Senator KING. The point I made is, I do not quite understand the reason why, although you did explain it but I didn't quite get the point, when A was granted, if B, C, and D, were germane, and I use a phrase which you as a lawyer understand-connected with, or a part of or directly related to-it all should not expire contemporaneously. Mr. COE. There is no reason at all, Senator, why they should not. Senator KING. Why should they not be granted at the same time? Why should B, C, and D be held in vacuo during that period? Mr. CoE. We do just exactly what you are suggesting except where they are independent inventions, and in that case we haven't the authority to grant a patent covering more than one. The CHAIRMAN. Let me suggest, Mr. Commissioner, that you give a more detailed explanation of the diagram which appears on the upper part of "Exhibit No. 199". I think that explains rather clearly what you are endeavoring to develop. Senator KING. Before you do that, if I may be pardoned, why should not the Commissioner, when he filed A, B, C, and D, examine to determine whether they are related, and if he determines that they are not, that B, C, and D are independent, relating to a different invention entirely, why should he not say, "I am going to treat, however, the application of B, C, and D as of this date," and let the statute of limitations, if I may use that term, expire at the end of the 17 years? Mr. COE. If I understand your question, Senator, that is exactly what we propose in this procedure. Senator KING. That is satisfactory, but I got the idea that he might determine that B and C and D might be held there in suspense, so that ultimately they might not expire for 44 years. Mr. COE. No, Senator. If he lets this first patent issue before he files the separate divisional applications then he couldn't get a patent, because it has been disposed of, but in each case he files the divisional application before the issuance, so he has a continuance of pendency of the subject matter before the Patent Office. Now, in the actual case that we have cited, on the top of "Exhibit No. 199", an application containing four distinct inventions was filed on February 12, 1910. A divisional application dividing the B application was filed in December 1924. The B patent issued in December 1925, and expired at this point here. The A invention was prosecuted 27 years, and issued on March 9, 1937. The C invention was issued in March 1928, and the D patent in January 1931. In this case it is true that there were many interferences and appeals that accounted for that 27-year prosecution.' It was a perfectly normal procedure. I won't criticize it as something that shouldn't have happened, because it is the way the rules are made today. We do think that that is a condition which should be corrected. Dr. LUBIN. Mr. Coe, on the 20-year basis could those interferences and appeals still be in the picture? Mr. COE. I am going a little later to discuss the problem. I do not think the 20-year proposal can be applied fairly and equitably with our present interference practice, and therefore there will have to be a concurrent reform of interferences to make way for the fair application of the 20-year proposal. The CHAIRMAN. Let me say to the members of the committee that the Secretary of Commerce has suggested to me that if we allow the 1 See review of history of Steimer patents, Hearings, Part II, pp. 438-440. Commissioner to take his own time, he will develop the answers to all of these questions. We will try to follow our own rule, Mr. Commissioner. Mr. CoE. Some of these points I am coming to, but I am not sure I will cover them all, Mr. Chairman. In that Steimer history, as a part of that 27-year prosecution, there were some interferences. Merely to give you a general idea as to the effect interferences have upon this subject of delay, we have prepared this chart. (The chart referred to was marked "Exhibit No. 200" and is included in the appendix on p. 1134.) Mr. COE. This chart shows that in a total of 2,713 interferences which were decided on evidence in the period 1924 to 1933, the minimum duration of any of those interferences was 5 months, the maximum was 10 years and 9 months, and the average was 2 years and 6 months. I stated that this is a tabulation of interference cases decided on evidence. During that whole period there were a total of 17,162 interferences, but other than the number indicated on the chart they went out on record judgments, concessions, motions and dissolutions and did not go to the testimony stage. The next chart is somewhat complicated and I do not intend to go into it in detail, but I do want to put it into the record so it will be available for future study. (The chart referred to was marked "Exhibit No. 201" and is included in the appendix on p. 1135.) Mr. COE. The upper graph illustrates a long delayed interference, a prosecution during the interference of 10 years and 9 months. Of that time, 15.3 percent was taken up by the Patent Office; 30.5 percent was taken up by the parties; stipulations consumed 35.9 percent, and appeals to the court 18.3 percent. To Dr. Lubin I might suggest that if we had the 20-year bill, all that stipulation period would in the main fade out. The middle graph illustrates successive interferences on a single application, one case being involved in 123 interferences. The lower graph illustrates a complicated series of interferences between several applications. Finally there comes the litigation of patents. When a patent issues to an inventor we purport to give him the right, the exclusive right, for a term of 17 years to prevent others from making, using, or selling the invention covered by it. But we say that with our tongue in our cheek, for we know better than he that by our present method of adjudicating patent rights he will find it exceedingly difficult to prevent the wrongful appropriation of his property and may be compelled to stand helpless while he is despoiled. As you are aware, if the inventor undertakes to invoke the law for his protection he must file suit in a United States district court. If the decision of that court be objectionable to him or to the other party, the case must be taken to one of the 10 Circuit Courts of Appeals. This in itself is a heavy financial burden, but one which, perhaps most inventors could bear with their own means or the help of others. But having taken this appeal, what has he gained? Hardly more than a ruling as to his rights in that particular circuit. He must then, at least theoretically, go from one to another of all the other circuits, and if perchance from these many litigations there come conflicting decisions. he has the privilege-if he still has the wherewithal-to carry his case to the United States Supreme Court. My conviction is that the poor inventor, and through him the public, suffers injustice precisely for the reason and to the extent that the monopoly, the exclusive right, purportedly bestowed on him is not now fully safeguarded. What we need is not to decrease but to enhance the monopoly called a patent. Genuine protection in that form would be the last surviving bulwark standing between the inventor and the onslaught of mighty corporations. A patent should function as a leveler whereby an individual or a company of small means may be enabled to hold his or its rights of property against the pressure of the strongest adversary. It should have a protective character like that of a high-power rifle in the hands of a puny man beset by a wildly charging bull elephant. Unfortunately, the patent affords no such safeguards. The charts I shall now show to you reveal some of the complexities of our system of adjudicating patents. Here is a map of the United States. (The chart referred to was marked "Exhibit No. 202" and is included in the appendix on p. 1136.) Mr. COE. This map is divided into judicial circuits, showing the number of patents in litigation before the district courts and courts of appeals in each circuit for a 4-year period from 1935 to 1938. By reference to the upper right-hand corner, in the second circuit you will see during that period 1,386 patents were involved in the district courts, and within the circle of that circuit, 192 patents went to the court of appeals. In the tenth circuit, 115 patents were involved in litigation, and within the circle, 18 went to the court of appeals. The shaded portions of each of the blocks in each circuit, such as the upper shaded portion in the second circuit, indicated by a numeral "270" indicate the number of patents in each circuit which have been adjudicated in at least one other circuit. So, of all the patents indicated in that period, about 20 percent have been adjudicated in more than one circuit. Here is a case history of the litigation of one patent, showing seven suits filed in four different circuits, and a continuation of litigation after decisions of invalidity by two different courts of appeals. (The chart referred to was marked "Exhibit No. 203" and is included in the appendix on p. 1136.) Senator KING. Could you say definitely that the same issues were raised in each case where the validity of the patent was challenged in more than one district? Mr. COE. I can say that when the validity is challenged there can be only one issue, and that is whether it is a valid patent. Senator KING. I was wondering if there was any other issue involved. Mr. COE. I will show you how generally the same result is obtained. In the first suit the patent was held valid and infringed, and defendant took a license. In the second suit the claims were held not infringed, and on appeal the claims were held invalid. There you have a ruling of invalidity by this court of appeals and a ruling of validity by the district court in the same circuit. Certiorari petition was filed and denied by the Supreme Court. In the third suit, a preliminary injunction was granted. Appeal was dismissed without prejudice on plaintiff's motion. In the fourth suit, over in the second circuit, the patent was held valid and infringed by the district court; was held invalid on appeal. Certiorari was denied there by the Supreme Court. Suits 5 and 6 were filed in Ohio, dismissed at plaintiff's request; and suit 7, now out here in the tenth circuit, was filed and claims were held invalid at the trial. I defy anyone to tell the exact status of that patent in the United States today. The next chart breaks down numerically the number of suits filed and the number of patents involved in both the district and courts of appeal in the fiscal years indicated at the bottom of the chart. (The chart referred to was marked "Exhibit No. 204" and is included in the appendix on p. 1137.) PURPOSE OF PATENTS THE ENLISTMENT OF CAPITAL AND LABOR IN NEW ENTERPRISE Mr. CoE. It is not the principal purpose of the patent laws of our own country or of any nation to reward an individual. The purpose is much deeper and the effect much wider than individual gain. It is the promotion of science and the advancement of the arts looking to the general welfare of the Nation that the patent laws hope to accomplish. The individual reward is only the lure to bring about this much broader objective. Every patent granted benefits society by adding to the sum total of human knowledge, but that is not enough, and that alone will not achieve the ultimate goal of the patent system. An inventor will not be rewarded and society will not be benefited until the invention passes into commercial channels. And it is just at this point that patent protection plays its most essential role, that of transforming the invention from the idea into a commercial enterprise. Unfortunately, this step involves the expenditure of money, and a very peculiar kind of money at that. It is not only necessary that capital be available but that speculative capital shall be available, capital that does not respond to risks and ventures unless there is promise of more than the ordinary Government-bond reward. Dr. Thorp, for example, has pointed out the risks of business and the hazardous character of both new and old enterprises. Capital knew this long before Dr. Thorp called it to our attention.' It will know it until the end of time. As Dr. Thorp has indicated, there is nothing quite so risky as a new enterprise and yet it is in just such things that the capital that goes into the commercialization of new inventions must be invested. Speculative capital must be encouraged to fall in behind a new enterprise and this is true whether the enterprise is wholly new or represents merely an expansion of an established organization. Some testimony has been offered to this committee by representatives of large corporations that they would continue to invent, and invent, and invent, and research, research, and research whether or not they were rewarded by the patent grant, but, if you will investigate, I believe you will find that whenever these large corporations, themselves firmly established, undertake a new development, that development is likely to be founded upon patent protection. Whatever opinions have been expressed to this committee or may hereafter be expressed as to whether or not the inventor will continue to invent 1 Testimony of Dr. Willard Thorp is included in Hearings, Part I. without the patent system, I think I can present to you indisputable evidence that speculative capital will not back new inventions without the patent protection. And in the final analysis this is the crux and the most important thing in the whole patent question. About 8 years ago, the Patent Office started a practice of making applications for patent "special" as a means of inducing the investment of capital and the employment of labor in the commercialization of an invention sought to be patented. In order that the application shall be accorded this special status and thus be expedited, the applicant is required to make oath as to his willingness and ability to comply with three conditions. He must make oath that First. He has sufficient available capital and facilities to manufacture the invention in quantity. Second. That he will not undertake manufacture unless certain that the patent will issue. Third. That he obligates himself to manufacture the invention in quantity immediately upon the allowance of claims which will protect the invention. Under this practice we have during the period from July 1, 1933, to June 30, 1938, made 457 applications special. After the patents have been granted under these circumstances and to determine the good faith of the patentee, it is our practice to call upon him to report under oath at the end of 3 months from the grant of the patent as to the exact amount of capital that has been invested and the increased employment of men resulting. Recently we have caused an analysis to be made of these reports and I think you will find the results interesting. Remember that the figures which I shall cite are only for the first 3 months of the patent life. Obviously, if these reports were continued throughout the full term of the patents, that is 17 years, the showing would be very much more impressive. I have prepared but will not now repeat a detailed tabulation of the statistics respecting these applications. I shall supply it to the stenographer for inclusion in the record. In the meantime I shall give you only a summary. Here are the facts as to the 457 cases given special status: Money expended or men employed, or both__ Negative report. No report Total Applications abandoned or forfeited. Applications pending Aug. 25, 1938. Total made special. The reports filed indicate the following results: Patents 247 36 62 344 61 52 457 |