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suggestion of drastic changes in our patent laws by reason of which the encouragement to invent and to introduce inventions into use will be reduced. Even the threat of such changes is unfortunate and ill-advised. The public interest surely requires that our people should more than ever be encouraged and stimulated to invent, as our chief basis for hope that we may maintain our industrial supremacy or anything like our present material prosperity.
I cannot help thinking that the Oldfield Bill, which has been reported by the Committee on Patents to the House of Representatives at Washington, is a most serious attack upon our patent system. In the opinion of the writer it does not at all meet any evils of the present patent law, if there are such, but, on the contrary, its provisions are almost without exception definitely harmful. If it became law, the bill would surely discourage invention and the promotion of inventions to a marked degree, with no compensating advantages. Those of its provisions, Sections 4, 5, 6, 7, 8, 9, 10, 11 and 12, which purport to develop the underlying principles of the Sherman Anti-Trust Law into a long series of drastic restrictions and negations, aimed only at patent owners and those who manufacture under patents, should clearly not appear in a bill dealing with the patent laws. If any of the provisions of those sections are wise for any purpose they should be adopted as part of a revision of the Anti-Trust Law and not of the Patent Law. In the effort to put them on the statute book they should be discussed as relating to the alleged necessity of curbing trusts and monopolies, and not as germane to the patent system. There is obviously no justification whatever for such discrimination against patents and manufacturers under patents as is proposed.
This is not the time or place for a discussion of these provisions in detail, but I urge the members of the American Bar Association to read Sections 5, 7, 8 and 9 of the proposed Act, that each member may determine for himself whether there was ever suggested more unreasonable and illogical legislation. Those sections, in phrases which, though in many cases vague,
obviously involve the most far-reaching and destructive restrictions, penalize those manufacturing under patents, while allowing those who make unpatented articles under the same conditions, to be entirely free to do their business without any such restrictions.
These anti-trust provisions in the Oldfield Bill were taken almost bodily from the so-called Lenroot Bill, which was of general application and which the Judiciary Committee of the House of Representatives after full hearing did not report. It seems incredible that they can ever become law, whether general in their application or confined to the field of patented manufacture.
The remainder of the Oldfield Bill is significant by reason of its attack on certain fundamental principles of the United States Patent Law to which I have already referred. The American Patent Law from the beginning has applied definitely and radically the provision of the Federal Constitution that for the purpose of promoting the useful arts and as an inducement to inventive effort there shall be granted to him who makes a patentable invention the "exclusive" right to make, use and sell the same for a relatively short period. Under the constitution, the statutes and the decisions of the courts he who turns his attention to inventing has always known that if he succeeded in securing a patent his right, during the term of the patent, to deal with the invention as he chose was absolute. He or his successor in title could use it or not. He could license others to use it or refrain from so doing. He could sell the whole or a part, or make any contracts "not definitely unlawful" with relation to it. In his efforts, or in the efforts of his assignees or licensees, to build up a market for the invention he, or they, had a free field for the exercise of ingenuity in determining how to handle the patent property in such a way as to get from it adequate returns. The patentee could offer to capital the same monopoly that he had himself. He was entirely free to make practically any contract or any series of contracts "not in their very nature illegal" which he chose. Having given to the world a new thing, he could impose, during the short term of the
patent, any conditions which seemed to him to his advantage that were not inconsistent with restrictions imposed in the exercise of the police power or in violation of underlying and fundamental principles of law. There is no question that this legal situation has resulted greatly to the public good.
The inventor or the investor backing him, knowing that if success were attained the patent owner would have a free hand for seventeen years, from the beginning of our history as a nation has been ready to take great chances by way of effort and expenditure of money although he knew that many inventions fail and that a substantial part of them are of commercial value only in the later years of the term of the patent.
Any provision in the law preventing the imposition of conditions, as part of a sale or license of a patented article or of a contract authorizing its manufacture or use, or any requirement that would impose a penalty if the invention was not manufactured, and particularly any requirement by which under any circumstances a license to use the invention could have been acquired without the patent owner's consent, by a person or corporation to whom the patent owner did not wish to grant a license, would undoubtedly have checked invention and the development of inventions to a marked degree. The testimony before the Oldfield Committee of those familiar with the subject is practically unanimous on this point.
And yet it is just such an inroad upon the established law of the land that characterizes the Oldfield Bill, not only in the antitrust provisions already referred to, but in its remaining sections. It provides for a compulsory license in certain contingencies and for a limitation upon the right to impose conditions, such as are now lawful, in the disposition of a patented product. The specific provisions of the bill on these subjects may not seem very drastic; they may not be very effective; but they would, if they became law, undoubtedly operate to discourage invention to a marked degree. And a most serious consideration is that they are an attack upon a basic and most important principle of our Patent Law which opens the door to further like attack. It is at the beginning of such a crusade that the
matter should be carefully considered and if such a change in the law is unwise, all possible effort made to prevent it. I urge every member of the American Bar Association to study the Oldfield Bill and, if possible, to read the testimony before the Oldfield Committee. If, after full consideration, the members of the Association conclude that the bill in whole and in part is thoroughly bad, in that it would operate to discourage invention at a time when it needs most to be encouraged, and is an entering wedge for further destructive legislation, they can perform a public service by opposing it. I only call attention to the fact that a very large number of our business enterprises have been established and their methods developed, relying upon the law as it stands. Whether it is for the public interest that these enterprises should be demoralized by such a modification in the law as is proposed, or whether expediency or good faith permit such change, are questions not within the scope of this paper.
I believe that there is but little occasion for the revision of our patent laws in so far as fundamental principles or the provisions of the statute are concerned. The substantive law seems altogether admirable. It is far otherwise with the procedure of the courts and Patent Office. The entire practice in patent cases in the courts up to the recent rules formulated by the Supreme Court of the United States was vicious and defective. to the last degree. It is doubtful if it will be satisfactory under the new rules.
Reform in the procedure in patent cases is a legitimate field for effort. The methods of the Patent Office, particularly in interference cases, need thorough revision. All such changes can be easily brought about if only sufficient and definite attention is given to the subject.
Under the present system of nine Circuit Courts of Appeal there is serious confusion in the application of the patent law to special cases, resulting in some instances in a divergence of views between two different Courts of Appeal as to the validity and scope of the same patent, and generally in the different circuits in a want of harmony as to questions of patentability,
construction of patents and infringement that is a serious evil. The establishment of a single Court of Appeals in Patent Causes, for which the American Bar Association has worked so assiduously for more than ten years, will correct these evils. Although there is no valid argument against such a Patent Court of Appeals and no real criticism upon the American Bar Association's Bill providing for its establishment, Congress has as yet failed to act. This most important of all reforms in patent matters is sure to come and the more vigorously the members of the American Bar Association press for it, the sooner will the law be passed.
I have said nothing in this paper as to the sense and justice of a full recognition of intellectual property as a real thing, or as to the clear right of such property to protection on scientific, logical and ethical grounds. I have endeavored to approach the subject matter entirely from the point of view of the interest of the community as a whole, which, in my opinion, requires for its prosperity an adequate patent system. I believe that ours is adequate, that in its substance it is not open to serious criticism and that it would be a national misfortune if it were weakened as proposed by the Oldfield Bill.
I have only touched upon many most important phases of the situation which would require complete discussion if the question under consideration were whether or not our Patent Law should be amended on the lines of the Oldfield Bill or otherwise. For example, I have not undertaken to advance the many reasons why compulsory licenses would surely be arbitrary, unfair and utterly ineffective for the purpose intended. I have not dealt, except incidentally, with the allegation which is sometimes made that any patent system, and that of the United States in particular, promotes monopoly to an offensive extent. I have made no reference to such charges as that inventions are "suppressed" and patents" pigeonholed," a proposition which, as a substantial matter, has never been and cannot be supported by any evidence. The testimony before the Patent Committee of the House of Representatives, to which reference has already been made, deals with these and many like questions. My single purpose in this paper is to emphasize the controlling importance of a liberal