CONCLUSION-A DECADE OF THE PAST, AND A DECADE OF THE FUTURE

In 1945 Dr. Vannevar Bush, Director of OSRD, reported to the President on a program for postwar scientific research.317 He there stated:

Research is also affected by the patent laws. They stimulate new invention and they make it possible for new industries to be built around new devices or new processes. These industries generate new jobs and new products, all of which contribute to the welfare and the strength of the country.

Yet, uncertainties in the operation of the patent laws have impaired the ability of small industries to translate new ideas into processes and products of value to the nation. These uncertainties are, in part, attributable to the difficulties and expense incident to the operation of the patent system as it presently exists. These uncertainties are also attributable to the existence of certain abuses, which should be corrected. They have led to extravagantly critical attacks which tend to discredit a basically sound system.318

The years since this report have seen vigorous enforcement of the antitrust laws that has gone far to eliminate the abuses referred to by Dr. Bush. Anti-competitive patent licensing practices, cartel agreements, coercive package licensing, and other activities have been prohibited. Indeed, virtually every one of the examples of abusive patent practices of current interest at the time of Dr. Bush's report has since been the subject of a consent decree, a litigated decree, or has turned out to be unsupported on the facts.

Concurrently with this development a new competition has become dominant. No longer can the businessman make the same old thing the same old way. Rather, he must compete in research and development as well as in price, production, and service. The patent system has stimulated this trend. First, it imposes an ever-present risk of sudden obsolescence by reason of a technology developed by an actual or potential competitor, coupled with the chance that the competitor may refuse to grant patent licenses. Second, the patent system encourages competitive effort of a kind that would not otherwise take place. The television industry, for example, was for all practical purposes nonexistent a decade ago now it dwarfs the radio industry from whence it came. Yet the industry is characterized by huge research expenditures in advance of any monetary return-over $65 million in color television already and the return is yet to come. These expenditures have been made in anticipation of monetary return through patent license royalties. The antibiotics industry, limited to penicillin a decade ago, is now the scene of the most intense competi

317 Science, the Endless Frontier.

318 Id. at p. 16.

tion revolving around the development and marketing of new products. Today the industry is engrossed in a new competitive race to develop improved tranquilizers.

It is particularly significant that the new competition is not confined to the huge industrial giants that first appreciated the potentialities of research. Rather through the operation of the patent systemthe small company and the newcomer has been able to gain a foothold without being subject to appropriation of developments by the larger entrenched firms. Polaroid, Thiokol, Mallory, and many others, represent small and modest sized businesses which have launched new products against the competition of an existing industry. Such activity creates both a new commercial product or process and a new competitive entity. The examples may be multiplied endlessly.

This competitive order should be a matter of pride, but not complacency. The decade ahead should be devoted to its improvement. A particularly crucial area is found in the Patent Office budget. The tempo of the Patent Office should match the pace of technical development. No amount of effort by a dedicated corps of examining personnel can maintain both quality and quantity when flooded with an overwhelming volume of work. This is a matter of first importance. Steps have been taken in the right direction, for a more adequate budget has been put into effect and a long-term plan of action is being executed. For the benefit of the public, manufacturers, and patent applicants, the Congress should give its sympathetic and sustained aid to the Patent Office in overcoming the backlog.

An increased level of Patent Office operations will doubtless reduce the patent mortality in the courts. Only time can tell us the extent of the improvement. In the meantime attention should be directed to other matters, such as relieving the load of defensive patent applications, equitably overcoming the problem of delayed patent issuance, and the like. And, over-all, there should be a continuing effort to devise simplified procedures for obtaining and enforcing patents.

Finally, we need a reorientation in concepts. It ought not to be necessary endlessly to defend the patent system against the stigma of "monopoly," when it is in fact a source of competition. It should not be assumed that every time an excuse is found to invalidate a patent, competition somehow necessarily benefits. It ought not to be necessary to indulge in endless argument over whether the patent laws or the antitrust laws ought to prevail when both serve the same end of maintaining competition and we should be looking for ways to make both more effective. This is the real opportunity of the times. If the patent system can be made to do more effectively what it is already doing, patent issues are treated in their proper perspective, and the antitrust laws continue to be enforced, we can look forward to a future of technical progress within the framework of a competitive order.

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Printed for the use of the Committee on the Judiciary

UNITED STATES

GOVERNMENT PRINTING OFFICE

WASHINGTON: 1957

COMMITTEE ON THE JUDICIARY

JAMES O. EASTLAND, Mississippi, Chairman

SUBCOMMITTEE ON PATENTS, TRADEMARKS, AND COPYRIGHTS

JOSEPH C. O’MAHONEY, Wyoming, Chairman

MARCUS A. HOLLABAUGH, Counsel
JOHN C. STEDMAN, Associate Counsel
JULIAN CAPLAN, Consultant