companies in a worldwide cartel allocating manufacturing and selling territories in the manufacture and sale of plastics by the joint exercise of patent rights. A consent judgment was entered on the same day the complaint was filed which, among other things, made available a number of patents on a royalty-free licensing basis. The paragraph in the judgment that dealt with the licensing of these patents directed Rohm & Haas to issue to any applicant making written request therefor a license under any one or more of the U.S. letters patent and patents In January 1949 a prospective licensee wrote to Rohm & Haas stating they would like to obtain copies of the patent applications listed in exhibit B of the final judgment for the purpose of ascertaining whether or not they would be interested in requesting licenses thereunder. They asked to be advised what arrangements could be made to obtain copies of the applications. In response to this request, Rohm & Haas replied: The applications are not available for inspection. You will note that the decree requires that licenses be granted under any patents that issue upon the applications but does not alter the status of the applications themselves. Until such time, therefore, as patents are granted, the decree does not affect the applications. Rohm & Haas has advised that their records do not indicate any further correspondence or discussion with the applicant concerning this point. Rohm & Haas assumes that the applicant agreed it did not have rights of access to the applications. 3. United States v. Bendix Aviation Corp., et al. (Civil 44-284, S.D. N.Y.). This case charged a combination and conspiracy to restrain and monopolize commerce in the manufacture and sale of braking systems. The complaint alleged that the defendants used patents to retain and extend their control of this field, to compel customers to purchase unpatented parts and to suppress inventions and improvements in braking systems which might compete with defendants' products. Separate judgments were entered which required, among other things, the compulsory licensing of patents. The judgment entered on December 22, 1948, against Westinghouse Air Brake Co., listed a number of patents and patent applications. Information available indicates that a potential applicant sought information concerning the possible licensing under the patents and applications and requested Westinghouse Air Brake to furnish copies of the applications listed in the decree. Westinghouse Air Brake stated that an investigation was started to determine whether or not the furnishing of copies of patent applications might, as a practical matter, endanger the successful prosecution of the applications and to determine whether, as a legal matter, Westinghouse Air Brake was required to furnish the requested documents. The potential applicant apparently did not press the matter. All of the applications listed in the judgment have now been issued as patents and are available as public records. There are conflicting considerations which affect the question of whether patent applications should be included under compulsory licensing. On the one hand, for example, a patent is not enforcible until its issuance; therefore, an applicant technically does not need a license to make or use under an application, as he cannot be sued if he discovers and uses the technology described in the application. On the other hand, however, he may not have the means or the ability to discover the technology involved on his own, and if the purpose of compulsory licensing in a specific case is to give an applicant access to technology and know-how so that he might compete effectively, then it would seem that there is a need for licensing patent applications. C. The problem of publicizing the patents available for licensing This report has pointed out that in a large number of cases there has been a complete absence of inquiries concerning patents available for licensing under antitrust judgments. There are several possible explanations for this, among them being the following: The expiration of the more important patents; advancements in the art which reduced the commercial importance of defendant's patents and made such patents less attractive to a potential licensee; and there may have been à general lack of interest in the patents held by the defendants. Still another possible explanation, however, is that there has been insufficient publicity concerning the availability of the patents, and that those who might be interested in applying for licenses were and are unaware that such licenses are obtainable. Some of the ways in which these decrees might be more adequately publicized are the following: 1. Resumption of listing is Small Business Administration's publications. During the period from June through December 1956, the SBA's "Products List Circular-Opportunities for Small Businesses" (Bulletins Nos. 10 through 15) carried information concerning the patents available for license under the judgments entered in January 1956 in the IBM and AT&T cases. Included were abstracts of some of the patents involved and a listing, by number and title, of others, and an explanation of the circumstances of how the patents had become available. In its subsequent bulletins the Small Business Administration has discontinued the practice of identifying the patents subject to compulsory licensing under antitrust judgments. Patents available for licensing under antitrust judgments are now listed in the same manner as any other patents that a manufacturer is willing to license or sell. As a result small business firms can no longer tell from the bulletin which of the listed patents are subject to those decrees. Yet this is obviously a matter of substantial interest to a prospective licensee. In a letter to Senator O'Mahoney dated August 7, 1959, the Small Business Administration gave the following explanation for this change. Originally such patents were published by number and title together with a caption to the effect that their availability resulted from an antitrust suit. Our experience with such publications indicated that the listing of patents by number and title was not sufficient information and that an The alternative, therefore, was to request the patent owner The Small Business Administration has further advised the subcommittee that in answering specific inquiries about patents described in its products list circular it does "not advise the inquirer that the patent is available by reason of a judicial action." (Letter from Wendell B. Barnes, Administrator, to Senator O'Mahoney dated August 19, 1959). If, as the Small Business Administration suggests, some defendants are reluctant to supply adequate digests of the patents they have agreed to license a reference of this matter to the Antitrust Division would seem to be appropriate. If the Justice Department cannot obtain from the defendant an adequate digest of a defendant's patent except on the condition that the fact that compulsory licensing has been decreed will not be publicized, there would seem to be no basis for accepting an agreement to license that patent as public antitrust relief. 2. Maintenance of a current index by the Antitrust Division.Another way potential users of such patented art, particularly small business concerns, might be aided would be for the Antitrust Division to establish and maintain a current index of the general fields of products in which patents are available for licensing under antitrust judgments. Any program of this kind should be coordinated with other agencies, particularly the Small Business Administration, the Patent Office, and the Trade Association Division of the Department of Commerce. 3. Use of judgment provisions to require defendants to publicize patents available for licensing. Some judgments have included provisions requiring defendants to publicize the availability of their patents. This procedure might be expanded. If defendants are required to publicize, more than just a single advertisement in a trade publication might be in order. Periodic publication could be required, not only in a trade publication of the industry involved, but also in trade publications of related industries whose members might be logical potential entrants into the industry involved. 4. Exploration as to further assistance from Patent Office.--At one time, the Patent Office listed judgment patents in the Official Gazette, a periodical having wide distribution, but that practice has been discontinued. At the present time, when patents are made available for licensing in an antitrust judgment, a notation to this effect is made in the Patent Office records, and the information will thereafter appear in the assignment records of that Office. While this practice is undoubtedly helpful to someone searching the records relating to a specific patent, it is not the type of publicity which would engender general interest in patents. D. The problem of listing patents in a manner that will be meaningful to prospective applicants Some final judgments in antitrust cases have made available for licensing literally thousands of patents. It is estimated, for example, that the recent judgment in the RCA case made available about 12,000. The IBM and Western Electric cases likewise required that large numbers of patents be licensed. Normally, the patents available for licensing will be listed numerically, and a brief identification will be given for each, corresponding to the title of the patent. This identification is not always sufficient to indicate the field of utilization of the patent, or the product to which it relates. It sometimes occurs, therefore, that a potential applicant, even with the decree before him, does not know specifically what patents he has an interest in and cannot designate the particular patents under which he desires a license. An example of this arose in connection with the Libbey-Owens-Ford Glass Company case. There, one defendant prepared a document outlining the procedure to be followed in the event a prospective applicant requested information concerning licenses under the judgment, which listed several hundred patents. One paragraph of the document stated: No request will be deemed adequate if it refers merely to a product or process without identifying the patent or patents under which the license is desired. Subsequently, a prospective applicant, a manufacturer of metal products, wrote to the defendant, as follows: Several weeks ago your company forwarded to me a copy of the settlement between the U.S. Government and yourselves. As a layman, it is impossible for me to determine which patent or patents would best be suited for my purpose. *** A defendant required to license hundreds or thousands of patents and who insists, as he well might do under customary judgment language, that the applicant specify with particularity the patents he is interested in, can impose an unreasonable burden on small companies who are unfamiliar with the coverage of the patents. It does not seem reasonable to require a small company, interested in obtaining licenses to a few patents covering a limited product or process, to engage counsel or to utilize its own small staff to examine hundreds or thousands of patents in which it might have no interest. E. Problems of reciprocal licensing Along with the compulsory licensing provision in final judgments, there has developed the doctrine of reciprocal licensing (sometimes referred to as "grantbacks"). Briefly, this requires that a licensee, who obtains patents from a defendant under the licensing provisions of a decree, must agree to license his own patents to the defendant. One example of a decree provision allowing reciprocal licensing is found in United States v. Western Electric Company, Inc. and American Telephone and Telegraph Company (Civil 17-49, D.N.J.). This judgment, after designating the patents to be licensed by the defendants, states: ***but upon condition that the applicant shall grant to defendants at reasonable royalties licenses to make, have made, use, lease, and sell such equipment useful in furnishing common carrier communications services and such machines, tools, and materials useful in manufacturing or operating any such equipment, as defendants may then designate in writing, under all claims or any or all existing and future patents under which, and to the extent to which, the applicant or its associated companies may have the right to grant licenses.28 Reciprocal licensing has been included not only in consent judgments, but also in judgments following litigation, as in National Lead and ICI. In those cases the court had found section 1 Sherman Act violations. In the Gypsum case, involving sections 1 and 2 violations, the trial court without extended comment denied the defendants' request to include reciprocal licensing. In the General Electric case, also, after finding violations of sections 1 and 2, the trial court denied reciprocal licensing as to existing patents, but permitted it as to future patents, the latter in part because to deny it would have given an "unnecessary boon" to other defendants. The court's comments in the GE case aid in highlighting some of the problems, pro and con, of reciprocal licensing: General Electric's proposals contained a provision to the effect that a defendant need not grant a license under existing patents unless the applicant, upon request, agreed to license that defendant under any, some, or all of its patents. General Electric contended that absent such a provision other members of the industry would be able to develop while blocking General Electric's development. It noted that Westinghouse and Corning, which have signed consent decrees, could demand patent licenses from General Electric, while the latter would be unable to compel them to reciprocate. It maintains that its position is supported by United States v. National Lead Co., supra, in which reciprocal patent licensing was ordered. Inasmuch as provision has been made for dedication of existing patents on lamps and lamp parts, this proposal is pertinent only to provisions as to the licensing of patents on lamp machinery. As to these I am inclined to agree with the assertion of the Government that provision for reciprocal licensing would tend to perpetuate the situation of industry dominance by General Electric which the decree is designed to end. For many years General Electric conducted the bulk of the research in the industry. In addition, it received cross licenses in whatever patents were held by its licensees. To attempt to dissipate the effect of the great advantage which accrued to General Electric primarily, but also to its former licensees, and which must necessarily project itself into the future even after the formal termination of the 28 There is a peculiar reason which favored the acceptance of such a provision in this particular case. The Bell Telephone Systems, operated by or affiliated with A.T. & T., are to some extent, at least, regulated monopolies and should have access to the latest developments, from whatever source, in order to provide the public with the most modern equipment. The judgment terms, allowing "grantback" provisions is in aid of that objective. |