structure, do any changes need to be made in its substantive or procedural provisions with a view to its improvement? The patent system has its basis in the Constitution. The Department of Commerce through the Patent Office is the administrative agency in the Government to which has been delegated responsibility for the proper issuance of patents. Our interest, however, goes far beyond mere matters of procedure. We believe in the importance of invention that the "progress of science and useful arts" is one of, if not the most important dynamic element in our national economic advance. In the long run, new processes and new products offer our greatest hope for progressive rise in the standard of living and for increased opportunities of leisure time. We believe that an effective patent system is an important factor in fostering invention and furthermore in bringing about the partnership of new ideas and speculative capital, which is so necessary to make the discovery bear fruit. While we thus unhesitatingly accept the basic concept of a patent system, we are greatly concerned with the problem of making it reach its maximum social value. We must prevent, as far as possible, abuses of any kind which may creep into its operation or which may be committed under the guise of the patent right. During recent years we have tried to deal with these situations by improving and strengthening the administrative process. However, we now believe that some of the difficulties can only be met by legislative action. The basic purpose of the system was declared in the Constitution: To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries. In judging its operation and any proposed changes, these fundamental terms must be kept always in mind. Our purpose in this hearing is twofold. First, we wish to present to you the experience of the Patent Office, pointing out certain conditions and problems which have directly emerged from its operations. Second, we hope to picture for you certain aspects of the patent system at work. For this purpose we have arranged for several witnesses to appear, typical of successful, independent inventors who have controlled the manufacture of their products, independent inventors who have turned over the results of their invention to other enterprises for exploitation, and inventors who function in research groups attached to large corporations. We shall present several businessmen who have had significant experience with the patent system, and one or two other witnesses whose general knowledge and experience in this subject should be helpful to the committee. May I emphasize that this is not a completed report. At certain points it will not even be a rounded or completely balanced presentation of a given problem. We do feel that the evidence to be introduced is pertinent to any consideration of changes in the patent law, some of which will be suggested by the testimony of the Commissioner of patents. Perhaps the committee may feel that certain of the conditions or problems discussed should be subjected to further examination and research. I can assure you that the Department of Commerce stands ready to pursue any problem as far as the committee feels it to be important. The first witness whom I wish to introduce is Mr. Conway P. Coe, Commissioner of Patents since 1933. Commissioner Coe has a wide range of subject matter which he wishes to cover and I hope that it will be possible for him to present his evidence with a minimum of interruption at this session. I am sure that there will be points in his testimony on which the committee may wish to question him in some detail and that we will arrange for him to return to the stand at a later stage in the hearings for as prolonged a discussion of these matters as the committee may wish. The CHAIRMAN. Thank you, Mr. Secretary. The chairman desires at this point to make note of the presence here of the Honorable Homer Bone, senior Senator from the State of Washington, who is the chairman of the Senate Committee upon Patents. We feel very grateful that Senator Bone has seen fit to be present at the hearing this morning. Mr. Coe, are you ready to present your statement? The CHAIRMAN. Will you be good enough to take the stand? May I say in advance of your beginning to the members of the committee that I understand Mr. Coe has a rather lengthy survey which he desires to enter if possible without interruption. I think it will be a good rule if this afternoon we refrain from interrupting the statement of the Commissioner by questions until he has concluded his prepared statement. If that is agreeable to the committee, Commissioner Coe may proceed. STATEMENT OF CONWAY P. COE, COMMISSIONER OF PATENTS Mr. COE. In the last 5 years of my service as Commissioner of Patents I have devoted myself to a careful study of almost every aspect of our patent system. This I have done not merely for my own information but with the purpose of increasing the usefulness of the system to the American people. In the course of this long and serious study I have utilized every available source of information. I have had correspondence and conferences with many persons familiar with the system; with its critics as well as its champions. I have discussed it with inventors; with representatives of every class of industrial organizations; with little men and magnates of business; with patent lawyers and Federal judges; with officials of different executive departments of the Government, and with Members of Congress. My investigations have extended even beyond our own shores. I have had the benefit of the knowledge, experience, and judgment of the officials of various foreign countries, including those of leading industrial nations such as England, Germany, France, Japan, Italy, Canada, and Belgium. I mention these facts only to indicate that my interest in the nature, operation, and effect of the patent system is neither recent nor casual. Let me not be understood as intimating that nothing more can be added to my knowledge, but rather as recognizing the many and difficult problems involved in any attempt at appraising the value of the patent system to our national economy. At the beginning of my statement I wish also to make so clear as to prevent misunderstanding, first, that I am not only willing but eager to rid our patent system of any and every abuse identified with it, and, secondly, that I shall welcome the adoption of any effectual remedy. Indeed, I am prepared to propose specific improvements before this statement is completed. For nearly a century and a half the American patent system has had the esteem of our citizens. It has been regarded not merely as a lawful institution, but also as a benefactor to the Nation. I am confident that your committee appreciates the wholesome influence which our patent system has exerted on the economic and social life of the American people. I am quite certain that you wish to preserve all that is good while correcting whatever is evil. For I know that you could not regard as wholly wrong and vicious a system that has brought so many benefits to our people during our entire national existence. PATENT SYSTEM, BEARING ON EVERY INDUSTRY, AN INTEGRral part of GOVERNMENT Mr. COE. It is hardly necessary to tell you that nearly every major industry in the United States and, for that matter, in the civilized world, owes its existence to inventions once protected by patents. However, it may be well to remind, if not to inform, you that American agriculture is indebted to the gin, the reaper, the tractor, and many other machines that facilitate larger production of the crops which our farmers must exchange for their own numerous needs. Communication depends on the telegraph, the telephone and the radio, and other inventions necessary to their successful operation. In the field of chemistry there are vulcanized rubber, celluloid, and bakelite as the expressions of immense investments of money and employment of thousands of workers. Modern transportation, though an industry in itself, depends to some degree on scores of other industries based on patents. In short, every industry in America depends to some degree on others for its operation and all of them are beholden to patents. Every individual in the United States, young or old, rich or poor, is in some form from birth to death, a user and a beneficiary of patents. Indeed, it would be all but impossible for any of us to free ourselves from this daily dependence on patents, for our very escape beyond the confines of civilization would itself require the use of some patented invention. The American patent system was established at a time when mechanical inventions had already begun to affect not only the industrial_conditions, but also the economic, social, and political status of Europe and the new Nation just erected on this continent. The significance of the inventions put to work in England and the States of the Confederation was realized by the American statesmen of that era. It is agreed that their recognition of the value of these new economic factors prompted them to write into the Constitution the provision of article I, section 8, empowering Congress "to promote the progress of science and useful arts by securing for limited times. to authors and inventors the exclusive right to their respective writings and discoveries." This provision, by the way, is impressive not only because it is included in the Constitution as one of the major grants of power to Congress, but equally because it [bestows on patentees a complete monopoly, and therefore raises a question as to the constitutionality of an attempt to compel the owner of a patent to share with others the title, use, and avail of his property. I do not presume to determine the point; but I must comtemplate it as an issue to be met here or hereafter. The authors of our patent system, judging by the language of article I, section 8, held the exclusiveness of the rights vested in a patentee as a powerful aid to progress in arts and sciences. No American among his contemporaries or his successors has achieved a greater reputation as an opponent of monopoly than Thomas Jefferson. Yet he not merely sanctioned, he eloquently advocated the form of monopoly represented in patents. I cite his commentary on an early act of Congress, presumably that of 1790, in the administration of which he collaborated with Henry Knox, Secretary of War, and Edmund Randolph, Attorney General. An act of Congress authorizing the issue of patents for new discoveries has given a spring to invention beyond my conception. Being an instrument of granting the patents, I am acquainted with their discoveries. Please, Mr. Chairman, note how ancient is this criticism. Many of them, indeed, are trifling, but there are some of great consequence which have been proved of practice, and others which, if they stand in the same proof, will produce great effect. In the arts, and especially in the mechanical arts, many ingenious improvements are made in consequence of the patent-right giving exclusive use of them for 14 years. Certainly an inventor ought to be allowed a right to the benefit of his invention for some certain time. Nobody wishes more than I do that ingenuity should receive liberal encouragement. That is the end of the quotation from the Jefferson statement. MONOPOLY OF PATENT A BENEFIT NOT IN CONFLICT WITH ANTI-TRUST LAWS Mr. COE. It occurs to me that a great deal of misapprehension results from the failure to distinguish between the monopoly or privilege vested in a patentee and the sort of monopoly that British sovereigns once conferred. It is only when we appreciate this distinction that we can understand how Jefferson could consistently advocate the monopoly of patents for inventions while condemning the traditional form of monopoly. Americans generally detest monopoly in the true sense of the term because it makes possible the ruthless exercise of power. Indeed, the American Revolution was precipitated by popular resentment of the monopoly on tea held by the East India Co. It would, therefore, have been exceedingly strange if, only a few years later, the delegates sent to the Constitutional Convention by Massachusetts and the other Colonies had been willing to sanction an equivalent form of monopoly under the new government they were creating. In the sixteenth and seventeenth centuries a king or queen of England could reward a favorite by granting him a monopoly on salt or some other necessary of life. This beneficiary of royal favor was not, of course, the discoverer of salt. That came ready-made from the hands of the Creator eons before the advent of man. What the darling of his or her majesty received was the power to compel others to use salt solely of his supplying and only on terms of his dictation. But a patent is no such monopoly. It is a reward for the invention or discovery of something new, something before unknown, something added to the sum total of human knowledge, utility, well-being; something which the inventor or discoverer, despising the lure of money or fame, might have withheld from his fellow men. By the monopoly that goes with a patent, then, the Government recompenses and, for a limited time, protects the inventor or discoverer who gives to the world the use and benefit of his invention or discovery. This is a kind and a degree of mutuality that negatives monopoly in the old or the current concept. Monopoly in the latter sense of the term gave to an individual or a group complete dominion of something already existent. A patent awards monopoly to the producer of something original, something superadded to the common store. it is that two things bearing the same name need not be of the same nature. It has been contended that there sometimes occurs a clash between the antitrust laws and the patent statutes. I might suggest that since the first antitrust legislation in 1890, the patent laws and the antitrust laws have coexisted without any irreconcilable conflicts between them. They have each of them at least one common objective, namely, the retention by the public of a right once acquired by it. As a matter of fact, patents accomplish more than the retention of the acquired rights. Their influence is creative; they operate to multiply and expand acquisitions by the public. INDUSTRIAL DEVELOPMENT UNDER THE PATENT SYSTEM Mr. COE. Naturally, there will be differences of opinion as to the influence of the patent system upon our industrial development from the beginning of our Nation down to the present. There are some who will continue to assert that science would have progressed as steadily and that our industrial advancement would have been just as rapid without the patent laws. On the other hand, there are those who, with equal sincerity and far greater logic, insist that the industrial supremacy enjoyed by the United States today is attributable to the liberality of our patent laws. It must be admitted that inventions were few in the centuries between the first recordings of history and the sixteenth and seventeenth centuries of our own era. I cannot dogmatically declare that civilized mankind's inventiveness and progress have come because of the institution of patents, but I can, and do, assert with emphatic positiveness that most of our indispensable inventions and much of our material progress have come since the establishment of patent systems. It is strange, but no less true, that citizens of other nations, perhaps because of their remoteness, can appraise our institutions better than we can. One of the foreign visitors attracted to the Centennial Exposition held in Philadelphia in 1876 was a Mr. Bally, a Swiss manufacturer. At that period Switzerland was a comparatively industrial nation, having world-wide recognition as a producer of watches and other manufactures but did not yet possess a patent system of any description. On his return to his own country, Mr. Bally addressed his fellow industrialists, presumably an early counterpart of our National Association of Manufacturers. In that address he extolled the American patent system and urged its emulation by the Swiss Government. He testified to what he described as "the zeal and activity of Americans" but recognized also the importance of their patent system as an aid to their industrial progress and a help to |