The Honorable CHARLES KRAMER, METLAB Co., Philadelphia, Pa., March 14, 1941. House of Representatives, Washington, D. C. MY DEAR SIR: We have noted a report on American Machinist (magazine) relative to a bill on patent infringements by yourself which would make it impossible to hold up defense production by getting a court injunction upon infringement of patent. Naturally patriotic citizens will be in favor of such an arrangement. But it would seem to be of the utmost importance to properly protect the interests of inventors against unfair treatment which might result from taking advantage of the present emergency. Anything which tends to discourage inventors and invention in this country tends to deprive America of one of its greatest assets. Your favorable considerable of these facts will be appreciated. COMMITTEE ON PATENTS, METALLURGICAL LABORATORIES, INC., FRASER, MYERS & MANLEY, United States House of Representatives, Washington, D. C. SIRS: I have before me a substitute for H. R. 3360, which has been presented by the Department of Justice. I desire to make the following comments on this bill. That the defense of the United States is of transcendent importance, we all agree. At the same time I think we all should agree that it should be conducted in a way which does not involve the confiscation of the property of any one class or any one class of property. Section 68 of title 35 of the United States Code already provides that if any patented invention is used or manufactured by or for the United States, the patentee's remedy is a suit in the Court of Claims for his entire compensation. Contractors for the United States are, hence, immune from damages for the manufacture or sale of any such invention to the United States. There still remains the element of injunction against contractors for the United States, which is not literally covered by section 68. Section 1 of the substitute bill, however, is not limited to manufactures for the United States. It applies to any manufacture-for private parties, or for any other purpose. In preparing for defense the United States has use for a great multiplicity of different devices. This use, however, in most part is not the only use of such devices. Many devices have large and continuous sales quite outside of the United States requirements. The effect of section 1 of the proposed bill would be to throw open patents on almost every conceivable article for competitors to manufacture and use, relegating the patent owner to a recovery which may take and usually does take-years to effectuate. Further, the patentee is held to a recovery of the "reasonable value of a nonexclusive license." This is wholly inadequate under many conditions. Again, under this first section, it would seem at least probable, if not certain, that the elimination of the right of injunction would rob the equity courts of jurisdiction and compel the patent owner to bring his actions at law, before a jury, with the possibility of repeated actions becoming necessary in order to cover a continuous course of infringement. So much for section 1. Section 2 seems to have little or no excuse. is already immune under section 68 of title 35. A contractor for the Government The United States already has the right to accept title to patents or licenses under patents by donation or purchase. It also has the right under section 68 of title 35 to condemn nonexclusive licenses; see Crozier v. Krupp (224 U. S. 290). What is the purpose of condemning patents? I do not understand what the phrase, "under any of the foregoing" means in section 2. If it means inventions or patents covering products in the interest of national defense, it should say so plainly. But, assuming it does, even then section 2 means that any patent, no matter how valuable or useful for other purposes, no matter how much used for other purposes or how little used for national defense, shall be open to condemnation. There are literally thousands of patents covering devices which are partly used for purposes of national defense and which are largely used for other purposes. Are these to be condemned by the United States as to their ownership, so that the owners have no rights against infringers and are relegated to a suit in the Court of Claims? If so, section 2 would be ruinous to the whole patent system. Further, under section 2, the acquisition of patents is not dependent upon the period of the national emergency. They are not to be restored to their owners after the national emergency. Further, there is no chance of any tribunal's passing upon the matter. The President of the United States has no time or opportunity to investigate the situation of any particular patents; nor, indeed, would any officer to whom this duty is delegated have either the time or the opportunity. Again, the sole right of the patent owner is an action in the Court of Claims for any compensation to which he may be entitled under the Constitution. I wonder if any of this committee has investigated the length of time that is required for a patent suit in the Court of Claims, and particularly a successful patent suit, wherein there is an accounting. Notwithstanding the assiduousness of that court and its commissioners, I think it will be found that the average is around 10 years. This information can be easily given to you by the Department of Justice, which defends all such suits in the Court of claims. So far as I am informed, I believe that all of the proper purposes of this substitute bill could be accomplished by a simple bill depriving the patentee of the right of injunction against any manufacturer on any infringement having to do with supplies for the Government. Or, if it be desired to extend this deprivation to supplies for Great Britain, Greece, or other democratic countries, there could be a provision for so doing by Presidential proclamation. H. R. 3360 itself appears to be far more suitable and infinitely less objectionable than the Department of Justice's proposed substitute. There are two points, however, included in this bill which seem to me to be beyond any necessity. The first of these is that the provision that no injunction shall be issued not only applies to articles manufactured for the Government, but also applies to articles manufactured for all private concerns. For reasons given in my discussion of the substitute bill, this unnecessarily penalizes the patent owner, and in many cases will do him irreparable damage. I can see no reason why an injunction should not run against the infringer so far as goods supplied to others than the Government (or allies designated by the President) are concerned. The second objection is that it limits the recovery to "reasonable compensation." So far as compensation for use of the invention in Government work is concerned, that is provided for by section 68 of title 35. So far as infringement by private users is concerned, it seems to me no reason why the ordinary methods of recovery, such as defendant's profits, plaintiff's lost profits, etc., should not remain in force. Chairman, Committee on Patents, House of Representatives, Washington, D. C. DEAR MR. KRAMER: Enclosed is a statement in respect to H. R. 3359 and H. R. 3360, submitted in behalf of the National Association of Manufacturers. Very truly yours, ROBERT L. LUND, Chairman, Committee on Patents and Research. STATEMENT ON BEHALF OF THE NATIONAL ASSOCIATION OF MANUFACTURERS TO COMMITTEE ON PATENTS OF HOUSE OF REPRESENTATIVES, RE H. R. 3359 AND H. R. 3360 The National Association of Manufacturers feels that any legislation proposing to aid the United States in its present tremendous national-defense activities should be looked upon sympathetically in the light of the basic principle that any existing conditions which interfere with national defense should be immediately corrected. It is from this viewpoint that the association has examined H. R. 3359 and H. R. 3360, now pending before the Committee on Patents of the House of Representatives. The all-out national-defense effort of America is aimed at erecting a rampart for the protection of our fundamental liberties and the system of free enterprise under which this Nation has progressed to the highest standard of living known to man. The patent system of this Nation is a highly important integral part of the American system of free enterprise. Possibly the first formal body of laws drawn up in this Nation, the Massachusetts "Body of Liberties," established in 1641, recognized the fundamentals of the American patent system in these words: "No monopolies shall be granted or allowed among us, but of such new Inventions that are profitable to the Countrie, and that for a short time.". The exclusive property right granted by a patent is the just reward offered by the Government to free individuals which has provided the incentive spark to research and the creation of inventions and has proved to be beyond any question of doubt "profitable to the countrie." Even in times of gravest emergency we must be careful not to upset the fundamentals of a patent structure so important to our system of free enterprise and so essential to the American way of life. H. R. 3359: The Commissioner of Patents and representatives from the Army and the Navy have stated to the Committee on Patents that, in their opinion, H. R. 3359, which would require a license from the Commissioner of Patents before patent applications may be filed in foreign countries, is a measure necessary for national defense. On the basis of these authoritative statements, the National Association of Manufacturers is satisfied that H. R. 3359 is justified as a purely emergency measure. H. R. 3360: The National Association of Manufacturers is in complete sympathy with the objective of making patents available during the emergency period for national-defense purposes. In the interests of national defense, H. R. 3360 proposes to prohibit the issuance and enforcement of injunctions on patents. A careful study of the testimony presented to this committee and particularly the statements offered by representatives of the Army, Navy, and the Office of Production Management, who would obviously be most concerned with this type of legislation, fails to disclose any factual need for H. R. 3360 or the proposed substitute bill offered by the Department of Justice, nor is the National Association of Manufacturers aware of any facts creating a necessity for or the desirability of such legislation. Nevertheless, if those in the Government primarily concerned with national-defense production consider that there is a necessity for enacting special legislation to make patents available for national-defense purposes, we feel H. R. 3360, if enacted as an emergency measure, should be amended to limit its scope to the requirements of national defense and to assure the patent owner protection against irresponsible infringers. We respectfully call the attention of the committee to the following amendments, recommended to improve the form of H. R. 3360 without interfering with its stated objectives: 1. Strike out "or the chief officer of any established defense agency of the United States"; so that power to initiate prohibition of injunctive relief will be limited to the Secretaries of War and Navy and the Director General of the Office of Production Management. 2. Strike out "or required by the public interest or public safety" so that the scope of the bill will be limited solely to national defense. 3. Insert appropriate language to require the user of a patent to file a bond so that payment will be made to the patent owner of reasonable and adequate compensation. We appreciate this opportunity of submitting our views to the committee, and we trust that they will receive favorable attention. Yours very truly, ROBERT L. LUND, Chairman, Committee on Patents and Research. NAVY DEPARTMENT, OFFICE OF THE JUDGE ADVOCATE GENERAL, The CHAIRMAN, COMMITTEE ON PATENTS, House of Representatives, Washington, D. C. MY DEAR MR. CHAIRMAN: Reference is made to your telephone conversation with the Patent Division, Office of the Judge Advocate General, on April 25, 1941, at which time you inquired as to when a reply may be expected to your letter of February 26, 1941, relative to the bills H. R. 3359 and H. R. 3360. The Navy Department's views and recommendations on these bills will be forwarded to your committee as soon as information is received from the Bureau of the Budget as to whether or not such views and recommendations are in accord with the program of the President. Sincerely yours, W. B. WOODSON, Judge Advocate General of the Navy. Hon. CHARLES KRAMER, House of Representatives, Washington, D. C. OBERLIN, LIMBACH & DAY, MY DEAR CONGRESSMAN: I should more promptly have acknowledged receipt of your letter of the 17th ultimo advising of public hearings on H. R. 3359 and H. R. 3360, for I appreciate very much your bringing the legislative proposals to my personal attention. Indeed, they possess a high degree of interest not merely for patent lawyers, but for the large number of manufacturing concerns, many of them relatively small in size, whose business is in whole or in part dependent upon the protection afforded their products by letters patent. I accordingly at once referred the copies of the two bills in question to our local patent law association (Cleveland Patent Law Association, care of Robert W. Wilson, president, East Ohio Gas Building, Cleveland, Ohio), and through the association and its members expect that those who are primarily concerned will seek to present their views at the hearings, which I understand are still in progress. My further purpose in writing you at this time is to inquire whether any report has as yet been published of the hearings thus far held, and particularly of the statement made before your committee by Assistant Attorney General Shea. If so, I should like very much to obtain a copy of such report or statement. I understand that Mr. Shea made reference to certain particular situations to which H. R. 3360 was directed. The trouble with the latter, as I read it, is the extremely general all-inclusive character of its provisions, under which power would in effect be given to a couple of bureaucrats to strike down the whole patent system if they were so minded. Evidently the measure is going to be given the careful consideration at the hands of your committee which it requires. I hold no brief for the Dow Chemical Co., which I understand is mentioned in one of Mr. Shea's "illustrations of the need" of the measure, such as proposed. However, I do know of my personal knowledge that it has only been because of this company's voluntary pioneering in the production of magnesium that the United States today has any source of supply of this metal whatever. When, therefore, the Government, in addition to providing taxpayers' funds for the purpose of financing a competing manufacturer, as I understand it has done in the case of the Permanente Co., proposes to seize the patents as such pioneer company may have been granted for its original work in this field, it seems to me that it behooves your committee and the Congress to move cautiously and act only after the fullest possible hearing has been afforded. I do not know whether Mr. Shea or the Department of Justice in the investigation of the magnesium metal situation has given any consideration to American patents owned by British interests. I understand there are such which relate to methods of magnesium production, but I have not heard of any of them being donated for the use of American competitors. Yours very truly, JNO. F. OBERLIN. Hon. CHARLES KRAMER, THE PATENT LAW ASSOCIATION OF PITTSBURGH, House of Representatives, Washington, D. C. SIR: The committee on legislation of the Pittsburgh Patent Law Association has before it the report from the Attorney General's office (prepared by Mr. Shea) on H. R. 3360, and has considered with careful and, as is believed, sympathetic attention the substitute bill that Mr. Shea has presented. The committee respectfully submits its judgment that the need for shifting from the judicial to the executive branch of Government this matter of injunctive relief is not apparent. It has considered the argument that manufacturers may, because of patents, hesitate to enter contracts and to fill them, but doubts seriously whether such drag upon industry does exist, or could exist. This association has already had the privilege of appearing before your committee, and its general position already has been indicated. Should your committee, however, be disposed to look with any degree of favor upon the alternate bill that has been presented by Mr. Shea, the committee of the Pittsburgh association sees no warrant for adding to section 1 of the bill the more drastic innovation that is contained in section 2. Even Mr. Shea's report presents no situation that would not be cured if the first section alone were enacted. This committee doubts that any gain, resulting from the enactment of section 2, could compensate for the uncertainty that would inevitably arise in the mind of every patent owner, and for the reluctance of patent owners generally to promote new industries, or to expand old ones, under the protection of the patent system. Respectfully, BAYARD H. CHRISTY, President. FULTON B. FLICK, Chairman. THE PATENT LAW ASSOCIATION OF PITTSBURGH, April 23, 1941. Hon. CHARLES KRAMER. House of Representatives, Washington, D. C. SIR: You have been generous in allowing me to appear before the House Committee on Patents, and to testify, particularly with reference to H. R. 3360 and the proposed alternatives. There was one point that has been raised in earlier hearings and that was passed over in yesterday's hearing, a point which should not be passed over, and upon which I venture to make this memorandum. Under existing law the Government may use a patented invention, and a contractor who has a contract with the Government may use a patented invention. And in either case the owner of the patent finds his sole redress in pursuit of a claim in the Court of Claims. So much is beyond dispute. The question was raised in an earlier hearing, Whether a subcontractor is similarly free of being embarrassed by application for injunctive relief advanced by the owner of a patent? The Department of Justice was disposed to take the position that in such case the subcontractor was not secure, and that because of such insecurity the smooth operation of the defense program might be impeded. There is, I believe, no specific adjudication on the point. The law reads (act of June 25, 1910), United States Code, title 35, section 68"Whenever an invention described in and covered by a patent of the United States shall hereafter be used or manufactured by or for the United States without license of the owner therefor or lawful right to use or manufacture the same, such owner's remedy shall be by suit against the United States in the Court of Claims for the recovery of his reasonable and entire compensation for such use and manufacture." ** I submit to your committee that if, as is conceded, the phrase "manufactured * for the United States" brings into contemplation the immediate contractor, so that his activities may not be interfered with, it must also include the subcontractor. The language is applicable to contractor and subcontractor alike. Should the committee feel any doubt or hesitation upon this point, it were a simple matter to revise this extant statute, and to provide specifically that in such case neither the contractor who manufactures for the United States, nor any subcontractor who furnishes the chief contractor with means or mate |