regarding the characteristics of the rights granted to inventors, I would like to make a few remarks in regard to the fundamental merits of this bill as a demonstration of the determination of Congress to redeem the merited reputation that our Government holds for discharging whatever obligations it assumes. In this connection, I would like to call your attention to the significant words of the Constitution by which Congress is granted the power "to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive rights to their respective writings and discoveries" (art. I, sec. 8, clause 8). The basic question presented by this bill is whether or not the Congress, pursuant to this purposeful grant of power in the Constitution, already has passed legislation under which the Government has fully discharged the obligations it assumed by the issuance of patents to inventors. To weigh the equities of the proposed legislation now under consideration, it is immaterial to me whether the holder of the patent issued under our present laws has the exclusive rights to its full use and exploitation or whether he has merely a right to exclude others from its use. Under any theory, the fundamental issue here is whether or not the Government has fairly and diligently and completely carried out the obligations thus assumed.

Essentially, the rights granted to an inventor by the issuance of a patent under our laws are analogous to those which rise out of a simple contract. In exchange for the public disclosure and dedication of an invention, the Government of the United States solemnly undertakes to secure to the inventor the exclusive rights to the use of his invention for a full period of 17 years. That is the inducement to inventors which the Government has long offered by law and upon which inventors have been led to rely.

Now, as legislators we would be justifiably incensed if some one proposed that we enact a statute arbitrarily reducing the terms of patents heretofore issued and outstanding from the issued period of 17 years to a period of 13 years or even less. We would regard such a proposal as a clear violation of the obligations which the Government assumed when the patent was issued. And yet the result is the same when the Government during public emergencies, issues an order directing that for a period of time the holder of a patent shall not use certain machines or articles or materials or processes the use of which is necessary to the use or development or manufacture or exploitation of a patented invention. A similar result occurs when the inventor himself is drafted into the armed services or is accepted for enlistment therein.

The fact that the Government does not take such drastic measures except during public emergencies does not justify the Government refusing to make reasonable restitution for that part of the 17-year period of the patent during which the action of the Government prevented or substantially curtailed the use and development of the patent. In my opinion, the Congress should make a reasonable restitution in those classes of cases most directly affected by restoring the parties affected to their original position as far as possible after the emergencies that necessitated the unilateral action on the part of the Government. The right to the exclusive use of a patented invention for the full 17 years is analogous to a right of property. Where the Government expropriates private property for public use it is required by the Constitution to pay just compensation for it. If public emergencies such as World War II or the Korean conflict force the Government to abridge the special obligations it assumed by the issuance of patents, the least the Government can do to make good its original undertaking is to extend the terms of such patents for a period corresponding to that during which the normal use or development of the patent was prevented or substantially curtailed.

In conclusion, it seems to me that unless such as H. R. 2128 is enacted into law, we cannot contend that our Government has fairly and justly carried out the obligations it assumed by the issuance of patents under our laws.

Mr. Chairman, with your permission, I would like to leave a discussion of the details of this bill to the Patent Office and the law associations. They would be more familiar with the legal ramifications since they are intimately concerned with the patent laws and its day to day administration.

Mr. WILLIS. At this point we will insert in the record a statement of Hon. Chauncey W. Reed, another member of this committee, who favors the bill H. R. 3134.

(The above-mentioned document is as follows:)

STATEMENT OF HON. CHAUNCEY W. REED, CONGRESSMAN FROM ILLINOIS

I introduced H. R. 3134 on January 26, 1955, as a bill for the extension of patents. I have introduced similar bills in the preceding Congresses because I felt there was a need for such legislation. The need for it has been emphasized in the past before previous committees by businessmen, lawyers, inventors, manufacturers, and patent owners, as is attested by the record of the hearings over the past years.

The bill provides an opportunity for a fair hearing and the granting of relief as an extension of patent to inventors or patent owners who believe that they are entitled to an extension.

The Commissioner of Patents, familiar with such matters, would have jurisdiction to decide all petitions for extension. Appeals from his decisions would go to the United States courts.

H. R. 3134 is, in my opinion, sufficiently broad to encompass the rights of any inventor or patent owner, and this bill would automatically eliminate the necessity of introduction and consideration by the Congress of any private patent relief bills.

The bill protects the general public in that under the notice of section 3, anyone can appear and for cause shown object to the extension of a particular patent. The bill protects the rights of persons having conflicting patents and provides for the right to a license on the payment of reasonable royalties during the period of extension.

It protects a licensee and provides how his license may continue for the term of the extension.

The passage of this bill will not increase the budget of the Patent Office, since it provides that the Commissioner of Patents may establish regulations for the conduct of such proceedings, which regulations will include assessment of costs of such proceedings. The Government is protected against belated claims for infringement under extended patents by section 8, paragraph 1 of the bill, which reads as follows: "No patent extended under the provisions of ths act serves as a basis for any claim by reason of manufacture, use, or sale by or for the United States during the period of extension, and the rights of the United States shall remain in all respects as if such patent had not been extended";.

H. R. 3134 does not attempt to set up particular classes of inventors or patent owners to whom relief should be granted.

Any attempt to legislate patent relief which circumvents part of the inventors or patent owners may cause those excluded to more vociferously demand their opportunity to ask for such relief.

Invention should be encouraged, and the passage of H. R. 3134 by the Congress will show the people that Congress is interested in the welfare of the inventor. It is my further understanding that all of the principal large countries in the world, excepting Russia, have similar patent extension laws, which laws discriminate against Americans because we do not have reciprocal patent extension laws. This condition should be corrected.

Mr. WILLIS. The next individual who will testify is Representative James B. Utt. Mr. Utt, we are glad to have you this morning.

STATEMENT OF HON. JAMES B. UTT, REPRESENTATIVE FROM THE 28TH DISTRICT OF CALIFORNIA, HOUSE OF REPRESENTATIVES, UNITED STATES CONGRESS

Mr. UTT. Thank you. I am James B. Utt, Representative of the 28th District of California, and I introduced H. R. 4700, which was the same bill as Mr. Crumpacker had last year, and simply want to associate myself with the remarks made by Congressman Fisher and to say that I am urging the substantive part of this legislation, and not directing my remarks to H. R. 4700, but generally to the substantive matter before the committee.

I might state that I have no interest in any patent or manufacturing myself, but I was requested by constituents in my district who were greatly affected by the suspension of operations during the war on their patent, and I might give it as an example.

They have a little piece of machinery that goes into an electric shaver. It was critical during the war, and they were given an order to cease and desist from manufacturing this item, so that their royalty dropped from around $14,000 a year down to nothing.

Then, after the war, when they could proceed again, they began to build up to substantial amounts, but they were kept from operating for 5 years during the emergency. I think that it is only just and fair to the patentholder, as well as to the manufacturer, who was in the field and developed the product and developed a marketability, and should also have the protection of the extension of time on his lease of the patent, or use of the patent, I should say, rather than to throw it open to his competitors after all the work has been done by one promoting company.

I have examined the objections of the Justice Department and the Department of Commerce, and I can see no problem which cannot be resolved there. I have no suggestions to make as to the form, but as to the substance I would certainly urge that this committee would give favorable consideration to one of the bills pending before them. Further than that, I have no more to say, Mr. Chairman.

Mr. WILLIS. As I understand it, you offered this same bill to the last Congress; is that correct?

Mr. UTT. Yes, sir.

Mr. WILLIS. My recollection is that your bill and many others form the basis for a special study by Mr. Crumpacker at the time, so you did make a contribution to the Crumpacker bill, for which we are grateful.

I think your bill is slightly different from the final Crumpacker bill and from bill H. R. 2128 in minor particulars.

Mr. UTT. That is correct.

Mr. WILLIS. As I understand it, your bill would not set a specific. time for extension; is that correct?

Mr. UTT. That is right.

Mr. WILLIS. Whereas the Crumpacker bill would. H. R. 2128 does set a time limit in each case, so that everybody would be more or less similarly treated.

Mr. UTT. That is correct.

Mr. WILLIS. But my understanding of your testimony is that though you, of course, favor your bill, you are after attacking the problem involved, and you would not quarrel with us if we did not exactly take your bill and lift it word for word; is that right?

Mr. UTT. Yes, sir; I take the position-I confess to a little laziness in using the bill we had last year, although I knew there were some changes made, and I wanted to present it before the committee; and then when I found the other bills introduced, I would rather direct my remarks to the support of Mr. Fisher's bill.

I am simply supporting the substantive matter and nothing for the form.

Mr. WILLIS. We thank you for the contribution you made last year. Mr. UTT. Thank you.

66663-55-2

Mr. WILLIS. IS Mr. Richard Whiting with us?

(There was no response.)

Mr. WILLIS. Mr. James E. Hooper then will be our next witness. Mr. Hooper, will you identify yourself by name, address, and occupation, please.

STATEMENT OF JAMES E. HOOPER, REPRESENTING WILLIAM A. HOOPER & SONS CO., OF BALTIMORE, MD.

Mr. HOOPER. Yes, sir. I am James E. Hooper of William A. Hooper & Sons Co., Baltimore, Md. We are engaged in the spinning, weaving, manufacturing, and finishing of cotton fabrics.

Mr. WILLIS. Of what?

Mr. HOOPER. Cotton duck and other heavy cotton fabric. Mr. Willis, I have a prepared statement, which I will read.

Mr. WILLIS. Is it very long?

Mr. HOOPER. It is double spaced, 11 pages, and if you would rather not have me read it, I can comment on it briefly. I have some extra copies here.

Mr. WILLIS. If you wish, we will make it a part of the record and it will not be necessary for you to read it.

(The above-mentioned document is as follows:)

STATEMENT SUBMITTED IN BEHALF OF WM. E. HOOPER & SONS Co.,
PHILADELPHIA 7, PA.

SUMMARY OF CONTENTS

Wm. E. Hooper & Sons Co., (hereinafter called "the Hooper Co.") urges enactment of H. R. 2128. It understands that H. R. 2128 is essentially the same as H. R. 3534, 83d Congress, which was reported out favorably by the Committee on the Judiciary and passed by the House. The Hooper Co. believes that its experience in matters of the sort that H. R. 2128 is designed to deal with demonstrates the wisdom and justice of such legislation.

Commencing in the 1930's, the Hooper Co. engaged in a program of research and development in "finishes" for fabrics and other materials, with the object of treating such materials as cotton duck to make them water-resistant, mildewresistant, and flame-resistant. The outcome of this program was that certain compounds were developed which could be readily applied to fabrics, and when properly applied did not wash out, made the fabric resistant to water, mildew, and flame, and significantly prolonged its useful life.

This achievement was a real public and industrial value in a peacetime economy, and was soon to prove of outstanding, unique value to the military forces of the United States, for tents, tarpaulins, gun covers, life preservers, camouflage fabrics, and numerous other materials.

The inventions were duly covered by United States patents, six in all, the first of them issuing in 1936 and the last in 1942. The Hooper Co. undertook to commercialize the inventions under the patents and justly looked to that commercialization for financial returns that would pay for the large expenses of research and development and reasonably compensate it for the inventions that had been made. Under our patent system, the patent rights were limited to a period of 17 years for each patent, a modest period when one considers the time which is necessarily consumed in research, testing, and preliminary development, particularly in inventions of this kind.

To further the interests of the United States of America, the Hooper Co. granted to the United States on February 20, 1943, at its request, a royaltyfree license under the Hooper patents and further agreed to grant a similar royalty free license to any contractor manufacturing goods for the Government, if such contractor applied to the Hooper Co. for such a license. These licenses were to continue "for the duration of the war and 6 months thereafter."

The United States, and contractors producing goods for the United States which required the use of the Hooper Co.'s patented inventions, made substantial use of the inventions during the war period and thereafter. The great value of the inventions is indicated by their extensive use in all theaters of military activity and by the fact that no satisfactory alternate treatments or compounds were found. Indeed, Government specifications made use of the Hooper inventions virtually mandatory.

The normal exploitation of the inventions was prevented by Government orders substantially limiting the use of the formulas to products required by the Government. There is and can be no criticism of such orders-they were essential to the war effort-but one result of them was that, for all normal purposes, a period was cut out of the life of each of the Hooper patents, and in effect their commercial life was materially reduced from the 17-year period promised by the grant. The precise period of time that was taken out has been much debated, the answer turning on the meaning to be given to the words "duration of the war."

The Hooper Co. submits that it is only just and equitable that patents which have been made freely available to the Government in furtherance of the war effort and whose normal exploitation has been thus prevented, should be extended so as to accord to the patentee the period of commercial exploitation promised by the grant.

The philosophy of the patent system is to encourage the full disclosure of new inventions. Without patents, new inventions might be kept as trade secrets and never made available to the world except as they might be independently discovered by someone else. With patents, the discoveries are published and become forever public property on the expiration of the patent. The patentee receives no financial reward from the Government for making such disclosure; the only return that is open to him is that which comes from his exploitation of the invention during the period of exclusive use promised by the grant. To extend patents under the circumstances required by H. R. 2128 for the time periods stated therein, takes nothing from the public and nothing from the Government; it simply effectuates and honors the intent of the original grant.

I

Brief history of Wm. E. Hooper & Sons Co.-The Hooper Co. is a Maryland corporation having its executive offices in Philadelphia, Pa., and its mill or factory in Woodberry, Baltimore, Md. Although the Hooper Co. was incorporated in 1905, the company is the continuation of a business which was established in 1800, and the management and ownership of the company has continued in the Hooper family for 6 generations.

For many years the business of the Hooper Co., has been conducted in two departments-the manufacturing department and the finishing department. The business of the manufacturing department is the manufacture, including spinning and weaving, of cotton duck to be used for awnings, tents, tarpaulins, and the like, and other heavy cotton fabrics, such as filter twills for filtration of chemicals, sugar, oil, and other materials; felts for use in the manufacture of paper; and rope, sash cord, and other heavy goods.

In its finishing department, the Hooper Co. manufactures certain patented "finishes" or mixtures of chemical compounds, which, when properly applied to cotton duck as a finish, impregnate the duck, will not wash out, and render the cotton duck thus finished or treated fire-, water-, mildew-, and weather-resistant, so as to make the treated duck in all respects suitable for outdoor use in all climates. In addition to these properties, the finish prolongs the life of cotton duck used outdoors, in some cases to about three times the life of untreated duck. These compounds, and cotton duck finished therewith, are sold by the Hooper Co. under the trade name "Fire Chief." The properties imparted to cotton duck and other fabrics by the Hooper Co.'s compound make the use of such duck and other fabrics much safer, more economical, and more satisfactory by industrial, commercial, and domestic users of such products, and by the United States military forces for tents, tarpaulins, gun covers, life preservers, camouflage fabrics, and numerous other materials.