Mr. DIENNER. I take it, Mr. Graham, that you have taken out patents on the items that you have mentioned, such as the toaster and the coffeepot.

Mr. GRAHAM. I have.

Mr. DIENNER. Now, tell us approximately what you obtain in the way of royalties on the toaster, roughly.

Mr. GRAHAM. Well, I would have to get those figures, but it has been over $113,000.

Mr. DIENNER. Have you an illustration of a device which you were unable to patent, unable to market?

Mr. GRAHAM. Yes; there is another one down here, if I can get it all together. This is not an awfully elaborate thing but in some sections of the country it answers the same problem as the toaster. It is for making biscuits, baking cake, it will bake most anything along the lines of cornbread, biscuits, and so forth. You mix your biscuits and put them in this pan here when it is cold; you don't have to preheat it or anything, you stick it in there, lift this up and set it over there, you set this for what you are going to bake.

Mr. DIENNER. That is a thermostatic control, I take it.

Mr. GRAHAM. It is more than that The idea is that it takes 20 minutes or 15 minutes to bake some things. If you had a thermostat in there it would get hot before that period. You have to have more than a thermostat to give you that long a period, so when it is done the ball will fall down and shut off the current and you take it out when you get ready.

I had a deal negotiated with the Scott-Atwater Co. in Minneapolis. I was negotiating a deal with them, and we thought we had the possibilities of a pretty good patent on our control heater, but after a complete search we found a reference that just took all the teeth out of the patent; you might say all we would have was a design and we were never able to get anybody to take it because we couldn't get patent protection on it.

Mr. DIENNER. Would you tell us any criticism you have in connection with the securing of patents?

Mr. GRAHAM. Well, I have taken out, I assume, 15 to 20 patents in the last 10 years, all of that, and in that sum I have had one, two, three, I have had four interferences; one interference cost me $8,000 and that is a lot of money. That was a toaster interference. Owing to my set-up I had a royalty contract with the McGraw Electric Co., even on a patent that had not been issued, and this particular interference was on this particular patent, so it was up to the McGraw Electric Co. to try to help out in the expense, otherwise they may lose the main patent that they were working on, so they had to cocoperate with me, otherwise I don't know whether I would have wanted to go to that extent and spend that much to fight that interference with the patent.

I have had four other interferences, and it seems as though when you get a good item that you are ready to put on the market, if you put it on the market before the patent is actually issued it just seems to me that I always run into an interference; in fact, that has been my experience as far as I have gone.

I can't help but believe that there must be some way of shortening the action of interferences or declaring somehow who the inventor is other than, you might say, leaving it to this one and that one and

the other one who may want to come in and witness this, that, and the other thing. It is just a complicated set-up. I wish there was some way it could be changed. That is the only complaint I have under the patent system.

INABILITY OF INVENTOR TO ENLIST CAPITAL WITHOUT PATENT

PROTECTION 1

Mr. DIENNER. Let me ask you one more question. What would be your attitude in regard to any change in the patent system which would allow anyone to come to you and demand a license on the payment of royalty. How would that affect your situation?

Mr. GRAHAM. What was that again?

Mr. DIENNER. Suppose there were provision in the law allowing anyone to come to you and request a license, offering to pay royalties. How would that affect your situation? In other words, compulsory license law.

Mr. GRAHAM. I don't think in the electrical appliance field that I have ever built an item that I could go out to somebody and get him. to build it if he only had the use of it for a year or two or three, as the case might be, and then the so-called "gyp" manufacturer could come in and take advantage of it, because this particular coffeepot is so much different and yet it looks just like a coffeepot, and somebody has got to spend a lot of money in advertising to let the public know what this thing does. It is not a coffeepot, that is an old-fashioned percolator, because that is a discarded system. With the Silex and the other ways of making coffee, you can hardly sell a percolator today, and this looks just like a percolator. All manufacturers want to get into a metal coffee maker if they can, because with stainless steels and various other alloy steels there is a steel that is just as good for making coffee in as glass. If I would go to them, for instance the General Electric Co., and ask them to spend $50,000 to advertise this, then in a given time anybody could come in, I don't think I would ever be able to sell it. I couldn't interest them in it.

Mr. DIENNER. Mr. Chairman, that is all the inquiry on which I wish to examine this witness, unless the witness has something further to say to the committee.

The CHAIRMAN. Do any members of the committee desire to ask Mr. Graham any additional questions?

Dr. LUBIN. Mr. Graham, do you still own the patents on these devices and rent them on a royalty, or have you sold some of them? Mr. GRAHAM. Some of them I still own, some of them I have had the patent transferred to the man-well, for instance, the McGraw Electric Co. has a great number transferred to them on a royalty contract. I have that come up every once in a while: "Will you assign the patent to us, or are you bound to have just an exclusive contract?" I don't know. In some instances it is better to hang onto the patent, and in some instances it is just as well to take on the exclusive contract and give them the patent.

Dr. LUBIN. Is this biscuit device on the market now?

Mr. GRAHAM. No; I have never been able to put it on the market, because I haven't got a patent and I can't get one that amounts to anything on it. There are designs and a few little features to it, but it is one of those patents like many of them, that don't mean anything.

1 This subject is resumed from p. 995, supra.

Dr. LUBIN. Is there any danger, in the event it might be put on the market, it might be held infringing some other patent?

Mr. GRAHAM. No. There is an old reference that I found, an expired reference, but it just took the teeth out of the possibilities of getting a claim that was any good on this.

Dr. LUBIN. In consulting with various manufacturers about that device do they feel there is a market for such a thing?

Mr. GRAHAM. Yes. This has been made for possibly 4 years. The Knapp-Monarch Co. came out with a biscuit maker, anyway, and the General Mills has tried to get me to find some way to simplify this so they could put it out with their Bisquick. I may some day get hold of some way of putting it out as a premium, but so far as putting it out with a staple manufacturer as a year in, year out product, I don't think it is possible to do it.

The CHAIRMAN. Why not?

Mr. GRAHAM. I can't get them to take it. The tool cost is too much to tool up for a thing like this, with the possible profit there is in it and then have somebody else come in and copy it and take away that portion of the business that there is.

The CHAIRMAN. In other words, to bring an instrument of this kind into production a patent is necessary.

Mr. GRAHAM. I think so.

The CHAIRMAN. But on the other hand you have there a device which is actually the result of prior expired patents which never went into production.

Mr. GRAHAM. That is true to some extent. The reference is a long ways from this type of a device. There are many patents that are cited to a fellow that are not practical and still they have something about them that makes the practical device hard to get into perfection and get any claim on it.

The CHAIRMAN. And do you mean to tell us you haven't been able to find a patent lawyer in Washington who is unable to distinguish this from the others?

Mr. GRAHAM. I live in Minneapolis.

The CHAIRMAN. There is an opportunity here for somebody, I would think.

Mr. GRAHAM. Then again, in Minneapolis we are located quite a little way from the logical manufacturing center. We have many things against us; we have freight rates against us up there and, where we go to a home manufacturer, if we can't protect him so that he can have a protected price, it is difficult for him to compete with the eastern manufacturer.

The CHAIRMAN. What is your judgment, in the light of your experience with this device, with respect to the recommendation which has been made to us practically universally by all of the witnesses thus far, that the period of exclusive use of any patent should be limited to 20 years?

Mr. GRAHAM. Well, I know of only one patent in my life that ran 17 years, speaking now of electrical appliances. I have never seen more than one patent that actually lived its life in actual production. I think the 20-year idea has its merit. It may hurry some inventors to try and answer an amendment quicker and finish the patent sooner. The CHAIRMAN. But if the reference in this case had not expired it would be possible for you to acquire that right and thereby put this machine on the market.

Mr. GRAHAM. Well, that didn't have much bearing on it. I still could put this on the market without interfering with that patent, because it was an old patent.

The CHAIRMAN. But I understood you to say that it was because of that patent that you can't get the protection that you want for this. Mr. GRAHAM. I know; it was an old patent, but nevertheless that was an old patent, so this would be an old patent, so anybody could copy it.

The CHAIRMAN. But if the life of that old patent had not expired, it would be possible for you to acquire it and enter into an agreement with the holder of that patent, and then you would have the patent protection that you say you need.

Mr. GRAHAM. Well, I may understand it a little wrong as far as this 20-year idea, but as it is now, some of our patents-I have had one 6 years before I got it issued, one I had several interferences with, and that will make 23 years on that one.

The CHAIRMAN. That is exactly the point. The suggestion has been made that the period during which a patent may be permitted to remain in the application state should be shortened, or if it remains in the application state, that the term of exclusive use shall be cut down, so that altogether the period is 20 years.

Mr. GRAHAM. I think I would be in accord with that 20-year idea. I believe it would be better for the average small fellow who is trying to make both ends meet.

The CHAIRMAN. It is very interesting in the light of your experience and in this respect.

Dr. LUBIN. I am interested in the baker. Did you have a search made on that device before or after you built the instrument?

Mr. GRAHAM. That is where I stuck my neck out a little wrong. I usually do, but I did not on this one, and then the funny part of it is, after I made the search, it was about a $60 search, I had no reference, but when I was down here one time and I was looking through the Patent Office and found it myself.

The CHAIRMAN. If there are no other questions, the witness is excused. We are very appreciative.

(The witness, Mr. Graham, was excused.)

Mr. DIENNER. Mr. Chairman, may I call my next witness. It is Mr. Baekeland. Will you please be sworn, Mr. Baekeland?

The CHAIRMAN. Do you solemnly swear the testimony you are about to give in this proceeding shall be the truth, the whole truth, and nothing but the truth, so help you God?

Mr. BAEKELAND. I do.

TESTIMONY OF GEORGE BAEKELAND, VICE PRESIDENT OF THE BAKELITE CORPORATION, NEW YORK CITY

Mr. DIENNER. Mr. Baekeland, will you please state your full name and occupation?

Mr. BAEKELAND. My name is George Baekeland. I am vice president and secretary of the Bakelite Corporation, and president of two of its subsidiaries.

Mr. DIENNER. Will you please tell us your education and training for the position which you now occupy?

Mr. BAEKELAND. I received an A. B. degree from Cornell, an E. M. from the Colorado School of Mines. I practiced mining engineering until 1923-24, when at the request of my father I gave up my profession with some reluctance and went to work for the Bakelite Corporation. I have been with Bakelite Corporation since that time, and, well, a jack of all trades, and my experience has been somewhat rounded and full, I think.

Mr. DIENNER. Are you familiar with your father's earlier work preceding the invention of bakelite?

BACKGROUND OF BAKELITE CORPORATION'S FOUNDER

Mr. BAEKELAND. Well, the earliest work that brought him any prominence was done at a time when I was about born, or perhaps a year or two previous to it. He invented Velox paper in the early nineties. He went into partnership-it was not a corporation or a company, a pure partnership-with a man who put up the necessary money. At the time my father had only recently resigned as professor of physics and chemistry and had gone into photographic research work, following work he had done as a student in photochemistry. The result was his invention of Velox paper, or photographic paper to which he gave the name Velox, which was manufactured under this partnership arrangement.

He took out no patent; it was a secret process. The business was small, of course. He alone knew the formula, although there was a written formula sealed, I believe, I am not sure of that, in escrow in case he died. He himself mixed the emulsions daily that were used for the making of this photographic paper.

Perhaps some of the members of the committee will recall that in the early days of photography it would take about half an hour in sunlight to get a print. This Velox paper made a print instantaneously, and in that way greatly added to the improvement in the art.

The paper, of course, became strongly competitive with the old types of paper on the market at that time, and the Eastman Kodak Co., on two occasions, came to my father and his partner with a desire to purchase the business. They were reluctant, however, to part with their business, but finally, when it became a nice running business and the troubles were over and it became routine manufacture, I think my father became a bit bored with the whole thing, and it was decided to sell on the third attempt by the Eastman Co. to purchase, so the whole thing was sold, lock, stock, and barrel, and my father dropped out of that business and went into the thing that he wished to do.

He was then quite comfortably off. In fact, for those days he was quite a wealthy man. He devoted his time to chemical consulting work and at his home in Yonkers he converted an old barn, a stable, where he carried on work in a number of fields, and at the time of the Russo-Japanese War, among other things he was working on synthetic camphor. Natural camphor had become very high-priced owing to the Japanese War. He was not the only one, however. who was working at that time on that particular problem. He was also working on synthetic shellac. Shellac, as you may know, is a product from an insect in India.