Mr. COE. I didn't say that. I said it was likely that that is the case. Senator KING. Isn't it a fact that with nearly every patent that promises some utility, the patentees form a corporation because they can more readily carry on the business, more readily obtain capital, sell stock to their neighbors or friends, and have greater access to the capital market through the instrumentality of a corporation than if they held the patents in their own name? Mr. COE. I think that is the preferred method of carrying on business. The CHAIRMAN. If there are no other questions, and if the witness doesn't care to add anything at this point, the committee will stand in recess until 10 o'clock tomorrow morning, and Mr. Dienner will proceed under the direction of the Commissioner. (Whereupon, at 4:25 p. m., a recess was taken until Tuesday, January 17, 1939, at 10 a. m.) INVESTIGATION OF CONCENTRATION OF ECONOMIC POWER TUESDAY, JANUARY 17, 1939 UNITED STATES SENATE, TEMPORARY NATIONAL ECONOMIC COMMITTEE, Washington, D. C. The Temporary National Economic Committee met, pursuant to adjournment yesterday, at 10:30 a. m., in the Caucus room of the Senate Office Building, Senator Joseph C. O'Mahoney presiding. Present: Senators O'Mahoney (chairman) and King; Representatives Williams and Reece; Messrs. Henderson, Ferguson, Patterson, Frank, Peoples, and Thorp. Present also: Senator Homer T. Bone, of Washington, chairman of the Senate Patents Committee. Counsel: John A. Dienner, special counsel for committee; George Ramsey, of New York, assistant to Mr. Dienner; Leslie Frazer, Assistant Commissioner of Patents; Justin W. Macklin, First Assistant Commissioner of Patents and Henry Van Arsdale, Assistant Commissioner of Patents. The CHAIRMAN. The committee will please come to order. Mr. PATTERSON. Yes. Mr. Chairman and gentlemen of the committee, yesterday, Mr. Conway P. Coe, Commissioner of Patents, appeared before the committee as a representative of the Department of Commerce to outline the history and operation of the patent system of the United States, concluding with recommendations designed to correct certain abuses with which his experience has acquainted him. Today, we are to leave the broad discussion to receive testimony from users of the system. This testimony will be developed by Mr. John A. Dienner, who will conduct the examination of the several witnesses. Mr. Dienner is now serving as a special assistant to the Department for the purpose of these hearings. He has been actively engaged in the practice of patent law for more than 25 years. Since July 1933 he has been a member of the Patent Office Advisory Committee, appointed by the Secretary of Commerce, and has participated in all its deliberations and in its consideration of many phases of the patent system, both procedural and substantive. Mr. Dienner has been a deep student of the patent law and its operation in this country and abroad, and at present is the president of the American group of the International Association for the Protection of Industrial Property. Along with Commissioner Coe, he was sent by the President to London in 1934 as a delegate to the London Conference for the Revision of the International Convention for the Protection of Industrial Property. He is a past president of the Chicago Patent Law Association. I acquaint the committee with these qualifications of Mr. Dienner in order that you may utilize his talents to the fullest extent, and I am sure that he himself will be willing to assist you in clarifying the testimony of any of the witnesses at any point of the proceedings. The CHAIRMAN. Thank you, Mr. Secretary. Mr. Dienner, if you will be good enough to call your first witness, we will proceed. Mr. DIENNER. Dr. Vannevar Bush. The CHAIRMAN. Dr. Bush, do you solemnly swear that the testimony you are about to give in these proceedings shall be the truth, the whole truth, and nothing but the truth, so help you God? Dr. BUSH. I do, sir. TESTIMONY OF DR. VANNEVAR BUSH, PRESIDENT, CARNEGIE INSTITUTION OF WASHINGTON, WASHINGTON, D. C. Mr. DIENNER. Dr. Bush, will you please state your name and occupation? Dr. BUSH. Vannevar Bush, president of the Carnegie Institution of Washington. Mr. DIENNER. Dr. Bush, in approaching the problem of increasing industrial production, I think we might break the subject up into three or four general headings. We all agree that there is necessity for the production of new ideas and their introduction into industry. Now may we not break up our inquiry into the phases of how new ideas and with what concomitance they enter into industry; next, how industrial exploitation of new ideas is accomplished; further, in respect to patented inventions, with which we mainly deal, the termination phase of the patents and the delivery of the monopoly to the public. Then we shall take up general questions in relation to the introduction of new ideas into industry, and finally we would like to have you give your recommendations as a man especially qualified by reason of your investigation of the question of the introduction of new ideas in industry through the patent system. With the brief outline of the headings under which we will proceed I would ask you, please, to state your qualifications as a witness to cover those points. Dr. BUSH. I took my degree of doctor of engineering from Harvard and the Massachusetts Institute of Technology in 1916, and after that time, for about 15 years, I was engaged in consulting practice for industry, except for the interruption of the war, at which time I was engaged in research on submarine detection for the United States Navy. After the war I became associated with the Massachusetts Institute of Technology and combined academic teaching and research with the consultant practice. In my academic work, I was first an assistant professor and later professor of electrical engineering, and finally became the dean of engineering of the Massachusetts Institute of Technology and the vice president of that institution, at which time I relinquished my consulting practice and proceeded with that post for 6 years; and then became president of the Carnegie Institution of Washington. In the course of my consulting practice, I was instrumental, with others, in the founding of several new companies, based on inventions, which companies have not made a great deal of money, but some of which have been successful in the sense that they have furnished employment through the depression. I was also chairman of the Committee of the Science Advisory Board which was requested by the Secretary of Commerce to report on the relationship of the patent system to the initiation of new industries in this country. I am also vice chairman of the National Advisory Committee for Aeronautics. Mr. DIENNER. Then we might summarize your qualifications briefly as a man who as a graduate engineer has done practical work, an educator, consultant, and inventor, a director of research, an author, businessman, and a public servant. Dr. BUSH. I think I qualify for all of those. I have about 20 or 30 patents in my own name. INTRODUCTION OF NEW IDEAS INTO INDUSTRY Mr. DIENNER. Referring to the first phase of our subject, which relates to the question of how new ideas get into industry, let me ask you whether you consider that the patent system has any place in maintaining and promoting industrial progress in the United States. Dr. BUSH. There is not the slightest question that this country has a high standard of living as compared with other countries. That has been brought about for several reasons. First, this is a country of pioneers. The frontiers have disappeared geographically as the frontiers of technology have advanced. Pioneering experience still remains to a certain extent. That pioneering spirit, that willingness to take a chance, has been very important in our industrial advance. The existence of the patent system has made that work possible in industry; it has implemented the ingenuity, the resourcefulness, and courage of our people, and it is in no small degree responsible for the present high standard of living in this country. Mr. DIENNER. Under modern conditions in industry, how do new ideas come forward? I mean by that, consider the individual, consider the corporation, or other forms under which enterprise is conducted. How do these ideas come forward? What produces them? Dr. BUSH. There are two ways that are important. First, they result oftentimes from the long program of research, careful and meticulous analysis of the situation by a group of men, through large industrial research laboratories or scientific institutions, and the like, which produce new knowledge out of which come new applications. In addition, there is the independent inventor, whose day is not past by any means, and who has a much wider scope of ideas and who often does produce out of thin air a striking new device or combination which is useful and which might be lost were it not for his keenness. Mr. DIENNER. Considering the past history of the introduction of new ideas into industry, do you consider that the lone individual has in the past been an important factor in introducing such an invention as might form a taproot of an industry? Dr. BUSH. He has been and still is a very important factor. RESEARCH Mr. DIENNER. You speak of research. Will you please explain so that we may understand the term and its implications what is gen |