them. The tendency would be toward a greater concentration in the control of patents, and a further encroachment upon the business of a small competitor.36 The large corporation might be tempted to crush a small rival by means of unfair competition, reduce its patents to idleness, and therefore subject them to the provisions of the law.37 Moreover, if one concern, like the United Shoe Machinery Company, already dominates an entire industry, the outside inventor would have no better market for his invention, for it would be the only possible licensee, as it is to-day the only purchaser or licensee.

Litigation, already a weakness of our patent system and the bane of the inventor's existence, would arise from the enforcement of the penalties of revocation and compulsory licenses. Every attempt to apply them would require the settlement of the question as to what constitutes "adequate" working of an invention. Unless the onus of proof were placed on the patentee, an applicant for a license would be unable to obtain data concerning sales, etc., with which to prove inadequate working. The differentiation of alternative inventions for the purpose of ascertaining which ones are worked would present an intricate problem. Furthermore, the fixation of the amount of royalty in return for licenses would ever remain a subject of controversy. It would be difficult, if not impossible in some instances, to stipulate a royalty which would be fair to both the licensor and licensee, because the value of a new invention is largely an unknown quantity.38 An invention, for example, which seems trivial to-day may be of great importance in the future. The volume of future sales is a matter of conjecture. Readjustment of the royalties from time to time would result in confusion and uncertainty. The embodiment of many inventions in a single product would complicate the problem. It might be contended that an applicant is not entitled to a license owing to the invalidity of his patents. The patentee would be forced into litigation as the defendant in suits

Ibid., No. 3, p. 21.

p. 67.

Revision of Patent Laws, Patent Law Assn. of Washington, 1912, "Oldfield Hearings of 1912, No. 3, p. 22.

brought for the securement of licenses. In addition, the inability to work a patent owing to the sickness, poverty, etc., of the inventor or to the existence of obstructive and controlling patents would require modification, allowances, and exceptions in applying the law, and therefore litigation and its attendant evils.

If the applicant for a license were not obliged to accept it upon the conditions prescribed by the court although the patentee were compelled to grant it, the situation would be unfair to the latter.39 The applicant should be compelled to take the license upon the terms stipulated by the court. Such a provision, however, would discourage applications for licenses and therefore would tend to defeat the purpose of compulsory licenses.

It should be remembered that neither revocation nor compulsory licenses guarantee the working of an invention. "Without cordial coöperation between the inventor and the manufacturer it is only rarely that the printed description of a patent-however carefully drawn-conveys sufficient information to enable a new process to be successfully worked and this successful coöperation can not be obtained by compulsion. As a matter of fact, a patent is only granted for a demonstrably new idea, whereas some of the fundamental conditions which allow this new idea to fructify may not in themselves be patentable and consequently are automatically excluded." 40 Many patent specifications filed by foreigners are either incomplete or intentionally misleading, a fact which accentuates the difficulty of the manufacturer. This applies particularly to chemical patents.41 Moreover, revocation and compulsory licenses would destroy the exclusiveness of a patent monopoly, and therefore lessen the incentive to assume the risk of developing a new invention since competitors could escape this risk and cost and yet partake of any resultant

success.

30 Oldfield Hearings of 1912, No. 8, p. 15.

40 Mond, "The Patents and Designs Bill," 1919, The Journal of the Society of Chemical Industry, Vol. 38, No. 2, 1919, p. 323 R.

"Discussion on Patent Law Reform," Journal of the Society of Chemical Industry, Vol. 36, 1917, p. 808.

The net effect of the foregoing objections to the compulsory working of patents would be the discouragement of invention. The inventor, it seems, would be likely to receive a smaller reward than at present. It would be more difficult to sell a patent upon satisfactory terms. Furthermore, the corporation would have less inducement in employing professional inventors. Many of their patented improvements, inferior or alternate in character, could not be advantageously embodied in a particular product, and therefore would be subject either to unprofitable and wasteful working on the one hand or revocation and compulsory licenses on the other.

The experience of foreign countries indicates a small measure of success with revocation and compulsory license provisions in their patent laws. They have been most effective with respect to patents granted to foreigners. Many American companies, such as International Harvester Company, Westinghouse Electric Company, United Shoe Machinery Company, National Cash Register Company, Singer Sewing Machine Company, Gillette Razor Company, Columbia Phonograph Company, Remington and other typewriter companies, American Pencil Company, and Diamond Match Company, have established factories abroad so as to save their patents.12 Other individuals and corporations have granted licenses more willingly. The Germans have resorted to subterfuges to evade the purpose of the working requirements of the English and other laws, for example carrying on the final processes abroad on intermediates made in Germany. The citizens of this country are required to work their patents in England, France, and many other countries from which they may obtain them, although the United States does not impose these restrictions upon its citizens who secure patents in this country. Similar laws in the United States which will apply

42

Export Problems of the United States, American Manufacturers' Export Assn., Vol. II, 1919, p. 177; Oldfield Hearings of 1912, No. 8, p. 12; The Economic Journal, Vol. XIX, p. 546; The Journal of Industrial and Engineering Chemistry, Vol. 7, No. 4, p. 306; Journal of the Society of Chemical Industry, Vol. 36, 1917, p. 809; Perry's Directory of Great Britain and Ireland, 1917, pp. 1943, 1944, 2605, and 2671; United Shoe Machinery Corporation, Report of the President to the Annual Meeting of Stockholders, 1908, p. 2.

to them are worthy of favorable consideration.18 The significance of such a provision is suggested in a previous chapter which describes the suppression of United States patents by foreigners.

Royalty Basis of Remuneration. Another proposed remedy is that the inventor should be permitted to dispose of his patent only on a royalty basis. Thomas A. Edison stated, in 1919, that "if there is any possible way whereby the law would in actual practice work out so that the inventor would be protected from the capitalist, either by the impossibility of alienating all his interest, or in that a fixed per cent should always be his, in spite of himself, it would be of great value to the people of the United States." The task of fixing the royalties of hundreds of thousands of patents suggests the impracticable nature of this proposal.

44

Expiration of Basic and Improvement Patents at Same Time. Another proposal for improving the patent laws rests upon a distinction between basic and improvements patents: namely, that the latter shall expire at the same time as the basic patent to which they relate. This would have prevented the prolongation of former monopolies by means of tying clauses based upon patents. The present illegality of such clauses removes this practice. The two facts, that about 99 per cent of the patents cover improvements, and that some of them are secured after the basic patent expires, are sufficient to demonstrate the futility of this proposal.45

"The United States patent law of 1832 required an alien to introduce his invention into public use in this country within one year from the issue of his patent. The patent law of 1836 provided that the suppression of an invention by an alien constituted one of the defenses which an alleged infringer could offer, to wit: "That the patentee, if an alien at the time the patent was granted, had failed and neglected, for the space of eighteen months from the date of the patent to put and continue on sale to the public, on reasonable terms, the invention or discovery for which the patent issued."

"Nolan Hearings of 1919, pp. 172-173.

45

A long list of improvement patents, however trivial, may serve to intimidate those who would consider the manufacture and sale of the product on which these patents appear. It has been suggested that they should be designated "improvement patents" and should indicate the specific improvements which they cover.

Dedication of Essential Inventions to Public Use by Government. Important inventions, like those relating to surgical instruments, wireless telegraphy for ships, methods of manufacture which protect the health of the workers, should be available to all upon reasonable terms. The self-interest of those who own the patents may clash with the vital welfare of the public. No one who has the social well-being at heart would question, for example, the urgent necessity for the immediate and general adoption of the new process of making matches and the discontinuance of the former sulphur match and its attendant evils. The government, in granting patents, should reserve the right of purchasing them and permitting others to use them either gratis or upon a royalty basis. Some nations retain this prerogative in their patent laws. The English Act of 1883, for example, compels the patentees to permit the government "to use in the public service the inventions for a consideration." Prior to that date inventors, like Arkwright, have received money for their inventions.46 The United States Government has appropriated money to a few inventors, such as Morse, to assist them with their inventions, but its patent law does not provide for the availability of important inventions through government action.

Institution for Development of Inventions. Undoubtedly the greatest obstacle to the average patentee is lack of capital in developing and defending his invention. A patent covers an invention of unknown value and therefore cannot be financed through banks and other regular channels. Consequently, the patentee, whatever the intrinsic value of his invention, is apt to suffer from insufficient capital and in addition, perhaps, from the practices of the unscrupulous promoter. This situation suggests the desirability of creating an institution to assist the patentee in developing his invention and presenting it to the public. It would reduce the untold waste of the present system by discarding the worthless invention at an early stage and by utilizing the meritorious invention. A thorough and impartial investigation of inventions would justify the inventor either in abandoning his invention, or in "Martin, English Patent System, p. 37.