EXTENSION OF PATENTS

FRIDAY, MAY 9, 1947

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON PATENTS, TRADE-MARKS, AND

COPYRIGHTS OF THE COMMITTEE ON THE JUDICIARY,

Washington, D. C.

The subcommittee met, at 10 a. m., pursuant to notice, in the committee room, No. 346, Old House Office Building, Hon. Earl R. Lewis (chairman of the subcommittee) presiding.

The subcommittee had for consideration H. R. 65, H. R. 124, H. R. 1107, and H. R. 1984, to provide for the extension of patents, etc., which are as follows:

Mr. LEWIS. Now, General Cutts is here and we would like to hear him on these bills he is interested in.

STATEMENT OF BRIG. GEN. R. M. CUTTS (RETIRED)

General CUTTS. Mr. Chairman, and gentlemen of the committee, I appreciate this opportunity to appear personally and it will be understood my remarks do not necessarily reflect the opinion of the War or Navy Departments.

Unfortunately the shortness of time precluded my being able to make a prepared statement so I will have to speak extemporaneously from notes I have made.

I hope that my remarks will prove constructive. That is the intent with which I come here.

With reference to H. R. 1107, a bill introduced by Mr. Rich, my remarks will be primarily directed to that bill. However several points that I shall bring up are equally applicable to H. R. 65, H. R. 124, and H. R. 1984.

First, I wish to offer that the preamble in section 1 of H. R. 1107 would appear to preclude from its benefits certain veterans, inasmuch as to be able to qualify to obtain the patent benefits under this act it is required that the veteran be discharged from the service.

I might mention that we still have many veterans who are still faithfully serving their country and I do not believe it was the intention of the author of this bill to exclude them from the benefits thereof. Mr. LEWIS. You want this bill changed to include members in the service?

General CUTTS. Or honorably separated or retired, as well. We have veterans in hospitals that should have these benefits. As it now stands this bill may require legal interpretation.

Mr. LANE. Suppose they were dishonorably discharged? General CUTTS. No, sir. Honorable service must be a prerequisite under all circumstances to share in the benefits of this bill.

In that connection I would like to offer the first paragraph of the bill H. R. 124 submitted by Mr. O'Hara as the provision most suitable to cover the points that I have just raised.

Again referring to H. R. 1107, section 1, subparagraph C, it is understood in order to qualify for the benefits under this act the patentee must submit and comply with certain requirements, one of which, under this subparagraph is that he must prove that his income is substantially reduced.

I offer that the requirement of this paragraph might be difficult to prove and I will cite three cases at random which might arise. One, the case of a patent which was taken out just prior to the war and from which there is no income. I believe everyone here will appreciate the fact it takes time to get a patent on the market before you can realize any benefits from the patent.

The second case where income may be running about the same, but not materially larger and did not increase due to interference of war with normal growth.

In this case the increased earning power of a patent would lie in the future and that might be denied under the provisions of this paragraph. This provision places the onus on the inventor to prove the problematical status of his income, what it was before the war, what it was during the war and what it might have been had the war not interfered.

Mr. LEWIS. General, you think that paragraph should be amended. General CUTTS. I do, sir. I offer the word "substantially" is a difficult one to qualify. It might be a vehicle by which corporations or other interests might hale the inventor into court and thus deny him of the rights of his patent under this subparagraph.

So, I feel that this limitation will not aid the over-all purposes of this bill.

I also believe it is safe to say that the war did interfere with the exploiting of patents owned by inventors. It is true the Government gives 17 years in which one may enjoy the benefits of one's patent. War is an act of God, but by legal decree we were denied certain materials because of priorities.

Referring to section 1, subparagraph E, it is my belief this section will operate adversely to the best interests of the patentee. The reason for this paragraph to me is not apparent.

It would apear obvious that anyone holding a license to manufacture under a patent would not be desirous of having the life of the patent extended. For were it not extended, he would thus be free to manufacture without payment of royalty.

Under this paragraph all the licensee would have to do would be to refuse his consent to the extension of the patent and thus obviate the entire purpose for which the bill was drawn.

Mr. LEWIS. Is there a possibility it might act the other way? The licensee would have his right extended, I suppose, and he would be in the position of having the exclusive right to continue it; would he not? General CUTTS. Yes, sir.

Mr. LEWIS. Might that not operate to secure his permission or consent to the extension, and thus operate the other way?

General CUTTS. From a personal viewpoint I would state that if a licensee of a patent had licensed a firm to manufacture under his patent, that would necessitate a separate agreement. That agreement would terminate at the end of a certain period of time. In my case, 1 year, 1 year's notice to the opposite party. I think it would be more apt to act to the detriment of the patentee if he must obtain the permission of his license or manufacturer before he can obtain an extension of the patent. However, that is a point that should be weighed from all angles, naturally.

Now, with reference to paragraph H, the first part of that paragraph appears to be quite clear, but the second part where it states

nor shall any extension granted under this Act impair the right of anyone who was lawfully manufacturing before the passage of this Act the invention covered by the extended patent

the wording to me is not clear in that provision.

It is conceivable a person might start manufacturing a device covered by a patent upon the expiration thereof. He would thus be manufacturing lawfully and should not be liable. However, he should cease and desist infringing when notified by the inventor that his patent has been extended and should not be allowed to continue to manufacture just because he commenced manufacturing between the expiration date of the patent and the date of the passage of this act. If he ceases and desists manufacturing upon due notification from the patentee he should not be held liable for suit for infringement. This suggestion is in order to protect any manufacturer who might not know that this law is pending. The only notice to the public is by the dates on the patents or copies thereof which serve as due notice of the life of the patent. But it might be interpreted from the paragraph at the top of page four that the manufacturer since his rights are not impaired by this act will continue to manufacture without a license from the patentee, even if the patent had been extended.

With the above provision to protect the manufacturers, the benefits of this bill could be retroactive without causing any undue injury to any person or firm.

I feel that any bill that should be passed should be retroactive. Otherwise it would benefit those whose patents are still in full force and effect while militating against those whose patents had expired due to no fault of their own.

Thus time is of the essence, and only by making this bill retroactive can its benefits be distributed equitably among the veterans.

In respect to H. H. 1107 I have nothing further to say.

Mr. LEWIS. Do you think the bill with those changes should be reported favorably?

General CUTTS. I believe it covers the situation up to this point. There may be some points I have not thought of.

Mr. LANE. In your opinion, which is the best of the four?

General CUTTS. Well, briefly, H. R. 1107, subject to the corrections I have suggested and maybe some others raised by other parties. Mr. LEWIS. Thank you very much.

STATEMENT OF CYRIL A. SOANS, VICE PRESIDENT, CHICAGO PATENT LAW ASSOCIATION, AND CHAIRMAN OF THE LEGISLATIVE COMMITTEE

Mr. SOANS. Could I be heard briefly on that bill?

My name is Cyril A. Soans, vice president of the Chicago Patent Law Association, and chairman of its legislative committee.

On May 8, 1947, this year, the Chicago Patent Law Association board of managers approved a report of the legislative committee opposing the enactment of H. R. 1107 and related bills, H. R. 585, H. R. 1167, H. R. 1495, H. R. 1496, and S. 417.

I beg leave to submit this report as a statement explaining our position.

Mr. LEWIS. It may be done.

Mr. SOANS. Briefly, Mr. Chairman, the remarks on H. R. 1107 are short and I will read them:

Bill H. R. 1107 is deemed objectionable for the reason that this bill seeks to extend benefits to a class broadly without adequate requirements that anyone of that class who receives such benefits shall have established that, because of his service in the armed forces, he suffered actual loss of income from or under his patents to such an extent as to work an unreasonable hardship upon him. This bill would enable servicemen to receive benefits to which they may be no more entitled than other patent owners not brought within the scope of this bill, some of whom may have suffered even greater hardships due to the effect of the war upon their ability to realize from their patent rights.

Since it would not appear to be feasible to include in this bill a set of standards for determining whether or not in individual instances the applicant for an extension of his patent had suffered such hardships as would justify the granting of his application, we are not proposing any amendments to this bill, but believe that the bill and the other bills mentioned should be rejected as without sufficient justification.

I might say in general, Mr. Chairman, that every patent law association and committee of patent lawyers that I have ever worked with, and I have worked with a great many of them in the past 15 years, has always come to the conclusion that extension-of-patent bills are not desirable and they are against them as a matter of principle and they have never voted favorably on any of those bills. Thank you.

(The document referred to is as follows:)

STATEMENT ON RICH BILL (H. R. 1107) AND RELATED BILLS, H. R. 585, H. R. 1167, H. R. 1495, H. R. 1496, AND S. 417

All such bills relate to the extension of issued patents.

The following report of the legislative committee of the Chicago Patent Law Association was approved by the board of managers of the Chicago Patent Law Association on May 8, 1947, and the vice president of the Chicago Patent Law Association was on that date directed to submit copies of same to the appropriate committees of the Congress of the United States.

REPORT

This subcommittee has given its attention primarily to the Rich bill (H. R. 1107), providing for the extension of the time limitations under which patents were issued in the case of persons who served in the military or naval forces of the United States during World War II. The other bills have to do with the extension of patents that are specifically identified in the bills, and are believed to be objectionable for the reason that they seek preferred treatment on grounds that are presumably applicable to numerous other patent owners who should be entitled to similar benefits, if any of the specific patent owners is.

Bill H. R. 1107 is deemed objectionable for the reason that this bill seeks to extend benefits to a class broadly, without adequate requirements that anyone of that class who receives such benefits shall have established that because of his service in the armed forces he suffered actual loss of income from or under his patents to such an extent as to work an unreasonable hardship upon him. This bill would enable servicemen to receive benefits to which they may be no more entitled than other patent owners, not brought within the scope of this bill, some of whom may have suffered even greater hardships due to the effect of the war upon their ability to realize from their patent rights.

Since it would not appear to be feasible to include in this bill a set of standards for determining whether or not in individual instances the applicant for an extension of his patent had suffered such hardships as would justify the granting of his application, we are not proposing any amendments to this bill, but believe that the bill and the other bills mentioned should be rejected as without sufficient justification.

Mr. LEWIS. Thank you very much.

W. A. MOREY.
SIDNEY WALLENSTEIN.
BENJAMIN H. SHERMAN,

Is there anything further on H. R. 1107, H. R. 124, H. R. 65, or H. R. 1984?

Mr. WEDDERBURN. Mr. Chairman.

STATEMENT OF ALEXANDER J. WEDDERBURN

It seems to me that it would be a good idea, instead of having individual bills, to extend all patents that had been issued before the war but had not expired, because I cannot see that it would do any special harm except to certain manufacturers who probably did not or were unable to manufacture those devices for which they had licenses and they may have lost some money on them because of the war conditions because they had to go into other manufacturing. But as a whole I believe that everyone, every able-bodied manufacturer in the country must have lost a great deal of money due to the fact they went to war, inducted into the armed forces, or into war work, and if all of the patents were extended I think it would be just fair to everyone that had a patent.

Mr. LEWIS. Mr. Wedderburn, you would not try to equalize the war hazards on everybody in the whole population?

Mr. WEDDERBURN. Well, most everybody.

Mr. LEWIS. That applies to nearly everybody in the whole country. You cannot equalize those things.

Mr. WEDDERBURN. I do not know why it would not be fair because every inventor must have lost a great deal.

Mr. LEWIS. Well, a lot of other people lost out. Some people lost their lives.

Mr. WEDDERBURN. Yes; but those other people that lost out would be remunerated by the extension of the patent, would they not?

Mr. LEWIS. No; I do not see how they could. They were not manufacturers or owners of patents. I do not see how they could.

Mr. WEDDERBURN. They could not do anything with their patent on account of the war.

Mr. LEWIS. I can see the point that individuals and many owners of patents lost and lost heavily during the war. I concede that, but when you attempt to extend all patents, I just cannot quite see the justice of that.

Mr. WEDDERBURN. Well, the patents are extended