Evening star., 1938-12-11
LEON HENDERSON
Charts course of inquiry.

LEON HENDERSON SENA
Charts course OF inquiry.
Because there lis feeling that the
past nine years of Americas history have
brought an end to its economic growth
under conditions as they were, Tenn
currently engaged in an effort to chart
the course of our economic habits of
the future.
Suggested by President Roosevelt and
created by Congress, the committee rep
resents many shades of thought within
the six members of Congress and the six
departmental executives who compose it.
Some among them, in fact, do not sub
scribe to the feeling that major revisions
in our basic reliances are essential to
move our economy back into high speed;
rather do they believe that such a cure
would be worse than the current illness.
1t is safe to say, however, that ma
jority Of those now engrossed in the
study are sincerely convinced that there
is some fundamental ailnent in our ma
tional economy and that efforts to effect
a cure should be active rather than
possive.
AS one of the symptoms, President
Roosevelt cited to Congress the undis-
puted existence of great concentrations
of private power and finances. Accord
ingly. major part of the committees
attention is being directed to a study
of these concentrations, their origin,
their operation and their effect.
The committee, for instance, already
has given reasonably clear indication that
one of its recommendations will COM
prehend an overhauling of the patent
laws and procedure.
TWO brief days of questioning and hear
ing executives of the automobile indus
try were sufficient to disclose the weight
of feeling that some constructive action
might be taken in this field.
With the underlying thought that
monopolistic practices in industry are
major factors in its good or bad opera
ton, it was fitting that the initial
phase of this committees work should
be directed at the working Of the patent
system, legalstic procedure of grant,
ing lawful rights of monopolistic control
on the theory that such grant will pro-
mote the progress of science and useful
arts.
Choice of Exploitation.
In further justifying this particular
inquiry, Thurman Arnold, head Of the
antitrust division of the Department of
Justice and q member of the committee,
points out that "the law at present af-
fords to the patent owner such wide
choice in exploiting new industrial art
that it offers wide opportunities for re-
straint of trade. These opportunities
are facilitated by the technical COM
plexity of patent law, the costs of liti-
CATION and the ever-present problem of
drawing sound line between the legiti-
mate use of patents and the uneconomic
extensions of that privilege"
To examine the present system, in
both its beneficial and its restrictive
effect, the committee chose the auto
mobile and glass industries, Mr.. Arnold
explains, simply because they illustrate
typical situations which are common
throughout the industrial field and in
volve products which are of interest to
every consumer"
In their broader aspects patent usages
in the automobile industry have been
of benevolent" nature, characterized
by free and frequent exchanges of rights
of application.
In brief, three patent policies as prac-
ticed in the industry were outlined be-
fore the committee.
First was that of the Ford Motor Co.
whose patents are dedicated to public
service" in the sense that the privilege
of applying them has been freely grant,
ed by the company to any applicants
who demonstrate intention to employ
them in actual manufacture. For this
privilege the Ford company charges ne
license fees or royalties, the committee
was told by Edsel B. Ford, present presi-
dent of the company, nor has it brought
infringement action in any instance
since 1909.
Pooling of Patents.
Second was that of the Automobile
CLIO S1oSONldtlO1l VI
its patents in licensing agreements
by which its members freely exchange
patent rights among themselves In
itiat"d in 1915, this policy involved all
the basic patents owned by virtually the
entire industry-Ford being the notable
company outside the association. In re-
newing the agreements in 1890 and 1885
however, the association membership de.
cided to exclude from the pooling all
patents of future issuance. If main
tanned in future agreements, this deter
mination would, of course, virtually null
lily any effects of the exchanges since
most of the important patents issued
prior to 1880 are expiring gradually.
Third policy was that of the Packard
Motor Co., member of the A. M. A. but
not a participant in the cross licensing
agreements. One of the earliest COM
panies to set up research division and
| obtain ownership Of large number Of