substantial benefit.

4. It makes a certificate of necessity binding upon the court if the patentee had had an opportunity to be heard by the officer issuing the certificate, but provides that it shall be only presumptive evidence if the patentee did not have that opportunity. Under this provision the producers seeking a certificate would give notice to any patent owner if he had reason to believe that he would find it necessary to use patented inventions of that owner, and thereby obtain the fullest. benefit of the certificate. He might, however, be sued thereafter under some patent owned by another patentee that had not come to his attention, in which case that patent owner would have no notice of the certificate before it is issued, and would be placed in the position. where he could show to the court that the injunction would not in fact interfere in any way with national defense.

5. It affords reasonable protection to the patentee by requiring that he file a bond to secure payment of compensation, and it provides that compensation fixed by the court shall be not less than a fair royalty. It is to be borne in mind that at this stage of the patent infringement action the court has determined the validity of the patent and that the same has been infringed, so that there is no excuse for not assuring the patentee a fair royalty.

6. It provides that a patentee shall not be prejudiced by delay on his part in asserting rights under his patent against the manufacturer, use or sale of defense articles during the emergency. This provision will encourage patentees not to bring suits during the emer

gency where it may seem possible that the infringement is furthering the national defense. I feel sure that most patent owners would be inclined to be lenient concerning in fringements of this kind, but they should not be penalized by reason of their leniency.

Mr. EDELSTEIN. There is nothing to prevent them from bringing suit.

Mr. EYRE. No; not to prevent them from bringing suit but not to make them subject to dismissal of the suit for laches in suing some years afterward for nondefense purposes. Simply not to penalize them if they do not bring suit.

Section 7 of our proposed substitute gives a licensee who is limited in his producing activities because of a restrictive provision in his license, substantially the same right to obtain a certificate and apply to the court as an unlicensed producer, and thereby become freed from such restrictive provisions.

8. This substitute provides that nothing therein shall be construed to repeal or modify section 68, title 35, of the United States Code. This is the section which gives the Government the right to use or have made for its use any patented invention, subject only to recovery of compensation by action in the Court of Claims. In this respect our substitute is like that offered by the Department of Justice.

This bill does not interfere with the present free, unrestricted use by the Government or for the Government.

Mr. HARRIS. What was the statement a moment ago about section 5?

Mr. EYRE. I said it simply does not-speaking of section 5-affect the existing situation or statute which gives the Government the right for itself and for its contractors to use any patented invention subject only to a suit afterward in the Court of Claims by the patentee. In other words, one of the reasons we do not think any bill of this kind is necessary is wherever the Government is sufficiently interested to want to manufacture for itself it already has complete power to do so.

I thank you, gentlemen.

The CHAIRMAN. Mr. Harris, do you have any questions?

Mr. HARRIS. No questions.

The CHAIRMAN. Mr. Edelstein, do you have any questions?

Mr. EDELSTEIN. No questions.

The CHAIRMAN. Mr. Coffee, do you have any questions?

Mr. COFFEE. No questions.

Mr. HEIDINGER. No questions.

Mr. PLAUCHÉ. No questions.

Mr. HARRIS. Do you think, under the present law which we have, that no bill is necessary and no legislation is necessary?

Mr. EYRE. No. I very emphatically said that at the beginning. Mr. HARRIS. I am sorry; I was not here.

Mr. EYRE. I very emphatically said, I did not think so. And I repeated what I had said at a previous session of the committee. But if the committee thinks it is necessary, I think this proposed substitute bill will accomplish all the proposed supposed objectives without any undue deprivation of the rights of patent owners.

Mr. EDELSTEIN. When you say, sir, that no legislation is necessary you make that assertion notwithstanding you have read the testimony of Mr. Shea and Mr. Arnold?

Mr. EYRE. I do. I read that testimony, sir.

Mr. EDELSTEIN. In the light of those facts you assert in your opinion no legislation is necessary?

Mr. EYRE. I do.

The CHAIRMAN. I might say for the benefit of my distinguished colleague and other members that all of the hearings that we have had upon this subject have been mailed to all persons whom the committee had any knowledge of being interested and to the entire Advisory Board and each member of the committee has received copies of this committee print. Your secretary probably would have it. They were sent out some 3 or 4 weeks ago. I wanted to give everybody an opportunity to be fully advised as to what had been done in the past.

Mr. DORR. Might Mr. Eyre read the proposed bill?

The CHAIRMAN. Mr. Eyre, would you mind reading the text of the bill so that we may have it in mind, please?

Mr. DORR. Yes.

(Whereupon the proposed bill was read.)

The CHAIRMAN. Thank you very much, Mr. Eyre.

STATEMENT OF LAWRENCE LANGNER, EXECUTIVE SECRETARY, NATIONAL ADVISORY COUNCIL TO THE COMMITTEE ON PATENTS OF THE HOUSE OF REPRESENTATIVES; CHARTERED PATENT AGENT; SECRETARY, NATIONAL INVENTORS COUNCIL

The CHAIRMAN. Mr. Langner, I believe you are next.

Mr. LANGNER. My name is Lawrence Langner. I am the secretary of your National Advisory Council, and I am also secretary of the National Inventors Council, which is established here in Washington under the jurisdiction of the Department of Commerce, and which is engaged in evaluating inventions relating to national defense; and we refer to the Army and the Navy different inventions made by civilian inventors which may be valuable for the national defense. I am also a specialist in international patent practice and I am going to speak to you from the standpoint of somebody who has spent the greater part of his life, not in practicing under the United States patent system, but in practising under the patent systems of other countries. It is my experience under those patent systems that leads me to believe that in the first place we do not need this measure at all, H. R. 3360, and far less do we need the proposal of Mr. Shea. And going one step further, I would like to say that I think Mr. Shea's proposal is an extremely destructive proposal for the future of the United States.

First of all, I want to say that, from my experience, I think we have in the United States the very finest patent system in the world. It is a much finer patent system than that of any other foreign country, because we give in this country an unconditional monopoly. In every other country in the world the monopoly is conditional, and there is not the encouragement to invention that there is in this country. It is not because we are inherently any more inventive; I have seen, in many instances, inventors coming over here from Europe who, under the stimulus of our patent system, have become magnificent inventors. You have only to look around. I do not need to tell you our industries in this country, under the stimulus of our patent system, have become