A drawback of the United States patent law lies in the system of interference proceedings. If one considers that an interference is a proceeding to find out, by due process of law, who of two applicants is the first inventor, and, if one considers that the average cost of such an interference is about $3,000 for each party one must concede that the people of the United States pay too high a price for this particular institution.

Considering that the numbers of the recently declared interference cases move at about 63,000, and that, according to information by the honorable Commissioner of Patents, about one-sixth of this number are decided by the tribunals, one arrives at the stately figure of $63,000,000 as the cost of interference litigation. This amount does not take into consideration the interest on the money thus spent within a few decades for fighting such interference cases. Moreover, it must leave entirely out of consideration the enormous loss of money sustained, because machinery could not be used to the full extent and laborers could not be employed because the outcome of interference had to be waited for; and this outcome being uncertain, no investments could be made and the development of the industry had to wait. Moreover, it leaves out of consideration the mental anguish many a junior party of the remaining fivesixths of parties to interferences has suffered when he had to waive his rights because he found out that he was too poor to fight for his right.

The amount of money spent on litigation for interference, with the compound interest thereon, represents a small national fortune, which could be saved if the interference proceedings are entirely abolished and are substituted by the provision that the first applicant gets the patent, similarly as this matter is now governed in England, France, and Germany.

If one looks at the Rules of Practice of the United States Patent Office one finds, disconsidering some rules of general importance, that there are about 69 rules governing the examination and proceedings to obtain a patent, whereas there are 58 rules governing the proceedings on interferences. These aforesaid figures show that a form of proceeding, which should only be a minor part of the work of the Patent Office actually and materially contributes to procrastinate the industrial progress, for it is mostly the industrially valuable inventions which come into interference. An interference involves a proceeding which is one of the most technical and intricate legal procedures of the entire legal system of the United States.

But the industry has nowadays grown out of those conditions under which this interference may have been advisable. Now the industry involves too great an investment to have some party pull the brakes by an interference, because for some selfish reason of his own he had deemed it advisable to postpone for years filing his application until he learned that somebody else got in ahead of him.

The rules governing the interferences are also occasionally not flexible enough and often a party obtains an undue advantage over his opponent.

All this is avoided if we introduce the English and German system that, as soon as a patent is allowed upon an application, the latter is open to inspection by parties having interests in that particular matter. If the first applicant is to get the patent, all a late comer can do is to have an allowed patent application adjudged as to its scope concerning prior patents, etc. This simplifies the whole procedure and the law examiners and the other higher officials of the Patent Office, acting now on interferences, could easily set up any new proceedings necessary for the adjudication of patents on allowed applications. This very same institution, suggested above, we have already in the United States Patent Office in the practice of registering trade-marks. And as everybody familiar with trade-mark work will readily acknowledge that the trademark division does admirable work and absolves each application in record time, if only the attorney in each case will properly cooperate with the division, I can not see any reason why, after relieving the patent divisions of the burdensome work on the many minor and absolutely useless "inventions" by registering them as designs," the Patent Office should not be able to give an official action on any patent application after approximately eight weeks from its filing date.

Finally I wish to add that a fundamental change in the term of the validity of a United States patent may also help to greatly accelerate the amending of pending applications so as to bring them to an early issue. This change would require the provision in the law that a patent under all circumstances expire after 20 years from the date of the filing of the application. This will expedite the amending of pending cases to let the inventor have the benefit

of a patent at as early as possible a date and as a premium a diligent inventor might enjoy the validity of his patent for 18-19 years instead of 17 years allowed to him now.

I regret that lack of time prevents me from personally submitting my views on this matter and that I have to submit the same in a somewhat abbreviated form; should you care to have above suggestions explained more fully, I will gladly be at your service.

Respectfully,

OTTO K. ZWINGENBERGER.

The CHAIRMAN. We will now call upon Mr. McKenna.

STATEMENT OF ROYAL MCKENNA, REPRESENTING GENERAL MOTORS CORPORATION, DETROIT, MICH.

The CHAIRMAN. State your full name to the stenographer.

Mr. MCKENNA. Royal McKenna. The views entertained by the General Motors Corporation are identical with those of the Ford Motor Co. Mr. Farley will speak to you on behalf of the General Motors Corporation, which has 34,000 shareholders, as well as on behalf of his own company; so in the interest of time I will not address the committee any further.

The CHAIRMAN. For the sake of the record, would you care to make a statement?

Mr. MCKENNA. The views expressed by Mr. Farley will be in the interest of the General Motors Corporation, as well as those by the Ford Motor Co.

The CHAIRMAN. We will now call upon Mr. Farley.

STATEMENT BY I. JOSEPH FARLEY, COUNSEL FORD MOTOR CO., DETROIT, MICH.

The CHAIRMAN. Please give your full name to the stenographer. Mr. FARLEY. My name is I. Joseph Farley; am patent counsel in charge of the Ford Motor Co. matters and appearing before the committee to speak also in behalf of the General Motors Co. in support of these various bills before the committee.

The CHAIRMAN. Do you wish to be seated?

Mr. FARLEY. I prefer to stand. The automotive industry and particularly the Ford Motor Co. and the General Motors Co. have not progressed or reached the enormous volume of business they have because of patent monopoly or patent protection. These two companies are the largest in the country, and perhaps in the world. They have been built up more because of efficient management and splendid method of production, rather than because of the patent monopoly. Both companies are heartily in favor of the legislation that has been proposed. The opposition that has been found to some of the bills I find from reading the hearings together is opposition advanced more by the patent attorney than those whom we represent; the single inventor, rather than the corporation. I recall very definitely during my service in the Patent Office that I wrote some articles at that time in which I charged the corporations with being in favor of the long pending application. Now we have the situation that the large corporations of the country are supporting the measures that have been placed before the committee. Now we are supporting these measures, not because we consider they are to be

helpful to the corporate interests, but we concede them to be necessary for the promotion and progress of industry.

At the beginning of the almost important time, the inception of the Ford Motor Co., it was confronted with litigation on the Selden patent, and that was one of the companies wherein the patent was pending for many years in the Patent Office. The Selden patent did nothing to advance the industry.

The CHAIRMAN. What was the Selden patent?

Mr. FARLEY. The Selden patent covered rather broadly a general combination fixture of an internal-combustion engine to propel the motor car. We are continually confronted with the situation wherein, as has been told the committee, by many other speakers who appeared before it of the great harm that may result to industry because of an application pending in the Patent Office a long time. The industry does not have an opportunity to find out about these pending applications and after very large sums of money are expended, after an investigation to find out whether or not any investigations control it, find out in word construction they find a faulty case we had many years later, and find something which has been developed by the engineers of the company and the manufacturing program begun in the belief that the company had a perfect right to make this particular thing. A great deal has been said in some of the meetings to the effect that some of the bills are not necessary, that the Commissioner of Patents does not favor them.

The CHAIRMAN. And by the way, while on that subject, where you spend a fortune of money on your own engines, how about the original individual who puts in a claim and keeps on paying on the original claim and it happens to be the very thing that your industry has put in? How about the priority of the original claim?

Mr. FARLEY. We have an instance of that.

The CHAIRMAN. Have you been affected?

Mr. FARLEY. Very materially. We have one case, very recently filed against us in which the patent application was filed in 1910 or 1911 and was pending before the commissioner in the Patent Office until 1921. In 1916, five years before the patent was issued, the commissioner called upon that applicant to place his patent for final action as promptly as possible. During the prosecution of the case a personal letter was sent him by the General Indemity Corporation urging upon him the necessity of getting it in shape for final action, and although for a number of years every letter that went from the Patent Office calling upon that attorney to place his patent for final action, the attorney succeeded, after five years, even before the letter was sent, in keeping his case before the commissioner in the Patent Office.

The CHAIRMAN. And succeeded in hurting his case?

Mr. FARLEY. In that particular case; yes. There are two very large industries in this country that develop this particular type of patent, and although that patent disclosed a very fine thing, and that became a regular installation on their automobile, this application was amended to cover up the practical construction. Now the industry is confronted with expending considerable-and I will not endeavor to say how much-money we will have to spend to defend that suit.

Mr. GOODWIN. Was this attorney in exercising the dilatory tactics, with no authority to effect his application and put it in shape for final allowance, within his rights?

Mr. FARLEY. Entirely so. The Supreme Court has held that a man is justified or entitled, under the law, to do that very thing. However, they take advantage of it.

The CHAIRMAN. Perhaps if he only had taken advantage of it to the extent the law allows that would not have happened.

Mr. DIES. If the 20-year bill had been in effect the patent would be expired.

The CHAIRMAN. Yes; if we had had the 20-year bill the time for the patent would have expired.

Mr. FARLEY. Now, we favor the bill H. R. 10152, to empower assignee of inventor to file divisional, continuation, renewal, or reissue application.

The CHAIRMAN. By whom was that introduced?

Mr. FARLEY. By the American Bar Association.

Mr. GOODWIN. By Mr. Underwood?

Mr. FARLEY. I do not know the bills by the name; I just remember them by the name of the individual who introduced them. I will not take the time of the committee because I understand there is no opposition to this bill.

Bill H. R. 10153, to limit the life of a patent to a term commencing with the date of the application-that is, 20 years-we are heartily in favor of. That it might have had such opposition as will be advanced to the committee, will be based largely, I think almost entirely, upon the experience of the soliciting attorney who calls to mind a certain case in exceptional instances in his own practice. He is not prompted by any desire to benefit the public interest. It is some particular case he may have had in the past where some particular client of his would have been somewhat embarrassed had the application been in force 20 years, but these cases are much in the minority. Of course, this bill diminishes litigation, and the other practice keeps litigation going.

The CHAIRMAN. Exactly.

Mr. FARLEY. Bill H. R. 10154, for permitting single signature in patent applications and validating joint patent for sole invention, we are in favor of with the exception of the portion of the bill that tends to make a joint application valid and a joint application retroactive. There may be real danger in the retroaction of that bill. The CHAIRMAN. Mr. Brown, did the American Bar Association take that up?

Mr. BROWN. They recommended to repeal that.

The CHAIRMAN. They recommended to repeal it?

Mr. BROWN. Yes.

Mr. FARLEY. Perhaps the bill does not make it quite clear as to whether or not the retroactive feature there would have the effect to validate a patent which had formerly been held invalid by a court. I think the wording could be interpreted" which had formerly been held invalid."

The CHAIRMAN. Could we put in a word or two that would help that situation, Mr. Brown?

Mr. BROWN. Yes, sir.

The CHAIRMAN. Go right ahead, Mr. Farley.

Mr. FARLEY. We are heartily in favor of the statute of the proposed bill H. R. 10155, which abolishes the renewal applications. We are also in favor of bill H. R. 10156, which limits the priority of the claims of inventors to two years before the filing of applications for patent. With respect to that bill, perhaps I know more about the opposition to it than any of the others before the committee. We feel that the 20-year bill and the 3-year pending application bill are steps very much in the right direction, but we feel that without the 2-year priority provisions there is the opportunity for those who wish to use the law to, in effect, practically to miscalculate the 2-year and 3-year bill rather, and, of course, if a pantentee may keep his invention secure for a number of years before he files his application, then when he goes into court the defendant does not have the slightest idea of how far back he must go, does not have the slightest idea whether patents or other information would tend to show the patent is of any use beyond which that party can not go to claim the date of his invention.

We are heartily in favor of bill H. R. 10157, for the expedition of the prosecution of patent applications pending more than three years, and also in favor of the bill that provides a permanent force to classify patents, and so forth, in the Patent Office, H. R. 10741.

The CHAIRMAN. Has your bill been taken up, Mr. Goodwin? Mr. GOODWIN. It is here.

Mr. FARLEY. I understand there have been some proposals made before the committee to abolish the reissue of patents and we are in favor of that. Both the renewal and the reissuing rights as they exist to-day, more so the reissue than the renewal, give patentees an opportunity, as it were, to revise their contract after it has been drawn and to use a long pending application to cover up the devices which have since appeared on the market. In regard to classification, we are heartily in favor of that as one of the most important things that can be done to help out the Patent Office. It is of the utmost importance to the large number of patents accumulating through the years that the examiners have the information to determine whether or not a patent is valuable, he to have consideration for the value of his patent and it can only be by efficient classification that it can be patented.

The CHAIRMAN. If the General Motors Co., represented by Mr. McKenna and Mr. Farley, will be kind enough to help our committee by calling upon the Rules Committee and also to make suggestions so we can put the Patent Office in efficient cooperative condition, and all the organization and industries, to distribute these claims that have been laying there for many years.

Mr. FARLEY. I have no doubt but what all of those organizations will give all the help they can to the committee as far as possible. The CHAIRMAN. Because you will realize it will necessitate 30 new examiners to bring into the Patent Office the facility that does not now exist, and you know $50,000 or $100,000 will be well spent on what it will entail.

Mr. FARLEY. I think I can say on behalf of the Ford Motor Co. we will be glad to contribute $20,000 in support of that.