I think that if price maintenance is made under a perfectly valid patent you are going to suffer for 17 years somewhat of the inconvenience of having to pay more for that article than you would have if there were free competition, but in return for that you have obtained. from the inventor this tremendous investment in energy, in individualism, which after all we are trying to continue under our system of government, you have this thing that encourages people to put up the money, and under those conditions my feeling is that if it is a good patent and a good invention, that man should be allowed to charge perhaps more than he would with competition. However, if there are systems set up whereby a number of people get together under patents that are ambiguous or not what they should be, patents that there is so much question as to the validity of, and make agreements that they are all going to sell the articles at their own price, you have your remedy under the antitrust laws.

Senator BONE. If you concede the right of the owner, the holder of a patent to retain in all its purities the monopoly the law gives him, it seems to me your antitrust laws are nullified to that extent. I practiced law all my life, and I can't follow those two thoughts in their parallel columns and reconcile them, because if the law on the one hand gives a man a monopoly right, I want to be realistic enough that we might as well throw the antitrust laws out of the window if we are going to recognize the right of a men to do what he pleases with his patent. This is not an argument; it is one of the reasons why this inquiry is being conducted.

Mr. LANGNER. My reply to that is this: That where we have decided, that is, the framers of the Constitution in their wisdom decided, that in order to encourage invention and the promotion of the useful arts and industries, that there should be this monopoly for 17 years in order that after that the public might have it for perpetuity, that is the bargain, and it seems to me that you don't have to throw your antitrust laws in the wastepaper basket at all. That monopoly is all right. That is where that man is going to get his reward. There is nothing the matter with that.

The CHAIRMAN. Wouldn't it be proper, if I may interrupt you, to say that the patent monopoly does not arise by virtue of-I don't want to use the word "virtue"-a combination or conspiracy, which is the thing the antitrust law prohibits?

Mr. LANGNER. That is exactly it, and if patent monopolies are used as part of a conspiracy, that is another matter entirely.

The CHAIRMAN. The antitrust law would apply in the case where a patent was the basis of a conspiracy or a combination in restraint of trade, and there is nothing in the patent law that prevents the operation of the antitrust law in such a case, that I know of.

Senator BONE. One would not have to conspire where he has the whole thing in both of his hands? No.

Mr. LANGNER. Then I say he has not committed a wrong.

The CHAIRMAN. As the witness has stated, and if I understand his position, it certainly is mine, it is decidedly in the public interest to hold out to inventive genius the certainty, as far as our patent laws go, that that genius will be rewarded by a complete monopoly for a limited period of years, in order that we may get the benefit of every invention that may possibly be devised, but at the same time it seems to be, I think, general agreement, certainly among the wit

nesses who have appeared to date, that no device should be permitted to extend unduly the period of the monopoly, and that is the reason why the Commissioner of Patents has recommended that there should be a specific limitation to 20 years, and that devices which are used for the purpose of extending monopoly are not in the public interest. Senator BONE. You heard Mr. Coe's testimony, where so many of these things have been projected over 40 years. Would you consider that an abuse of the patent laws?

Mr. LANGNER. Very definitely, and it is not possible for that to happen in foreign countries.

Senator BONE. Evidently there has been some laxity in this country, in that respect, under our statutes.

Mr. LANGNER. No, I do not think it is laxity; I think it is due to the fact that in our great desire to preserve the rights for the inventor we have allowed complicated procedures of interference to grow up, but in the 25 years since I have been in this country it has been getting better all the time. Mr. Coe has done a wonderful work in getting patents out of the Patent Office much quicker than used to be the case and what was common practice when I first came to this country 25 years ago is the exception to the rule today. I think I am correct in stating that.

Senator BONE. I am assuming of course that whatever the cause of this it must rest ultimately on the wording of the statute, attributed to Mr. Coe and his Department, but to the wording of the statute which permits that sort of thing to continue, if it be a wrong. Therefore our inquiry, it seems to me, might legitimately be directed toward the wording of the statute so if there be abuses we can correct it so the courts could not authorize or permit or seem to countenance that sort of thing. My own questions are not intended to indicate my own state of mind; I want information about this business, but I suspect that our beloved ancestors in this country could hardly have contemplated this technological age in which we live and envisioned the possibilities of monopoly and abuses none of which I assert here, but obviously they are here or we would not be having this inquiry. But they could not possibly have envisioned the tremendous growth in our industrial life, the use of machinery, the scientific achievements and gadgets of this age, else probably they might have had somewhat a different slant to it.

Mr. LANGNER. I think they thought very clearly on one point, and that was they thought very clearly on the fundamental idea of how you should encourage an invention, and I think, they thought much better than most of the people who had to do with the formulation of the European patent systems. I think that is evidenced by the results and those results are due to those men who thought out the Constitution and their ideas were good.

Senator BONE. Have you contemplated the drafting of any suggested amendments to the act?

The CHAIRMAN. Mr. Langner was invited here, Senator, to comment upon the foreign laws and not so much to make suggestions with respect to our own.

Are there any other questions, Mr. Dienner?

Mr. DIENNER. No, Senator.

1 Supra, p. 853.

The CHAIRMAN. Any other questions by members of the committee? Do you care to state now who will be your witness tomorrow morning? Mr. DIENNER. We shall put Mr. Carlton, C. C. Carlton, on the stand. He is an automobile parts manufacturer and will present the picture, typical picture, of that industry. Then we hope to have further Mr. Baekeland, who will present the picture of plastics, the plastics industry.

The CHAIRMAN. Thank you, Mr. Dienner. Mr. Langner, the committee is very much indebted to you for your testimony this afternoon. We thank you for appearing here. The committee stands in recess until 10 o'clock tomorrow morning.

(Whereupon, at 4:45 p. m., a recess was taken until 10 a. m. Friday, January 20. 1939.)

INVESTIGATION OF CONCENTRATION OF ECONOMIC POWER

FRIDAY, JANUARY 20, 1939

UNITED STATES SENATE,

TEMPORARY NATIONAL ECONOMIC COMMITTEE,

Washington, D. C.

The Temporary National Economic Committee met pursuant to pursuant to adjournment yesterday, at 10:30 a. m. in the Caucus room of the Senate Office Building, Senator Joseph C. O'Mahoney presiding.

Present: Senators O'Mahoney (chairman), and King; Representative Reece; Messrs. Patterson, Peoples, Thorp, and Coe.

Present also: Senator Homer T. Bone of Washington chairman of the Senate Patents Committee. Counsel: John A. Dienner, special counsel for committee; George Ramsey of New York, assistant to Mr. Dienner; Justin W. Macklin, First Assistant Commissioner of Patents; and Henry Van Arsdale, Assistant Commissioner of Patents.

The CHAIRMAN. The committee will please come to order.

UNITED STATES PATENTS HELD BY FOREIGNERS AND FOREIGN PATENTS HELD BY AMERICANS

The CHAIRMAN. When Commissioner Coe was on the stand a few days ago, at the opening of this phase of the hearing, he was asked by Dr. Lubin and I think some of the other members if he would be good enough to compile some figures from the Patent Office on the number of patents held by foreigners. The Commissioner indicates that he is now ready to present that material, and if you will be good enough to wait just a moment, Mr. Dienner, I think we will ask the Commissioner to put that material in the record now.

Mr. CoE. Mr. Chairman, as indicated, interest has been expressed by members of the committee in the number of patents this country grants to citizens or residents of foreign countries. In order to answer the question, as well as others which might arise, I would like to introduce several tables into the record.

The first table shows the number of patents granted by the United States to residents of foreign countries for the 8 years 1930 to 1937. The annual averages are also given. Looking at the last column it is seen that out of the average number of 48,697 patents that we grant each year, 6,421, or 13.2 percent, are granted to residents of foreign countries. Just to mention a few of these countries-2,375, or 4.8 percent of our total, are granted to residents of Germany; 1,273, or 2.6 percent of our total, are granted to residents of England; 632, or 1.3 percent, to residents of France; 493, or 1 percent, to residents of