CONCLUSION The contract of the Government was to give the patentee the right to exclude others, and that contract was not breached by the imposition of wartime controls. Respectfully submitted. LAURENCE CURTIS. STATEMENT OF EDWIN H. ARNOLD, CHAIRMAN, COMMITTEE ON PATENTS, NATIONAL ASSOCIATION OF MANUFACTURERS Mr. Chairman and members of the committee, my name is Edwin H. Arnold. I am chairman of the committee on patents of the National Association of Manufacturers, and I am making this statement on behalf of that association, a voluntary organization of approximately 20,000 manufacturers. The National Association of Manufacturers opposes enactment of H. R. 2128 or H. R. 3134, or any other general legislation providing for the extension of the 17-year term of patents. While it might seem to the interest of our membership to support extension of patents as proposed, there are overriding considerations of public interest to which we wish to call attention. Such legislation would adversely affect our American patent system and would, therefore, be contrary to the public interest. Our objections are to the general principles and the basic effect of the proposals rather than to the details of the bills mentioned, and we shall refer to them together as the proposed law. The bad effect of such a law on our patent system would follow— (1) from the fact that owners of patent rights-one species of propertywould be singled out for preferred treatment, which is unfair to the owners of other kinds of property; (2) from the resulting uncertainty as to the expiration date of patents, and the consequent difficulties for business enterprises in planning their future activities; and (3) from the further overloading of the Patent Office by a flood of applications for extension, to the detriment of its vital business of handling applications for patent. The Office is even now so far behind with its work that the situation there is critical. (1) Patent owner versus owner of other property There are some who have the mistaken impression that a patent undertakes to assure to the patentee 17 years' use of his patented invention. It does noteither expressly or impliedly. Indeed, more often than not, practice of the invention is interfered with by one thing or another. An earlier and broader patent may prevent it; a later and better invention may make it obsolete before it can get on the market. The mistaken impression comes from a failure to distinguish between an inventor's right to use his invention-which he has (if at all) without any patent and the actual patent right, which is nothing whatever but the right to exclude others from using the invention. An inability, in time of war to get steel to manufacture it may interfere with "the right to use an invention,” but it does not at all interfere with the patentee's right to "exclude others" from using it. For example, if the invention were to be made by somebody outside the United States and brought here and used or sold, the patent would be as effective as ever to stop such infringement. Unless this important distinction is kept in mind, the unfairness of the proposed law may not be clear. If war or other compelling circumstances prevent a patentee's profitable use of his invention during the time he has the right to exclude others, he is of course damaged. Time is important to him because after a while his right to exclude others runs out, and his chance for profit is reduced. But in hundreds of other situations the time element is equally important to profitable enterprises, and interruption by war damages in the same way. Consider, for example, the man who took a 17-year lease on a gasoline service station. Later, because of the war, he could not get gasoline enough to do business and had to close down for 3 of his 17 years; or the owner of a factory who had to shut down for want of sheetmetal but who had to keep up his mortgage and tax payments. War and other exigencies interfere with profitable business by many others as much as with the business of patentees. There is no more reason for saving patentees from loss than for doing the same for thousands of other businessmen. The proposal to grant an extension of a patent because the patentee has voluntarily granted the Government a license free of royalty, or at a nominal Scores royalty (H. R. 2128), has little to recommend it as a general provision. of companies and individuals did this during the war as a patriotic sacrifice. Few of them, we believe, would want to go back on the arrangement by now seeking payment in the form of a patent extension. It is understood that there are one or more exceptional cases where unexpected damage was caused to the patentee, as, for example, where the Government took advantage of ambiguities in the terms of the license to extend the free use long after actual war hostilities ceased. These few cases, however, are better cared for by special relief bills than by such a general provision as proposed. As to veterans, the record shows that they had very little interest in the extension of patents. Under the Veterans' Extension Act of June 30, 1950 (64 Stat. 316), only 107 extensions were granted, and under the Supplemental Act of July 1, 1952 (64 Stat. 321), only 6 were granted. A total of 45 applications were denied. The results were published in the Official Gazette of the Patent Office for November 24, 1953, and it is interesting to note that, out of the 113 extensions granted, nearly a fourth were issued to 1 person. Several others got several extensions each. Only some 50 individuals in all, received extensions. (2) The disadvantage of uncertainty Manufacturers, in planning new products, commonly examine the patents relating to the subject to determine whether the new product will infringe any patent still in force and to discover when they will be free to use the inventions of existing patents of interest. The contract between the public and the patentee is that the patentee may exclude others for 17 years and that the public shall have free use of the invention thereafter. One of the most important things about a patent, therefore, is the date upon which it expires. That is when the public takes title. Any uncertainty as to the expiration date is a handicap to business. At present (with the exception of the very few patents which were extended under the now expired veterans' law) the date can be found by merely adding 17 to the year of the date of issue printed on all copies of patents. Under the proposed law the expiration date could not be determined with certainty except where an extention had already been granted, and then only by a separate investigation as to each patent. Moreover, as will be obvious, the mere fact that a petition for extension was pending-or even the possibility that one might be filedwould be enough to deter a manufacturer from planning to adopt the invention of an expired or expiring patent. Therefore, under the proposed law, the 17-year life of a patent might, in actual effect, be readily extended for an indeterminate time merely by the filing of a petition for extension, however unjustified the petition might be. (3) Overloading the Patent Office The proposed law would impose upon the Patent Office the duty of passing judgment upon many petitions for extension. The Patent Office is already so overloaded and undermanned as to constitute a serious handicap to the intended functioning of our patent system. The importance of having patent applications handled promptly, but only after thorough consideration of the prior art and a mature judgment by the patent examiner, can hardly be overstated. Each petition for extension under the proposed law would be time consuming and difficult to decide. Consider, for example, how hard it would be to find out whether the "normal use, exploitation, promotion or development” of an invention has been "prevented" or "impaired" by a Government restriction, a state of war, or other national emergency, or some "circumstance beyond the control" of a patentee. What is "normal" use or development? If it was "impaired” was it due to one of the things named or to something else? These are very difficult questions of fact to be decided only on adequate and competent testimony; and there would be many very troublesome borderline cases. The load of work under the proposed law would quite certainly be so great as to handicap seriously the performance of the normal and more important duties of the Patent Office. Finally, it should be observed that the proposed law is, in substance, a reversion to a discredited experiment. For 25 years we had in this country a law providing for the extension of patents in hardship cases. It worked so badly that it was repealed in 1861. It would seem wise to profit by experience and not make the same mistake again. In the very exceptional cases where there may be sufficient reason for extending a patent, Congress can do so by special law. THE PATENT LAW ASSOCIATION OF CHICAGO, Re bills H. R. 2128 and S. 116. CHAIRMAN OF THE HOUSE JUDICIARY COMMITTEE, House of Representatives, Washington, D. C. SIR: At a recent meeting of the board of managers of the Patent Law Association of Chicago, it was resolved that this association oppose the passage of these bills relating to proposed patent extension. A copy of the report of the committee considering these bills is attached hereto. This report has been approved by the board of managers of the Patent Law Association of Chicago. Very truly yours, THOMAS F. MCWILLIAMS, Secretary. THURSDAY, MARCH 10, 1955. Re report of subcommittee on proposed patent extension bills, H. R. 2128 and S. 116. BOARD OF MANAGERS, THE PATENT I AW ASSOCIATION OF CHICAGO, Care of Mr. Roy H. Olson, Chairman, Legislative Committee, 141 West Jackson Boulevard, Chicago, Ill. GENTLEMEN: The subcommittee which you recently appointed for the consideration of these bills has completed its study of the same and submits herewith its report relative thereto : 1. These are identical and companion bills, S. 116 was introduced in the Senate by Senator Dirksen of Illinois, on January 6, 1955, and the companion bill, H. R. 2128, was introduced into the House by Representative Fisher on January 13, 1955, and the bills are now pending before the Senate and House Judiciary Committees, respectively. ANALYSIS OF THE BILLS These bills propose to make it possible to extend the term of any United States patent in a number of instances which are as follows: Section 1 (1) where any person or persons owning solely or jointly with his or their spouses was in the active military service and thereby prevented or substantially curtailed from the normal use, exploitation, promotion or development of the patent; or Section 1 (2) where the normal use, exploitation, promotion or development of an invention covered by a patent was substantially curtailed by an order of any Federal agency limiting the production or use of the subject matter thereof; or Section 1 (3) the owner of the patent has granted a royalty-free license or a nominal royalty license to the United States, or to any manufacturer, etc., for the United States, for use of the patented invention in the war effort in the period since September 1, 1939, but in the period of either World War II (December 7, 1941, to September 2, 1945, or in the period of the Korean war, June 26, 1950, to July 26, 1953, as provided in section 1 (d) (1)). Where such a license has curtailed the normal private use, exploitation, promotion, or development of the patented invention; 2. The proposed periods of extension suggested in these bills are as follows: Section 1 (b) (1) provides that where the only ground for extension is the active military service provision of section (a) (1) the period of extension shall be twice the length of the period of active military service in which the normal use, exploitation, promotion, or development of the patented invention was prevented or substantially curtailed whereas, on the other hand, the bill provides (sec. 1 (b) (2)) that in those instances in which the ground for the requested extension is that the normal use, exploitation, etc., of the patent has been curtailed by order of any governmental agency restricting the use or production, etc., of the patented invention (in either of the two war periods referred to above) the additional term of the patent shall be only the period during which such normal use, exploitation, etc., took place; Section 1 (b) (3) provides that in those instances in which the ground for the requested extension is that the normal use, exploitation, etc., of the patent has been curtailed by a royalty free or nominal royalty license for the benefit of the war effort, or for national defense, since September 1, 1939, the addi tional term of the patent shall be the period in which the royalty fre or nominal license was in effect; Section 1 (b) (4) provides that where more than one ground exists for an extension the extended terms shall not be cumulative but that the patent owner shall be entitled to the longest permissible extension; Section 2 of the bill provides that when an application for extension is filed with the Commissioner of Patents, the Commissioner shall publish a notice thereof in the Official Gazette and that within 60 days thereof any person may oppose the extension by filing with the Commissioner a notice of opposition stating the grounds therefor, which shall not include any charge that the patent is invalid. The bill further provides that the Commissioner will then set a date for a hearing (within 45 days of the date of filing of the notice of opposition) at which the interested parties shall present evidence in support of and in opposition to the requested extension, and that the Commissioner shall either grant or deny the requested extension within 6 months of the filing of the application for extension, with the right to the applicant of further proceedings in the CCPA or District Court for the District of Columbia, if the application is denied; Section 4 provides that if the requested extension is granted notice thereof shall appear in the Official Gazette; Section 5 provides that when the certificate of extension is issued the patent shall have the same force and effect in law as though it had issued for 17 years plus the extended term, while section 6 prevents the patent owner from making any claim against the United States by reason of manufacture, use, or sale by the United States during the extended term; Section 7 provides that if the requested extension is not issued until after the date of expiration of the original term of the patent, or a reissue thereof, the extension order shall provide that any "vested rights" arising out of the actual manufacture, use or sale of the patented invention, which took place after the expiration of the patent and before the issuance of the extension order, may continue during the remainder, if any, of the extended term upon such terms and conditions as the Commissioner may prescribe, including payment of reasonable royalties, providing the person or persons claiming such vested rights establish such rights to the satisfaction of the Commissioner of Patents, upon a hearing: Section 8 provides that in any action for infringement after the expiration of the original 17-year term of the extended patent, but during the period of the extension, the defendant may plead and prove that any material statement of the application for extension is not true in fact, and that if any one or more of such statements shall be found untrue in fact, judgment shall be rendered for the defendant, with costs. Section 9 limits the time for filing the proposed application for extension to within 1 year from the effective date of the act except as to those applications which are based on active military service which may be filed within 1 year from the date of the applicant's honorable discharge. RECOMMENDATIONS OF THE SUBCOMMITTEE The subcommittee, after careful consideration, is unanimously opposed to these two companion patent-extension bills because we feel that they constitute merely another unwarranted attempt to enact patent-extension bills of one kind or another and to extend the statutory 17-year term of a group or class of patents without consideration by the Congress in each instance. This would, in our judgment, establish a dangerous precedent for additional patent-extension bills by interested groups in the future and these bills are, therefore, for this reason, highly undesirable. Moreover, we believe that these bills are objectionable for the further reason that they represent an unwarranted delegation of the legislative power of Congress to the Commissioner of Patents, in giving him discretionary power to extend the term of any patent coming within the scope of the bills, with resultant substantial danger to the public at large. The subcommittee further feels that section 7 of these bills is particularly objectionable in that under this section not only would the Commissioner be given what is, in effect, legislative power in extending the term of the patent but he would have arbitrary power to bind parties, whose rights might be affected by the grant of an extension of the term of the patent after expiration of the original term thereof, to the payment of royalties, and as to other terms and conditions, without right of appeal or any other remedy. This would, we believe, in effect, be making a binding contract for the interested parties, raising a serious question as to the constitutionality of this provision. 66663-55-6 We feel that these bills are objectionable for the further reasons (a) that they represent undesirable class legislation and (b) because they would, if enacted, seriously jopardize the rights of the public and particularly manufacturers and other investors who might, and frequently do, invest large sums of money in building and equipping plants for the anticipated manufacture of devices, etc., covered by patents, when such patents expire at the end of the 17-year statutory period. This has come to be and is an important concept in the American tradition and an important phase of American business life which would be seriously jeopardized if these bills were enacted and, if this were done, the public would never know what its status is in regard to any patent and anticipated use of a patented invention at the end of the now accepted 17-year patent term. The subcommittee, therefore, recommends that these bills be disapproved in toto. Yours very truly, CHARLES B. CANNON, Chairman. JOHN T. LOVE. Congressman EMANUEL CELLER, PALISADES PARK, N. J., April 19, 1955. House Office Building, Washington, D. C.: Refer H. R. 2128, covering extension of certain war-affected patents. Respectfully urge your favorable attention as this will eliminate hardships caused. by war. Hon. EMANUEL CELLER, TECH LABS, INC., BINGHAMTON, N. Y., June 16, 1955. House of Representatives, Washington, D. C.: Urge you to attend Judiciary Committee meeting today. Vote to report bill H. R. 2128 out to floor immediately so Congressmen may act on same. Vote for restoration 1-A-2, stop-order provision to H. R. 2128. Yours very truly, MARTIN P. FOY & SON, INC., FRANK W. BOWIE, President. BOSTON, MASS., June 29, 1955. Hon. EMANUEL CELLER, Chairman, Judiciary Committee, House of Representatives, Washington, D. C.: The telegram you may receive today from Boston Patent Law Association opposing H. R. 2128 was based on following vote: 23 opposed to bill, 16 in favor, 22 not voting, out of total membership of 160. As a member present at meeting. I do not feel this vote of small minority can be relied on as expressing informed opinion of full association membership. Hon. EMANUEL CELLER, C. YARDLEY CHITTICK. NEW YORK, N. Y., April 18, 1955. House of Representatives, Washington, D. C.: Reference H. R. 2128, covering extension of patents on inventions whose practice was curtailed during war. Respectfully urge favorable consideration of this bill. This legislation is important to us and believe it to be of vital interest to many operating under patents. A. G. COOLEY. NEW YORK, N. Y., May 20, 1955. Hon. EMANUEL CELLER, House of Representatives, Washington, D. C.: To give American inventors same protection afforded inventors of foreign countries except Russia, Patent Equity Association solicits your support, H. R. |