The Consideration should also be given to the problems of small business investing in new inventions and how we can stimulate and encourage businessmen to spend money on research and developing inventions so as to ensure adequate incentives and reasonable returns from such efforts and investment. Due consideration should be given to the tax problems involved in such investments, granting of priorities for materials and manpower, etc., so as to further the public interest. If we are to prevail over the evil forces conspiring against our free-enterprise system and individual liberty, we must turn to the inventor to rescue us. inventor has liberated us from physical slavery, from a filthy precarious animal existence to the possibility of living a full and rich life. He has freed us from the adverse forces of our physical environment so that we are no longer slaves to natural forces. The inventor has given us our physical environment in which the dignity of the human individual can rise to its utmost heights. Today the inventor can also save us from loss of our individual liberty and freedom and our American way of life by giving us the physical implements to fight and overcome our enemies. The inventor is our most precious asset and savior against the serfdom of communism. We must do everything possible to encourage and help him or we will surely perish. Respectfully, JOSEPH ROSSMAN. 123 SOUTH BROAD STREET, PHILADELPHIA, Pa., June 22, 1951. Re H. R. 3760. Hon. JOSEPH R. BRYSON, House Office Building, Washington, D. C. DEAR MR. BRYSON: The suggestion made during the hearings on this bill to amend section 122 (confidential status of applications) to include the second paragraph of section 121 of former H. R. 9133 (or its equivalent), if adopted and enacted into law, would, I believe, so emasculate our patent system as to virtually destroy its vitalizing force in our economy. My views in this respect are more fully set forth in the attached counterpart of a letter which I wrote to a member of the coordinating committee when H. R. 9133 was before it for consideration. It is my understanding that the coordinating committee voted against this provision for the publication of patent applications in large part on the basis of the views expressed in my letter, and it is for this reason that I feel certain that you and the other members of your subcommittee would prefer to have these views before it for consideration. In addition, I should like to point out that, to the best of my knowledge, in all instances where the pros and cons were fully developed before a vote was taken, the members of all groups considering this provision have voted it down. Obviously, a vote taken on a matter as to which no issue is presented, or on which only the pro side is presented, is rather meaningless. The thought here is that you might wish to determine rather exactly how the vote was taken on this matter in the case of group representation before your subcommittee. From the nature of the attached you will no doubt conclude that I am in the employ as patent counsel of a small company, which is true. I have not employed company stationery simply because I wish to bring out that the views expressed are my own. It is my sincere hope that this letter and the attached will receive your most careful consideration. I am enclosing extra copies so that you may distribute them among the members of your subcommittee if you wish. Yours very truly, Re H. R. 9133-Codification of the patent laws. HUGO A. KEMMAN. DECEMBER 1, 1950. DEAR ANDY: I have given the second paragraph of section 121 of H. R. 9133 some further study, and I believe that it might be quite properly labeled the section to prevent competitors from getting patents. In this connection you will recall the often-told story about the company that published material (upon which it could not do a great deal of research in view of more pressing projects) in a newspaper in a small town in the South which was more or less isolated in the hill country. In this way it obtained publications which were quite effectively hidden, but which could be used to anticipate any patents which a competitor might obtain in fields which the company wished to hold open for its own possible entry at a later date. As you know, no research program is ever capable of even beginning to exhaust all of the possibilities in a field. The way to hold open that portion of the field which cannot be immediately explored is to make all manner of suggestions therein, whether responsible or irresponsible, and obtain publication thereof in the hope that this will anticipate the other fellow's patent. The difficulty, of course, is in obtaining publication, particularly of material not supported by factual data. One method is that referred to above. Another method which has been resorted to is the taking out of a patent in a foreign country which employs the registration system, such as France. In both instances, however, many patents have nevertheless issued because it was always difficult to get such publication under the nose of the examiner. Then too, both systems of publication had a very serious drawback in that they provided a competitor with the current thinking of the company making the publication, if the competitor got wise to what was going on. So we come along with the second paragraph of section 121 which is really made to order. There will no longer be any difficulty in getting the publication under the nose of the examiner for he will have been examining the very application being published, and there will no longer be any danger of providing one's competitor with one's current thinking, for the whole subject matter may be kept in secret for from three to five or more years by merely keeping the application pending in the Patent Office. No idea that doesn't click is worth much after this period, so that the public will gain nothing from its publication. Then too, we must not overlook the fact that this provides a very effective tool in breaking a competitor's morale in the development of new ideas, and in keeping new competitors from entering the field. In warfare it is well recognized that the greatest morale breaker for the enemy is to let him complete a vast project before you blow it to pieces for him. He, of course, has been operating with the mistaken idea that his activities would not be noticed by the other side, the same as a competitor (or a potential competitor) operates in developing a new idea. So after a competitor spends large sums of money in developing a new process, or in bringing out a new product, with the belief that he has the field preempted by way of patents, all that need be done is to expose the proper card, namely, the proper patent application, to effectively anticipate everything which he has done. If the timing is right, the application may be published before the competitor's patents issue, thus preventing their grant. The interference procedure should help in ascertaining what applications a competitor has pending. As you know, any publication is effective as a reference, irrespective of the amount of irresponsible material it may contain. Furthermore, in accordance with recent decisions, a mere suggestion is sufficient to anticipate. So we have everything very nicely set up for those companies who, while paying lip service, in fact find the patent system to be a disconcertingly restrictive nuisance. Many companies are so large that they do not need a patent system for purposes of doing business. Some have arrangements whereby they exchange new ideas freely among themselves. Their patent departments are maintained largely for defensive purposes and for the purposes of attracting competent research men who somehow have a preference for seeing their contributions reach the public in the form of patents. On the whole, however, such companies would be far better off if the whole patent system were abolished, or in lieu thereof, the number of patents very greatly restricted so as to make the patent system ineffective. In widespread business operations, the dangers of patent infringement are quite troublesome, particularly when a company wishes to expand even further. It follows that if the second paragraph of section 121 is enacted into law, it will mark the beginning of the end of our patent system as a vitalizing force in our economy. I will not question its constitutionality, but it certainly nullifies that which the fathers of the Constitution had in mind. As you no doubt know, the present practice in many foreign countries is such that before a patent issues the specification must be conformed to the claims, eliminating all excess matter. My foreign associates have just given me a sampling of such countries and they are England, Switzerland, Germany, Holland, Sweden, Norway, Denmark, Finland, and possibly Japan, which is expected to follow its previous practice in this respect. Such practice was undoubtedly adopted to do away with the many broad irresponsible statements that foreign patents used to contain. In fact there was a time when such statements in foreign patents were so irresponsible that this became recognized by the United States Patent Office in decisions refusing to rely upon such statements as anticipations. You no doubt will recall certain decisions of this kind. It seems to me that we should try to benefit by the experience of others in connection with such statements and not insist on learning the hard way. I could say much more in speaking against the second paragraph of section 121, but I believe the above will give you some things to think about. Yours very truly, HUGO A. KEMMAN. DENVER, COLO., June 20, 1951. SUBCOMMITTEE NO. 3, JUDICIARY COMMITTEE, House of Representatives, Washington, D. C.: Patent-codification bill. Proposals to publish patent applications reflect perversion of constitutional intent in and seek return of caveats long discarded as unsuited to American economic philosophy. Original committee-print proposal has been repeatedly considered and defeated by patent coordinating committee and individual groups. Proposals are inimical to individual inventors and small businesses and can benefit only large corporations who would neither seek nor require patents to maintain their dominance. Government defense agencies should if necessary be accorded a personal defense unavailable to general public. Very respectfully, MAURICE W. LEVY. GOVERNMENT PATENTS BOARD, OFFICE OF THE CHAIRMAN, Washington, D. C., June 18, 1951. Hon. EMANUEL CELLER, House of Representatives, Washington 25, D. C. DEAR MR. CELLER: In response to your request of May 24 for an expression of views on the proposed legislation, H. R. 3760, I would submit the following statement as an indication of my views as Chairman of the Government Patents Board, in which the Board concurred at its meeting on June 4. The Government Patents Board and this Office were established by Executive Order 10096, issued by the President on January 23, 1950, to provide for a uniform patent policy for the Government with respect to inventions made by Government employees and for the administration of such policy. The only provision of H. R. 3760 with which the activities of this Office and the Board are likely to be concerned is section 212. If this section is to be included substantially as proposed, it is suggested that the section be amended (1) in lines 3-4 by deleting the words "but neither of the owners" and substituting "and any owner"; (2) in line 5 by deleting the words "or without accounting" and substituting "provided he accounts"; and (3) in line 6, before the period, by inserting the words "for any material consideration therefor." While the above amendments would be preferred if the section is to be included substantially as proposed, there would be no objection to the reinstatement of the similarly numbered section 212 in H. R. 9133, Eighty-first Congress. I am advised that the Bureau of the Budget would interpose no objection to the submission of this report to the Congress for its consideration. If I can be of further assistance to you in this matter please call upon me. Sincerely yours, ARCHIE M. PALMER, Chairman. C. E. NIEHOFF & Co., AUTOMOTIVE PRODUCTS, Subject bill H. R. 3760. Hon. CHAUNCEY W. REED, House of Representatives, Congress of the United States Washington, D. C. DEAR CONGRESSMAN REED: May I direct your attention to the above bill, H. R. 3760, page 22, section 231, parts B, C, and D referring to infringement of patents. In my opinion this brings up a controversial matter which has been previously objected to and we are again objecting to it, as we did in the original bill, H. R. 5988, of the Eightieth Congress, and also in the bill H. R. 3866, of the Eighty-first Congress; both of which were discussed with your Judicial Committee in previous years. Actually section 231, parts B, C, and D, headed “Infringement of patents," brings up an issue which looms as a very serious factor to us. We are engaged in the manufacture of replacement parts for the maintenance of automobiles, trucks, busses, tractors, and so forth, and it is only a relatively few years ago when we had to defend successfully a number of suits brought by General Motors which were carried to the court of appeals, in which the same issue of supplying unpatented parts for replacement to a distributor, such as used on automobiles of today, was determined. The Supreme Court refused General Motors a hearing, thus sustaining a successful appeal. If General Motors had succeeded in their appeal, it may have resulted in giving the car manufacturers a complete monopoly on replacement parts or such unpatented parts, resulting therefore in an unreasonable level of prices to the motoring public. We said at that time, that it was emphatically demonstrated through the World War II period, that these large concerns were unable to supply the needed parts for cars, trucks, busses, farm implements, and so forth, and it was the smaller manufacturer that helped to supply their needs. Actually, this bill might affect our business very seriously for the future. We believe the comments made by J. Carter Fort, of the Association of American Railroads, emphatically set forth the seriousness of this bill, section 231, parts B, C, and D in the maintenance of railroad transportation, in objecting to bill H. R. 5988 and as shown on pages 82 and 83 under Serial No. 21, subcommittee hearings of the Eightieth Congress. It is our belief, therefore, that this is a controversial matter which has been previously objected to and we are, therefore, submitting this to you as a member of the Judicial Committee for your consideration of the same matter which is now appearing in the new bill. Thanking you for your kind attention that you may give this problem, we remain, Sincerely yours, C. E. NIEHOFF. DEPARTMENT OF JUSTICE, OFFICE OF THE DEPUTY ATTORNEY GENERAL, Hon. EMANUEL CELLER, Chairman, Committee on the Judiciary, House of Representatives, Washington, D. C. MY DEAR MR. CHAIRMAN: I enclose an extension of the testimony of Mr. Wilbur Fugate, of this Department, relative to H. R. 3760, a bill to revise and codify the patent laws. Mr. Fugate testified before Subcommittee No. 3 of your committee on June 15, 1951, but time did not permit a completion of his statement. Mr. Bryson, chairman of Subcommittee No. 3, stated at the conclusion of the oral hearings that the record would remain open for additional statements. The Department as stated in our letter to you of June 13, 1951, is particularly concerned as to the possible effect of section 231 of the proposed bill in limiting the application of the patent misuse doctrine. The rule that a patentee who has misused his patents may not recover in a suit for direct or contributory infringement is, in the opinion of the Department, a salutary principle which is important in the enforcement of the antitrust laws. Yours sincerely, PEYTON FORD, Deputy Attorney General. EXTENSION OF TESTIMONY OF MR. WILBUR L. FUGATE, ANTITRUST DIVISION, DEPARTMENT OF JUSTICE Section 231 of H. R. 3760 is substantially the same as H. R. 3866 of the Eightyfirst Congress, first session, and particular reference is made to the statement of the Department of Justice upon that bill (hearings before Subcommittee No. 4 of the Committee on the Judiciary, House of Representatives, Eighty-first Congress, first session, on H. R. 3866, May 25 and June 3, 1949, Serial No. 17, pp. 50-60, 63-64, 75–79). Subsection (d) of section 231 is particularly objectionable in the opinion of the Department since, although couched in general terms, its effect is to permit a patentee to sell unpatented parts for a patented device or combination and at the same time prohibit his competitors, by suit for contributory infringement, from selling such unpatented materials in competition with him. Mr. Giles Rich, of the New York Patent Bar Association, who aided in drafting this section, has testified that subsection (d) (1) was designed to overrule the Barber Asphalt case (Barber Asphalt Co. v. La Fera Grecco Contracting Co. (116 F. 2d 21, C. A. 3, 1940)); that (d) (2) was designed to overrule the Mercoid cases; and that (d) (3) was designed to overrule the Stroco case (Stroco Products, Inc. v. Mullenbach (67 U. S. P. Q. 168, D. C., S. D. Calif., 1944)). The proponents of this section of the bill, accordingly, do not so much wish to clarify the law as to change it. In the first Mercoid case (Mercoid Corp. v. Mid-Continent Investment Co., 320 U. S. 661 (1944)), the Supreme Court (unanimous on this issue) applied the misuse doctrine to a case involving contributory infringement and held that where there was a conflict between the two, the misuse doctrine must prevail. The misuse doctrine, in this connection, is that a patentee may not extend the monopoly of his patent by attempting, by means thereof, to control competition in unpatented articles. The practice by a patentee of granting a license to those who buy unpatented articles from him and suing for contributory infringement those who do not buy from him comes within this rule as laid down by the Supreme Court. The Stroco case is merely an illustration of the rule. The courts with few exceptions, have applied the Mercoid cases as holding that there can be no recovery for contributory infringement if the patentee has misused his patents, but that without such misuse the patentee may recover for contributory infringement. The cases of Florence-Mayo Nuway Co. v. Hardy (168 F. 2d 778, C. A. 4, 1948) and Harris v. National Machine Works (171 F. 2d 85 (C. A. 10, 1948)), far from disregarding the Mercoid case as suggested by Mr. Rich, both refer to and follow it. The case of Henry v. A. B. Dick (224 U. S. 1), overruled in Motion Picture Co. v. Universal Film Co. (243 U. S. 502), was cited in the Florence-Mayo case merely for a statement as to what constitutes contributory infringement. The Court of Appeals of the Fourth Circuit still regarded this statement as good law in the absence of any misuse of the patents there involved. On pages 78 and 79 of the hearings on H. R. 3866 (81st Cong.) previously referred to, the Department of Justice listed 1948 and 1949 cases (to the date of the hearings) showing that there is no confusion in the law at present with respect to contributory infringement. This list supplemented a list of earlier cases set forth at pages 77 and 78 of the hearings on a similar bill (H. R. 5988) introduced in the Eightieth Congress. A list of subsequent cases decided from 1949 to 1951 is submitted as an appendix to this statement. To summarize, the Department of Justice objects to section 231 since its effect might be to carve out an area in which the antitrust laws would not operate. Acts which are a misuse of patents, particularly the expansion of the patent to cover unpatented articles might no longer be a misuse. The proponents of the bill indicate that such a result is contemplated in the language of section 231. The courts are not confused as to the Mercoid doctrine and the Department opposes making an exception to the misuse doctrine under the guise of clarifying the law. APPENDIX (Prepared by the Department of Justice) 1949-51 FEDERAL CASES CONSTRUING THE MERCOID CASES 1. Cases discussing the effect of the Mercoid case on the contributory infringement doctrine. Jordan v. Hemphill Co. (180 F. 2d 457, 461 (C. A. 4, 1950)), Judge Dobie: (3) We are not impressed by the statement in defendant's brief that charges of contributory infringement are obsolete. What Mr. Justice Douglas said in |