leading manufacturers of industrial stokers have taken out license on this system. A differential pressure control is required to regulate the operation of the cleaning apparatus. He wishes us to propose descriptive specifications and a list price on a unit for this application, and if that seems satisfactory to him, he will purchase two of the units immediately for use in his own test laboratory. If these units that he would use perform satisfactorily, he will write a specification and recommend it to each licensee who, in turn, would each purchase their requirements directly from Mercoid. Now this patent owner, he didn't go out and try to make money on the controls. Now, suppose we had approached him and taken a license and said, "The only way you can get this thing is by buying this control from us." That is the improper method which the Supreme Court in the Mercoid decisions objected to. That is what you are repealing or changing in section 231 (d). The letter I have just quoted from shows you that there are methods for these owners of patents to license their patents. He is licensing his properly. He is recommending a control. He is not saying where they must buy it. We will sell it in a perfectly safe way and even with his cooperation. He needs that control for his purpose and we have to design some specifications for it. Now, there is an approach, I think, that these people are forgettingthat is, that the patentee can go out and operate in a legal manner and not go out and make his money on the unpatented articles. The Supreme Court decision was very definite on that—that you cannot go out—and we have not operated that way. Rather than take up more of your time, I would suggest you again read the Mercoid decision. I believe there was an error made by Mr. Rich as to the Supreme Court decision on the Mercoid Midcontinent case being a 5-to-4 decision on the question of contributory infringement. The disagreement of the Court was with respect to the subject of res adjudicata, relating to misuse as a defense, on the grounds that the defense could have been raised in an earlier suit but wasn't. As to the misuse principle, the Court was also unanimous in the Mercoid Minneapolis-Honeywell case. I believe that you will find that there are ways for these inventors to license their patents without conditioning the same to obtain a monopoly on unpatented (by them) material. We are working with inventors right along. We are not trying to obtain a monopoly. This man found a way to meet a stoker invention and he is doing it nicely and he isn't infringing and isn't practicing the patent improperly; nor are we infringing his patent. Mr. BRYSON. We will certainly reread the Mercoid case. Gentlemen, we are very much obliged to you, you highly technically trained attorneys of patent law. As declared, we will leave the record open and those of you, even those who have not appeared in person, who have pertinent suggestions to make may submit them within this period. Under those conditions the oral hearing has been concluded. (Whereupon, at 4: 20 p. m., the hearing was concluded.) APPENDIX EXECUTIVE OFFICE OF THE PRESIDENT, BUREAU OF THE BUDGET, Washington, D. C., June 28, 1951. Hon. EMANUEL CELLER, Chairman, Judiciary Committee, House of Representatives, Washington 25, D. C. MY DEAR MR. CHAIRMAN: Reference is made to H. R. 3760, a bill to revise and codify the laws relating to patents and the Patent Office, and to enact into law title 35 of the United States Code entitled "Patents," which is now pending in your committee. An examination of this bill indicates that it vests directly in the Commissioner of Patents most of the functions relating to patents. In so doing, it conflicts. with, and would partially nullify, Reorganization Plan No. 5 of 1950, which became effective May 24, 1950. This plan transferred to the Secretary of Commerce all functions then vested in other officers and agencies of the Department, except those vested in hearing examiners, the Inland Waterways Corporation, and the Civil Aeronautics Board. It also authorized the Secretary to provide for the performance of any of his functions by any officer, employee, or agency of the Department. As a result of this reorganization plan, the patent functions: are now legally vested in the Secretary of Commerce but are performed by the Commissioner of Patents by delegation by the Secretary. Reorganization Plan No. 5 of 1950 is one of a series of reorganization plans which have become effective within the last 2 years transferring the functions of nearly all subordinate officers and agencies to the Secretary in the case of six civil departments. A similar transfer has been effected by statute (Public Law 73, 81st Cong.) with respect to a seventh department, the Department of State. These transfers have been made to carry out two basic recommendations for improving departmental administration which were made by the Commission on Organization of the Executive Branch of the Government in its Report on General Management of the Executive Branch, namely: "Recommendation No. 14.-Under the President, the heads of departments must hold full responsibility for the conduct of their departments. There must be a clear line of authority reaching down through every step of the organization and no subordinate should have authority independent from that of his superior" (p.34). "Recommendation No. 20.-We recommend that the department head should be given authority to determine the organization within his department" (p. 41). These recommendations embody fundamental principles of effective administration which have been worked out through years of experience in Government and industry and have been widely applied in large business organizations. By vesting all functions directly in the head of the department, subject to delegation by him, these plans eliminate question as to the authority and responsibility of the department heads for the effective administration of the affairs of his department. At the same time these plans enable the department head to make adjustments in the internal organization of his department by revising the delegations of the functions legally vested in him. While in each case the head of the department initially redelegated the transferred functions to the officers who had previously possessed them, a number of changes in delegations have already been made to gear the departments for the administration of defense activities. In the case of the Department of Commerce, the reorganization plan made it possible for the Secretary to transfer from the existing bureaus a number of units and activities needed in setting up the National Production Administration to handle defense responsibilities assigned to the Department. Though the reorganization plans were drafted with out particular reference to a defense emergency and became effective a month before the invasion of Korea, they have proved a valuable tool in organizing the administration of the defense program. As conditions change and new problems arise, these reorganization plans will greatly facilitate the adaptation of departmental organization to the new requirements. However, if the bills adopted by the Congress to enact titles of the code into definite law vest the functions in subordinate officers, this possibility will soon be blocked and the purpose of the reorganization plans destroyed. For these reasons, it is very important that new legislation, and especially the bills enacting entire titles of the code, adhere to the pattern established by recent reorganization plans of vesting functions in the heads of departments rather than in bureau chiefs and other subordinate officers. This principle has long been observed by the Congress in case of certain departments, particularly tht Departments of State, Post Office, and Agriculture, and now applies to the other civil departments. In this connection it should be noted that the Congress has followed this principle in the numerous regulatory laws administered by the Department of Agriculture as well as those relating to its operating programs. Accordingly, I should urge that your committee revise H. R. 3760 to vest the functions in the Secretary of Commerce rather than the Commissioner of Patents. Sincerely yours, Hon. JOSEPH R. BRYSON, ELMER B. STAATS, Acting Director.. THE SECRETARY OF COMMERCE, Chairman, Subcommittee No. 3, Committee on the Judiciary, House of Representatives, Washington, D. C. DEAR MR. CHAIRMAN: This letter is in further reply to your communication of April 30, 1951, requesting the comments of the Department concerning H. R. 3760, a bill to revise and codify the laws relating to patents and the Patent Office, and to enact into law title 35 of the United States Code entitled "Patents." This bill, if enacted, would codify the patent laws, enact title 35 of the United States Code into law, and make certain revisions in existing patent laws. The Department of Commerce is fully in accord with the purpose of H. R. 3760 but finds it necessary to object to the use of language inconsistent with the provisions of Reorganization Plan No. 5 of 1950. On March 13, 1950, the President transmitted to the Congress Reorganization Plan No. 5 of 1950, which vested in the Secretary of Commerce the responsibility for the performance of all other offices of the Department and all functions of all agencies and employees (with exceptions not here relevant) of such Department. Resolutions unfavorable to the plan failed to pass either House and the plan became effective March 24, 1950. In testifying before the Committee on Expenditures in the Executive Departments of the House of Representatives, the Secretary of Commerce stated that"The central idea of the plan is to make the Secretary of Commerce responsible in fact as well as in theory for the operations of the Department which he heads. Without reservation, I am convinced sincerely that this plan is entirely sound in terms of both theory and practical operation." In his testimony before the committee at that time the Secretary dealt at some length and went into considerable detail concerning the functions of the Patent Office and the effect of the passage of the plan on the location and supervision of those functions. He stated: "I have no intention of changing the present procedure or the present powers of the Patent Commissioner or the Patent Office, and I have already announced my intention of authorizing the Commissioner and the Patent Office to continue to carry on their functions in accordance with their present statutory powers." A departmental order carrying out this announced policy was promulgated immediately when the plan went into effect. Enactment of H. R. 3760 in its present form without providing for the vesting of the functions described therein in the Secretary of Commerce would effect a partial repeal of Reorganization Plan No. 5, and we are opposed to any such result. Accordingly, it seems appropriate that provision be made in the proposed codification for continuing the amendment made by this plan. It appears that amendment of H. R. 3760 to provide for the performance of the functions by the Secretary of Commerce would be the procedure which would be the most satisfactory since the resulting bill would clearly set forth the officer of the Government with primary responsibility. We will be glad to work with the staff of the committee in the task of making appropriate amendments to the bill for this purpose. As an alternative, but less direct and therefore less desirable, method of accomplishing this purpose we suggest the addition to the bill of a section reading somewhat as follows: "SEC. For the purposes of Reorganization Plan No. 5 of 1950, this Act shall be deemed to have been enacted prior to the effective date of such plan." Language similar to that here proposed was adopted by the Congress in enacting the Social Security Act Amendments of 1950 (Public Law 734, 81st Cong.). Apart from the problems arising with regard to Reorganization No. 5 the Department believes that the selection of the statutes to be included in the title, and the changes in the language required by the arrangement and the omission of obsolete material have been in general, very well carried out in the bill. In addition to the codification the bill also proposes to make various changes of substance in the patent laws. Since most if not all of the changes introduced are of a minor character or are of a procedural nature and substantially noncontroversial, or, are such that general unanimity of opinion can be easily obtained, the Department has no objection to the changes proposed. If we can be of further assistance in this matter in any way, including technical assistance by experts in our Department, please call on us. We are advised by the Bureau of the Budget that it would interpose no objection to the submission of this report. Sincerely yours, D. W. RENTZEL, Acting Secretary of Commerce. THE NATIONAL EDITORIAL ASSOCIATION, Representative JOSEPH R. BRYSON, House Office Building, Washington, D. C. DEAR MR. BRYSON: It is our understanding that subcommittee No. 3, of which you are chairman, has just completed a series of hearings with respect to H. R. 3760. The proposed omission of the following, "by word, circular, letter, or by advertising" provokes some concern on the part of our newspapers. There have been so many attempts to curtail advertising with respect to Patent Office that we are frankly suspicious that this omission could be construed as granting the Commissioner of Patents additional control over advertising by patent attorneys or agents. The National Editorial Association is a trade organization representing approximately 6,000 newspapers published largely in small towns, some weekly, some semiweekly, and several hundred dailies, and having distribution in every State of the Union. The South Carolina Press Association is one of our affiliated groups. So long as advertising conforms to established principles of truth and decency and its effect is not contrary to the public welfare, we are committed to defend its use against all further restrictions. I am sure that the publishers of your State and other areas represented by our membership will appreciate your thoughtful consideration in clarifying H. R. 3760 to the extent that the Patent Office cannot possibly interpret any section of the bill as giving it arbitrary control over advertising. Very truly yours, ED M. ANDERSON, National Editorial Association. A. PAUL CONNOR, ATTORNEY AND COUNSELLOR at Law, Re Patent advertising ethics. Hon. J. K. BRYSON, Member of Congress, Washington, D. C. DEAR CONGRESSMAN: I suggest that you look into the following phase in patent matters. It seems that some patent attorneys expend some $5,000 a month in paid advertising in periodicals. The same attorneys employ learners to make up their applications, but get the full fee for the work, leaving the impression with the inventors that they are getting the personal service of the members mentioned in the title of the concern. If requested, the Commissioner of Patents would be glad to furnish data on this phase of patent practice. It would seem consistent with good practice to limit the expenditure for paid commercial advertising by patent attorneys to $1,000 a month at normal rates (no discounts or rebates). And put this in the statute, so it will be enforceable. Yours very truly, A. PAUL CONNOR. KANE & KOONS, CHARLES J. ZINN, Esq., Washington, D. C., June 15, 1951. Law Revision Counsel, House Judiciary Committee, DEAR MR. ZINN: In our brief conversation of yesterday, I gave you a reference to volume 61, page 941, of the Reports of the American Bar Association (1936), which showed that Mr. Howson, of Philadelphia, recommended the amendment of title 35, section 11, of the United States Code (R. S. 487), by striking out from the second sentence thereof the words "by word, circular, letter, or advertising." An examination of that reference will further show that Mr. Howson explained that the presence of those words in the statute had been construed "by some" as recognizing by inference that some advertising by patent attorneys is proper, and that, as the statute then and now stands, there is a question as to whether or not the Commissioner has the power to prohibit registered patent attorneys from advertising, except when done with misleading intent. From the report of the committee on ethics and grievances of the American Bar Association to the section of patent, trade-mark, and copyright law (1939), it is very clear that Conway P. Coe, when he was Commissioner of Patents, interpreted the law as preventing him from prohibiting advertising. The following is a quotation from that report: "That subsequently a conference was held at Chicago on February 19, 1939, at which it was agreed that the most desirable action would be the Commissioner's promulgation of a rule prohibiting the practice but that, irrespective of how favorably disposed he might be, he would not take such action unless the present statute be clarified by amendment, as it is his view that under it he does not have the authority to do so. He has been advised that the following portion of section 11 of the present act: or who shall with intent to defraud in any manner, deceive, mislead, or threaten any applicant or prospective applicant or other person having immediate or prospective business before the Office by word, circular, letter, or by advertising' are words which limit the broad disciplinary authority which the statute apparently intends to vest in him." Reference is also made to volume 65, Reports of the American Bar Association (1940), pages 470 et seq. On page 471 it appears that the section of patent, trade-mark, and copyright law reported to the American Bar Association in 1940: "The Commissioner of Patents alone has power to discipline registrants who are not lawyers, and it is asserted that the power given him by statute (R. S. 487, 35 U. S. C. 11) is insufficient to enable him to forbid all advertising because the present statute, by mentioning advertising, impliedly authorizes it." The section thereupon recommended to the bar association-for the purpose of accomplishing the result of enlarging the Commissioner's power in order to make it possible for him to forbid advertising-the enactment of a statute which would omit from the law the words "or who shall, with the intent to defraud |