Representative REECE. Mr. Chairman, I am rather surprised to hear this instance cited, because I rather got the impression, when representatives of G. M. C. were before the committee, that they never harmed anybody.

Mr. GRAHAM. Well, this is not a case of picking individual companies. This might have happened to any company.

The CHAIRMAN. Mr. Graham has been called for the purpose of illustrating the effect of the present patent system upon this particular industry, and the individual companies were not material to the inquiry, as I understand it.

Mr. DIENNER. That is correct.

The CHAIRMAN. Mr. Coe, you wanted to ask another question.

Mr. COE. Mr. Graham, without regard to the particular defendant in your litigation but in view of your experience with these numerous litigations, would you care to express any opinion as to the handicap a small company or an individual has in conducting patent litigation against a large corporation or an adversary of considerable strength? Do you regard that as an equal conflict?

Mr. GRAHAM. No; very unequal.

Mr. COE. You think the small company is at a decided disadvantage?

Mr. GRAHAM. Very much so. If it hadn't been for the fact that the original investors in our company were people that could enlarge their investment, and if it were not for the fact that they had confidence in the management, our company probably wouldn't be here today.

Mr. COE. In other words, the result of the litigation, even though you might ultimately have prevailed, would have meant failure to the existence of your business.

Mr. GRAHAM. Absolutely.

The CHAIRMAN. Do you regard this instance as in any degree typical of industry today? Have you heard of any other similar instances?

Mr. GRAHAM. Well, I have heard of lots of instances where companies appropriated inventions and the person who first started the invention or started to merchandise the invention wasn't able to stay through to the finish.

Mr. FRANK. Mr. Graham, have you any notion of what the litigation cost the defendants?

Mr. GRAHAM. I should think it was equally heavy.

Mr. FRANK. You think approximately the litigation cost some $600,000?

Mr. GRAHAM. That is right.

Mr. DIENNER. May this chart be introduced in the record as an exhibit?

The CHAIRMAN. Without objection, it will be so ordered.

(The chart referred to was marked "Exhibit No. 209" and is included in the appendix facing p. 1149.)

The CHAIRMAN. Are there any other questions of Mr. Graham?
Mr. DIENNER. I have no further questions.

The CHAIRMAN. Do any members of the committee desire to ask Mr. Graham any additional questions? Dr. Lubin? Mr. Frank? Mr. Williams? Mr. Davis? Congressman Reece? Then the wit

ness may be excused, and the committee will stand in recess until 2 o'clock this afternoon.

(The witness, Mr. Graham, was excused.)

(Whereupon, at 12:10 p. m., a recess was taken until 2 p. m. of the same day.)

AFTERNOON SESSION

(The committee reconvened at 2:10 p. m. on the expiration of the recess.)

The CHAIRMAN. The committee will please come to order.

Mr. DIENNER. We will next call Dr. Frank B. Jewett, who is president of the Bell Telephone Laboratories, which is the largest industrial research laboratory in the world. He will explain the operation and purposes of his laboratory in terms of its effect upon the promotion of science and the useful arts in conjunction with the United States patent system.

Dr. Jewett, will you please be sworn?

The CHAIRMAN. Dr. Jewett, do you solemnly swear that the testimony which you are about to give in this proceeding will be the truth, the whole truth and nothing but the truth, so help you God?

Mr. JEWETT. I do.

TESTIMONY OF FRANK B. JEWETT, PRESIDENT OF THE BELL TELEPHONE LABORATORIES, INC., NEW YORK CITY

Mr. DIENNER. Dr. Jewett, will you please give your name and your position with your company?

Dr. JEWETT. Frank B. Jewett, vice president of the American Telephone & Telegraph Co., and president of the Bell Telephone Laboratories.

Mr. DIENNER. Will you please state your qualifications so that the committee will have your background and some idea of the experience which you have had so that we may ask you questions which may be more or less in the nature of your opinion in certain respects?

Dr. JEWETT. I was born and brought up in the Southwest at a time when social insecurity was the order of the day. I got my preliminary training as an engineer in what is now the California Institute of Technology, then Throop Polytechnic Institute, and I went then to the University of Chicago, where I did graduate work in physics and mathematics, and for 2 years was a research assistant to Prof. A. A. Michelson, later a Nobel prize winner in physics, and then I went to Boston as an instructor in the Massachusetts Institute of Technology, and was there at the time, and was an associate, of Dr. Coolidge, who spoke here, who testified here, yesterday, and Whitney, and was there at that period. At that same time, or about the same time, that Whitney and Coolidge went to Schenectady to organize the General Electric research department laboratories, I was asked to go to the American Telephone & Telegraph Co. to do a similar job.

For, as I listened to Dr. Coolidge yesterday, I think essentially the same reasons I accepted that position. I accepted that position although I had never had any intention of going into industrial research work; in fact, in those days none of us were ever trained for

that. Those of us who took advance degrees were scheduled to go either into fundamental science research in universities or into the teaching profession. It so happened that an appealing story was told and also happened that I wanted to get married and needed some money, so here I am, and for 35 years now I have been an employee of the American Telephone & Telegraph Co., always in intimate association with its research and development work and in the main after the first 2 or 3 years, either in responsible charge either of a part of it or for more than half the period in completely responsible charge for the program of research and development work and the expenditures which the Bell System makes in the communications field, so that whatever judgment is passed on the research function of the Bell System is one which I will have to share in and share a large part of, whether it is good, bad, or indifferent. The only exception to that tour of duty of nearly 35 years now (and it wasn't only a minor exception) was the 3 or 4 years that I served as the operating vice president of the Western Electric Co., and while I had general charge of its research and development functions my primary duty was an operating job in those years.

But since about 1922 or 1923 I have been the chief executive officer in charge of that function of the Bell system's business. That you may have a proper background to get some of the answers I may give to questions, since a large part of this testimony, I judge, will at least touch on the patent side of research and development work, I might say that when I entered industrial life from academic circles I was completely opposed to the patent system, patents at least for that class of work. I had grown up in the atmosphere of pure science, and at that time, whatever it may be now, I think it is safe to say that the consensus of opinion of the leaders of science looked upon the patent system and patents as a thing which were well enough, that had their place with regard to mechanics and possibly to engineers and inventors, but had no place whatever in the purview of those who were trained in fundamental science. I know that that is the way my chief, Professor Michelson, felt. He thought that when I entered industrial life, which was a field where patents were a part, I was prostituting my training and my ideals.

I say that because during the years which have followed I have completely reversed the preconceived ideas I had as to the value and necessity of the patent system. I think scientists in general have changed; I doubt if the same atmosphere prevails now that did then, and also because in the process of the change I found myself changing my point of view. In order to know why I was doing that I made it somewhat of a hobby to learn a little something about the patent system, how it came to be, what society organized it for, what they expected to get out of it, and what price they expected to pay for what they got. Now, that is the sort of background of my history which may help you to appraise whatever I may say.

Mr. DIENNER. I think it would be very interesting at this time to have you tell us what you did find out, under your study of the patent system, as to its usefulness, and the way in which it accomplished its purposes.

ORIGIN OF U. S. PATENT SYSTEM

Dr. JEWETT. Well, in the course of my examination, of course, I could not help but come back to the acts of Parliament at the time of James I. Of course, I had thought in my ignorance that the inclusion of the patent section in the Constitution and the acts of Congress which followed it was a thing generated by the fathers of the country. When I came to look into it, of course, I found that they were well versed, the colonial people, in the British thing, and the whole history of this patent business went back to that act of Parliament at the time of James I, when the iniquities which had grown up around the grant of royal patents for every sort of thing had become so obnoxious to the people that Parliament at one fell swoop wiped them all out. That was quite conceivable, but the thing that always struck me about it was that in that era of intense dislike which was willing to wipe out the thing that had grown up over hundreds of years, men were wise enough to see that there was one exception to that thing in which the State could well afford to grant certain rights to people who did certain kinds of things, and that was mainly in the field of those who created new and useful things.

They established that at that time and every patent system, so far as I know of course I am not an historian-which exists in the world is fathered in that act of the British Parliament back at the time of James I.

Now then, I think most people have a misconception as to what the patent system was set up to do and what patents are. In fact, some of the questions and answers which I heard here yesterday led me to feel that even some of the members of the committee may not have in mind what I conceive to be what a patent is. In the first place, some people have the idea that in the exclusive right which is given to the inventor of a new thing by the issuing agency, in our case the Patent Office, he is given a right to do something which he otherwise didn't have the right to do. That is not at all, of course, the case. Anybody has a right to do anything if he thinks about it, unless he is excluded from doing it, and what the patent is is a right for a limited period of time to exclude others from the use of that thing, assuming it is a valid patent.

Now just what was it that the English Parliament sought to do when they established the first British patent system, and what was the situation which they were trying to correct? The thing they were trying to correct was to break down the walls of secrecy, by which process new ideas were kept secret by those who thought of them, and operated in their own behalf, and the reason they wanted to break it down was because any scheme of secrecy as a means of control is necessarily a limited and small thing. You can't have things secret if you have too many people involved in them. You just can't keep it a secret. And Parliament felt in the interests of the nation as a whole that anything that could be done to break down the walls of secrecy was a good thing.

The other thing that they were attempting to do was to act in behalf of the nation as a whole. They wanted to stimulate invention, they wanted to stimulate new ideas, new manufacture, new products, but they wanted to do it for the benefit of the nation. They weren't thinking particularly of the individual himself, but they could only

do it through the individual, and what they did was to offer what was in effect a bribe to the individual by being willing to agree in advance and to pledge the faith of the nation to inventors unknown, even unborn, that if they would do certain things, the nation pledged itself to do certain other things. And that certain other thing which they did was this: What they demanded of the inventor was that he publish forthwith and fully his invention; in other words, that he break down the walls of secrecy and give all and sundry notice of what it was he had done, and in turn for that and on behalf of the interests of the state, the state agreed to constitute his new thing, his brain child, as real property endowed with all the attributes of real property, principal among which was the right to exclude others from its use for a limited period of time, after which it became public property.

I think, as one looks over the history of the growth of industry in England, and particularly in this country and laterally in the other industrial countries, there can be no question that whatever may have been the deficiencies of that concept in its applications in different places at different times, whatever may be its deficiencies at the moment, the over-all effect of the thing as measured from the standpoint of the nation, of society, has been of inestimable value, and, so far as I can see from my observations of it, the fundamental conditions which obtained at the time of James I's Parliament have obtained continuously since, and obtain at the present time unless one is prepared to say which I am not that we have so far explored and made use of the unknown of nature that there is no substantial future for development in the years ahead comparable to that which we have had in the past.

ORGANIZATION AND PURPOSE OF BELL LABORATORIES

Mr. DIENNER. Dr. Jewett, will you please tell us about your laboratory, the Bell Telephone Laboratory?

Dr. JEWETT. As I mentioned a few minutes ago, I was asked to go to the American Co. at about the same time, a year or so after Whitney and Coolidge went up to the General Electric. Of course, I stated that I thought the conditions which originated that request were almost identical with those which Coolidge testified to here yesterday as having been the genesis of the thing at the General Electric, and it seems quite obvious that was so. Whether at that time there

were conversations between the people who managed the General Electric Co. and those who managed the Telephone Co. and it was somewhat of a concerted action, of course I don't know and never will know.

The 35 years of course which I have been in the Telephone Co. are half the life of the industry since Alexander Graham Bell made. his invention, and it is perfectly clear that at the time what has grown to be this great research organization was started back in 1903 or '04, the industry had outgrown its ability to progress wholly on the basis of random invention which was the basis of its new material in the very early days after Graham Bell, and had also outgrown the second stage in which inventive ability and genius was teamed up with engineering skills, skills of the trained engineer, and had reached a stage in which it was clear that some other kind of attack on many