6. TECHNICAL RESEARCH ON GLASS PACKED PRODUCTS The Association carried practically all of the technical packaging research until this work was taken over by members of the industry. This work was primarily the development of commercial packing in glass. It involved the development of equipment, and the development of a process for packing many of our food products. Since 1931 this work has largely been taken over by members of the 5. TREASURY DEPARTMENT REGULATIONS The Association has cooperated with the Alcohol Tax Unit of the Treasury Department in developing and policing regulations governing the marking of liquor bottles. This cooperation has meant that the regulations have worked smoothly, and without a single violation on the part of the glass manufacturers. 1934 1935 1936 1937 1938 1939 industry, though the Association continues to supervise special projects given to commercial laboratories on particular products which we believe can be satisfactorily packed in glass, or on which we believe the method of packing can be improved. 7. INDUSTRY TECHNICAL RESEARCH Through the Association, the industry has developed a standard method for the testing of commercial glass. This has involved the improvement and the development of equipment, as well as the perfection of testing methods. This testing procedure enables all glass manufacturers to test containers on a uniform basis, and to be sure that all glass going to market is of good commercial quality. We believe that it will also have the effect of improving production methods, and will elevate the standards of commercial glassware. 8. ADVERTISING AND TRADE PROMOTION Through the Association the industry has carried on an extensive advertising and promotion program. This has no doubt had the effect of increasing the use of glass packed products, and of [44] encouraging many packers to adopt the glass container as a package. This work has involved not only advertising but extensive market research. It also involves a Glass Kitchen which the industry sponsors to develop new foods, and new combinations of foods packed in glass. 9. TARIFF The Association has represented the industry on all matters concerning tariff. This has included information supplied to the Appraiser's Stores, witnesses for the Tariff Court, facts for the Tariff Commission, and presentation of information to the Committee negotiating reciprocal agreements. 10. LAWSUITS INVOLVING BROKEN BOTTLES A very considerable racket has grown up in claims involving broken bottles. Upon investigation it was found that probably 95% of these cases were fraudulent. The Association, through legal counsel and through technical experts, has been able to clean up the greater part of this racket. On legitimate cases the Associa tion, through counsel and experts, has advised satisfactory settlement. 11. COSTS The Association, after consultation with cost experts in the industry, has developed methods of cost finding which are probably the best available. These methods have been offered to the industry for voluntary acceptance. 12. The Association has represented the industry on matters concerning laws or regulations either municipal, state, or federal. For illustration, State Departments on Weights and Measures, Federal Pure Food and Drugs Act, Wage and Hour Bill, National Recovery Administration, etc. The Association has also kept the members informed on the operation of these regulations and laws, and to the best of our ability have advised the industry on proper conduct under them. The following memorandum was submitted by Mr. Lawrence C. Kingsland under date of February 21, 1939, and was subsequently entered in the record as "Exhibit No. 431.' It is printed at this point in connection with testimony herein, see text page 636. Honorable JOSEPH C. O'MAHONEY, Chairman, Temporary National Economic Committee, Washington, D. C. DEAR SIR: During my testimony before the Temporary National Economic Committee, as appears on page 534 of the Preliminary Print of the transcript of that testimony, I was requested by Senator King to send the Committee a memorandum setting forth my views as to what changes should be made in the present patent laws. At the same session, Honorable Thurman Arnold requested a memorandum in regard to the relationship of the patent laws and the anti-trust laws. This letter is in response to the request of the Committee, voiced by Senator King, as the subject inquired about by Mr. Arnold will be separately treated in another memorandum to the Anti-Trust Division of the Department of Justice. At the outset, it is my view that it may be taken as granted that the fundamentals of our patent system are sound, and that, therefore, no changes should be made in the general policy expressed in the patent legislation. Therefore, any proposals in connection with the patent laws, ipso facto, take the direction of curing such evils as may exist in the administration of those laws. Certain evils are recognized as existing in the patent system in the form of abuse of laws that, in themselves, are not objectionable. In a general way, the evils that do exist reside in the protection of monopolies beyond those reasonable monopolies that are the midway point between destruction of the rights of the public on the one hand, by absolutely uncontrolled patent monopolies, and utterly emasculated monopolies on the other hand that are insufficiently verile to stimulate inventive effort. In other words, that intermediate monopoly, which is the desideratum of the statute, is one that at once adequately promotes the arts and useful sciences and yet protects the public by assuring to it its share of the contract which is the proper enjoyment of the subject matter of patents. At the outset, and after a full consideration of the subject, I am definitely opposed to the compulsory license. I feel that a compulsory license radically changes the effectiveness of the patent system under which American industry has been fostered and enlarged. My first conclusion, therefore, is that this proposal does not present a solution of the problem and would be a radical change that would be detrimental to the general economy of the country that has been based upon the legal monopolistic principle of the absolute enjoyment for the limited period of years provided by the patent monopoly. I have further reached the definite conclusion that a shortening of the term of the patent monopoly, except as it may be influenced by the initiation of the period of the monopoly by the application date, which I shall discuss hereinafter, should not be changed. I am convinced that the 17-year term of a patent is only a reasonable reward to the patentee for the disclosure of the invention to the public. There are, however, several manifestations of the distortion of the time factor. Inventions, when disclosed, ordinarily go into public use and it is a clear abuse of the rights of the public for industry extraneously to develop around the public disclosure, only to be circumscribed after years of evolution, to which evolution the minds of the entire field have contributed improvements, by issuance at a late date of a basic patent dominating not only the original idea, but also the improvements. Under the later basic patent all are compelled to contribute for an interval of 17 additional years, during which time many of the improvement patents may, in themselves, have expired. The owner of the improvement patents thus effectively loses their value, which should exist at least for the interval during which their lives continued after the expiration of the basic patent. In order to capitalize upon the improvement patents, their owner is virtually compelled to turn only to the owner of the fundamental patents and to deal with him on his own terms. Furthermore, without injecting subsequent patents into the matter, a user who employs the published inventions during the interim years, perhaps completely innocent of the existence of any pending applications, suddenly finds himself ejected from a business he has built up after years of effort to a point where to stop it may mean destruction of the user's future business possibilities. The remedy for this situation, in a measure would be accomplished, in my judgment, by a grant of the patent for a term of 17 years, or for the balance of a 20-year term dating from the application date, whichever is the shorter. This so-called "20-year term" proposal would avoid an unseasonable delay in the issue of a basic patent with a disturbing effect on industry, in some instances, many years after the application was filed. A procedure whereby a patent may issue on an application, in some cases as long as twenty to twenty-five years or more after the filing of an application, is definitely wrong; and, while it is true that there are not numerous instances of periods of twenty-years or more between the filing of the application and the issuance of the patent, there are sufficient of them to have a serious detrimental effect. Therefore, I would strongly favor the so-called "20-year term" proposal. But, in adopting such a proposal, it must be recognized that certain injustices to the inventor may occur unless provision is made for reducing the normal prosecution of an application in all instances, in the Patent Office. The present requirement, that an applicant must respond to a Patent Office action within six months, has a tendency, so far as that prosecution is under the control of the applicant, to reduce the time of the pendency of the application. But the reduction in the time for the applicant to act upon the application alone does not solve the difficulty, as the historical facts show that the reduction of this period from two years to one year and finally to six months does not prevent, in some instances, a long delay between the filing of the application and the issue of the patent. I feel that there would not be any injustice to an applicant if the period was further reduced from the present six months period to a three months' period, providing there was a reciprocal provision that the Patent Office response be limited to a corresponding period. In many cases the Patent Office actions occur within a three months' period, whereas, in other instances, longer delays than six months in the Patent Office exist. I have no doubt with the present personnel of the Patent Office that the application work is handled as expeditiously as possible, but there is no question that the period of prosecution in many instances is increased by reason of delayed actions by the Patent Office itself. Without doubt, the interference proceeding in its present complicated form is the major cause for delay in prosecution of applications beyond a reasonable period of pendency. Numerous suggestions have been made with respect to a complete revision of the interference proceeding. It is an extremely difficult problem to solve. There have been several methods of approach suggested: 1. The total abolishment of interferences; 2. A substitution of an opposition practice; and 3. A simplification of the present interference proceeding. It is my view that the first solution is the only one that will effectively reduce the delay in the issue of the patent, but there remains the question as to whether this theory could be applied in practice without working an injustice in some instances. Under this solution the patent would be issued to the first applicant; but some provision should be made for priority determination between a diligent applicant and the issued patent, lest injustices arise to the applicant. The present interference practice, that depends upon depositions found so unsatisfactory as to become the exception in equity cases twenty-five years ago; and upon depositions of scattered witnesses; and with appeals to the Patent Office Board and even to the courts under Revised Statutes §§ 4911 and 4915, only then to result in inconclusive opinions short of res adjudicata and hence subject to retrial in the courts in later litigation, is extremely costly. Since the statute now provides for interferences in the district courts by way of appeal under Revised Statute § 4915, as de novo trials, and original actions between interfering patents under Revised Statutes, § 4918, a similar procedure could be adopted in all interferences without introducing a judicial novelty. I, therefore, suggest that interferences should, under restricted circumstances. be allowed, but determined by the District Courts in the jurisdiction of one of the parties. This cuts away the interference practice from the Patent Office, with its three potential reviews on appeal, and sends it at once to a court convenient to at least one of the parties, where it had two chances of ultimately going under old procedure, but then only after a costly and tedious prior determination in the Patent Office. If the applicant was successful, his term should still be held to the "20-year term." Under the simplified federal court procedure priority issues should be promptly determined. Such action should be reviewable on appeal, and the decree in such suit should be res adjudicata as between the parties. The solution of the problem has the merit of removing the primary cause for delay in prosecution of applications. It would safeguard the rights of the junior applicants, and it would eliminate the time and expense of presentation of the issue to the two tribunals in the Patent Office and on appeal to the Court of Customs and Patent Appeals that result in an inconclusive opinion. In order that the junior applicants, having interfering applications pending in the Patent Office, upon the issue of the patent to the first applicant, may be notified of the existence of the interfering patent, provision should be made for a formal notice from the Commissioner of Patents of the issuance of the patent and of the common subject matter found by the Patent Office in the issued patent and the application, or applciations, then in the Patent Office. It is my view that the right to obtain a determination of the issue of priority by the courts should accrue only to applicants whose applications are filed within one year (or other limited time) of the filing date of the senior party whose patent has been granted; and also that there be a formal action by the Patent Office determining the question of the existence of common subject matter. The purpose of such provision is (a) to stimulate prompt filing of applications in the Patent Office (and, coupled with the 20-year term rule, prompt issuance of patents) and (b) to safeguard against setting up false interferences for purposes of delay where common subject matter does not, in fact, exist. The time within which priority actions may be instituted after such notice should be limited. The second solution, namely, the substitution of an opposition proceeding for the present interference proceeding, particularly the plan proposed by the Advisory Committee to the Secretary of Commerce, has merit and, in my opinion, should receive consideration as a solution of the problem. My feeling, however, is that it would be time-consuming, perhaps to a lesser degree than the present practice but, nevertheless, to a degree sufficient to defeat the purpose of prompt issue of patents to the extent necessary to justify the "20-year term" proposal. Under the third suggested solution, namely, simplification of the present interference practice, it seems almost hopeless to acomplish the elimination of delay. There are, of course, certain palliative measures that may be taken. Among these are the proposals of: 1. Eliminating one appeal in the Patent Office; 2. Abolishment of optional appeals to the Court of Customs and Patent Appeals or actions under § 4915; 3. Requirement for disclosure of invention dates when applications are filed, with proper provision for secrecy; 4. Limitations as to period of pendency of an application that may be declared in interference, i. e., a junior application filed over one year after the senior one, for example, may be denied the right to contest priority with a senior application; 5. Curtailment of preliminary motions; and, 6. Definite limitation as to time within which testimony must be taken. Each of these proposals has merit, and would tend to reduce the delays due to the present practice, but they are inadequate, in my opinion, to correct the long pending application evil. There are instances in which interferences are obtained by filing a reissue and involving another issued patent in a priority contest in the Patent Office. While this practice is not one that is directly connected with delay due to interferences, it does, in many instances, work an injustice because the patentee of an issued patent can be drawn back into the Patent Office and required to go through the complicated interference proceeding, and thus prevent him from enjoying the full effectiveness of his issued patent. Such practice accomplishes no useful purpose because the patentees, if there is in fact common subject, may contest |