generalizations and they do not show the results you inquire about. They don't show the location of so-called key patents, for example.

The CHAIRMAN. I was impressed by your testimony given a little bit later after you had introduced these charts when you were discussing the necessity of protecting the small inventor by giving him—and by the use of the word "small" I really meant the individual inventor a more certain court of appeals, by reducing the number of courts through which he may be dragged in the prosecution of suit. I was impressed, I say, by your statement, as I recall it, that there should be a better bulwark to protect the individual from what you described as the large and ruthless corporation. On what experience of yours did you base that statement?

Mr. COE. Mr. Chairman, we expect to substantiate that statement by witnesses which we shall present the remaining part of the week to the committee.

The CHAIRMAN. I see. You are prepared to proceed with another witness tomorrow?

Mr. COE. Yes, sir; we will start tomorrow to introduce the testimony of the various witnesses referred to by Secretary Patterson at the opening of the hearings today.

The CHAIRMAN. Who will be the first witness to be called?

Mr. COE. Dr. Vannevar Bush, the president of the Carnegie Institution.

The CHAIRMAN. It is my understanding that Mr. Dienner will conduct the examination.

Mr. COE. He will conduct the examination.

The CHAIRMAN. Do any members of the committee desire to ask any more questions?

Senator KING. I should like to ask one question. Is it not a fact that a large number of patents issued have no utility—

Mr. CoE (interposing). That is a fact.

Senator KING. And several hundreds of thousands of those issued never have been put into any practical use?

Mr. COE. That is a fact, sir.

Senator KING. Your office does not have anything to do with the granting of copyrights and the work which is being done by the Library?

Mr. CoE. We do not administer the copyright law; we do administer one part of the copyright law which relates to prints and labels.

Senator KING. That is what I understood. Have you had any controversy growing out of your administration of that branch of the law?

Mr. COE. Nothing that I know of, Senator, except that in our own administration some people think it ought to be administered by the Library of Congress rather than the Patent Office.

Senator KING. I ask that question in view of the fact that representation has been made to me in favor of taking away from your organization and transferring to the Library the limited authority you have in administration of copyrights.

Mr. COE. There is a very interesting story back of that, Senator. Years ago the Library of Congress, the Copyright Division, seemed to have very lofty ideas about such matters. They didn't like to have in their office anything as practical and vulgar as a label for a tomato can, so they sent that all over to the Patent Office, and now there seems to be a change and they want to get that back.

ASSIGNMENT OF PATENTS TO CORPORATIONS BY EMPLOYEES

Representative REECE. I want to ask a question with reference to the custom of the assignment of patents into corporations. Is it customary when an employee of a large corporation conceives a patentable idea-and under the law he, as an individual, of course, makes application for the patent-for the assignment to be made to the corporation before the patent is issued, so that your 17.2 percent, being the percentage of patents issued to large corporations, includes in the main the patents of employees of the corporations? 1

Mr. COE. I should say in the main, sir, yes; but, of course, it also includes any application acquired by the corporation prior to the issuance of the patent.

The CHAIRMAN. May I ask, Congressman Reece, what do you mean by patents of the employees?

Representative REECE. Under the law, if an employee of a corporation conceives a patent, a patented idea, he must make application as an individual. My question was if it was customary for him to make the assignment of the application to the corporation before the patent is issued, so that that group would be included in the 17.2 percent.

The CHAIRMAN. Of course, every patent must be applied for by an individual.

Representative REECE. But it can be issued to a corporation.

The CHAIRMAN. Yes. If a corporation is to receive it, the individual who applies for it must assign it to the corporation and there is, as I understand it, a Book of Assignments maintained at the Patent Office for that purpose.

Senator KING. However, some assignments are made weeks or months or perhaps years after the patent is issued to the individual. The CHAIRMAN. Oh, yes.

Mr. COE. This chart is partially in answer to your question because it shows the number that were issued where assignments were filed prior to the grant, and the rest show the assignments of patents that took place after the grant, that were acquired by purchase from an individual after the patent had been issued.

As to all the rest in those groups, the patents were issued to the corporation before the grant of the patent.

The CHAIRMAN. Are there any other questions?

3

Dr. LUBIN. Mr. Coe, are there any data available which would show how large a percentage of these individuals were foreigners? In other words, you have foreign corporations but you don't have foreign individuals.

Mr. COE. I don't think we have any. I suppose it could be ascertained.

Dr. LUBIN. I raise the question merely because it might have some definite bearing as to how the patent law is a stimulant to invention. Knowing whether any large number of foreigners who would invent and patent under foreign laws came here to patent something they had invented and patented at home, would have a definite bearing on the problem.

1 See "Exhibit No. 186", appendix, p. 1126.

1 See "Exhibit No. 188", appendix, p. 1127.

Mr. Coe subsequently submitted figures relating to the number of patents held by foreigners. They were entered in the record as "Exhibits Nos. 210, 211, 212, and 213" and appear in the appendix on pp. 1150-1152.

There is a second question I would like to ask if I might. Let's assume that you could so increase the staff of the Patent Office so that you could cut your 3 years to 2 or to 1 as the normal length of time. If such a thing were possible through sufficient funds or staff, what happens to your 20-year change? Then you have automatically expanded the period of 17 years to 18 or 19, depending on the time you cut down in your office.

Mr. CoE. No; you never change the life of the patent itself. If we ever reach that happy situation where we could get rid of the applications in 2 years, the 20-year proposal would still cause that patent to expire within 17 years of the grant. We are not proposing at all or contemplating the enlargement of the patent period under any circumstances.

Dr. LUBIN. One final question which arises out of your question regarding the place of the large corporation dominating the field, particularly because of litigation and otherwise: Would it be possible for the record to recalculate your charts, "Exhibits Nos. 183 to 191", just the statistical material, and instead of calling a corporation which has $50,000,000 worth of assets a big one, let's call a $5,000,000 corporation a big one and see what change it would have on your charts. Mr. COE. I think that study could be undertaken.

Dr. LUBIN. It might change the whole picture.

Mr. COE. It might. I still think you would find among that large group a great many patents that are exploited by very small corporations. Frequently, for example, almost inevitably when an inventor begins to exploit his own invention, the first thing he does is to incorporate, so that could be included in this group; "to small corporations" in "Exhibit No. 186", of all the corporations below 50 million

assets.

The CHAIRMAN. It wouldn't be a difficult task for you to prepare a chart embodying the material Dr. Lubin suggests, namely, the number of patents held by corporations having assets of more than $5,000,000 and less than $50,000,000?

Mr. COE. It wouldn't be a difficult task. It would be a lengthy one, but we would be very glad to do it.

The CHAIRMAN. How long would it take you to do it?

Mr. COE. I would rather not estimate, Senator, but we could start it right away if you would like to have that information.

The CHAIRMAN. I think it would be illuminating.

Dr. LUBIN. If I might ask one final question arising from the answer Mr. Coe just gave, if the individual who has a patent and wants to exploit it usually incorporates, does that mean that these individual figures in the charts really mean nothing in the sense that most patents are exploited by corporations anyway?

Mr. CoE. No; I don't mean to indicate that, because still included. in your individual group are a number of patents that are exploited by corporations by license agreements, but I should say in my judg ment it would be a healthier condition, sir. This is my own personal opinion, now, and not statistics. The more patents in this group "To individuals" on "Exhibit No. 186" that pass down into here "To small corporations" on the same exhibit, the healthier the condition, because it indicates that the patent has passed into the hands of the medium that ordinarily indicates commercial activity.

The CHAIRMAN. In other words, what you are saying is that most of the inactive patents are in the group labeled "to individuals."

Mr. COE. I didn't say that. I said it was likely that that is the

case.

Senator KING. Isn't it a fact that with nearly every patent that promises some utility, the patentees form a corporation because they can more readily carry on the business, more readily obtain capital, sell stock to their neighbors or friends, and have greater access to the capital market through the instrumentality of a corporation than if they held the patents in their own name?

Mr. COE. I think that is the preferred method of carrying on business.

The CHAIRMAN. If there are no other questions, and if the witness doesn't care to add anything at this point, the committee will stand in recess until 10 o'clock tomorrow morning, and Mr. Dienner will proceed under the direction of the Commissioner.

(Whereupon, at 4:25 p. m., a recess was taken until Tuesday, January 17, 1939, at 10 a. m.)