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Senator KING. But you built up the industry under the patent system?

Mr. BAEKELAND. We did.

Dr. LUBIN. What I am trying to get at is whether you might not have built up the industry without the patent system. I am not convinced.

Mr. BAEKELAND. I certainly am.

Mr. DIENNER. Dr. Lubin, it may be you fail to appreciate the point that those materials or those devices that you have there require certain raw materials to be prepared and that you cannot walk out into the open market and in a drug store buy raw materials. The raw material which you must mold is the subject matter of the patents that Dr. Baekeland took out.

Mr. DIENNER. Now it would not have been possible for you to get the materials unless someone had supplies the materials and that is where Dr. Baekeland's patents and his industry come in.

Dr. LUBIN. My contention is that Mr. Baekeland's father had developed this new material and it became known to industry that such a material was available; they should use it and he produce it, whether or not there were patents if he could make it and industry wanted it?

LACK OF INCENTIVE TO INVENT WITHOUT PATENT PROTECTION

Mr. BAEKELAND. Well, now, Dr. Lubin, when he invented this it was the basis of this industry. It required a great deal of work to bring it to a point where it could be commercially utilized. He spent his own money on it in the early days, before the company was formed, and then with his own money and that of others he conducted research work; profits came in; they were put back into the business; more research work, development, more introductory work. He would not have gone ahead with that if he had not been protected because anybody could have come along and copied him. Who would have had to amortize the expense that he went to, the money he spent on research, in equipment that did not work and had to be junked, and other materials tried? And all that sort of thing. People don't go ahead without an incentive.

The CHAIRMAN. There would have been no motive for the development of the industry if there had not been a patent system? Your father would have found himself in precisely the position of the gentleman who left the stand just before you took the seat, who has been unable to find any person who is willing to manufacture an apparently useful device which he exhibited to the members of the committee because he cannot offer any patent protection?

Mr. BAEKELAND. Exactly, and there would not have been the continuing development. Now what this did for him, this patent system enabled him to build up a glass wall around himself, behind which he could work in security without being rushed and through which the public on the outside could peer in and see what he was doing, and wait until 17 years when they knocked the walls down and everybody could then come in. Now that is all that it did. It gave him a chance to work and develop, to improve and to do the things that a research worker does.

Dr. LUBIN. Perhaps I can clarify what I have in mind better by adding this question. In your research laboratories do you work only on the development of new materials or the improvement of existing materials, or do you also work on the possible uses of existing materials?

Mr. BAEKELAND. Yes; we work on those, and then we run into an anomaly when is a patent not a patent, or when is a patent monopoly not a patent monopoly? I will tell you how that is.

Suppose we developed, suppose we had taken out a patent on this adhesive tape. On this adhesive tape, incidentally, a patent was applied for. It is coated with one of our materials and what it produces is an adhesive tape that you can keep on for weeks, and go in swimming twice a day, and it doesn't come off or come loose. You can wash it right off; dirt doesn't stick to it. It has certain advantages.

We developed the material. We did not develop the adhesive tape. We turned it over to an adhesive tape manufacturer who came to us wanting this kind of coating. He applied for the patent.

Suppose we had applied for that patent, or taken out a patent on adhesive tape. The law doesn't permit us to issue a license to an adhesive tape manufacturer under the patent with the proviso_that he must buy his material from us. That is against the antitrust laws. So what we have to do in those cases is to give the dear old customer the right to use the patent and hope that we can get our share of the business with our competitors.

We are not manufacturers of adhesive tape We are not in the patent licensing business, and although in theory we could license him and collect a royalty and sell him material, it doesn't work that way. When a man pays you a royalty he thinks he has given you enough, and if he is going to buy materials, he is going to do that from your competitor. He says, "Those fellows get enough from us on a royalty, and I'll be darned if I'll buy material from them too."

Dr. LUBIN. Here you have these laboratories, people working, finding new uses for existing materials upon which patents have expired. Despite the fact that you have no patent protection you go ahead and develop new uses for your materials.

Mr. BAEKELAND. Because they are added outlets for our materials. But if we didn't have the materials to fill the needs and use, we wouldn't be bothered with developing a use patent.

Dr. LUBIN. What I am getting at is, you can develop a new use for a certain product you have on which there is no patent, and your competitor can make exactly the same thing tomorrow once they have discovered it, yet you continue to produce these new things, despite the fact that your competitor can produce them immediately thereafter.

Mr. BAEKELAND. You mean in the case of a use patent?

Dr. LUBIN. You use your product in making these. Assuming now that the product out of which this is made-your research laboratory develops this, but you don't make them, other people make them. Mr. BAEKELAND. We didn't develop the switch plate.

Dr. LUBIN. I mean you do, in your laboratory, seek new uses for materials upon which patents have expired.

Mr. BAEKELAND. That is true.

Dr. LUBIN. Despite the fact that you have no patent protection and despite the fact that tomorrow, once you have found a new use

for your product, anybody can go out and make that product, just as you do.

Mr. BAEKELAND. Yes. If we run across it accidentally, yes; but we don't put our men to work on something like that. We would rather put them to work on something that is protected.

The CHAIRMAN. To what extent are the materials which your father and your company have developed, and upon which the patents have expired, being used now by competitors?

Mr. BAEKELAND. Widely.

The CHAIRMAN. That is the point, I think, the doctor was trying to develop.

Mr. BAEKELAND. These materials on which patents expiredThe CHAIRMAN (interposing). Your counsel is making applications for patents which are really improvements upon the basic patents? Mr. BAEKELAND. Yes; that is true too, but we hold our own in the field where the patents are expired through service to our customers. The CHAIRMAN. Then it comes down to what in the trade is called the "know how" and the reputation and the goodwill.

Mr. BAEKELAND. It is more than that. We give almost a professional service. Our customers are in constant touch with our sales engineers. They are not salesmen who go out and take orders.

Let us assume you are ready to go into business to make hardware. You are a hardware manufacturer and you want to make this kind of hardware. You don't know anything about the technic or anything of the sort. Our people will lay out a plant for you, specify optional equipment, recommend certain equipment for you to put in there. We will go so far as to try to get you personnel for a skeleton organization of that kind and get you started.

The CHAIRMAN. Yes; you endeavor to render an efficient service. Mr. BAEKELAND. An engineering service.

The CHAIRMAN. But there is nothing in the patent system or in any other system which prevents competitors of yours from using the materials upon which your patents have expired?

Mr. BAEKELAND. None whatever.

The CHAIRMAN. I think that is what Dr. Lubin had in mind.

Senator KING. In your research work do you discover new elements, if I may use that expression, and get a patent upon that new discovery? Perhaps the new element or the new product would be the result of a rearrangement of the molecules or the atoms of the various compounds out of which the product is made.

Now, do you find, in your investigations and in your researches, that you discover new processes which would permit you to obtain inventions for plastics?

Mr. BAEKELAND. We do; yes.

Senator KING. And upon those new inventions and new discoveries out of the same elements you get patents?

Mr. BAEKELAND. Yes; and frequently our older materials are in competition with the new, or some other material might be in competition with it.

The CHAIRMAN. You find yourself putting yourself out of business as you go along.

Mr. BAEKELAND. Sometines we do, and then there are substitute materials that can be used, too, where it is a matter of choice, and we

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have to try to convince the customer that the new material is better than what he is accustomed to using.

Mr. PATTERSON. Mr. Baekeland, your father started the plastic business?

Mr. BAEKELAND. The plastics industry in this country with the exception, I should say, of celluloid, which is cellulose nitrate, gun cotton, invented by Hyatt. He was endeavoring to develop a billiard ball material which would be a substitute for ivory, and he invented celluloid. That was the first synthetic plastic, but its field, you know, is limited.

Mr. PATTERSON. Are not 95 percent of the buttons men wear on their clothes plastic, or some very high percent?

Mr. BAEKELAND. It is increasing.

Mr. PATTERSON. To what proportion would you say that the plastic industry has grown-60 million per annum, 80 million per annum, or have you an idea?

Mr. BAEKELAND. The Department of Commerce has those figures. Mr. PATTERSON. I don't have them.

Mr. BAEKELAND. I don't have them in my head; no.

Mr. PATTERSON. I want to ask you one other question. Some time ago you spoke of airplanes and plastic wings. Can you speculate as to whether these new planes might meet the administration's much discussed problem of having adequate facilities for mass production in case of need?

Mr. BAEKELAND. Yes; it would do so admirably.

Mr. PATTERSON. And what is the comparison of the length of time it might take to make a plastic wing over the other type of wing? Mr. BAEKELAND. Well, I will have to guess at that.

Mr. PATTERSON. I won't ask, you to do that. I don't want to press you.

Mr. BAEKELAND. It would be many times the amount of time; oh, I should say it would be 20 or 30 times.

Mr. PATTERSON. More difficult?

Mr. BAEKELAND. As long to make the other.

Mr. PATTERSON. To make the present wing.

Also is anyone ready to go into commercial production of these wings?

Mr. BAEKELAND. The plant has been designed, and production awaits a contract which is pending.

Mr. PATTERSON. Is there an invention of this plastic wing, any one man responsible for it?

Mr. BAEKELAND. Yes, Colonel Clark.

Mr. PATTERSON. Colonel Clark?

Mr. BAEKELAND. Formerly of the United States Air Service.

Mr. PATTERSON. An ex-Army man?

Mr. BAEKELAND. He is the man who developed the thing, and he got a backer to support him on his development work, and that development work was carried out by one of our customers, the Haskelite Co., of Grand Rapids, Mich.

Mr. PATTERSON. What is Colonel Clark's first name?

Mr. BAEKELAND. I might have it here in a letter. I think he was in command of Wright Field, at Dayton, and he is the man who developed the Clark Y-section wing, which is widely used. He is one of the ablest and foremost technicians of airplane design.

Representative REECE. Have you explored the possibilities for this material in the building supply industry?

Mr. BAEKELAND. Yes, sir. There is quite a little work being done in that field. Here is a piece of plywood. That is made up of a number of pieces of veneer welded together with this material here which is a bakelite plywood bond. Those sheets are established in between the layers of veneer, the whole is pressed together warm, and it makes a water-resistant, weather-proof ply.

The CHAIRMAN. The material that you supply there is the bond. Mr. BAEKELAND. That is the bond.

The CHAIRMAN. The veneer is wood.

Mr. BAEKELAND. Wood. The first plywoods were made with animal and vegetable glues, which are water soluble, and as soon as the plywood goes out-of-doors and gets in the weather it splits and comes apart. This plywood here is usable under water. Anthony Fokker built a new 110-foot triple-screw yacht out of that material. Even his engine beds were made of it, and he has three 1,000-horsepower motors. He had built plywood airplanes; he knew the value of plywood; he knew its strength. He is perhaps as well versed in the use and limitations of plywood as anybody I know. He had the courage of his convictions and he built this expensive, large yacht entirely out of those materials.

The CHAIRMAN. Are there any other questions?

SEARCH FOR SUPPRESSED PATENT UNSUCCESSFUL

Mr. DIENNER. I have one more question. Do you know of any patent which is being suppressed?

Mr. BAEKELAND. No; I don't, Mr. Dienner. I don't know of one, and as it is interesting, I might tell you that Mr. Parsons, who is Secretary of the American Chemical Society-the American Chemical Society is quite an organization, it has a large membership, it runs into the thousands-was aware of the fact that some people believed that patents were being suppressed and that perhaps they were right, so he circularized the membership of the American Chemical Society and asked the membership to submit to him cases of a suppressed patent. He didn't get a single example. I can't conceive of a patent being suppressed. I don't know why anyone should suppress a patent when he could use it.

Senator KING. Don't some inventors claim a suppression of patents because after bringing them to the attention of manufacturers or persons engaged in a particular industry they didn't see fit to utilize them and the inventor then claimed that they were suppressed? Perhaps the person to whom he exhibited them had better patents or at any rate felt that there was no necessity of utilizing this because it would not add to the success of the products which they were giving to the public.

Mr. BAEKELAND. I can conceive of an inventor that you might say was perhaps a bit of a sorehead or whose vanity was hurt because he had sold someone a patent and that patent wasn't outwardly used. For example, suppose that Mr. Graham here had bought a patent on an article that wasn't commercial and wasn't useful, but a patent which was valid and had not expired, one feature of which might remotely bear upon his biscuit maker. The patent might have been

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