Senator O'MAHONEY. You do.

Mr. CURTIS. When the chairman was at the telephone, I stated that the only section that I am interested in is subsection 2. There is precedent for giving protection to veterans. That is a much more extreme

case.

If the Government lays its hand on a man and pulls him out into the Army, that is a much more extreme case than these other cases where war orders have interfered. I have no objection at all to that.

Senator O'MAHONEY. Then do I understand, for the record, that if section 2 were eliminated from this bill, you would have no objection to the bill?

Mr. CURTIS. Absolutely, sir. Subsection 2, I think you mean? Senator O'MAHONEY. Yes; that is correct, subsection 2.

Are there any other questions?

Senator DIRKSEN. Since Congressman Curtis alluded to that gold mine decision I thought it might be interesting to have the pertinent excerpt of the decision put in the record at this point, because I have an idea that questions may arise with respect to it.

Mr. CURTIS. I will be glad to do it. Senator DIRKSEN. He gave one excerpt. Since that is a very recent case that came in in February, I think it would be helpful to have others.

(Pertinent excerpts are as follows:)

The decision referred to is dated February 20, 1956 (Judge Littleton) and rendered by the U. S. Court of Claims in Central Eureka Mining Company (a corporation) v. The United States (No. 49468); Oro Fino Consolidated Mines, Inc. v. The United States (No. 49486); Alaska-Pacific Consolidated Mining Company v. The United States (No. 49603); Idaho Maryland Mines Corporation v. The United States (No. 50182); Homestake Mining Company v. The United States (No. 50195), and (1) Bald Mountain Mining Company, (3) Alabama-California Gold Mines Company, (5) Consolidated Chollar Gould & Savage Mining Company, (7) Ermont Mines, Inc. v. The United States (N. 50214). The Government's motion for new trial was filed March 20, 1956, and is now pending before the Court of Claims.

LITTLETON, Judge, delivered the opinion of the court:

The plaintiffs were, at the times herein mentioned, the owners and operators of gold mines. On October 8, 1942, the War Production Board issued Limitation Order L-208 requiring certain so-called non-essential mines to close down and cease all mining operations, or any other operations in and about the mines, except to the minimum amount necessary to maintain the mines safe and accessible. Violations of the order were punishable by fine and imprisonment. By its terms, the order suspended for the life of the order the right of plaintiffs to mine and sell gold.

It is plaintiff's contention that this action by the Government amounted in law to a taking, for a public purpose, of their right to make profitable use of their mining properties for which just compensation is due them under the Fifth Amendment to the Constitution. In the alternative, the plaintiffs contend that by virtue of the jurisdiction conferred on this court by the special jurisdictional act of July 14, 1952, 66 Stat. 605, they are entitled to recover for the closing of their mines the amount of losses incurred as a result of Order L-208. It is plaintiff's position that in the absence of the special jurisdictional act, this court would not have jurisdiction to render a judgment in favor of a gold mine owner for losses incurred unless they could establish a compensable taking, but that the act conferred on this court jurisdiction to render judgment for such losses where they resulted from the issuance of L-208.

No agency of the Government was ever granted any real power to control civilian manpower during the war. However, the War Production Board found

it necessary to take into consideration manpower problems obviously inherent in the overall problem of increasing the production of vital raw materials and finished products necessary for defense. Shortly after the establishment of WPB's predecessor agency, the Office of Production Management, an operating division known as the Labor Division was established in OPM to study and keep abreast of the labor requirements for national defense and to advise and collaborate with the other divisions of OPM on all matters affecting labor. In the summer of 1942, the Labor Division of what was now WPB, became concerned with the seriously increasing shortage of hard-rock or underground miners in the vital nonferrous metal mines, particularly in the copper mines. This concern was shared by the recently established War Manpower Commission and by the War Department which had become alarmed by the growing shortage in the output of copper. Upon investigation, these groups found that the exodus from the strategic metal mines was the result of the higher wages and better working conditions available to the miners in the aircraft and shipbuilding industries and on the armed services building construction projects frequently being carried on in the vicinity of the copper mines. It was also determined that a large number of experienced miners were being drafted into the armed services and Selective Service was adverse to granting deferments to such workers. Despite the urgings of mine employers and the government agencies involved to miners to stay on the job, the strategic metal miners continued to leave the mines for the more attractive job opportunities offered by other defense industries. Production was also hampered by the generally low morale of the miners, the short workweek in the mines, and the lack of any effective means of recruiting workers for work in the strategic metal mines.

During this same period the gold mines were losing experienced miners by virtue of the same circumstances, except that working conditions in many of the gold mines were good, many of the miners owned their own homes, and gold mining was often a family tradition from which they would not readily depart.

Over the vigorous objection of informed persons in and out of the War Production Board, the Board on October 8, 1942, issued L-208 which ordered the complete shutdown within 60 days of all the country's gold mines which did not produce sufficient strategic metals to warrant their holding serial numbers.

Within a relatively short time it became apparent that the closing of the gold mines was doing little to relieve the shortage of hardrock miners in the strategic metal mines. In fact, the record indicates that no more than 100 gold miners went into other mines and remained there for a year or more. Despite numerous appeals and a desire on the part of WPB officials to modify the order to permit the gold mines to operate at least on a break-even basis, the order was continued in effect and unchanged until the summer of 1945.

The record establishes that no one having anything to do with the issuance of L-208 believed that it was devised or intended to be devised for the purpose of conserving critical materials, equipment or supplies, inasmuch as existing preference orders had solved that problem in connection with the gold mines. Although WPB had full power to requisition any large inventories of supplies, materials, and equipment owned by the gold mines, or to authorize more essential users of such materials to place mandatory orders with the gold mines, no such power was ever exercised. In L-208 WPB did not even attempt to assure that those critical materials, equipment and facilities would be held for possible future requisition or order, but left the owners free to sell them to anyone they pleased, whether the prospective purchaser was engaged in essential defense work or not.

The record establishes that the purpose and intent of WPB in issuing L-208 was to deprive the gold mine owners and operators of the right to use their properties in the only way they could be beneficially used, i. e., to mine and sell gold for a profit, and that this was done in the unfounded hope that the underground workers thus deprived of their employment in the gold mines might seek employment in the nonferrous metal mines. The record fails to establish that the prohibition of gold mining was reasonably calculated to or in fact did increase the country's war efficiency.

The following contentions were made in the Homestake brief and were adopted in general by all the other plaintiffs. After discussing those contentions and disposing of them, we shall take up separately the applicability of the conclusions reached to each of the plaintiffs.

Plaintiffs contend that L-208, while in form a regulation restricting their acquisition and use of critical materials needed for defense, was in substance a requisition or taking, for the life of the order, of plaintiffs' right to make profitable use of their gold mining properties for which taking the Government is liable to pay just compensation under the Fifth Amendment to the Constitution. Plaintiffs also contend that if the court should decide that L-208 was actually a regulation in substance as well as in form, it was arbitrary in that it went far beyond what was required by the exigencies of the war situation existing at the time of its issuance, bore no reasonable relation to its ostensible purpose of conserving critical materials needed in the defense effort, and in fact and law amounted to a taking of valuable property rights of plaintiffs for which just compensation should be paid.

*

We conclude that L-208 by prohibiting the carrying on of otherwise lawful mining operations placed a servitude on plaintiffs' profitable or beneficial use of their mines and thus amounted to a temporary taking of that property right in the case of those mine owners and operators who were forced to close their mines by virtue of their compliance with those provisions of L-208 which prohibited them from using their materials, facilities, and equipment to mine gold and which ordered them to close down their mines. Such mine owners and operators are entitled to be paid just compensation within the meaning of the fifth amendment to the Constitution (p. 33).

Senator O'MAHONEY. Thank you very much, Mr. Curtis. We are indebted to you.

Mr. GREEN. We have a representative of the Patent Office, Mr.. P. J. Federico here. I understand that the Patent Office and the Secretary of Commerce do not desire to make a formal statement, but he is available for any questions you might have.

At this time I ask permission to insert a letter of May 3, 1956, from the Secretary of Commerce to the chairman of the subcommittee relating to H. R. 2128.

Senator O'MAHONEY. Would you be good enough to read that so that those who wish to testify may have the opportunity of hearing it.. Mr. GREEN. Yes, sir.

It is addressed to Hon. Joseph C. O'Mahoney, chairman, Subcommittee on Patents, Trademarks and Copyrights of the Committee on the Judiciary, Washington, D. C.

DE'R MR. CHAIRMAN: This letter is in reply to your request for the views of the Department of Commerce with respect to H. R. 2128, an act to authorize the extension of patents covering inventions whose practice was prevented or curtailed during certain emergency periods by service of the patent owner in the Armed Forces or by production controls.

If it should be determined as a matter of policy by the Congress that H. R. 2128 should be enacted, the Department of Commerce would interpose no objection to such action.

We are; however, concerned with respect to certain administrative difficulties which may develop in connection with such a law. During the period covered, there were approximately 850,000 patents in effect. Of these approximately 450,000 would not be eligible for the benefits of the law because of their dates of expiration. The actual number of owners who would seek the benefit of the law is, of course, unknown but might be very large. All applications under the bill are required to be filed for processing within 1 year from enactment of the law and should be processed expeditiously to carry out the purpose of the law. Such action could, depending on the demands, present an extremely difficult and expensive administrative problem.

Consistent with Reorganization Plan No. 5 of 1950, the authority granted by H. R. 2128 should be placed in the Secretary of Commerce rather than the Commissioner of Patents. Adequate authority exists under the reorganization plan to allow the Secretary to arrange for the performance of such functions as described by the act.

Senator O'MAHONEY. So far this seems to be identical with the letter of March 8, 1955, submitted to the House.

Mr. GREEN. I believe it is, Senator. I believe it is identical to that one contained in the House report.

Senator O'MAHONEY. That being the case, it is available to everybody that wishes to testify. But it may be inserted at this point in the record.

(The letter dated May 3, 1956, is as follows:)

Hon. JOSEPH C. O'MAHONEY,
Chairman, Committee on the Judiciary,

THE SECRETARY OF COMMERCE,

United States Senate, Washington, D. C.

Washington, May 3, 1956.

DEAR MR. CHAIRMAN: This letter is in reply to your request for the views of the Department of Commerce with respect to H. R. 2128, an act to authorize the extension of patents covering inventions whose practice was prevented or curtailed during certain emergency periods by service of the patent owner in the Armed Forces or by production controls.

If it should be determined as a matter of policy by the Congress that H. R. 2128 should be enacted, the Department of Commerce would interpose no objection to such action.

We are, however, concerned with respect to certain administrative difficulties which may develop in connection with such a law. During the period covered, there were approximately 850,000 patents in effect. Of these approximately 450,000 would not be eligible for the benefits of the law because of their dates of expiration. The actual number of owners who would seek the benefit of the law is, of course, unknown but might be very large. All applications under the bill are required to be filed for processing within 1 year from enactment of the law and should be processed expeditiously to carry out the purpose of the law. Such action could, depending on the demands, present an extremely difficult and expensive administrative problem.

Consistent with Reorganization Plan No. 5 of 1950, the authority granted by H. R. 2128 should be placed in the Secretary of Commerce rather than the Commissioner of Patents. Adequate authority exists under the reorganization plan to allow the Secretary to arrange for the performance of such functions as described by the act.

We are advised by the Bureau of the Budget that it would interpose no objection to the submission of such report as is deemed appropriate in this matter. The Bureau of the Budget further advises that it "is opposed in principle to using exceptions to the patent system as a method of bestowing benefits on selected individuals or corporations. Benefits under these bills would have little, if any, relation to the injury sustained by the patentee; persons reasonably relying on the terms of a patent might be damaged; administration of the exceptions would present difficulties and may require increased funds for the Patent Office; and extension of patents whose practice was curtailed by production controls would so widen the area of exceptions as to serve as an important precedent for additional exceptions in the future. A great many people were unable to fully exploit their profession or property as a result of production controls. Enactment of these bills would bestow benefits on a very small group of them even though there seems to be no convincing evidence that this group has a specially meritorious claim.”

Sincerely yours,

WALTER WILLIAMS, Acting Secretary of Commerce.

Mr. GREEN. The next witness is Mr. John J. Lyons, legislative director of the Patent Equity Association, Washington, D. C.

I believe there is also appearing with Mr. Lyons, Mr. Benjamin Miessner, president of the Patent Equity Association, and Paul N. Vonckx, vice president and general manager of International Shoe Machinery Corp.

If you have statements, will you bring what statements you have with you so I might present them to the reporter for the record.

STATEMENT OF JOHN J. LYONS, LEGISLATIVE DIRECTOR, PATENT EQUITY ASSOCIATION, WASHINGTON, D. C.

Mr. LYONS. I am John J. Lyons. I am the legislative director for the Patent Equity Association. And, as I told you before, the membership of that association is composed of independent smallbusiness patent lawyers and inventors.

They are here in support of H. R. 2128, and have a general program for improvement of the patent system.

H. R. 2128 was preceded by H. R. 3534, which is practically the identical bill. That bill passed through the subcommittee of the House, the House floor itself, and the Judiciary Committee of the Senate in 1954 unanimously, and got on late on the Consent Calendar and died before the time the session closed.

Senator DIRKSEN. Were the bills identical?

Mr. LYONS. There is an amendment this year in the bill, Senator, which further limits section 3, namely, the royalty free and nominal royalty free provision applicants.

In the testimony in the House it was brought up that the witnesses were not concerned with taking back the promise that they had given to the Government. The gift that they had given to the Government during wartime, they thought was to be for what they termed "the shooting war."

They said that what they were concerned with was the further keeping of those patents in the hands of the Government after V-J Day, the cessation of the Japanese hostilities.

So the House made an amendment to restrict it to that further period rather than the period that they had given to the Government. They were not taking back what they had agreed to. They wanted to get an extension to take care of the abuse of the holdering of the patent.

That is the main change that was made in the bill. Otherwise, I think the bill is essentially as it was, except there are some language changes.

They changed one section and put it back in section 9, so the bill would be in letter form.

Mr. Crumpacker rather ably covered most of this material. I do not want to subject you to a repetition at this time.

Senator O'MAHONEY. Thank you very much. We do not want any cumulative evidence, naturally, but there are some questions which I should like to ask in order to get this matter clear in my mind. This is represented as a bill for the Korean veterans?

Mr. LYONS. The military part of it?

Senator O'MAHONEY. Yes, the military part.
Mr. LYONS. Yes.

Senator O'MAHONEY. Now, the nonmilitary part of it refers to what?

Mr. LYONS. Refers to all other persons who formerly had no relief at all. There were bills before for the military which took care of the World War II part.

Senator O'MAHONEY. In other words, one part of this bill refers to veterans who by reason of having been taken into the service were not able to pursue whatever rights they gained by a patent?