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Printed for the use of the 
Temporary National Economic Committee 





(Created pursuant to Public Res. 113, 75>th Cong.) 

JOSEPH C O' .AHONEY, Senator from Wyoming, Chairman 

HATTON W. isDMNERS, Representative from Texas, Vice Chairman 

JAMES M. MEAD, Senator from New York 

WALLACE H. WHITE, Jr., Senator from Maine 

CLYDE WILLIAMS, Representative from Missouri 

B. CARROLL RBECE, Representative from Tennessee 

THURMAN W. ARNOLD, Assistant Attorney General 

♦HUGH COX, Special Assistant to the Attorney General 

Representing the Department of Justice 

SUMNER T. PIKE, Commissioner 
Represeriting the Securities and Exchange Commission 

GARLAND S. FERGUSON, Commissioner 

•EWIN L. DAVIS, Chairman 

Representing the Federal Trade Commission 

ISADOR LUBIN, Commissioner of Labor Statistics 

♦A. FORD HINRICHS, Chief Economist, Bureau of Labor Statistics 

Representing the Department of Labor 

JOSEPH J. O'CONNELL, Jr., Special Assistant to the General Counsel 

•CHARLES L. KADES, Special Assistant to the General Coilnsel 

Representing the Department of the Treasury 

WAYNE C. TAYLOR. Under Secretary of Commerce 

►M. JOSEPH MFEHAN, Chief Statistician, Bureau of Foreign and Domestic Commerct 

Representing the Department of Commerce 

LEON HENDERSON, Economic Coordinator 
DEWEY ANDERSON, Executive Secretary 
THEODORE J. KREPS, Economic Adviser 





KOHN, Jr. 


This monograph was written by 

Professor of Law, Tale University Law School 






The Temporary National Economic Committee is greatly indebted 
to this author for his contribution to the literature of the subject 
under review. 

The status of the materials in this volume is precisely the same as 
that of other carefully prepared testimony/ lohen given by individual 
witnesses; it is information submitted for Comm/ittee deliberation. 
No matter what the official capacity of the witness or author may be, 
the publication of his testimony, report, or monograph by the Com- 
mittee m no xoay signifies nor implies assent to, or approval of, any 
of the facts, opinions, or recommendations, nor acceptance thereof in 
whole or in part by the members of the Temporally National Eco- 
nomic Cominittee, individ{ially or collectively. Sole and undivided 
responsibility for &very statement in sucji testimony, reports, or mono- 
graphs rests entirely upon the respective authors. 

(Signed) Joseph C. O'Mahonet, 
Chairman, Temporary National Economic CommAttee. 



Letter of transmittal .. vii . 


Salute to invention 1 

Function and question _ 1 

The art belongs to the artisan... ._. 4 

Technology swaps masters _ __ ._ 7 


The Government assumes an obligation.... 11 

In the old country 11 

Across the Atlantic. . , _. 18 

And into the Constitution 23 


The ages of letters-patent 29 

Culture shares the invention , 29 

A number of beginnings 33 

Invention does not ride aloue 41 

Fact forsakes the law. _ 45 


Alternative paths for the law 51 

RumbUngs of doctrine.. _ 51 

A man and his own __ 57 

Immunity by contagion 62 


The grant as shield and sanction 71 

Tolerance of remote control. 71 

Along the horizontal line _ 76 

Still the open road _ 80 


Maintenance of the corporate estate 87 

The telephone — and longevity 87 

The electric light — and the closed market 93 

Beryllium — and foreign policy - 103 


The poles of trade practice. 109 

The glass container — the patent as police. 109 

The automobile — and aloofness 115 


The creation and validation of sanctions 123 

Norms and procedures - 123 

The court as underwTiter 129 

Process into current usage - - 134 





A policy for the national economy 145 

Improvement and betterment ;.'. 145 

To promote the industrial arts 152 

The peril to free enterprise - - 158 

Wanted: A policy for technology _ 163 

The release of creative resources.. 170 

Table of cases.- 1 177 


Hon. Joseph C. O'Mahoney, 

Chairman J Temporary National Economic Gommittee^ 

Washington^ D. O. 

My Dear Senator : An inquiry into the concentration of economic 
power cannot ignore the patent system. The sanction for "the ex- 
clusive right" conferred upon the inventor is the Constitution itself 
which delegates to the Congress the power "to promote the progress 
of science and the useful arts." -The patent question, however, is not 
an exclusive affair of technology. The inventor assigns his grant to a 
corporation; it thus comes under the influence of the usages of busi- 
ness and is employed rather widely as an instrument of offense and 
defense by the corporate estate. Hence the concern of this mono- 
graph is with "Patents and Free Enterprise." 

The monograph has been submitted to a number of individuals 
who in an official Or a professional capacity are concerned with the 
operation of the patent system. The author is under heavy obligation 
to Mr. Joseph Borkin, of the Department of Justice; Mr. Willis B. 
Rice, counselor at law, New York; and Mr, Samuel E. Darby, Jr., 
of the firm of Darby & Darby, counselors at law, New York, for the 
time they have taken with this manuscript, for a number of fresh 
leads, and for a host of constructive suggestions. It, however, goes 
without saying that they have no responsibility for such frailties as 
this document possesses. 

Dewey Anderson, 
Executive Secretaryy 
Temporary National Economic Gorwmittee. 

March 14, 1941. 



From the very beginning the National Government has been 
charged with responsibility for the advance of the industrial arts. 
In 1787— as the Constitution has it— "We the People of the United 
States" took steps "to form a more perfect Union, establish Justice, 
insure domestic Tranquillity, provide for the common defense, promote 
the general Welfare, and secure the Blessings of Liberty to ourselves 
and our Posterity." To the Congress ^\e delegated — along with other 
authority necessary to attain these objectives — the power "to promote 
the Progress of Science and the useful Arts." And through the 
Fathers who represented us on that historic occasion, we specified as 
the means, "by securing for limited times to Authors and Inventors 
the exclusive Right to their respective writings and Discoveries." 

The clause assigns to the Federal Government an office in the 
national economy. It affects technology with a public interest ; 
demands that the Congress encourage its development; outlines the 
policy which oversight is to follow. The industrial arts are rooted 
in the long ago, passed on as a cultural legacy, and subject to im- 
provement. As a body of useful knowledge they are the possession 
of the entire people ; from the store of techniques and skills every 
man may draw as his particular calling demands. But the arts — 
and the science which feeds them — are not to be allowed to. become 
stagnant; they are to be kept exposed to the contagion of experiment 
and imagination; and, as an incentive, the author of a device or a 
process which is novel is to enjoy an exclusive right in his discovery 
for a limited time. ' Its span is to be just long enough to stimulate 
the creative faculties of the man of talent. At the end of a reason- 
able period his privilege is to lapse and the innovation merged in the 
parent art is to become public property. Thus invention and dis- 
covery are made to serve the general welfare. The private grant is 
made the instrument of the common good. 

The list of powers granted to Congress can be written on a post- 
card and this clause is brevity itself. It is,'in fact, a trifle verbose ; for, 
unlike others of its kind, it not only names, the power but sets down 
a line as to how it is to be exercised. The words "to promote the 
progress of science and the useful arts" are as concrete as an aim 
into an unknown future will allow. The clause which specifies 
the means is wanting in detail ; evei^ word offers an open choice 
among alternatives. "To secure" was a favorite infinitive with the 
founders of the new republic ; but no single road leads to security. 
The term "exclusive right" is not defined. "Exclusive" as a shut- 
ting out of other persons is somewhat less than exemption from the 



general law; and "right" is among the the loftiest of political sanc- 
tions, powerful at all times to incite dispute, propel argument and 
touch off conflict. The "limited times" are left of an indefinite 
length; incentives are among the vaguest of intangibles, and men 
will not agree upon the number of years of earthly reward neces- 
sary to draw forth the genius of the inventor. The question of 
what is a discovery is unresolved. The provision permits Congress 
to issue letters patent; it does not forbid it to decree a bounty, to 
purchase the invention, or to contrive some other arrangement to 
attain the objective. The clause beginning "by securing" is instru- 
mental ; the word "patent" makes no appearance in the Constitution. 

So general a clause cannot be self-operative. The Constitution 
gives a general command and is content to leave its administration to 
Congress. A task of such a cliaracter cannot be executed through 
a process of deliberation; the endless host of decisions which it 
invites is beyond the physical endurance of a single body. So Con- 
gress, in a single act — which from time to time it has amended — 
has translated the general command into a series of statutory provi- 
tions. In these the patent is chosen as the instrument, the terms under 
which grants are* to issue are laid down, and the privileges which 
they carry and the obligations they impose ai-e specified. And it 
has entrusted the detail of administration to a Patent Office, sup- 
plemented by a special court of appeals. It is inevitable that, in 
the exploitation of inventions, collisions should occur. So the courts 
are kept open to conflicts over claims, and rights cannot be finally 
accepted as valid until they have been litigated. 

Thus has emerged an institution to advance the useful arts. The 
clause in the Constitution imposes an office and points a direction. 
The act of Congress translates national purpose into legal com- 
mand, elaborates standards and procedures, and exercises a con- 
tinuous oversight by agency. The Patent Office, in an endless stream 
of decisions, issues or refuses to issue, letters patent. The Federal 
courts pronounce grants valid or invalid, and appoint boundaries 
to their competing claims. The constitutional provision is as the 
statute makes it; and the statute has whatever meaning the stream 
of administrative and judicial rulings give to it, The law thus lies 
upon three intertwined levels and' overlaps to'bring into being a net- 
work of usages. It is all an intricate affair, a product of growth and 
of many men, a creation with many aspects. It lacks geometrical 
design ; it has the symmetry of a thing that lives. 

The patent-system, touched off by a line in the Constitution, has 
become of increasing importance. In government we reach back 
across the decades for words with which to hallow current under- 
takings; in science, the latest decree from the laboratory has a 
weight which discredits authority. The lines of policy were set 
for it before technology had staged its industrial revolution. As 
pens were put to the nnished document, America was still in the 
stage of the crafts. It was a country of self-sufficient farms, each 
almost a miniature economy in itself, fringed by a commerce whose 
dominant exports were staple crops. Skills were largely of the hand ; 
trades were passed down by tradition; the windmill and the water- 
wheel timidly disputed the sovereignty of ox and horse as the source 
of industrial energy. Workmen still came from abroad bringing 
their callings with them. The machine as we know it was to most 


of the signers a matter of hearsay; the machine-process an abstrac- 
tion hard for Americans to conceive for lack of instances. A new 
wrinkle occurred here and there in an established art; a discovery- 
was an event rare enough to be noted. But the atmosphere of the 
new world was dynamic ; the spirit of contrivance was in the land ; 
men like Dr. Franklin and Mr. Jefferson were not above tinker- 
ing in projects. Science might still be a minor term in the equation 
of the general welfare; biit in respect to the useful arts the fathers 
did not propose to stand on the status quo. In the Constitution they 
gave the bugle call for the shtjw which invention and discovery were 
about to put on. 

As events took their course, the patent system came up in the world. 
A division of labor cleared the way for the coming of the machine. 
A handicraft was broken down into its elements ; each was discovered 
to be a routine operation ; at a task whose requisites are precision and 
repetition a machine is as good as a great many men. As a source of 
energy old Dobbin — and even that synthetic animal called the mule — 
was found woefully inadequate compared with gas, coal, or oil. The 
skills of the workers were built into a complement of machiiies, and 
metallurgy was drawn into the service of the productive process. The 
electric spark and the vacuum tube, the dynamo and the internal com- 
bustion engine, caused old arts to atrophy. Physics, chemistry, 
biology, bacteriology were enlisted in the service of invention and an 
advancing science kept technology on the move. Hardly a method of 
production has been able to stand out against new processes; and so 
breathless is the march that novelty falls into jeopardy before ever 
it gets established. As trades have become industries, loosely articu- 
lated into a system, the industrial arts have become the foundation of 
a national economy. 

As a result access to the store of useful knowledge has become a requi- 
site of free enterprise. It is as essential to the venturer into an indus- 
try as fuel to the engine, food to the laborer, or breath to animate life. 
A man may possess drive, intelligeiicej and capital; he may be able to 
command labor and bund up markets. Yet, if he is denied access to 
the necessary techniques, such assets are to him of no avail.. And, 
where science prods an art along, a liberty to use established methods 
may still leave him at a hop^ess disadvantage. A concern must keep 
its technical processes up to date or fall behind in the competitive race. 
It is the rare invention which lives out its statutory period of protec- 
tion and becomes common property before it is discarded for a revised 
edition of itself or is ousted by a sheer upstart. The whole economy 
has come to rest upon a scientific technology ; and, with its rapid 
progress, innovation lies like a blanket over the intricate fabric of 
modern industry. 

Accordingly the multifarious actuality kn'own as the patent system 
invites critical appraisal. It is under this system that creative in- 
centives are released, that discoveries are protected, that arts-in- 
transit serve the public interest. Here it is to inquire what the system 
is, how it came about, what usnges make it up, how it operates. As an 
instrument, has its sole concern been to promote the progress of science 
and the useful arts? Has it been diverted to other purposes which 
are no part of its constitutional intent ? How far has it left undone 
the things it ought to have done ? How far has it done what it ought 
not to have done? ^^There does the balance lie? How can its per- 


formance be improved? Its activities be kept in service to its office? 
The Congress is charged with making the industrial arts the instru- 
ment of the commonwealth. How well is this function of government 
being performed ? 


It is only upon tne most prmiitive levei — ii at all — that the needs 
of man are satisfied directly from Nature. Early he begins to inter- 
pose tools and methods between the wants of his organism and his 
environment. He forges crude weapons with which to bring down 
the deer; he contrives a boat and a net to enlarge the sources from 
which he may have fish ; he discovers simple processes by which to break 
grain into bits, press grapes into wine, and keep meat from decay 
against the winter. A mite of knowledge lies at the base of each of 
these inventions; as it grows and is turned to use, each becomes an 
industrial art. As those increase in number and intricacy man converts 
more and more of the great unknown to his own account. There is 
no surer index to the quality of a culture than the state of its industrial 

We can know little, save by inference, of early inventions. Fire, the 
hammer and the ax, the basket and the stone-jug are in use when 
the records of history begin. We cannot set down the incentives 
which drew them forth and the steps in the mental processes out of 
which they emerged. But the evidence from primitive cultures 
within which the useful arts are painfully set upon their way indicates 
that it was no conscious process directed at a definite result. A neo- 
lithic man could not have taken ore and have said "Let there be iron" 
when he had never heard of iron. Nor could he have fashioned a 
chisel, a wheel, or a long bow when such things were alien to his mind 
and world. The first vague promptings doubtless came from Nature; 
a vague notion, a stroke or two, a bit of luck decreed the start. A 
dried gourd into a dipper; a pointed stick into a spear; a log — hol- 
lowed and shaped — into a canoef diese are gigantic, but not impos- 
sible, leaps for the untutored mind. Yet each of them led its culture 
over a horizon. 

The initial idea was the urge;, once a beginning was made, the 
carry-on would in time take care of itself. As life goes its way, small 
variations in its daily round are inevitable. Each mutation presents 
some slight difference in result, and among the people there are some 
who will observe, repeat, and learn. As tribes are thrown together, 
in trade or in war, a process of borrowing is inevitable and in some 
fertile mind elements from two culttires unite to form a tool or a 
technique not known before. An exposed tribe is more tolerant of 
innovation than an isolated one. A crisis demands expediencies 
which, when the event is passed, are not forgotten. A people who 
have a history are disturbed more in their customary ways thaii an- 
other to whom each new year is like the last. One art advances 
through a series of minute changes; another goes forward through 
leaps of the kind which biologists call sports. A technique may even 
shift its base entirely. As peoples mingle, their ways mix; even 
where change is slow, little is ever preserved in its pristine purity. 
Events and the social order are creative forces ; but it is only as some 
mind gets a novel idea that they feed the stream of knowledge. 


A primitive folk impresses its own character upon its arts. Its 
tools are few in number and simple in form. Each in the hands of its 
workman is a generalized instrument. A' knife with a single blade 
serves many uses. A Zulu will use an untrimmed lump Of sandstone to 
clean his feet, polish the shaft of an assei^aij scrape an antelope skin. 
Its multiple function has been incorporated nito its structure ; its em- 
ployment remains at large. It lacks precision in its own right; the 
neatness and dispatch with which it operates depends upon the nim- 
bleness of the persoji wielding it. The finer wood carvings of tlip 
Maori rank with anytliing of their kind, yet they were all done with 
stone tools. A primitive craft leaves skill to the worker; it puts 
a premium upon nimblerjess of muscle, coordination of hand and eye. 
tricks of the trade which are never modeled into wood or metal. A 
new method of spearing a salmon, lassoing a steer, or paddling a boar 
is as truly an invention as an ax or a spinning wheel. The work- 
ways which go into an oriental tapestry are of far greater significance 
than any instruments which the worker employs. Such inventions 
are passed along from generation to generation as knowledge is passed 
along among a people who have not become literate. In a museum 
we may observe the tools of many a former culture; their techniqaes. 
too intangible to leave any material remains, are lost arts to us. 

Until well after the discovery of America skill continued to domi- 
nate technology. As tribal life became more complex, persons began 
to sjiecialize. and a bundle of skills came to constitute a man's craft. 
Although members were brotiiers in the trade, a rivalry in workman- 
ship was not stilled. As da}' followed day men Avere accounted exceJ- 
lont, competent, or poor at their tasks. The person who was deft at 
his craft, turned out a superior Avare, or invented a new wrinkle, 
played for the admiration of his fellows. A trade which enlisted 
the instinct of Avorkmanship could not escape ils occasio)ial innova- 
tion. But tools Avere simple, fixed by tradition, easy to possess; tecli- 
niques, ncA-er inherent in the instruments, were A'isible only in appli- 
cation; a novelty emerged through its incorporation into someoiie's 
scheme of Avorking habits. Technology was usef id knoAvledge. AvhicU 
found no expression apart from the practice of a trade. Tlie crafts- 
man stood at the center of his industrial Avorld. 

It is not easy for us, from our alien culture, to understand the 
richness and intricacy of these techniques. A trade had its comple- 
ment of tricks which only the skill and learning of the Avorkman 
can turn into an art. Among primitive people the practice of 
useful knowledge had often been a priestcraft; and until the Middle 
Ages Avere far gone, the crafts Avere still mysteries, whose secret:^ 
Avere closely guarded. The workers in wood, cloth, leather, con- 
stituted a fraternity. Among the brothers the severities of the 
economic struggle are relaxed and a united front is maintained 
against the outsider. An oath, a ceremonial, a collection of sym- 
bols, the favor of a patron saint, a contact with the Deity euA-elop 
the trade Avith a religious rubric and wrap its privileges in sanc- 
tions from on high, A "savage" tribe has a single secret society, 
or at most one of Avarriors and one of priests. As an intricate 
AA-eb of folkAvays is spun, the cult, amoeba-like, divides and thus nuil- 
tiplies. In the England of the fourteenth century, butchers, dra- 
pers, carpenters, and a host of smiths, mongers, and masons put o)i 
miracle plays which sanctified and advertised their sao-ed callings. 


Arid there were enough of these mysteries to present a pictorial 
edition qf lioly writ. In their aggregate the craft guilds presented 
the social structure of the English town. 

In their profession of aims the general welfare is strangely mixed 
with that of the brotherhood. Their charters consecrate their crafts 
"To the worship of God and of Our Lady Saint Mary, and of St. 
John the Baptist, and of all saints.^ Their ordinances profess great 
solicitude for the user of the ware, for excellence in workmanship, for 
honest weight and high quality, for reasonable price. The practice of 
the art is a monopoly of the brotherhood. Admission to the trade is 
severely limited; for the novice a 7 years' apprenticeship is the 
test of fitness. The doors are rigidly closed against the stranger 
who would invade the trade. An. ordinary calling belongs to as 
tight a company as that of the clergy or the doctors of physic. For 
"the well ordering of the trade," the guild is a self-governing body, 
with the power to discipline its own members; the perquisites of 
the craft — claimed not for a term of years but in perpetuity — are 
boldly asserted and valiantly defended. .An industrial art, insepar- 
able from the mind and skill of a workman, is a body of trade 
secrets ; as such it is the exclusive property of the fraternity. A 
code of ethics, a doctrine of- responsibility, a catalog of I6fty profes- 
sions cloak the liberties from which men "not of the guild" are 
excluded. A rhetoric which has outlived its employment sets it all 
down in terms of "the common good." 

As the guilds, overreaching themselves, fell into decay, the Crown 
usurped its office. The King's favor is among the oldest of political 
usages, and commerce is far too important to lie beyond its ambit. A 
series of acts of Parliament regimented various trades into the com- 
monwealth ;2 and the royal prerogative — which it took a century, a 
civil war, and a "silent revolution" to tame— obtruded into the affairs 
of industry. For the profit of the realm, to introduce a new ware, as 
a special favor, or without reaeon at all, His Majesty granted to 
worthy persons, goodly companies, or honorable corporations exclu- 
sive rights to certain trades or control of particular commodities. 
Since such privileges were likely to be challenged, written evidence 
was needed, and such favors fell into the form of ^ants of letters- 
patent. Such a certificate of privilege served a miscellany of pur- 
poses. The King was His Gracious Majesty, and it was as broad as 
his f avbr.^ A technique of production was thus often made a personal 
property ; and its owner had recourse to a court called Star Chamber 
to prevent trespass upon his grant.* • 

The royal grant threw into sharp relief a trend lon^ in ^he making. 
As the companies gained wealth and power, a hierarchy arose to com- 
promise their pristine- democracy. The master came to dominate a 
closed trade .and to decree the terms under which workmen might, 
practice their callings. As often as not the gi'ants of monopoly went 

1 The particular saint, of course, depends upon the craft. University of Pennsylvania, 
Translations and Reprints from the Original Laws of European History, vol. II, n. 1. 
English Towns and Gilds, p. 26 (1466). . „ , ,. ^ . ^* 

2 Edgar S Furnlss, The Position of Labor In a System of Nationalism ; Hecksher, 
Merchautilism, vol. 1, pp. 221-326 (1935). .... w .». 

* The royal favor begets the royal favorite and becomes an incentive to curb the royal 

* Terms do not easily carry across the centuries. But an action for trespass on the case 
is rouKhly equivalent to the modem suit for infringement. Only a scanty sheaf from the 
voluminous records of Star Chamber has been published. Until that mass of materials has 
been worl;ed over, we cannot tell how widely and severely it was used to guard the, close 
holdings in the Industrial arts. 


to persons ignorant in the mystery ; their issue separated the right to 
the trade from the practice of the art. Th^ letter with the royal signa- 
ture thus became a solitary privilege to emjSloy a particular process or 
to fashion a specific ware. Its recipient, to the extlusion of all 
others, is accorded a license to make and vend alum, saltpeter, or 
playing cards. A new ware is introduced or a novel occupation en- 
couraged, by conferring upon artisan-author or workman-importer 
exclusive rights for a period of years. The whole of the art is com-, 
prehended in the grant — skills which human hands, not material in- 
struments, must practice. A grant of letters patent serves a score of 
public uses and twice as many royal whims. Amid the miscellany 
is to be discovered the instrument by which claims were recognized 
to private property within the domain of the useful arts. 


The term "industrial revolution" is shorthand for the myriad of 
influences which deprived the craftsman of his industrial throne. It 
began long ago, moved quietly through various aspects of life, gathered 
momentum in the late eighteenth century, and still goes roaring 
through the decades and into remote lands. It appeared far off-stage, 
as ideas of quantity, precision, cause and effect. It became more ex- 
plicit in the calculus, Newton's laws of motion, the operation of the 
money economy, the conversion of the Christian universe into a world 
of law and order. 

In time the system of handicraft fell back before the rush of idea, 
shifting usage, and seething event. The market for wares of trade was 
expanded by ventures overseas; the size of the shop was enlarged; the 
number of workers was increased. The stage was set for a revision of 
the process of manufacture. The art was broken down into its ele- 
ments; the worker was assigned a specific act in a sequence; an aptness 
at a single operation replaced the mastery of a mystery. The division 
of labor, about which Adam Smith spoke such words of eloquence," by 
its analysis of an industrial process, cleared the way for a machine. 
Knack had given wa:y to a repetitive precision, and the unstandardized 
human being was hardly built for so mechanized a task. 

But a craft is a multiple affair, and it took a number of machines to 
assume its^ complement of tasks, A single machine could hardly go 
it alone ; if speed, exactness, quantity, came in at one point in an indus- 
trial process, it could operate only with a serious loss of efficiency if 
tHe step bef 01^ or the step after were left in the grip of handicraft. It 
takes the output of a machine to feed a machine ; a machine loom de- 
mands machine spindles; the busyness of spindles causes the demand 
for the cotton-gin. It. takes machines to make a machine; and, as in- 
dustrial processes intertwine, at points of contact between handicraft 
and mechanized technology, the gears clash as they engage. The urge 
toward the machine is contagious ; the crafts had to take a declining 
place within the emerging industrial order. 

Inert as it is, the machine has a will of its own, A creature of human 
intelligence, it can also command. It is easy to talk of the machine as 

"An Inquiry luto the Nature and Causes of the Wealth of Nations, bk. 1. ch. (1776). 
It is of note that thp rlptailed discussion of the "division of labor" and the merely Incidental 
reference to the machine dates the book in the chronology of the progress of the industrial 


stripping from the worker his skills. But if a-way-of-doing-it is in- 
corporated into a series of mechanisms, which only need to be tended, 
the need for human guidance is not far off. The craft survives in the 
learned professions; a goodly "number of old-fashioned trades still 
exist; it takes a nmnber of disciplines and quite an assortment of skills 
to keep the factory system going. It is easy to underestimate the tech- 
nical knowledge which the ordinary man working about machinery 
must possess. The plumber, the electrician, the automobile mechanic, 
the linotype operator practice no simple art ; any one of them may meet 
an emergency which calls for the kind of a hunch which only wide 
experience can give. Yet, for all of that, the craftsman no longer plies 
an independent art. The newer technology has nowhere quite taken 
over; vestiges from the older ways appear in its most advanced patterns. 
Manual skills supplement those caught up into the precisions of me- 
chanics. The movements of the machine operator become the subject 
of investigation by experts in time and motion study. A human engi- 
neering makes stark reality out of the fanciful analysis of Thomas 
Hobbes.^ The shift of emphasis transforms the character of useful 
knowledge. It no longer exclusively resides as once it did in trade 
lore, in habits of work, in the person of the craftsman. It has been 
abstracted from him, conceived as a sequence of operations, and incor- 
porated into an apparatus or process. A machine, or a complement of 
them, is an instrument so arranged as to secure from specified mate- 
rials a prearranged result. It stands as a material expression of human 
knowledge, an aggregate of wheels and levers and gears, its productive 
function frozen into its structure of wood and metal. The process is 
freed from its craft; it is made independent of the workman ; it is given 
a quite impereonal existence. It can be set down in a series of blue- 
prints, passed from person- to person, dispatched through the mails, 
legible to all versed in its graphic language. It can be translated into 
a model which, with a few notes of explanation, display a production 

As a result invention enters a novel intellectual climate. The world 
about us is as our knowledge makes it; dodges and devices are keys 
to the storehouses of human and material resources. The machine- 
process enlists science in the service of the useful arts. In the wake 
of physics and mathematics followed chemistry, biology, biochemistry, 
bacteriology, economic geology as sources to refresh an advancing 
technology. The basic work of the laboratory is for the Michael Far- 
adays rather than for the Thomas Edisons; it lies too remote from 
the market-place to be directed by the urge for gain. It opens vistas 
and explores paths which the inventors who follow must reduce to 
possession. In ideas and techniques they have untold riches with 
which to work. Novelty emerges from the combination of idea with 
idea, the transfer of a technique from one trade to another, the adap- 
tation of an instrument to an alien product, a shunting of a process 
toward an unfamiliar objective. In days of old innovations emerged 
from the clash of cultures ; among the Chinese the explosion of gun- 
powder se -ved a religious ceremonial with a mighty noise; in the 
feudal culture of the West it came to propel a missile against the 
enemy. In our times, provinces of human knowledge overlap and 
tbrou2"h creative minds elements from sources apart are fused into 

• Hobbes, Leviathan, Introduction, xli (Everyman's ed.). 


processes and contrivances hitherto unknown. The state of culture 
invites putting two and two together and getting a series of variations 
upon the theme of five. 

As ideas are fused, novelty gets endowed with degree. Here and 
there appears a discovery so fundamental as to create a fresh base for 
an old art or to establish a new one. The microphone, the electric 
circuit, the vacuum tube are conscripts . into a conspiracy by which a 
broadcast brings the performance of a symphony to the people of a 
nation. More often a developed technique is given new industrial 
employment. A technology imported from radio renders obsolete the 
large horn and the vibrating needle by which music was accorded a 
faint and noisy immortality upon the phonograph record.^ Quite 
usual is the revolution of an art through almost an infinitude of minute 
stages. A succession of finite steps has bridged the great gulf be- 
tAveen the snapshot and the motion picture in technicolor. Most com- 
mon of all is the emergence of an improvement through the mere 
union of two or more well known devices. A surgeon uses a laiot he 
had learned as a canal boy; the X-ray through slight changes in 
apparatus is employed all the way from internal medicine to watch 
repairing; a manufacturer takes over the whole technology of auto- 
mobile bodies to the construction of railway coaches. Creation arises 
from a union of familiar things ; knowledge must select from among 
possible permutations; and, where their number is legion, learning, 
experience, or a rarer gift must direct a continuous process of choice. 
• A culture like ours is fertile to invention ; a host of iijdividuals, very 
differently situated, is exposed to the contagion; novelty is touched 
off by a talent whicli ranges from sheer genius to a mere mechanical 
gift. Amid such cross-currents of understanding, the contribution of 
the individual to the ad^-ancement of an art can hardly be sharply 
defined. ■ 

A like disregard of industrial boundaries attends the use of inven- 
tions. In a society that is gone the tricks belonged to the trade. The 
cobbler, draper, tailor, each employed needle and scissors;. but instru- 
ments of a comni.on kind occupied different places in the several crafts. 
An industry still has its distinctive technology ; but the employment of 
a device may cut horizonta|,ly across a number of domains. A vacuum 
tube is used for phonograph records, radio broadcasting, amateur re- 
ception; the electric circuit, in its many variations, is the instrument 
of many activities. A single factory makes use of a bewildering array 
of teclmiques ; a single technical principle is put to work at a hundred 
different jobs. The lines of the industrial arts run with, depart fi-om, 
cvit across those which mark out the design of in-.iustry. As matters 
now go, technology is not an aspect of labor; it is severable from 
"ownership" and management; in the economy it has come to stand 
in its own right. It can, apart from the man who employs it and the 
establishment in Avhich it is put to vork, become property, be trans- 
ferred like otlier chattels, enjoy lega. protection in its own right. 

Technology has taken a distinctive place in an industrial culture; 
with the implications of its ascend ivicy the pages which follow are 

'The art of Invention has its moments c:? rony. Once upon a time Thomas Edison 
tinkered for a day or two with the vacuum ti i)e and decided that something was there. At 
the time he was engaged in perfecting the n'ti; lal phonograph and was not to be diverted 
from the serious business in hand by idle cur' ..s. :y. 

294640— 41— No. 31 2 


concerned. A kit of simple tools, well within the means of the ordinary 
workman, is replaced by a complement of machines which only invest- 
ment can supply. The craftsman becomes a factory hand, living by 
his earnings, and drawn into a wage system. The technician — whose 
task is to devise, to improve, to keep machinery going — becomes an 
essential functionary of industry at work. His skills are rather em- 
ployed in anticipation of production than utilized in its process. A 
management — as often as not divorced from those who venture with 
their own money — is no longer a corps of master-workmen; its skills 
have cbine to lie in finance, in oversight, in knowledge of markets, in 
com])etence at purchase and sr^ le. Its tasks are to cut expense, improve 
^oods, puff wares, tempt with tc, iring points. A new device, a muta- 
tion on an old method, a novel product, an innovation in process or 
article becomes a card of consequence in a business game. Access to 
an industrial art became a requisite of corporate life ; a denial of access 
to rivals became the way to dividends and growth. An appraisal of 
the current scene makes the state of the industrial arts the factor of 
greatest consequence in the national economy. An insistent question 
of public policy concurs our technology, the ways of 'its control, the 
instruments by whidi it is directed to the general welfare. 



As current opinion has it, the patent and the invention are to each 
other as incentive and achievement. Yet it is usage, grooved into 
thought and grounded into the law, which makes inevitable the con- 
nection between them. It was not to prod the sluggish industrial arts 
along their way that the grant of royal favor came into being, and the 
trade-ways had managed somehow to advance before the King's pre- 
rogative was ever enlisted in their progressive cause. 

The patent, as an encouragement of technical advance, came slowly 
into bemg. The King's pleasure is as venerable as his authority; it 
had from olden times often been invoked to bestow office, issue a par- 
don, ^uard privilege against trespass, and even to create the right of 
taxation. In due time it appeared a suitable instrument for an in- 
crease in the wealth of the realm. Britain was situated on the rim 
of Christendom ; its useful arts were few and primitive by comparison 
with Flanders and Florence. If fame and power were to come to the 
<;ommonwealth, the trades of Merry England must be quickened and 
multiplied. In 1331, a certain John Kempe, a weaver by calling, just 
out of the Low Countries, was promised the King's protection in return 
for teaching his art to Englishmen. The grant was not exclusive;^ 
a like protection was specifically promised to others who would bring 
their crafts from overseas. The instance contained its implication 
which ripened into a policy. A kindred privilege was presently ex- 
tended to some clock-makers from Delft. As the patent moved into 
its industrial office, again and again groups of skilled artisans were 
lured to the humid little island; and a country made up of sheep runs 
was headed toward its destiny as shopkeeper to the world. 

The "letters" granted to John Kemp'e were little more than a pass- 
port. They conferred upon him the privilege of entry and the right 
to ply his trade. But no monopoly of his craft and no immunity to 
authority was granted. He came into a country possessed of its own 
usages; as denizen and artisan he was expected to abide by the 
customs of the town and the law of the land. At the time industiv 
was still under the control of the guilds ; they set standards, solemhlj^ 
passed ordinances, provided for the government of their trades, pun- 
ished breaches of discipline — and the patentee was expected to con- 
form to the rule of his mystery. The liberties granted were manu- 
facturing, not commercial, in character; the purpose was to promote 
new arts, not to vest interests in old ones. The privileges were sur-i 
rendered by the Crown in the public interest; the artisan from across 

1 C. T. Carr, Select Charters of Trading Companies (Seldon Society Publications, voj. 28) 
Introduction, p. 5G. 



tlie water was a pawn in a game of national greatness. It was the 
King's realm — and his good people— that stood to gain.- 

The patent was not at once fitted to its office. As a singk one among 
many, its privileges were not sharply set off from otlier manifestations, 
of the King's favor. Tlie need of the Crown for reverme was met by 
the sale of grants and letters issued where aits were neither to be 
imported nor advanced. A control over a commodity, entrusted to 
the King's favorite, became in practice a private right to levy toll. 
A catholic range was accorded the word trade; the monopolies created 
by tlie Crown extended to the very fringes of useful knowledge. Thus 
iu 1451) Henry the Sixth took certain persons under his especial pro- 
ttction and sent them forth to seek the Philosopher's Stone. The 
good people of the realm needed a sanction with which to stop one- 
way grajits, trim away irresponsible growth, and hold the patent to 
its public purpose. The memory of man responded to Coke's prompt- 
ing; the grant of letters patent was circumscribed by^the common 
law ; and precedent and recollection were defied to recite anything to 
the contrary. 

As early as the reign of Elizabeth the supremacy of the law began 
to be asserted. The grant of letters patent was distinguished from 
the cliarter of the guild. The liberties of the Brotherhoods of joiners, 
drapers, cordwainers, fishmongers descended from "of old"; rested 
upon custom or act of Parliament ; were the perquisites of semi-public 
bodies. Tlie letters patent were legal upstarts. Their origin lay 
wjihout the rightful province of the King's prerogative; their privi- 
leges wei-e exercised by individuals who could be held. to no strict 
responsibility. The charters were of long standing; ex])erience had 
set practical limits to their powers; their structures had l)een woven 
into the fabric of use and wont. Their perquisitesj however extrava- 
gant they ma^ once have been, had become vested. The patents, hot 
from the throne, were clumsily thrust into a going industrial order in 
careless disregard of ancient rights. They vrere not easy to assimi- 
late; their exercise Avas often attended by friction; an appeal to the 
courts was frequently necessax'y to prevent trespass upon their pre- 
serves. The infringer was hailed not into a court of common law but 
to appear before the Cnnncelor. Adjudged "in contempt of the 
Queen's command," he might well, feel himself the victim of arbitrary 
justice. A private suit, resting upon a royal sanction, thus early came 
to be .the accepted remedy in a matter of public concern. 

As a Tudor, Elizabeth drove a hard bargain with those with whom 
she dealt. She made certain of a reasonable return, to the realm as 
well as to the Crown, for favors handed out. To secure a grant, the 
patentee must possess a method that would work, give employment 
to some native labor, and maintain a reasonable price. As, however, 
the need for revenue became acute, the alien with a novel trade had 
to perform as it was denominated in a very strict bond. The native, 
be he a courtier — especially if equipped w'ith ready and adequate 
cash — was accorded a measure of indulgence. As an empty exchequer 
made Her Majesty even more gracious, the right to take a toll was 
sold as a grant of patent. Even then a nominal respectability was 
maintainecl and an instrument of exploitation was blessed with public 
purpose. By the licenses through which he gave effect to his patent, 

* As. the Year Book tells us, "Ex auxy le Roy come chiefe gardain del common wele ad 
power et auctority per son perogatlve, de graunte mult des privileges." 


Raleigh strove to prevent the sale of "corrupt, mingled, and unwhole- 
some wines." In his strict oversight of tanners, Dyer attempted to 
counteract "words inaptly placed in the statute" concerned with the 
trade which were clearly' "contrary to the good meaning of the law- 
makers." Cornwallis was solemnly charged by liis sovereign to issue 
licenses to "honest croupiers" only. A clistinction between offices of 
state and private enterprises was not always respected; some grants 
went so far as to delegate legislative powers to private parties ; indi- 
viduals who had bought the Queen's pleasure might, at their discre- 
tion aiid to their profit, license inns and gaming houses. In the end 
came grants unabashedly made "in consideration of the true and faith- 
ful service" rendered to Her Majesty by some groom or "ancient 
domestical servant." ^ 

As vigilance was relaxed, patent came to be another word for 
monopoly r.nd a crescendo of abuses touched off otiong protest. In 
times past Elizabeth had been able to prevent the discussion of issues 
"which pass the reach of a subject's brayne," such as her marriage, 
the succession, the government of the church. But she seemed unable 
to contrive ways of escape from the mounting volume of co^nplaints. 
At first, in lofty detachment, she justified "her prerogative, which is the 
chiefest flower in her garden and tlie principal and head pearl in her 
crov/n and diadem." If formally she neither heeded a popular de- 
mand nor recognized constitutional bounds to her authority, she 
promised, by her oxm pleasure, to leave the moiiopolies "to abide the 
trial and true touchstone of the law." Francis Bacon put the case for 
his queen in the persuasive rhetoric of the common law, "If any man 
out of his own wit, industry, or endeavor, find out anything beneficial 
for the commonwealth, or bring any new invention, which every sub- 
ject of this realm may use; yet in regard to his pains, travail, and 
charge therein. Her Majesty is pleased (perhaps) to grant him a 
privilege to use the same only by himself, or his deputies, for a certain 
time. This is one kind of monopoly." ^ By leaving the matter to be 
tried at common law, Elizabeth averted an act of Parliament; and 
the law could ask no more appropriate formula than that preferred by 
her minister. In instances slie was compelled to go further ; but, even 
in a reluctant cancellation of the most obnoxious grants, she made it 
plain that she waived no right of the Crown, 

The resort to law, thus invited, came almost at once. One Darcy 
had been given a patent which secured to him a monopoly in the manu- 
facture and importation of playing cards. As with many such grants, 
he had been invested with the power of police and the right of search 
and seizure. Thus, legally equipped, he raided the premises of a 
certain Allen, a haberdasher by trade, and discovered thereon contra- 
band goods. In retort Allen brought two cases for trespass; Darcy 
threatened imprisonment for prosecuting actions in contempt of the 
royal grant; Allen Avithdrew his suits. Darcy then took the offensive 
and sued for infringeujent. Allen's defense, as reported by Coke,^ was 
a forthright attack upon the validity of the royal grant. Tlie letters 
l^atent, in appropriate words, set forth that "Queen Elizabeth, in- 

8 Can'. Select Charters, Introduction, p. 65 ff. 

*The instvuniental character of the grant and the anticipation of tlie language of the 
Constitution ara too obvious to escape attention. Note that towards the end of the 
sixteenth century the exploitation of a patent through deputy was already established 

' See Carr, Select Charters, Introduction, p. 66. 


tending that her subjects, being able men to exercise husbandry, should 
apply themselves thereto, and that they should not employ themselves 
in making playing cards, which had not been any ancient manual 
occupation within the realm, and that by making such a multitude of 
cards, card-playing was become more frequent, and especially among 
servants and apprentices and poor artificers; and to the end her 
subjects might apply themseh'^s to more lawful and necessary trades," 
granted the exclusive right to Darcy, a groom of the Privy Council.® 

The judiciary, not loath to enlarge its jurisdiction, eagerlj^ accepted 
the action. The plaintiff admitted a man's right to his trade as the 
rule of the common law, but pleaded the validity of the exception when 
conducive to the commonwealth. He insisted that a restrictive grant 
was le^al if the recipient introduced a new trade, or a guild regulation 
was essential to order, because the interest of the nation was at stake.^ 
He passed on to urge that cards, being "things of vanity,'' were under 
the parental oversight of the Queen ; ^ that the royal prerogative ex- 
tended to articles recreational ; and that, since the whole included the 
part, the power to prohibit the use of cards altogether — in order to 
prevent their abuse — comprehended the power to prescribe the terms 
upon which they might be made and sold.^ The argument contra, by 
the attorney for the defense, proved persuasive and was recited by the 
court as the law of the land. All trades which prevent idleness — the 
bane of the commonwealth — and "exercise men and youth in labor" 
are profitable to the country ; the end of all these monopolies is for the 
private gain of the patentees ; the Queen was mistaken m thinking the 
grant would be for the public benefit. It followed that the instrument 
was void at common law ; but the court,^° with gracious tact, set the 
^ant down as contrary to the intent of the sovereign rather than out- 
side her prerogative.^^ Allen's attorney had urged that the common 
law derived from that which was divine ; and Coke, who never objected 
to grounding a judgment upon so ultimate an authority, wa:s content 
with the statement, "Thou shalt not take the nether nor the upper mill- 
stone to pledge, for he taketh a man's life to pledge : whereby it ap- 
peareth that a man's trade is accounted his life, because it maintaineth 
his life ; and thereby the monopolist th§t taketh away a man's trade, 
taketh away his life." 

Meanwhile James I had come to the throne. .The decision in the 
Darcy case had given a legal sanction to the growing unrest; and, 
warned by this, the King suspended all monopolies save those of the 
trading companies and the guilds. But he was beset by a continuous- 

« Note how neatly this recitation fits Into the prevailing policy of nationalism. Cards, 
like other luxuries, are to be l^ept out of the hands of laborers, lest they be tempted from 
industry. , See Edgar S. Furniss, Labor in a System of Nationalism. The objec- 
tive of the grant is avowedly the protection of the public morals. It is an expression of 
an attitude, soon to become manifest in Puritanism, which aims to create scarcity in 
respect to goods of illth. The same attitude finds expression in our high taxes on whisky 
and tobacco, which were originally justified as tending to discourage their use. 

' At the time Englr iid was coming up in the world ; the era of competitive nationalism 
had already begun : the strength of the realm was becoming the dominant value in mer- 
cantile policy. Tlii' move toward a "totalitarian" attitude was accentuated by the struggle 
witli Spain and sharply dramatized by the incident of the Armada. At the time saltpeter, 
ordnance, and like essentials of national defense were under strict royal control. 

8 The Latin is, parens patriae. Pater might have been employed had there been a king, 
but note the reluctance to use mater. 

° That, in respect to rights, the greater comprehends the lesser, seems to be among the 
oldest of legal fallacies. In respect to, patents it occurs again and again. Only recently 
it was argued before the United States Supreme Court that the right of a patentee to 
refuse a license comprehended the xight to dictate whatevec conditions he pleased. General 
Talkinn Pictures Corp. v. Western Electric Co. (Brief for the Appellee, 304 U. S. 175 

" According to Coke, "Popham, C. .T., et per totam curiam." 

"The Latin terms are "contra intentionem" and "ultra vires," the latter an accepted 
idiom of the common haw. 


need of revenue; he thought of the royal prerogative in terms of divine 
right ; he had more than a human knack for doing the unpopular thing. 
A new court was gathered, another crop of favorites appeared, a new 
flood of patents issued . In their support the Star Chamber — a tribunal 
which identified the King's pleasure with justice — resumed its ancient 
role. Presently John Pym cried out against it as "an instrument of 
erecting and defending monopolies, to set a face of public good on 
things pernicious." The rule of the exchequer supplanted that of the 
regular process of justice; and Coke demanded that monopolies be 
tried "according to the common law, and not at the council table, star 
chamber, chancery, exchequer chamber." The grant of patent became 
a single aspect of an issue of mighty concern. It was a counter of 
consequence in the attempt of Parliament to confine the royal preroga- 
tive within what was coming to be called its constitutional limits. In 
1624, long before that struggle reached its climax, Parliament answered 
the country's petition for redress of grievances by passing the Statute 
of Monopolies.^^ 

The act of Parliament was not a clear-cut declaration addressed 
directly to its subject. ' A product of the legislative process, it re- 
flected all the pressures which had converged into its classic' and com- 
promised lines. In title and in general form it was a response to the 
general demand for reform. Its larger exceptions were concessions 
to established practice or to the demands of mercantile policy. Its de- 
tail of saving clauses represented vested interests which had to be 
placated if the measure was not to be defeated. A strong support 
came from members who, sheltered by exemption and immunity, were 
anxious to prevent fresh grants which might put their own perquisites 
in jeopardy. Instruments which Parliament itself had sanctioned 
were free from its blight. The statute was not intended to encroach 
upon the operations of government; hence the integrity of charters 
to municipal corporations were left untouched. And, since they were 
semi-public agencies throAigh which the commonwealth carried on, the 
exception was extended "unto any corporation, fellowships of any art, 
trade, occupation or mystery, or to any companies or societies of mer- 
chants within this reahn erected for the maintenance, enlargement, or 
ordering of any trade or merchandise." This provision was regarded 
by Bacon as no more than "a gull to sweeten the bill withal, it is only 
to make fools fain" — yet an earlier bill had failed for want of just 
such a concession. And certain activities, which the prevailing policy 
of mercantilism particularly affected with a public interest, were 
left untouched. 

Its advocates professed for the statute nothing new. They in- 
sisted that it did no more than declare the established and fundamen- 
tal law of the land ; what was set down was as it had always been from 
earliest days. It recited the ancient ban upon "the sole buying, sell- 
ing, working, and using of anything"; gave to any person or persons 
who might be "hindered, grieved, disturbed, or disquieted" on pre-- 
text of a royal grant, a right of action for threefold the amount of the 
damages and double the costs sustained ; and provided that all such 
suits "should be forever after examined, heard, tried, and determined 
by and according to the common laws of the realm and not other- 
wise." Thus the statute gave a legislative statement to the rule against 

"21 Jacobus 1, e. 3 (1624). 


restraints; elevated the common law above the roj^al prerogative, and 
took from the defense tlie right to plead a grant of monopoly from the 
Crown in a suit at law. 

"In this setting the patent, as an instrument of the useful arts, re- 
ceives its initial legislative sanction. A provision of the statute au- 
thorized a grant for 14 years "to the first and true inventor" for "the 
sole working" of a new manufacture. In the phrases "sole working" 
and "first and true inventor" appears the genesis of current usage. 
The royal grants had not clearly separated the inventor from the im- 
porter, and neither was sharply distinguished from the mei'c recipient 
of the King's favor. Xow it was made evident tliat the consideration 
for the grant was the benefit to the commonwealth resulting from the 
invention. A neat calculation limited to the reward to 14 years, 
just long enough to induct two sets of apprentices in the novel mys- 
tery .^^ Already ideas were stirring, and the shift of emphasis from 
borrowing from abroad to discovery at home reveals the growing sig- 
nificance of experimental effort. The legislative formula balances ex- 
ploitation for profit against technical advance to serve an expanding 
economy. A symptom of a changing attitude is the increasing impor- 
tance of a specification of the invention. Of old a description was not 
required, nor could it be had; tlie sequence of acts which make up a 
process resided in the practice of a manual art. It might, in a sort of 
abstract way, be explained in a pamphlet or a letter ; it could not be 
exhibited as a model. The clause invited the curious to tinker and to 
devise projects; it pointed toward a machine process. 

The statute was the event which lived in policy; the incidents 
which followed fall into place in the struggle to subdue the divine 
right of kings. The corpus of saving clauses opened roads to broad 
interpretations; and Charles the First invoked their sanctions for 
a grandiose adventure into arbitrary rule. He issued proclamations, 
exploited the power of incorporation, kept in service the Stkr Cham- 
ber, an<l turned loose a host of new monopolies. A decade and a 
half after the act which was to end abuses, an observer wrote : ^* 

After wee were risen I went into the Howse wheere sate the grand Com- 
mittee for Grievances, and then weere divers witnesses in examination about 
Mr. Squibs patent for cardes, being a Monopolie, how hee had violentie broken 
into ther houses, taljen away cards readie made, and ther stampes to malie 
them by : and raised the price of cards from 3d a packe to 9d a packe. Then 
was Mr. Squibb and one Mr. Thomas May a messenger whome Squibb had 
imploied called in : and ordered that they should no further prosecute. 

Again the same person states that a Sir Nicholas Crisp was dis- 
covered to have patents on coperas and gold stones — 

soe it was voted that he was a Monopolizer; and unfit to sitt as a member 
within this Howse. 

At that time Parliament had no brotherly love to waste on the 

" "* * * the reason wherefore such a privilege is eood in law is, because the inventor 
briugeth to and for the commonwealth a new manufacture by his invention, cost and 
chai-ges, and therefore it is reason tliat he should have a pilvilege for his reward (and the 
encouragement of others in the like) for a convenient time: but it v>as thought that the 
times limited by this act were too lon^ for the private, before the commonwealth should 
be partaker thereof, and such as served such privilesr^d persons by the space of 7 years in 
n)aking or working of the new manufacture (whicli is the time limited by law of appren- 
ticehood) must be apprentices or servants still during the residue of the privilege, by 
moans whereof such numbers of men v>'ould not apply themselves thereunto, as shouid be 
reauisite for the commonwealth, after the privilege ended." Coke, Institutes, third part, 
eh. 85. All patents to be granted in the future were limited to 14 years ; those already 
in existence were not to last longer than 21. 

" Sir Simonds D'Ewes, Journal (Notestein ed.), pp. 68, 312. 


So strong was the sentiment against patents that Charles found 
it expedient to beautify his grants with an appropriate ceremonial.^'* 
A dignified body was to inquire into the novelty and merit of the 
invention and to recommend. Thus the Court of Aldermen com- 
pared the cleansing virtues of soaps made by rival applicants for 
patents and reported that the new soap, "if it be used by skillful 
washers'" was suited to coarse linens, but that the older product 
was the better fitted to fine work and was the more popular among 
waslierwomen. But the King — intent upon chartering the new soap 
and reluctant to go forward without technical warrant — ordered 
another investigation; and testimonials from the Lord JNIayor, coun- 
tesses, viscountesses, and "common laundresses" proved the new soap 
"good, sweet, and serviceable for our people." The power of "the 
society" thus endowed. was gradually augmented from the right to 
exploit a new process to a right to sell all soap for all purposes. In 
time it became plenary, with a grant of authority to seek out, con- 
fiscate the goods of, and punish iufringers.^^ But royal favor was 
fickle, popular patience limited; the patentee presently surrendered 
its charter — which was promptly bestowed upon a company which 
had refused to respect its privilege. History does not record whether 
new testimonials from the Lord Mayor and the countesses sanctified 
the transfer. Already custom had begun to decree some sort of 
inquiry and royal research was off to a fumbling start. 

One other aspect of "ancient useage" deserves a word. It is obvious 
that a patent insures little privilege unless it is adequately policed. As 
late as the seventeenth century the honorable company remained an 
instrument of public order. There was nothing improper in endow -^ 
ing such a body, as an agency of state, with powers to investigate and 
to punish. The Christian Church had its inquisition and its courts : 
the universities had their statutes and jails; the College of Physi- 
cians of London possessed ,summary powers to discipline those who 
practiced physick or dispensed drugs without their license. The 
chartered companies, with their gentlemen adventurers, went forth 
overseas equipped with almost all the attributes of a sovereign state. 
It was accordingly fit and proper to confer upon the recipient the 
authority necessary to secure to himself the privileges granted by 

Even private police itself might be the subject of grant. Patents 
were issued to individuals to seek out infringers and to sue for 
penalties. In this way there arose a group of inspectors who were in 
effect paid on a piece-work basis. The grant of monopoly came to be 
accompanied by a separate patent to enforce the grant. The latter 
instrument, at the pleasure of the patentee, might be dispensed with. 
The norms were unsure, the public oversight absent, and favored 
persons were certain to attempt to enlargfe their pecuniary powers. 
In the medieval commonwealth, to which such a usage was indige- 
nous, the industrial housekeeping was entrusted to a private police. 
As older sanctions weakened before the compulsions of the money 
economy, such a surrender of powers of the state to privileged indi- 

" The sentiment against monopolies was deep-rooted and traditional. It became articu- 
late in the economy of the town, struggling for existence and often threatened with a 
shortage of food. Ordinances against regraters, forestallers. and engrossers were stiU uni- 
versal and were originally prompted by a sentiment which found expression in the Statute 
Of Mojiopolies. „ ^ , ^^ , 

" See Carr, Select Charters, Introduction, pp. 75-78. The dates are 1623 and 1634. 


viduals carried a serious threat to the common good. The grant of 
! patent is an expression of public l>olicy, yet enforcement was given 
over to parties who had ends of their own to serve. To this very day 
the institution bears the mark of this early abdication of the office 
of police by the government. 


As folk crossed the seas to settle in the New World, they brought 
with them an established culture. The ideas in their heads, their 
ways of doing things, their usages of social life all came from abroad. 
The breaking of ties back home isolated their communities, cut them 
off from the larger national influences, and sharpened whatever was 
peculiar in their outlook and beliefs. Their scheme of use and wont 
had to be accommodated to a new environment, and in the process 
novelty obtruded and custom was remade. From what England had 
to offer, they took and left; and the invisible imports were trans- 
formed in the course of survival. 

Bonds remained — as across a great gulf. A number of the Colonies 
rested upon royal prerogative ; a grant of letters patent to proprietor, 
corporation, or company lay at the very basis of their existence. Such 
instruments were at once legal, economic, and political. Their gen- 
erous clauses insured to the recipients their rights, launched industrial 
enterprises, and made provision for civil government. From the first 
there was oversight by the Crown; as Parliament • domesticated the 
monarchy, it asserted its authority; there was always the threat of 
general orders from abroad. From the beginning there was an intel- 
lectual bridge across which the norms of the common law were 
destined to pass. And the patent is among the most ancient of our 

There was, however, far too little conscious concern with inven- 
tion for it to enjoy a certain legal status. Nor in 13 separate 
colonies, linked more closely to a government over-seas than to each 
other, could there be uniformity. In spite of a variety of grants 
under which the local authorities operated, the common law was in 
name rather generally in force. But the common law, whose norm 
was the judgment of a reasonable man, spoke a somewhat different 
language in the shires of England, and it was in force over-seas only 
so far ,as was applicable. The place of the statutes of the realm was 
less certain. The orthodox view, as expressed by Blackstone, was 
that the American plantations were "subject to the control of the Par- 
liament," though not bound by its acts "unless particularly named." 
But such a sentence makes a complicated matter over simple. A new 
country caimot at once improvise a legal system ; as cases arise, they 
are referred to authority; and the scanty corpus which emerged from 
colonial legislatures had to be supplemented. No line is to be drawn 
between the common and the statutory law; acts are often no more 
than an official gloss upon the text of the common law.^^ 

"At the beginnlna: of the eighteenth century "An American" in "An Essay on the 
Government of the English Plantations" voiced his complaint that "'no man can tell what 
is law and what not In the plantations. Some hold that the law of England Is chiefly to 
be respected, and, when that is deficient, the laws of the several colonies are to take place, 
others are of the opinion that the laws of the Colonies are to tal<e, the first place and 
the laws of England are in force only where they are silent. Others there are who contend 
for the laws of the Colonies, in conjunction with those that were in force in England at 
the first settlement of the colony, and lav down that as the measure of our obedience, 


In respect to letters-patent for the promotion of invention the law 
is not reduced to explicit words, A man's right to his trade enjoyed, 
or at least came to be clothed with, the sanctity of the common law. 
The Statute of Monopolies was technically a rule of pleading. The 
person accused of restraint of trade was to be tried by the rule of the 
common law; and, certain exceptions aside, was not to be permitted 
to advance a grant from the Crown in his own defense. The limited 
right to the artisan who brings in a new trade is a legislative amend- 
ment of the common law. It is easy enough to argue that in the 
"Colonies the law was as it was laid down in the famous chapter in 
21 Jacobus 1 ; but a clear-cut corroboration is lacking m the documents 
of the period. The reason doubtless is that as yet few inventions 
were of such a character as to invite legal protection. The rule of 
law does not receive definitive statement until an occasion calls it 
into being. 

The New World, in fact, placed its own accent upon the norms of 
the law. The rights of Englishmen- were not forgotten by those who 
forsook the narrow isle for the broad continent. Courtiers who fat- 
tened upon the cream of monopoly were not uninterested in the 
plantations overseas; but for the most part they waited at home for 
the profits. The privileged came, and in the tidewater of Virginia, 
Maryland, and New York carved out manors which they worked with 
slaves and indentured servants. But their numbers were not large 
and new country was not an ideal soil for their institutions. The 
disinherited, the persecuted, the restless, played a heroic role in the 
settlement; but the great mass of migrants were poor people, men 
without status, who had experienced at first hand the lash of a caste 
system. They came with the vision of a government which was a 
commonwealth and of an economy in which there was personal 

A prerogative which was the "chief est gem in the royal diadem" 
lost caste as it crossed the ocean. Not that privilege was accorded 
no foothold in the New World, where from colony to colony con- 
ditions varied. A governor appointed by the Crown was fully mind- 
ful of his authority as King's vicar. His power to issue letter^ which 
carried special perquisites was weakened by its transport across the 
ocean, but could not be abated. Along Tidewater, the Hudson, and 
the James, plantations were maintained by men who were not their 
own masters. Servant was bound to master, even in the back country, 
hj various forms of indenture ; and here and there, where land was 
rich and owners could be careless in its culture, appeared outright 
slavery. The crafts, too, established in the towns, exercised such a 
discipline over their members as a more mobile society would allow. 
Where a colony was "self-governing," or the ties to an ultimate con- 
trol from London were loose, a spirit which much later came to be 
called "individualistic" was in the ascendency. And always there 
was up-country, over-the-mountains, the great valleys of the AVest, 
to put in jeopardy any establishment created in an old-world image. 

alleging that we are uot bound to observe any late acts of Parliament in England except 
such only where the reason of the law is the same here that it is in England."— -Quoted 
by St. George Leakin Sioussat, in an article on "The Theory of the Extension of English 
Statutes to the Plantations," in Select Essays in Anglo-American Legal History (— ). 
In this article Sioussat traces the various opinions on the matter with particular attention 
to Maryland but with references to other Colonies. 


Almost from the begimiing, New England had the name of rebel- 
lious; in Virginia, the rigid social structure of Tidewater had to 
make its truce with the less respectful ways of the back country. A 
disposition to tame letteis patent to a public office, or to have none of 
it, was speedily manifest. In 1641, the General Court of Massachu- 
setts decreed that there "should be no monopolies but of such inven- 
tions as are profitable to the country and that for a short time only." 
The statement is clear-cut ; it appears as an item in a Body of Liber- 
ties which proclaim the rights of men to be secure in their lives, lib- 
erties and estates. Unlike the Statute of Monopolies 18 years earlier, 
it sets down no exception, proviso, or saving clause. Its words stand 
against interests which might in the years to come seek to become 

Such a declaration means what it is made to mean. The general 
assembly did not abstain from grants, but in their issue was rather 
scrupulous not to barter away any "common right" except for value 
received. An early patent on an "engine for the more speedy cutting 
of grass," sets forth in explicit terms the general policy which 
prompts the award. The instrument is an "answer to jDetition of 
Joseph Jenks." He asks "for liberty to make experience of his abil- 
ities and inventions" to the good end "that things may be afforded 
cheaper than formerly." He prays for "14 years without dis- 
turbance from any others setting up the like inventions; so that 
his study in cost niay not be in vam or lost." The prayer is granted, 
but with the condition that "power is still left to restrain the ex- 
portation of such manufactures, and to moderate the price thereof 
if occasion so requires." In a word, the right conferred was subject 
to the general law, and power was reserved to forbid an unreasonable 
price and to accommodate the privilege to conditions which could 
not be foreseen. 

On occasion, when the Colonists themselves were tempted to swear 
away their birthright, a word of warning might come to them from 
back home. Thus the residents of Albany were admonished by the 
Dutch East India Co., a concern whose own experience had not been 
untouched by monopoly. It notes with alarm "that you, if we would 
ratify it, engaged to favor sundry individuals with grants." It 
enumerates this list, namely "on^ lor erecting a potash work, one 
for making tiles and brick, and the third for saltworks." These "not only entirely disapproves," but requires "that you will 
not give one single grant more hereafter, as it is in our opinion a very 
pernicious management." It finds the practice particularly reprehen- 
sible in a new state, "whose population and welfare cannot be pro- 
moted but as through general benefits in which every one who might 
be inclined to settle in such a country either as merchant or me- 
chanic may participate."^^ 

In colonial days the grant is shaped to the end it serves ; little that 
is absolute, inalienable, indefeasible attaches to the patent; its for^ 
feiture is to follow the breach of a condition. Thus South Carolina 
required the patentee of pumping machinery to build for all appli- 
cants alike and to maintain reasonable prices. Connecticut granted 
a monopoly in domestic molasses, but provided that it must be as 
cheap and"^as palatable as the West Indies product. Massachusetts 

18 MunseU, Anuals of Albany, (2d ed.), p. 78. 


granted privileges to a manufacturer of candles who in return agreed 
to teach his mystery to five apprentices, two of whom were to be 
nominees of the General Court. Pennsylvania required the patentee 
to publish a recipe so that others might practice his invention at the 
expiration of his grant — thus anticipating the provisions for dis- 
closure in the current law. 

As evidence of policy all colonial patents have significance. But 
only in the exceptional instance are they concerned with discovery 
of useful knowledge. The privilege, of erecting a grist mill on the 
banks of the Connecticut, or a lime kiln on the Delaware lowland, 
or an iron works in Virginia is a franchise " of narrow range. When 
its product must be sold on the local market, the town sawmill is a 
public utility.2° It must be regulated, by public pressure if possible, 
by lawful authority if need be; such was unquestioned doctrine as late 
as the turn into the nineteenth century. It must, at least for a time, 
have protection, for in a pioneer country capital was far too precious 
to be exposed to the corrosion Of competition.^^ In such an economy 
the closed opportunity is les°s the tool of monopoly than the instru- 
ment of public purjDose. The petitioner comes, hat in hand, quite 
prepared willingly to give a quid for the quo he seeks. The legal 
diction of the times knows no "property" in the industrial arts ; the 
records are barren of "a right to do as one will with his own" in re- 
spect to inventions. The privilege sought is to make and vend, not to 
hold or suppress. Mr. Jefferson talked the language of his age when he 
wrote, "Inventions then cannot, in nature, be a subject of property. 
Society may give an exclusive right to the profits arising from them, 
as an encouragement to men to pursue ideas which may produce utili- 
ties, but this may or may not be done according to the will and con- 
venience of society, without claim or complaint from anybody." -^ 

Nor was the lawyer's art quite able to break through the guard of 
public interest. The corporation, a fictitious pe''son blessed with the 
acquisitive virtues and imnmne to the frailties of the flesh, was little 
in evidence. Its arts were little employed in exploiting a grant, turn- 
ing its perquisites into absolutes, or endowing its grants with per- 
petuity. The Boston Water Co.^- and the Free Society of Traders in 
Pennsylvania ^* were the only corporations chartered in the seventeenth 
century. Only a few more were added before the Revolution — none 
for the promotion of manufacture. In an age in which a treatise on 
this branch of law could be called "Of Corporations, Fraternities, and 
Guilds," the dominant business unit was still the individual or the 
partnership ; even joint stock companies were far from numerous. For 

^^ Such words as "license" and "franchise" are not to be used without the caution that 
their meaning carries uncertainly from our age to the colonial economy. Note, for in- 
stance, that the liberty of a trade is not yet distinguished from the right to exploit an 

2" The usage, to serve "the public utility," survived until well past the Civil War. The 
term, as confined to a concern supplying a municipality with gas, light, water, is a very 
recent vintage. It would not have been understood in colonial days. 

"^ Here is a very engaging analogue to the patent system. To induce investment, with 
which to secure for the community a ferry, bridge, salt works, or iron foundry, an exclusive 
right -was granted for a period of years. The instrument might be silent about the term 
of years, and the recipient claim a permanent monopoly. Such a grant, reasonable enough 
in the early eighteenth century, outlived somewhat the scarcity of capital which drew it 
into being. Its permanence was outmoded in the famous case Charles Eiver Bridge Co. v. 
Warner Bridge Co. 11 Peters 420 (1837). 

. 2^ But note that the question had been raised, or Mr. JefCerson would not have answered 
It. A man tends to stretch his privilege as far as it will go and to make it his forever. 

2?i r ^^^''y privilege aspires to become a right. 

" 1682! 


the most part, by techniques free to all, local craftsmen made articles 
for local sale. Business had not yet emerged to make the patent a 
creature of its usages. 

A like question is presented by copyright and in copyright this trend 
of colonial expression finds its clearest expression. The Fathers were 
never mute ; the struggle with England made them vocal ; as the years 
of the war passed they came increasingly to cherish .their rights in 
their own writings. A committee on "literary property" made its 
■report ;" and in accordance therewith the Continental Congress recom- 
mended to the several States that they "secure to the authors or pub- 
lishers of any new books not hitherto printed" their, copyright for 
"a certain time not less than 14 years"; and, should they sur- 
vive, to another term of equal length, "under such restrictions as the 
several States may deem proper." ^^ All the States, other than Dela- 
ware, thereupon conferred upon the authors for a limited tune after 
their initial publication the exclusive right. to make and circulate their 
pamphlets, books, charts, and maps. Since a number were conditioned 
upon like action by other States, some of them never came into force ; 
others were in terms repealed; the remnant lapsed when, pursuant to 
the Constitution, the subject passed to the Federal Government. Yet 
in their ensemble they present the contemporary state of opinion on 
property in ideas as colonies become States and are welded into a 

Almost universally they reflect the instrumental character of the 
grant. The purpose, as expressed in, preamble, is to promote literature, 
or for the encouragement of literature and genius. That ^copyright 
should subsist therein, a work must possess intrinsic literary merit.-^ 
They provide' for registration and give a remedy at law for trespass 
upon the owner's preserves.- A number, in specific terms, restrict the 
privileges which are conferred. Five of the twelve States " required 
the author to furnish an adequate supply at a reasonable price. If he 
failed to do so, an action could be brought against him and the right to 
print be awarded, upon conditions which protected the public interest, 
to another party. To the Legislature of New York an adequate supply 
of "useful books at reasonable prices" was "necessary for the encourage- 
ment of learning." 

"• It consisted of a Mr. Williamson, a Mr. Izard, and a Mr. Madison. 

2» Copyright Enactments of the United States, 1783-1906. Compiled by Thervald Sol- 
berg. Copyright Office Bulletin No. 3 (1906). 

" See the early statutes of New York, Connecticut, North Carolina, and the Common- 
wealth of Pennsylvania. 

^ The states were Connecticut, New York, North Carolina, South Carolina, Georgia. A 
provision from the New York statute is typical and deserves quotation : "And, whereas it 
is equally necessary for the encouragement of learning, that the inhabitants of this State 
be furnished with useful books at reasonable prices : 

"Be it further enacted hy the authority aforesaid, That whenever any such author or 
proprietor of such book or pamphlet shall neglect to furnish the public with sufficient 
editions thereof, or Shall sell the same at a price unreasonable and beyond what may be 
adjudged a sufficient compensation for his or her labour, time, expenses, and risque of sale, 
any one of the judges of the supreme court of Judicature of this State, on complaint made- 
thereof to him in writing, is hereby authorized and impowered to enquire into the justice 
of the said complaint, and if the same be found true, to take sufficient recognizance and 
security of such author or proprietor, conditioned that he or she shall, within such rea- 
sonable time as the court shall direct, publish and offer for sale in this State, a sufficient 
number of copies of such book or pamphlet, at such reasonable price as the said court 
shall on due consideration affix, and if such author or proprietor shall neglect or refuse 
to give such security as aforesaid, the said court are hereby authorized and empowered 
to give such complainant a full and ample licence to re-print and publish such book or 
pamphlet in such numbers and for stfch termfi as the said court shall judge juat and 
reasonable: Provided, Such, complainant shall give sufficient security before the said 
court to afford such re-printed edition at such reasonable price as the said court shall 
thereto affix." — Copyright Enactments of the United States, 1783-1906. Compiled by 
Thervald Solberg. Copyright Office Bulletin No. 3 (1906), p. 30. 



In such a climate the power to promot^sthe progress of science and 
the useful arts was entrusted by the people to Congress. The words 
slipped into the Constitution without struggle. The clause prompted 
no formal debate ; no fiery pamphlet, no heated attack or fervid de- 
fense, no compromise between rival proposals provided a fanfire to its 
entrance. In contrast to the deliberation which attended the accept- 
ance of many other provisions, the silence of Congress is eloquent. Was 
it regarded as of no significance ? Did a small coterie want it and was 
the mass of delegates too indifferent to stop it. Was the grant a mere 
continuation of colonial practice so generally accepted as to be taken for 
granted ? Was it an assertion, against privilege to be rested only upon 
charter, of fundamental rights inherited from England and written in 
larger letters by the separation ? Above all how deliberate was the 
statement of policy which its words express ? 

Such questions cannot be given definitive answers from the reports 
of the proceedings. We must content ourselves with such light as cor- 
relative evidence throws on the event. The language of the clause 
itself is just such as would be written by delegates familiar with the 
history of letters patent. The struggle of Parliament against the 
Crown was familiar to the leaders of national life. The Revolution 
had begun as a struggle against an arbitrary monarchy. When it had 
gone so far that "a decent regard for the opinion of mankind" made a 
public statement necessary, the Peclaration of Independence was 
shrewdly directed — not against obnoxious acts of Parliament — but 
against irresponsible manifestations of the royal prerogative. The 
eloquent middle section, in which it gets down to the concrete, is a list 
of counts against the English Crown. The dialectical stage play which 
serves as accompaniment to military events followed the drama of 
more than a century earlier in England ; patriots, like Patrick Henry 
and Samuel Adams, visualized themselves in the roles of Pym and 
Hampden. The theme of the struggle was the assertion of rights to 
life, to liberty, and to estate over an authority which pretended to be 
absolute. A tyrannical monarchy once more was being domesticated 
into a constitutional government. 

A generation whom arms had made American could hot quickly 
forget the ideology of the conflict. It may be that those who came 
together into the convention were more conservative than the men who 
met in the same city as the Continental Congress. But they were fpr 
the most part young men; their average fige was 43, and a number 
conspicuous in the deliberations, such as Hamilton and Madison, were 
still in their thirties. Their formative years had been spent during 
the Revolution touched off by an arbitrary rule. A protest against 
letters-patent was a- .part of their tradition; the fight against the 
Stuarts and their monopolies was still green in their memories. It 
had provoked the political philosophy which they possessed; quite, 
a number at Philadelphia were followers of John Locke; one of their 
number had attended the lectures of Adam Smith. In general they 
represented the commercial interest, stung by the restrictions imposed 
by 13 upstart States, and determined to clear all obstacles from the 
arteries of trade.^ 

*For descriptions of the personnel and interests of the members, see Charles A. Beard, 
An Economic Interpretation of the Constitution of the United States (1935). For an 
account of their economic ideas see Hamilton and Adair, The Power to Govern, pp. 33-41, 
64-78 (1937). 


Nor were the members unacquainted with colonial practice. In 
1784 the State of South Carolina had passed "An Act for the En- 
couragement of Arts and Sciences." The statute gave to authors for 
a limited time the "sole right ^nd liberty of printing" their books, 
and to inventors "a like exclusive privilege of making and vending 
their machines." But if the supply was inadequate, or the price "un- 
reasonable and beyond what may be adjudged as sufficient compensa- 
tion" for the "labor, time, expenses, and risk of sale," the court of 
common pleas was to demand a correction of the situation. If its 
order was ignored, it became the court's duty to grant to any com- 
plainant "a full and ample license" to print or to manufacture the 
article in question. 

In the Convention, on August 18, 1787, Charley Pinckney, of South 
Carolina, rose to propose that the Congress-to-be have the power "to 
grant patents for useful inventions" and "to secure to Authors ex- 
clusive rights for a certain time." The .same day James Madison 
suggested authority "to secure to literary authors their copyright for 
a pertain time" and "to encourage by premiums and provisions the 
advancement of useful knowledge and discoveries." These and similar 
proposals were sent to committee; and on September 5, the "com- 
mittee on postponed matters" reported back the provision : "To pro- 
mote th^ Progress of Science and the Useful Arts, by securing for 
limited Times to Authors and Inventors the exclusive Eight to their 
respective Writings and Discoveries." The report was agreed to "nem. 
con." — that is, unanimously ,^° and in that form it stands in the Con- 
stitution today. 

The power was granted; the conditions of its exercise laid down. 
The new republic was" conscious of its need for arts and invention. 
There was, however, no unanimity hs to the form which "the exclusive 
right" of the inventor should take. In his famous Report to Congress, 
Alexander Hamilton set down "the encouragement of new inventions" 
as "among the most useful, and unexceptional of the aids which can 
be given tb manufactures" and proposecl "the propriety of stimulating 
by rewards the invention and introduction of useful improvements." 
The bonus system seemed best able to harness together the inventor's 
reward and the general interest; its great difficulty lay in adminis- 
tration. In so delicate a matter "general rules" will not do; "the 
dispensation of these rewards" must be put "under some proper dis- 
cretionary direction." Only thus could "specific compensations for 
discoveries of unknown and disportionate utility" be avoided. A 
little later his associate Tench Coxe wrote at length "On Invention 
and Encouragement of Industry." His thought still ran in terms of 
securing new techniques from abroad, as well as from indigenous 
"merit and genius." So he proposes "premiums for useful inventions 
and improvements, whether foreign or American." He argues that 
"the best experiments in any unknown matter, and for the largest 
qiiantity of a valuable raw material must have an excellent effect." 
lie suggests that "the state might with great convenience enable an 
enlightened society, established for the purpose, to offer liberal re- 
wards in land for a number of objects of this nature." He would 
even have "a committee of this society visit every ship arriving from 

^ The expression is nemo contra, no one to the contrary. 


a foreign country" in order to "inquire what persons they may have on 
board capable of constructing useful machines." ^^ 

ITius, as late as the middle of the I790's, the patent against the 
premium system was not yet a closed question. Letters patent had 
been thoroughly discredited in the great movements by which the 
monarchy was curbed, men were secured in their rights, and colonies 
became separate states. Its use, even for sn limited and so public a 
purpose, carried its hazards; it might b ^^ak its bondage to the 
commonwealth and become a sanction for privilege. But the pur- 
chase" of the inventor's rights and the immediate release of device 
or process to all who could make use of it was likewise open to at- 
tack. It was not possible to tell in advance what arts would prove 
useful or how useful they would prove. The premium system threat- 
ened to be prodigal with public funds; the patent system threw all 
risks upon those who asked for favors. It was not the command of 
the Constitution, but sheer expediency, which dictated the eventual 

There was call for action ; and, as so often happens, the choice was 
made long before the battle of words had reached a decision. In a 
speech to Congress on January 8, 1790, George Washington, who had 
presided over the Convention, urged : "I cannot forbear intimating 
to you the expediency of giving eifectual encouragement, as well to 
the introduction of new and useful inventions from abroad, as to the 
exertions of skill and genius in producing them at home." In response 
to this suggestion — and to the pressure of inventors seeking private 
bills of monopoly — Congress passed the first patent statute. The Sec- 
retary of State, the Secretary of War, and the Attorney General ^^ 
were authorized to grant letters for "sufficiently useful and important 
inventions." '•"■■ The Congress delegated its power to a trio of high 
ranking officials and set down the adverb "sufficiently" as a bolster to 
the restraint with which they were expected to issue grants. 

Among the three, Tliomas Jeiferson, himself a contriver of some 
repute, took the lead. He was scrupulous in holding applicants to a 
high degree of ingenuity and few "letters" issued. In 1790 only 3 were 
granted; in 1791, 33; in 1792, 11; in 1793, 20. Still he regarded the 
act as serving its function. In his first year as a patent official, Jeffer- 
son wrote Benjamin Vauglian, "An act of Congress authorizing the 
issuing of patents for new discoveries has given a spring to invention 
beyond my conception." He found many of them to be "trifling"; but 
"there are some of great consequence." ^^ 

But the gadgeteers, anxious to secure their privileges, were dissatis- 
fied with the close supervision of Mr. Jefferson. By 1793 they wcre^ 
strong enough to secure a revision of the original statute. Simple' 
registration was substituted for examination, and discretion faded 

^^ As yet the papers of Tench Coxe have not been made available to students ; it is pos- 
sible that they may throw light upon the acceptance of the Constitutional provision and 
the passage of the first patent act. Coxe was a kind o'" a brain-truster to the Constitu- 
tional Convention, an associate of Alexander Hamilto i in drafting the Report on Manu- 
facturers, and a confidant of men of importance in th j shaping of the policies of the new 

'^'At the time the ofl5cials were Thomas Jefferson, ;i<nry Knox, and Edmund Randolph, 

** At the" time it was not accepted doctrine that t .e power of Congress put the matter 
beyond the authority of the several States. For m .r • years the latter continued to act 
by giving exclusive rights to trades, granting lett< t's patent, and purchasing inventions 
outright. Usage, rather than a formal judgment, { a ually left the Federal Government 

=* Jefferson, Works (Liscomb ed;) vol. VIII 50. 

204G40— 4i— No. 31 3 


into a ministerial duty. Jefferson was vigorously opposed to the 
degradation of instrument into a Ceremonial under which any gim- 
crack could masquerade as a genuine invention. Nor could he ap- 
prove a procedure by which a number of familiar devices might be 
strung together into an "invention," or that sanctifying name be given 
to an old machine put to a new use. In indignation he protested the 
drift of the instrument from its constitutional objective: "I might 
build a stable, bring into it a cutting-knife to chop straw, a hand-mill 
to gi'ind the grain, a curry-comb and brush to clean the horses, and 
by a patent exclude anyone for evermore using these things without 
paying me." ^' 

The words attest a violent reaction by "the friend of invention." 
The act of Congress, which made a person the judge of his own inven- 
tion, attests clearly the character of the first period of national growth. 
It reflects an urge toward expansion, an exuberance in industrial 
adventure, a spirit of every one for himself that sent men forth to 
possess a continent. But it could no more succeed than a land policy 
in which every man was allowed to write his own title to real estate. 
The common domain in the industrial arts would be gone ; the entrance 
to every trade would be blocked by an array of competing toll gates; 
the right to earn a living would be b}^ leave of a host of hostile patent- 
ees. Its very liberality was the statute's undoing. Every device and 
contrivance could be affected with novelty ; but since there was far 
more than enough of such low-class ingenuity to go around, there were 
multiple claims to every invention. Discipline was not the dominant 
virtue of pioneer America; and privilege grew too rankly to be 
accorded an uncompropisect respect. It was the refusal to accept 
grants at face value which prevented the courts from breaking down 
vmder crowded calendars of competing claims and the rising economy 
from being strangled in a net work of litigation. 

The registration method served the cause of disorder and by 1836 
its bankruptcy was obvious. In that year a committee- of the Senate 
discovered that the system had created a flood of void grants, oppres- 
sion of the public, a plague of lawsuits, and a widespread contagion 
of fraud. It found that the institution had fallen into general dis- 
repute ; discovered a wild abandon in the issue of grants ; set it down 
as "a necessary consequence that" even for new and meritorious inven- 
tions, "patents are so much depreciated" as to be of "but little value 
to the patentee." It concluded that "the object of the patent laws, 
that of promoting the arts by encouragement, is in a great measure 
defeated." As a result of the investigation' the law was revised and 
examination restored. 

Since that date the history of the patent system has been a series of 
variations on a common theme. The refinement of procedure, the 
accommodation of the statute to the growing perplexities of industry, 
the establishment of a patent office, the development of a tradition, 
the creation of a special caste of examiners and attorneys — these have 
been the hallmarks of a century's development. The Patent Office has 
expanded like a mushroom ; the institution has insinuated itself into 
the pattern of industry ; the applications and the grants, the documents 
which attend and the records through which they are litigated would 

«8 Ibid, vol. XIII, 380 


fill a sizable library. The disputes touched off have cut a wide trail 
through the annals of the law. 

There have been paeons of honor — and an anvil chorus of dispraise — 
to the usages of the system. Yet by the Congress which shaped an 
institution to serve a general end, no inventory* has been undertaken, 
no balance sheet struck. For better or for worse, the patent as the 
means for promoting the industrial arts has had a role of consequence 
in the concentration of wealth. After a century and a half, its boun- 
daries need to be determined; its experience, recited; its operation, 
appraised. It is high time that an overall survey be made of an 
almost uncharted area of public policy. 



A patent is not to an invention as stimulus to response. The crea- 
tive urge runs deep; a variety of incentives, ranging from idle curi- 
osity through pecuniary reward to the necessity of survival, play 
upon it ; the conditions of society groove the channels through which 
it seeks outlet. The talents locked up in the chromosome are a bundle 
of possibilities ; it requires impinging circumstances to give to a dis- 
tinctive capacity its chance or to decree its atrophy. If for milleniums 
progress was almost static, it was not because the human mind in those 
far-off times lacked the quality !for the drive ahead which it manifests 
today. A native gift for finance lies sterile among backward peoples, 
an ability to create a vast edifice of dialectic cannot flourish in the 
twentieth century as it did in the Middle Ages. An ability to invent 
is indigenous to humanity and no affair of time and place; but it re- 
quires a favorable soil for growth. And culture must prod with 
occasion, supply the matrix of knowledge, and appoint directions to 
its activities. 

The first flush of American invention owed little to the patent. 
The transfer of an established culture to a primitive land brought its 
problems; and ingenuity in meeting them was the price of survival. 
In the towns — such as they were — artisans might ply their crafts much 
as in the old country. But, with forests to be cleared and land to be 
possessed, men drifted beyond tidewater, the compulsions of the price 
system, the mandates of colonial government. In the backwoods, in 
a miniature economy of self-sufficiency, the family upon the farm 
produced *its own living. Every activity which could be made to 
minister to human wants fell within its province. Its own native wit 
had to take the place of going to market. If substitutes could not be 
contrived for store goods, it had to do without. A man, without any- 
one's leave, put to use any knack he could think out or pick up. 

Since he was jack of them all, he could hardly help carrying over a 
trick from one trade to another. The arts in which he was learned 
were much fewer than those he must practice. In operations elemen- 
tary to a trained craftsman he had to borrow, remember, fill in gaps, 
resort to trial and error. The need for self-reliance put him on his 
mettle ; when he was stumped he could not look it up in a book or call 
in the person who was supposed to know; he had to puzzle it out for 
himself. The result was a sharpening of wit, a passion for tinkering 
second only to that for horse trading, the contrivance of a multitude 
of minor inventions. The pioneer picked up whatever the Indians 
could teach him; and, in importing their techniques into his estab- 
lished ways, he improved upon them. Again and again novelty cor- 



rupted the legacy of useful arts ; and domestic manufacture produced 
a host of articles not known over-seas. The art of the Indian fighter, 
of the woodsman, of the cowboy, indicates how ingenious and refined 
an indigenous art might become. 

But it all had its unique promptings. It was very much concerned 
with the making of a living and quite apart from the pursuit of gain. 
A great deal of it was in the day's work. The rewards which it 
brought were the plaudits of the neighborhood or a brief superiority 
in the practice of a calling. But the pioneer mind did not easily 
entertain the idea of private claims in the useful knacks; novelties 
were not called into being by any hope of an exclusive right; they 
were rarely blessed by a patent which was to be had only by a journey 
to the capital of the colony and a venture into a terrifying ceremonial 
of "making out papers." Often their use was severely local and never 
in such a world could they have been policed. The mind of the farmer 
did not always separate the invention from the craft in which it was 
incorporated. It required its detachment and an appreciation of its 
identity to bring it into general use. The "innate propensity" to con- 
trive and project is doubtless as strong as that "to truck and barter."' 
The conquest of the wilderness drew it out but put it to no business 

Much the same thing goes, on a miniature scale, for industry. Con- 
ditions did not favor colonial manufacture, and Great Britain did not 
point its policy to the encouragement of rival workshops across the 
seas. The crafts had been brought over ; and in the towns the cobbler, 
the weaver, the smith plied their common — or commercial — callings. 
The artisan fashioned materials into custom-made articles; when he 
was busy upon orders he produced ready-made goods for sale. In 
time some trades outgrew their domestic habitats and their products 
came to be widely known. The shoes of Lynn, cloth of Providence, 
stockings knit in Germantown, tinwai-e of Berlin in Connecticut were 
all famous "market-goods." Likewise a number of arts had become 
detached from the domestic scenery and were already industries in 
embryo. In cities like Philadelphia, Wilmington, and Baltimore, 
there were "commercial" flour mills; around Cape Fear and along 
the Mohawk River, commercial sawmills; and in New Jersey, Penn- 
sylvania, and Virginia, commercial furnaces, wherein iron was 
wrought. But mercantilism had its set pattern; within its stricture 
the Colonies were to remain plantations, not to become rival work- 
shops. Commerce was a mere fringe to an agrarian economy. But, 
within its . restricted area, Yankee ingenuity wrought its variations 
upon borrowed techniques. It had to improvise for sheer lack of 
knowledge; it had to invent to be able to carry on. But there was 
little separation of the art from the trade, and a treatise upon prop- 
erty in technology could not have been written for want of instances. 

The Revolution gave a strong impetus to technical progress. Muni- 
tions could not all be imported from France and Spain ; they had to 
be produced at home and in quantity. The economy had, in a crude 
sort of way, to be geared to manufacture; and, even in the eighteenth 
century, "war supplies" made up a rather formidable catalog. The 
Continental Congress authorized the formation of local societies, 
bound together by correspondence, to improve the arts and sciences. 
Factories established to serve military needs remained as plant capac- 
ity when the struggle was over. Where interests have been created, 


men are ingenious to find new uses for old capital. A host of workers 
had been trained ; a body of useful knowledge had been accumulated ; 
the conflict itself had created resources for a modest venture into 

The stimulus of war carried into the period which followed. An 
outcome of military interest was a Society for Establishing Useful 
Manufacturers, whose sponsors were Alexander Hamilton and Tench 
Coxe. It was to be financed by federal, state, and local bodies and 
to include upon its governing board representatives of the public. To 
the new nation elaborate projects became indigenous; a host of ven- 
tures, which inflamed the imagination and promised to fill the pocket- 
book, competed for the custom of investors. Grants, bounties, public 
lotteries, "Buy American" campaigns created a climate of belief in 
which such schemes found easy going. The rupture of the English 
mercantile economy caused men to look nearer home for manufactured 
goods. Massachusetts offered to a company established for the manu- 
facture of glass a monopoly, an immunity to taxation, and a promise 
that its employees should be exempt from military service. Ezra 
Stiles, the forward-looking president of Yale College, offered free 
mulberry seeds to the ministers o,f Connecticut. Neither the' glass nor 
the mulberry venture was successful; but faith was strong and not 
easily quenched by failure.^ 

The urge for promotion found vent in many channels. Companies 
were organized for banking, insurance, turnpikes, water supply, toll 
bridges, and inland navigation. Such ventures served a current need 
and met with success.- For the time manufacture had no such easy 
going. The mass of the people were little addicted to commerce; 
ready-made wares had to force their way into a pioneer design for liv- 
ing; it took a larger market than was to be had to sustain an enter- 
prise. The very conditions which stimulated ingenuity helped to 
retard manufacturing, for the bulk of the people who lived on farms 
had little ready cash and were clever enough to fashion hand-work 
to their needs. Yet the very multiplicity of projects, the propaganda 
by Hamilton and Coxe, the attempts of legislatures to fan the sparks 
testify to a national impulse not easily to be stopped. 

A ceaseless effort sought to remove obstacles and jDrod ventures along. 
If free enterprise fell short, the favors of the Government were sought. 
Indeed, there was fear "that some foolish and wanton assembly may 
parcel out the Commonwealth into little aristocracies"; and many 
good people deplored the influence of "large associations of overgrown 
moneyed importance and ambition." Perhaps the missing factor was 
capital — although Americans already had a name for being prone to 
rash pecuniary adventure. Labor was alike a deterrent and a stimu- 
lus. It was not skilled; it was willing to accept low wages; it had, 
through an English culture, been disciplined to a passive role in a 
mercantile state. But the frontier, with its opportunity to be a free 

^J. S. Davis, Essays in the Earlier History of American Corporations, vol. II, p. 269 

^ Gen. George Washington, after visiting the Boston Sail Cloth Manufacture, wrote in 
hie diary : "appeared to be carrying on with spirit, and is in a prosperous way * * *. 
They have 28 looms, and 14 Girls spinning with Both hands (the flax being fastened to 
their waste). Children (girls) turn die wheels for them, and with this assistance can turn 
out 14 lbs. of Thread pr. day when they stick to it, but as they are pd. by the piece, for 
work they do, there is no other restraint upon them but to come at 8 o'clock in the morn- 
ing and return at 6 in the evening. They are the daughters of decayed families, and are 
girls of Character — none others are admitted * * *. This is a work of public utility 
and private advantage." Davis, ibid., vol. II, p. 261 (1917). 


man, presented temptation; and its very scarcity drew employers to 
seek ways to make the available man-power go as far as possible. 

Even smuggling did its part to dull the edge of invention. Along a 
loosely guarded coast-line, the activity of "the gentlemen" had full 
opportunity to counter native effort with foreign goods. And patri- 
ots, whose feelings had been aroused by the recent struggle, were not 
above charging the British with sabotage. But the dominant handi- 
cap must have been the domestic state of trade. A backwoods stand- 
ard of life, a want of the wherewithal with which to purchase, and 
skill to fashion for one's self meant that the essential lack was an 
adequate market. But the urge to tinker and discover was there; 
insistently it sought expression. 

In this situation the separation from England became a prelude to 
opportunity. In the old country the useful arts were going through 
a transformation which many decades later was to be called "the indus- 
trial revolution." The word rubber suggested to Priestly — a friend 
of Mr. Jefferson who had brought from over-seas a head full of 
scientific, democratical, and deistic notions — an article for "wiping 
from paper the marks of a black lead pencil." Engine, as popular 
usage had it, was still a word at large ; it was an implement or tool, a 
plot or artifice, an instance or product of ingenuity. The engines of 
war were familiar, somewhat better known than "the dark engines of 
policy." Machine, to the denizens of the times, was a structure, a 
vehicle, an instrument of complicated parts; in mechanics the well- 
known examples were the lever, the pulley, the wedge, the screw, the 
inclined plane, the axis and wheel; "the mind casts its eye over the 
whole machine of society." Yet mechanics was on the march; the 
steam engine was becoming a source of power; the machine process 
was well on its way. America demanded factories; English work- 
shops possessed the technology with which to make them go. 

Access would have been easy — if current practice had accorded with 
the law. In effect the Statute of Monopolies imposed upon the owner 
of the patent an obligation to train two sets of apprentices. Since his 
privilege ceased as soon as this duty was discharged, the effect was to 
remove all legal bans upon the use of the invention. But mystery did 
not cease with the passing of the gild and parliamentary intent could 
not survive the rise of the division of labor. There was no longer a 
trade which in its integrity could be passed on from workman to work- 
man; there "were only devices, instruments, processes, more or less 
severable from the work of the artisan. The inventor did not have to 
take out a patent ; he might, if he preferred and if he could, keep his 
innovation a trade secret. Even if he accepted a grant, he might escape 
disclosure; it was a long time before the legislature recognized that 
apprenticeship no longer performed its office and decreed publicity. 
An "enticing away" of workmen became a common means of acquiring 
useful arts. Its possessors employed the division of labor as a defense 
and attempted to confine the knowledge of a single workman to a frag- 
ment of the whole process. Espionage, quite legal if successful, became 
established usage. 

The separation from the mother country became an invitation to 
America to help itself. No decrees of a mercantile economy were any 
longer strictures on domestic manufacture. The techniqaes developed 
in Great Britain remained mysteries only so long as they were closely 
guarded. Americans at home did not show an exaggerated respect 


for the property of Tories, and rights in such intangibles as trade 
secrets were far from sacred. It was an open season and, jDatent or no 
patent, citizens of the United States regarded themselves as free to take 
what could not be nailed down. The great deterrent was the dijSiculty 
inherent in the transmission of technical intelligence. As yet the blue- 
print had not become a universal language; societies for the mutual 
exchange of useful knowledge were in their infancy ; there was a dearth 
of trade papers and volumes of proceedings, English inventors, or 
their assignees, in instances at least, would doubtless have been glad 
to license Americans to manufacture; but the practice had in the 
Colonies been little in vogue and to the emerging national mind 
royalties to the erstwhile enemy w^as siiggestive of tribute. 

It was easy to start a factory; the difficulty lay in gaining possession 
of the useful knowledge with which to carry on. The technical litera- 
ture which came over the waters was meager. One who had visited 
the works could hardly carry away an exact description in his head; 
even a campaign of espionage, artfully planned and shrewdly executed, 
was likely to reveal far less than there was need to know. An ex- 
worker from an English shop who chanced along was a godsend ; he 
might supply missing pieces to the technical puzzle ; he was a rare bird 
if his head held the whole of any technology.^ Chance fragments of 
knowledge, a bit of hearsay, a general impression was checked against 
"the way it ought to go." In instances articles from abroad were 
carefully studied to determine how they Avere made; as occasion de- 
manded, arts or their elements, were smuggled in. As yet there was 
little of a technical tradition here; only in the exceptional instance 
did the domestic inventor chance upon something that was startlingly 
novel. But, if in reducing to precision a method about which 
he was not fully informed, the native turned up little that was original, 
his talents were constantly upon the alert. It was a period of empiri- 
cism ; a continuous process of repeated trial and corrected error whose 
objective was the reconstruction of arts established elsewhere. Enough 
that design or technique was new to the man who stumbled on it and 
that his activity was creative. An urge toward finding out went 
along with a lack of respect for equities in the discovery. But the 
period provided a grand school for inventors. 


A conjunction of elements touched off discovery. Its spirit is indig- 
enous to the conquest of the continent. Its early habitat is an agrarian 
culture. Its stuff of idea and process is a series of imports from the 
Old World. The occasion, which detached novelties from their trades 
and lifted them to importance in their own right, was the growth of 
manufacture. Science cannot escape its environment; men of talent 
cannot reach into another intellectual world to capture elements which 
are not there. Witbin such a frame a medley of trends has usurped 

3 The England which originated the patent device as inducement for the importation of 
new technologies placed rigid restrictions upon the direction of their growth. By parlia- 
mentary edict no worker in the textile trades was permitted to emigrate from the mother 
country. It was only- by stealth and without benefit of blueprint that the seed of English 
technology was transported to the fallow American soil. Samuel Slater, who by virtue of 
severance of family ties was freed from maternal obligation, undertook apprenticeship in 
the partnership of Strutt and Arkwright, determined on a future in the New World, 
committed to memory the advanced designs of Arkwright, Hargreaves, and Crompton. and 
in 1789, aged 21, departed the mother country in disguise for the United States. Under 
his guidance the first textile factory was built from the crude materials of American 
handicraft and artisanry and commenced operation in 1793 in Pawtucket, R. I. 


the dual role of cause and effect in the creation of technology. The 
isolated farm stimulated ingenuity rather than invention; the ad- 
vent of manufacture was an invitation to tinker; the occasional need 
for munitions was a prod to which even sluggish intellect responded. 
This economic trio, to an accompaniment written by a variety of minor 
factors, hastened or stayed the progress of the useful arts. In their 
varied impulses they made areas favorable or adverse to the urge 
toward innovation. 

Where culture was agrarian, the urge found outlet rather in revis- 
ing crafts than in contriving mechanisms. The vast stretches of vir- 
gin lands, the pioneer outlook on the world, the self-sufficiency of the 
economy, the absence of technical exposure, all kept the farmer from 
going to science for ideas and leads. Into his world of hay and wheat, 
of indigo and tobacco, of quilting bees and barn raisings, the ways of 
commerce came slowly. The farmer knew the windmill, the spinning 
Avheel, the rotary motion of the upper and nether millstone. But re- 
finement towered above invention; novelty did not stray far from 
maiuial dexterity; and the unspecialized activity of the farmer did not 
turn deftly to model and design. A cleverness of wit and hand left 
its products, but inventive gifts were not yet regimented toward serv- 
ice to a machine process. 

Along the commercial fringe of an agrarian economy, the climate 
was more inviting. Away from the highways of trade the man who 
forsook thrift and industry to waste time and substance was looked 
upon ■ as queer. But in the neophyte industrial centers of the East, 
where a quickening touch came from overseas, a search for novelty in 
instrument and method Avas accounted good business. Here the influ- 
ence of the farm could not be escaped. Town folk who had left the 
country could not escape the rural culture of their upbringing. It held 
in leash the impulse to contrive strange mechanisms and to transform 
handicrafts to sequences of repetitive motions. But impetus, too, came 
from back country; for ingenuity found expression in the establish- 
ment of rude hand factories to absorb, process, and turn to profit the 
surplus of farm products. And in agriculture, and the communities 
which it supported, was the great American demand for any gadget, 
machine, or contraption which could turn hard labor into easy work. 
The farm imposed its leisurely tempo upon the fami-bred inventor 
whose incentive was to exploit the farm market. 

The^ thinnest edge separated reconstruction from invention. As an 
instance, conspicuous in itself yet evidence of how gradually the line 
was crossed, witness the rise of farm implements. Agriculture was 
the American economy ; yet until 1800 its operations were carried on 
by hand, with the assistance of the I'ude creations of the local smith 
and the neighborhood carpenter. In the first census a single manu- 
factory of agricultural implements is mentioned, a concern whose an- 
nual output reached a figure just short of $2,000. Even by 1820 hardly 
a score of such establishments had come into being; their principal 
products were such rudimentary machines as axes, hoes, rakes, shovels, 
and scythes. Shape and quality might be on the mend, but in kind 
and name they were all known centuries before. 

Yet, even before the dawn of the new republic, improvement was on 
the way. In 1797, for an improved plow of cast-iron, the first im- 
portant agrarian patent was granted to Charles Ne\^bold. Against 
the finn conviction of sturdy farmers- that iron poisoned the soil, his. 


privilege to make, vend, and use proved of little value. The second 
major contribution came from the workshop of Thomas Jefferson. 
He experimented with the form of the moldboard, accepted New- 
hold's device, incorporated other novel features, and contrived an 
improved plow. It was not patented ; it had the name of its inventor 
and a lot of promotion by correspondence behind it; and, by 1830, 
it had triumphed over the conservatism of country folk. 

In 1803 a patent for the cradle, an implemented arm for cutting 
grain, was granted. Almost at once it began to replace the scythe; 
increased the efficiency of the worker; pointed the way for other 
mechanisms. About the same time the fanning-mill, a device for 
cleaning grain after threshing, was introduced. The scarcity of labor 
is most acute at harvest; and the two inventions, which were rapidly 
improved, hastened the extension of farming and speeded the western 

But such advances were improvements upon tools; the machine 
process had to be thrust into agronomy from without. In England 
a number of machines had been devised for the spinning and weaving 
of cotton. But nianufactiire was kept small by the scarcity of raw 
materials. Spindles and looms might be agile and greedy, but they 
could not have their real opportunity so long as the lint had to be 
separated from the fiber by hand. The steps in the productive process 
taken over by machinery threw into sharp relief the initial manual 
operation. Cotton was ready to become king, lord it over the planta- 
tion, provide slavery with an industrial foundation, give impetus 
to tbe youthful textile industry of New England — yet the condition 
of its reign was the invention of the cotton gin. 

The need was less obvious than it seemed. As yet cotton was not 
one of the staples ; the Southern States were not identified with its 
growth.*. It was really a pioneer adventure for Eli Whitney,^ a 
saddlebag schoolmaster from Connecticut, to contrive the original 
cotton gin. Yet, revolutionary in its effects, it was, as sheer tech- 
nology goes, no brilliant invention. Its mechanics was simple enough 
for the ordinary man to understand ; and, nothing daunted by a pat- 
ent from the Federal Government, the farmer folk of Georgia pro- 
ceeded to erect their own machines. The high prices demanded for 
the lawful product killed any scruples they may have had over an 
invasion of private rights in a necessary contrivance. Acts in negli- 
gent or wanton disrespect of Whitney's patent occurred faster than 
they could be quenched by infringement suits. Judges found diffi- 
culty in detecting legal harm in imitation and proved rather careless 
of property rights too incorporeal to be seen. Not until 1807, some 
13 vears after its grant, was the validity of the patent recognized 
by a court. The States of Georgia and South Carolina, however, 
in behalf of their own citizens purchased 'his rights and paid him 
$60,000 therefor. The bulk of this was spent by the inventor and 
his associates in attempts to protect his claims and to exploit his 
market. Very little of this expenditure was returned in royalties. 
Later Whitney anticipated Henry Ford and the assembly line in his 
most important contribution, the "invention of standardized parts and 

* The arrival of a small cargo of cotton at Liverpool late in the century caused some 
perplexity amonj? customs officials. They were sure that there was some mistake in the 
bill of lading which placed the point of origin in the United States of America. 

"FoT a discussion of the life of Eli Whitney see "Whittling Boy, The Story of Eli 
Whitney,' by Roger Burling^me (1941). 


belt-line production. But he had become so disgusted with the opera- 
tion of the patent system that he refused to put in a claim.® 

A more spectacular instance. is the steamboat. The produce of farm 
must get to market; and in the new republic waterways were the 
arteries of trade. The canoe is lacking in capacity for cargo; the 
raft is suited only to a one way passage; a ship with sails is not at 
its best on a river. There was need for a craft to which upstream was 
like down and whose agility in maneuver made bends, however many 
and sharp, of little account. The elements were all at hand; the 
boat was a familiar object; steam was well-known; the steam-engine 
had been in use for more than a century; in the year 1775, James 
Watt, a neighbor of Adam Smith, has given it efficiency and a future 
by the invention of a condensing cylinder. The task was to add a bit 
of tinkering and secure a vehicle of transport which was far more 
than the sum of its parts. 

The need lay obvious on the face of the economy ; a number of indi- 
viduals, rather widely scattered, were tempted to whet their talents 
upon it. As early "as 1783 Oliver Evans, in Wilmington, Del., 
began experiments in an attempt to apply steam to the propulsion 
of a boaf^ Yet the machine technology was so little advanced and he 
gained proficiency so slowly that it was not until 20 years later that 
he could link power to paddle-wheel in a way which even crudely 
could be said to work. But others were engaged upon the puzzle; 
and shortly after Evans' first attempts, the State of Pennsylvania 
accorded to John Fitch "the sole right and advantage of making and 
employing the steamboat, by him lately invented, for a limited time." 
Similar grants were acquired from the States of Delaware, New York, 
and Virginia ; but, despite this vantage position. Fitch was forced to 
abandon his experiments, when his attempts to operate a steamboat 
on the Delaware River resulted in financial disaster. Likewise in 
1787 a craft, devised by James Rumsey and operated by steam 
chugged weakly up the Potomac at 4 miles per hour. But this boat, 
like all others developed before the turn of the century, paraded defects 
in metallurgy, defects in the quality of machinery, defects in engine 
construction, defects in engineering principles. As with the others, 
the sum of the deficiencies spelled inadequate performance and 
financial insolvency. 

« The author has been afforded access to an unpublished manuscript by William A. W. 
Krebs, /V., entitled, "The Whitney Patents" (1940). 

' Evans, one of the most prolitic inventors of his time, early succeeded in developing a 
conveyance system for the handling of grain without use of manual labor. Attempts in 
the 1780's to introduce his contrivance into the then agricultural States of Pennsylvania, 
Delaware, and Vii-ginia met hostile reaction from millers interested in maintaining their 
rights to a livelihood. A Federal patent secured under the act of 1793 was declared in- 
valid by the circuit court of Pennsylvania shortly after it was issued. Subsequently, in 
1808, the Congress by a special act entitled "An act for the relief of Oliver Evans" au- 
thorized the "issuing to him of a patent" for the "invention, discovery, and improvements 
in the art of manufacturing flour and of the several machines applicable to that purpose. 
Numerous instances of alleged infringement, however, robbed him of the benefits of the 
congressional mandate. In 1815, the Supreme Court, without considering the merits of 
legislative grant held that use under the invalid patent did not entitle an alleged infringer 
to continued use subsequent to the 1808 statute. (Evans v. Jordan, 9 Cranch 199 (1815).) 
After prolonged litigation a case testing the validity of the congressional grant finally 
reached the Supreme Court only to be sent back for a rehearing on tlie question of prior 
use and publication. (Evans v. Eaton, 3 Wheaton 454 (1818), Mr. Chief Justice Marshall 
writing the opinion.) Four years later, 3 years after Evans' death, a second case reached 
the highest court ; the Evans' patents were finally declared invalid for lack of specificity. 
(Evans v. Eaton, 7 Wheaton 356 (1822), Mr. Justice Story writing the opinion ; Livington, 
Johnson, and Duvall, J. J., dissenting.) A companion case on a similar issue (Evans v. 
Uettich, 7 Wheaton 453 (1822)) was also decided against the Evans' interests. The gen- 
eral antagonism by the established trade toward the introduction of a novel art and the 
antipathy of the courts, those both of appellate, and original jurisdiction, to the patent 
grant, are not atypical reactions to the efforts of early inventors. 


It remained for the trio of invention, finance, and politics, in 
a close accord, to turn the trick. Robert Fulton tinkered with the 
old contraption, eliminated defects, introduced precisions, made the 
gears engage. In 1807 the Claremont paddled laboriously but as- 
suredly up the Hudson from New York to Albany. There might 
be interruptions of service and the vessel was not guaranteed to run 
on schedule ; but at last appeared a vessel which could hold its own 
against the wagon and the stagecoach and promised to become a 
profitable business enterprise. The -inventor could not go it alone; 
and to the venture Livingston brouglit adequate finance and political 

llie accord brought pragmatic results. It was, however, the State 
rather than the Federal Government which proved most helpful ; and 
encouragement took the form of an exclusive right to a trade rather 
than in an invention.^ The State of New York issued to Fulton a 
monopoly of steamboat navigation upon the Hudson River for a 
period of 20 years. By this late date there was no longer secrecy 
about the mechanism; the sums necessary to build and equip fly-by- 
nights or even palatial steamers were to be had ; and only with diffi- 
culty could outsiders be restrained from the business. A large part 
of their gains were spent by Fulton and Livingston in securing to 
themselves their chartered privileges. A decision of the Court for 
the Trial of Impeachments and Errors, from the pen of James Kent, 
fortified their legal position but did not abate the nuisance of com- 
petition.^ The issue would not doAvn; the law reports were again 
and again enriched;^" and it took an appeal to the United States 

8 Note that there was, in these grants by the several States, no separation between the 
exclusive right to a trade and the exclusive right to an invention. In applying for protec- 
tion the inventor kept secret his process and his mechanism. There was no disclosure ; 
instead officials or their representatives were' permitted to, witness the contraption in 
operation. Thus a group of gentlemen, who represented the Commonwealth of Virginia, 
observed Ramsey's steamboat on the I'otomac and recommended the grant. See letter 
from James Madison to Thomas Jefferson, January 9, 1785, describing events in the 
Virginia Legislature. "Letters and Other Writings of James Madison," Congressional 
Edition (1865), vol. I, p. 122. Apparently both Fitch and Rumsey obtained grants from 
Virginia, but neither was able to turn the assistance to practical advantage. 

" Livingston v. Van Ingen (9 Johnson's Reports (N. Y.), 507 (1812) ). 

''■"Livingston v. Van Ingen, opinion by Chancelor Kent, then chief justice of the New 
York Court of Impeachments and Errors, held the "five several statutes" of New York 
State, "passed between the years 1798 and 1811, inclusive, and granting and securing to 
claimants the sole and exclusive right of using, and navigating boats by steam' in the waters 
of (the) state for a term of years, * * * substantial and valid acts." In this first 
decision, supporting the Fulton-Livingston interests, Kent was forced to consider no 
explicit conflict with Federal acts ; but a subsequent action, grounded on infrin'j;ement, 
raised in embryo the State versus Federal issue which was to enslave so much of political 
thought during the first half of the nineteenth century. In Ogden v. CHbbons, 4 John.son's 
Chancery Reports 150 (1819), defendants to an action by an assignee of Fulton asserted by 
way of defense the supremacy of a coastal license granted under the laws of the United 
States. Both by the chancery court, Kent speaking, and subsequently by the court of 
errors, 17 Johnson's Reports 488 (1820), it was held that this license merely conferred 
an American character upon the steamboat for the purpose of revenue' ; ordained no benefit 
of property right to the holder thereof; and constituted no defense to the monopolistic 
franchise granted by the State of New York. Thereafter the issues considered in Ogden v. 
Oibbons maneuvered their way into the national arena to be at first turned out for lack of 
a final decree from which to- appeal, Oibbons v. Ogden, 6 Wheaton 448 (1821). At this 
same time a companion case, Sullivan et al. v. Fulton Steamboat Company, 6 Wheaton 450, 
arising in the Federal courts, was dismissed for failure to allege diversity of citizenship. 
Three years later the procedural deficiencies eliminated, jurisdiction assumed by the . 
Supreme Court, the memorable opinion of Mr. Chief Justice Marshall reversing the stand 
taken by Kent was handed down, Oibbons v. Ogden, 9 Wheaton 1 (1824). Although Mar- 
shall refused to touch "upon the right of the states to grant patents for inventions or 
improvements, generally," he did extend the implications of the decision beyond the 
simple question of competing State and Federal statutes. Asserting that "the deep streams 
which penetrate our country in every direction pass through the interior of almost every 
state In the Union, and furnish the means of exercising" a control over commerce, Marshall 
concluded that "the power of the courts * * * must be exercised within the terri- 
torial jurisdiction of the several states." For this destruction of a State's exclusive con- 
trol over its navigable waterways Marshall was criticized by Kent in his famed Com- 
mentaries ; but whatever the tenor of personal opinion, the Marshall pronouncement 
marked tlie end of monopolistic domination of steamboat traffic and the openins of the 
Hudson-Mohawk waterway to the commerce of the new West. For Kent's views, see, Kent, 


Supreme Court to close the chapter. In a celebrated case, Mr. Chief 
Justice Marshall ruled that, since his vessels were enrolled for the 
coasting trade under an act of Congress, Gibbons was quite in his 
right in operating two steamboats between New York City and the 
Jersey sh,oi ^ The Federal license was quite untouched by any 
monopoly oi "navigating by fire and steam" issued by a mere State 
of the Union; hence, the courts could accord no protection to the 
license which Ogden held from Fulton. The decision was followed 
by a breakdown of the legal privileges accorded the inventor. The 
technique of the steamboat became public property; its design and 
mechanisms were improved. Its art was, quite without the encour- 
agement of the law, pushed rapidly; an era of river navigation ran 
its course; and before the twenties were gone, steam propulsion had 
made its way into ocean transport.^"" 

In manufacture the urge toward invention was conditioned by' its 
opportunity. At the time the first patent act was passed. Oliver 
Evans had already developed a double-action, high-pres,sure steam en- 
gine and an improved grist mill. And others, like Fitch, Perkins, and 
Rumsey, had invented gadgets and improvements to standard agri- 
cultural implements. If such novelties did not speedily make their 
way into general use and bring forth others after their kind, it was 
because. an exuberant national development pushed them to one .side. 
Albert Gallatin, writing in 1813, was forced to revise Alexander Ham- 
ilton's optimism about the future of manufacture. He attributed its 
arrested gi'owth to high wages, the abundance of land, the scarcity of 
capital, and the endurance of agrarian culture habits. So backward 
was industry that in 1804, 10 years after the introduction of Whit- 
ney's gin and 12 years after Samuel Slater had set up his mill at 
Pawtucket, only four cotton factories were operating in the country. 
Two years later the dependence of American prosperity upon foreign 
manufacture was persuasively argued against the embargo. 

The origin of the machine process derives from the appropriation — 
without 'benefit of any patentee's consent — of the technology of 
English spinners and weavers. By the time of the Constitutional 
Convention,, the British textile industry was on a maxihine basis. The 
Napoleonic wars, by driving barriers between American markets and 
foreign sources of supply, stimulated domestic manufactures. When 
George Washington was inducted into the Presidency, only two tex- 
tile mills were in existence. The census of 1810 records vast strides in 
total production — half of which is to be attributed to textiles, leather, 
liquor, iron. Technology had come over in driblets; in general it was 
a domestic version of an imported art. 

The industry invites the invention; the invention blazes the patli 
for the industry. Each does the task the other gives it to do. In 1814 
the invention of the power loom gave impetus to textile manufacture 
and 2 years later George Dallas, the Secretary of the Treasury, notes 
its preeminence. The new device, installed by Francis C. Lowell in 
*'the first complete factory in the world," led the way to an era of 

Commentaries on American Law (1826), vol. I. Part II; The Jurisprudence of the United 
States, Lecture XVI, pp. 323-324 ; Lecture XIX, pp. 40-5-418. Kent's attitude on the 
Marshall decision has been more charitably interpreted in a recent book by John Theodore 
Horton, John Kent, A Study in Conservatism (1939). p. 288. 

loa Here, however, steam met the stiffest sort of competition. The clipper ship is .a 
triumph of American craft and invention. Seldom has a work of man 1)een so rapidly 
and brilliantly advanced. Yet the most romantic of nineteenth century arts went forward, 
under the stimulus of an intense competition and without the benefit of any patent what- 
«ver. See Samuel E. Morrison, Maritime History of Massachusetts. 


rudimentary belt-line production. Its introduction brought violent 
competition into the dry goods market; and Lowell. Lawrence, Fall 
River, Cohoes, Holyoke, and Paterson eacli sought to become the great 
textile center. So easy was admission to the trade, so rapid the in- 
crease in demand, that by 1840 more than 1.200 separate factories were 
processing 126,000.000 pounds of cotton annually. Yet only slowly 
were primitive ways outmoded. It was the early thirties before the 
machine outstripped the spinning wheel and the hand loom in volume. 
Even a decade later less than 10 percent of the factories made use- of 
steam power. 

Iron marks a turning point in the history of technology. Unlike 
textiles, it emerges from the union of many arts. Its establishment 
marks the industrial coming of age of the new Republic. If textiles 
■were dependent upon agriculture, iron was in bondage to munition^, 
farm implements, steam-power, the river navigation which enlarged 
markets, the satellite activities surrounding these major stimuli. An 
improved quality of iron was demanded by musket manufacture; by 
the machinery employed in ginning, weaving, and spinning; by the 
apparatus of steam power in factory and on ship. 

Almost at its inception the industry encountered a problem which 
for a time baffled it. The markets for iron — and for the machines it 
entered — were in the East ; an essential in the smelting of the ore was 
charred wood ; the forge must go to the charcoal or tlie charcoal must 
be brought to the forge. As eastern forests disappeared, sources of 
supply moved farther and farther away. The difficulty of transport- 
ing iron products over rude roads or by circuitous river routes pre- 
vented a western march of the furnaces. The scarcity of charcoal and 
the expense of getting it to tidewater raised sharply the cost of manu- 
facture. By the mid-thirties English iron — thanks to a process 
whereby a hot air blast was driven through bituminous coal — was able 
to vault tariff barriers and to threaten destruction to the native 

At this critical moment two factors conspired to save the domestic 
market. A dozen years before anthracite had been employed in the 
generation of steam; now it was successfully introduced into the smelt- 
ing process, and worries over inadequate supply and low quality Avere 
over. At the same time the fugacious spread of the railway made coal 
of generah value, solved the problem of carriage, and multiplied many 
times over the demand for iron. The advance of manufacture had 
been arrested by the lack of power-fuel free of serious shortcomings 
and the absence of an adequate supply of durable iron. As the produc- 
tion of power moved from a coal to a wood basis, the. signal to go was 
given to a whole technology of arts. The steam-blast supplanted the 
air blast in the smelting process ; the by-products of combustion, gas- 
eous excretion, were utilized in the processes of pre-heating. As iron 
became a superior metal, tools of more durable quality were devised 
and rough estimate gave way to precision manufacture. As malleable 
materials were converted into refined mechanisms, the system of effi- 
ciency was on its way. By 1850 a major part of the market for rolled 
iron and iron rails — which by virtue of a superior process belonged 
to the foreigne — had been reclaimed. The advance of iron culture — 
■which imprisoned a more refined art in a series of machines — was fatal 
to the less precise and more laborious methods of handicraft. Thus 


the newer metallurgy expelled the import, replaced the individual 
artisan, and created a market they never knew. 

Ancient arts became machine processes. Sewing machines, shoe 
.nachines, rotary presses were Expressions of the technology of the 
iorties — all structurally dependent upon advances in the quality of 
iron. An off-shoot of iron production was the Naysmith steam ham- 
mer, invented in 1842. It brought a mutation into all metal work and 
changed the methods of mining, dredging, and construction. Edge- 
tools, dependent upon superior iron, were fitted into planing machines 
to revolutionize woodworking and furniture making and to bring mass 
production to the cabinetmaker's art. Fragments of technology were 
amalgamated into new processes. 

Thus a spirit of tinkering, manifest before the Revolution brought 
economic independence, swung into its stride. For a time the progress 
of the industrial arts was conservative and orderly, little broken by -the 
appearance of mutations. Although at harvest time labor was 
proverbially as scarce as hen teeth, decades passed in the life of the 
Republic before McCormick invented the reaper and, through his 
innovation, the work of the farmer began its painful shift to a new 
teclmical base. Not until 1840 did Goodyear put into play an inquir- 
ing mind, a, dissatisfaction with the existing article, and a desperate 
financial plight to give rubber a new definition. His patent emerged 
from an industrial matrix quite unlike that which had attended the 
birth of the Nation, yet he died without realizing the significance of 
what he had done.^^ In the twenties science blazed the trails and in 
the thirties the telegraph followed as an instrument of comnuniication. 
But it had to bide its time until the railroad created the demand for the 
rapid transmission of " intelligence, safety required the subjection of 
electrical impulses to practical uses, and the tempo of business made 
necessary an instantaneous question and answer. No amount of pro- 
tection could have secured to genius its reward until society was ready 
and willing to put the invention to work. 

Jn all of this the roles of cause and effect are blurred into a mutual 
causation. The impulse of the industry is the stimulus which touches 
off the inventor's response. The inventor's idea, made manifest in 
process and design, gives to the industry its larger opportunity. In 
this formative period many are the incentives which quickened the 
advance of the useful arts — the borrowing from abroad, the recon- 
struction of processes not fully understood, franchises to trades from 
the States, the encouragement of letters patent, the necessity of car- 
rying on and of getting ahead, the sheer urge of idle curiosity. As 
yet science has contrived no instrument of precision by which the 
contribution" of each to the march of technology can be registered. 

But, whatever its causal role, the patent is a barometer of what was 
coming to pass. As industry from a faltering start gained momentum, 
the number of grants followed its course. In the decade 1790 to 1800' 
only 306 letters were issued ; in the next 11 years more than 1,200 were 
added. From 1812 to 1817 the annual average had risen to 192. For 
the single year 1830, the number reached 544. The total for the decade 
of the forties ran almost to 6,000; and, in 1849, for the first time the 

"Ilis'pateDt, issued in 1837 and numbered 240, was rather comprehensive. His strenu- 
ous empiricism had blocked out the rudiments of the modern process of curing, molding, 
waterproofing, and preserving the commodity. It took more than six decades to discover 
that his cusliion against sliock had opened the way for the conquest of speed and liad made 
the modern motorcar possible. 


annual vintage topped the 1,000 mark; only for 3 years since then 
has it fallen below that figure. In the fifties some 23,140 certificates 
testify to the contagion of invention through the whole economy. The 
macliine process was in the saddle. 


The nature of the grants reflects a changing economy. It was com- 
merce which prompted the Constitu' " )n ; yet for the first 20 years of 
the new republic, industrial patents y> art largely the off -shoots of work 
on the farm. Improvements in the plow, water power, the grist mill, 
the grain conveyor all reflect the rural environment. ^^ TheWhitney 
gin, the Lowell jDower loom, the inventions in textiles generally were 
devices by which wool and cotton sought wider markets. The demand 
for the steamboat came from agrarian communities intent upon outlets 
for their surplus produce ; the initial office of the railroad was to link 
the back country with the tidewater. 

Yet number and character signify only within the enveloping culture. 
It was an era of opportunity-— at least for the lucky, the resourceful, 
the man hardened to everlasting struggle; and many forces invited 
the progress of the useful arts. There was the expanding country, the 
transformation of culture, the migration of country youth into busi- 
ness, the conversion of household arts into industries, the simplicity 
and clumsiness of early machines, the factorization of the handicrafts, 
the work to be done if only tools adequate to their doing were to be had. 
As yet the country was little cut up into closed preserves; interests 
were striving none too successfully to become vested ; the map of the 
economy presented vague contours which refused to be put. The con- 
ditions which sustained competition were widespread and its roots ran 
deep. Kestraints were difficult to impose; the patent secured, rights 
in the invention. It had not yet become a legal foundation whereon to 
rest a body of trade practices. 

But even a flexible economy is not inmiune to stricture. Amid the 
din of change the ancient device of the corporation was furbished up 
for new adventures. As a fiction — a person of art by grace of the 
law — it came into play and was elaborated into an intricate and 
refined instrument of contrx)l. It gave unity to a mass of investments, 
piled up sums huge enough for large-scale ventures, and imposed a 
single will and purpose upon a misceliany of materials. It concen- 
trated power, established absentee ownership, and stripped from 
parties in interest — investors, stockholders, employees — all discretion 
while it absolved them from responsibility. It supplied a form under 
which the technical advances of the forties could be capitalized into 
giant business enterprises. And, by its regimentation of investments 
under a single command, it enabled "private capital" to undertake 
large-scale enterprises which otherwise would have to be left lo the 

"The 6 patents — there were in all 10 bui 4 involved the same patent;, a fifth con- 
sidered only a procedural point without c'.f ussing the substantive grant — to come to 
the United States Supreme Court before 1? K reflect the prevailing state of the industrial 
arts. Two concernMnventions in agricultu- al devices — the one an improvement in the side- 
wheel of a grist mUl ^termed a "wry fly", 1 'le other a device employed in the storing of 
•grain. A third, a revision in the method f Mping water, was adapted to agricultural use. 
A fourth involved percussion priming i ire-arms ; the fifth concerned a watch-chain 
manufacturing machine ; the sixth laid els m to p 'levice for felting \. jol to form hat bodies. 

204040— 41— No. 31 4 


The character of the business unit was transformed. The corpora- 
tion created the management, drew a sharp line between insiders and 
outsiders, established a hierarchy of offices. Persons at the top had 
authority over properties which in only the loosest sense were their 
own ; they could play with their estates as feudal lords had played with 
their fiefs. But there was a dilierence ; for a tenure resting upon the 
usages of election and a majority of shares was never quite secure. 
An item in red as a summary of a balance sheet was a threat to the 
capital structure which it was the principal duty of those in high 
places to guard. The cor peat venture hr;d to operate in a highly 
dynamic society; a measure oi vigilance wus essential to survival; 
the market for its wares must be fortified against invasion. Its 
strength lay in size, financial assets, preempted domain, power to 
dominate in any conflict. Its exposure to competition was a threat 
to its security. Immunity must be had through any instrument which 
might be bent to the purpose. 

Into the economy came the corporation as a device of business col- 
lectivism. In the years after 1840. with its increasing prevalence, 
came a recession ()f "opportimity. A textile industry of more than 
1,000 separate factories crystalized into a pattern mai-ked by a few 
large companies flanked by a handful of lesser concerns. At first the 
processing of iron was open to any individual who had access to an ore 
deposit. As its operation came to be an intricate technology, stereo- 
typed into an array of interlocking machines, the ascending demand 
for capital ^as attended by a decline in the number of units. The 
railroad, short as was then its line, was a giant enterprise, which 
regimented men and materials, credits and capital, into a single 
operation. As its fai flung arteries welded the activities of different 
.sections into an industrial organism, so its impersonal organization 
provided a mddel for general use. In time even the welter of smaller 
ventures fell into the corporate form — and tended to become domains 
closed against individual enterprise. 

It is hardly necessary to detail the trends accentuated by the Civil 
War- The struggle called a sluggish economy to attention; con- 
verted jx)tential resources into apparatus of production: bequeathed 
to a country a vast plant capacity; gave full rein to all the acquisitive 
urges. The usages of the corporation were elaborated; its efficacy 
ceased to be questioned ; its employment became traditional. A larger 
and larger section of the economy came to be- overlain with a mass 
of corporate relationships. Tliese differed greatly in kind and in 
strength, from the tightness of "parent" and "subsidiary" to the loose- 
ness of the vaguely interlocking directorship. The course of events 
has shaped its structure; countless situations, expediencies, decisions 
are reflected from its lines. It possesses no outline cut to design ; it is 
the kind of affair which blundered into being. But with its coming, 
financial pressures were enlisted in the cause of integration. x\s the 
myth of free enterprise became current, its reality fell away before the 
corporate estate. 

In nature business is acquisitive ; its high command has always em- 
ployed aggressive instruments. Tlie struggle betw^een corporations 
for estates was well along before the patent right was put to militant 
use. For a time it occupied the honorific post of reserve weapon. The 
Robber Barons, w^ho knew what they wanted and would not bother 
with indirection, had little time for so finicky a device. Even when 


the Titans learned the amenities and perfected "the gentlemen's agree- 
ment," they persisted in being forthright. Dealer contracts, price 
agreements, ganging up on the chiseler, all had back of them the 
sanctity of contract or some extra-legal symbol just as efficacious. 
Even as a secondary device — to protect gains won by financial manipu- 
lation or the imposition of restrictive covenants — the possibilities of 
letters patent were little explored. The grant was an exclusive right 
and as such to be cherished. But it was kept within its orbit, a thing 
to be used, enjoyed, and freely alienated. It was, however, even as 
late as 1890,^^ unburdened by covenants which ran with the chattel or 
radiated along the channels of trade. If the depressions of '73 and 
'93 were due to strictures within the economy, the complaint cannot be 
lodged against the patent system. 

From the forties — and increasingly after the Civil War — great 
corporate estates appear in the national economy. As truly as the 
demesne of old, eacK of these demands its legal titles, its sanctions, the 
protection of its territories, the expansion of its frontiei-s, its arma- 
ment of attack and defense. It is a task of no small magnitude tO' 
keep a corporate estate goin^. To enlarge the realm and increase 
its power calls for zeal, ingenuity, acquisitive skills, the larger strategy. 
In such an activity a grant of patent — a letter reciting an exclusive 
right which emanates from the Government itself — is a counter of 
consequence. It is at once a privilege, a legal warrant, a shield against 
attack — a versatile thing whose reach is as broad as the courts will 
allow, and whose possibilities only imaginative use can fully explore. 
In three distinct ways it operated to make secure the frontiers of 
corporate estates — and to restrict and modify individual enterprise. 

The first was that the inventor passed into the background. He 
was accorded an exclusive license in respect to method, process, design, 
or machine. But unless he had funds with which to venture, he was 
in no position to exploit his grant. And, since machines were required 
to make other machines, he became beholden to the financier for the 
opportunity to make the most of his discovery. At first the situation 
was met with an expediency. A partnership was formed between the 
man of talent and the man of money ; or the inventor arranged with 
some concern to make and vend the article and took a percentage of 
the profits. But eventually a clear-cut division of function was estab- 
lished. The inventor assigned his rights to a corporation ; his claims 
were liquidated in a contract; the assignee came into full possession 
and was entitled to all the return the novelty could be made to yield, i 

The second was that the field for individual talent was restricted. 
The free lance inventor could no longer roam at will wherever his 
curiosity led him. As an estate was blocked off by patents, there was 
no longer a ready access to its arts. The insiders alone had a real 
chance to play with its mechanisms, to experiment with its processes, 
to suggest its next steps. If the process hedged off was superior to 
any alternative open, the independent had an empty and indefeasible 
right to tinker. If from time to time the mystery, protected by law, 
could be refreshed with infusions of novelty, the domain might be 
closed against the stranger almost indefinitely. His only chance would 
be to take a new road, stumble upon a fundamental discovery, or 
project the technique from a new base. Even here opportunity is not 

" The Sherman Act was passed July 2, 1890. 


for all. A radical shift comes as often as not from a transfer of a 
process from one industry to another — all under proper corporate 
auspices. Even if the departure comes from without, the established 
concern offers to the inventor his best — often his sole — market. Then 
again the demesne is closed until some lucky accident or flash of genius 
strikes a brand new trail. 

As in 1790 the first patent act was passed, all industry was. virgin 
territory. By 1840 a number of corporate estates had been staked out 
within the public domain. The old-fashioned inventor had no pass- 
port to enter the domains of iron and steel, agricultural implements, 
machine tools, and telegraphy. The established concern wanted no 
help from outside in the development of its technology. In the half 
century stretch to 1890 the great discoveries came in fields not yet 
subject to proscriptive right. Individual initiative found expres- 
sion through Edison in electricity, Westinghouse in air-brakes, East- 
man in photography, Ford in the motorcar, the Wright brothers in 
' aeronautics. As in turn these were closed off, the riian of talent had to 
accept the affluence of wage slavery, or from his garret seek to pene- 
trate uncharted country. 

The "third was that the nature of invention was transformed. As 
the machine process was developed, it became an intricate affair broken 
down into many specialties. The concern of the individual was not 
with the whole technology, but v/ith an aspect of it. This narrowed 
for the inventor the fielcl of knowledge and the chance at experimen- 
tation. His creative gifts moved from a spatial lo an interstitial orbit 
and his inventions tended to become rehnements upon an accepted 
discipline. Advances were likely to appear within confined areas and 
to be of an esoteric character. Only in rare instances did they exhibit 
the indispensibility which marks the pioneer, discovery. The step 
forward was tmder strict control ; it must not depart too far lest it 
fail easily to be assimilated into the going art. It must not visit 
obsolescence upon expensive equipment or carry a threat to the finan- 
cial structure. 

Such changes came about slowly enough ; an array of facts marked 
their direction before their trend could be clearly seen. It remained 
for an act of Congress to brin^ drift into focus, to mike the patentee 
consciously aware of the possibilities in his grant, and to provoke into 
growth a novel scheme of usages. A spirit of unrest gathered momen- 
tum, during the eighties. Little fellows were crushed, trades were 
barricaded against those who desired to enter, prices were made to 
carry all the traffic would bear, the doors of opportunity seemed to 
be closing, the public took legislative notice of the situation. In re- 
sponse the Fifty-first Congress went in for trust-busting; passed the 
Sherman bill; and outlawed every contract, combination and con- 
spiracy in^ restraint of- tcade. The law of the land was invoked to 
break down barriers, to remove obstacles from the channels of ■C'm- 
merce, to make compecition the rule for industry. 

It was not the purpose of Congress to amend the patent law. Not 
even the hmt of such an intent appears in the debates. Yet, although 
tlieir text was m nowise amended, the usages which had grown up to 
give protection to the inventor were completely remade. In the in- 
junction that all men must compete and let the market do justice 
among them, the Government took the offensive. Gentlemen, to whom 
restraints were dear, looked around for an adequate defense against 


such an attack and discovered in the patent a weapon deftly suited to 
their purj^ose. The writ came from the Government ; it conveyed an 
exckisive right to all it covered. It was hoped that the privilege 
decreed for the invention might be converted into an immunity for the 
business ; that exemption from law could be pushed along marketing 
channels so far as the contagion could be made to carry. The patent 
was a counter to be played for all it could be made worth. The 
passage of the Shemian Act created a situation whose implications 
business proceeded to make explicit in trade practice. Placing the 
point invited the counterpoint. 


An ancient usage cleared the way for the new strategy ; the inventor 
assigned his rights to a corporation. In the act there is nothing novel; 
a contract betAveen parties passes title along; the law recognizes the 
change in ownership-— and that is all. In the economy the transaction 
extends far beyond its legal form ; it falls little short of a transfer of 
the invention from one culture to another. It lifts the patent out of 
the province in which it is suppgsed to operate, separates it from the 
objectives it is supposed to serve, strips away the world of idea and 
custom which impinges upon it. It sets the grant down in a universe 
of business, makes it a counter in the acquisitiA'e game, subjects it to 
the discipline of money-making. A radical change in its character 
attends the journey of the instrument to a new habitat. 

Nor could the integritj^ of the invention withstand the change of 
climate. It remained a device capable of being put to industrial work; 
it became a technique to be enlisted in the pursuit of gain. Whether 
it was used, held in reserve, or laid away in moth balls was no longer 
to be dependent upon its intrinsic merits ; instead its employment was 
to wait upon the exigencies of corporate policy. As with the invention, 
so too, with the progress of the art. A j)atent was a counter of conse- 
quence; but its limited term made periodic renewal necessary. As 
patents lived out their span of years, others must be had to replace 
them. Improvements were necessary; and to make secure its realm, 
the corporation created a research agency. 

The conduct of research became a response to corporate policy. One 
held, for the duration of his patents, as a tenant of the Government 
itself. If a few basic patents could be kept alive, the estate was in 
perpetuity. -Yet an excess of zeal in the pursuit of invention was to be 
avoided. More novelty might be turned up than the going concern 
could easily assimilate; a jeopardy to an interest alread}^ vested was 
to be avoided. Next steps become imperative; and they must be of 
such a kind as to maintain an advantage over the competitor who 
had access only to technology upon which patents had expired. But 
a strong presumption was set down against the radical innovation. 
In every instance judgment turned, not upon the up-to-date or back- 
ward state of the art, but upon such considerations as estimated 
expense, threat to investment, the protection of old and the conquest 
of new markets. In a word the corporate office of invention was 
severely defined. 

As the corporation became master to his profession, the inventor 
passed into its service. As he accepts a pecuniary alle,T;iance, a vestige 
of his own status is reserved to him; the device or process which he 


contrives is initially his property; he applies for a patent and it is 
issued in his name. But there the cloak of a nominal independence is 
put off; he is an employee, he works for a salary, his contract obligates 
him to sign away his rights. He is no longer free to roam at will where 
the urge of curiosity leads; his talents are pent within the corporate 
field ; his tasks fall within the ambit of its operations. He may look 
ahead, explore, and propose ; but it is for the executives to decide how 
his capacities are to be employed, the lines along which his researches 
arc to extend. His quest after knowledge is strictly subject to business 
direction. He is devoid of authority over the making, vending, and 
using of his machines. In instances he may receive a bonus graduated 
to the sales of the things he has contrived. But in the usual case the 
connection between the reward to the inventor and the returns from 
the invention is completely broken. Like a lawyer or an engineer he 
receives as much as, and no more than, the market value of his services. 
The research technician, who has succeeded the solo inventor, has 
become a hired specialist creating monopolistic credits wliich after 
corporate endorsement are put into circulation. 

But if the inventor has fallen into bondage, the rivalry between 
corporate estates continues. Like nations intent upon the game of 
power politics, they seek to maintain and to expand their dominions. 
Each has its arsenal of weapons with which to ward off, buy off, elim- 
inate, or sterilize with a dictated truce all who may challenge or im- 
pede. In the fray not one, but a number of patents, may be hurled 
at the enemy. The conflict is strenuous, the field for maneuver wide. 
The protagonist must vary his attack, seize his openings, capitalize all 
breaks. Victory is to the strong and the resourceful. Firms of in- 
ferior financial strength hesitate before going into such a struggle. 
The patents they hold may be of high value, but frequently they pre- 
fer such validation as a process of bargaining may give to the hazards 
of a resort to court. A grant of intrinsic value is a card with which 
to buy entrance into a patent pool. Another, a mere nuisance which 
it would cost a struggle to abate, often serves quite as well. The ac- 
cords between large corporations and lesser firms often reflect relative 
strength of the parties. And the validity accorded or denied to pat- 
ents, in whose name the arrangements emerge, are little more than the 
rhetoric of justification. 

As invention is harnessed to acquisitive ends, the defense must be 
secure, the attack ever ready. Its armament must be adequate to any 
campaign and equal to any emergency. The first requisite is to fence 
in its industrial preserves. But technology is a voluminous and in- 
tricate affair; its processes cross, overlap, intermingle. As scientists 
serve many interests, private claims come into frequent dispute; 
norms, knowledge, understanding are not beyond peradventure. The 
business firm, however conservative its research attitude, is much 
concerned over the number of its patents, and seeks for every aspect 
of its productive process the coverage of a legal umbrella. 

It may be that only a few of the inventions are actually employed ; 
the solid phalanx is terrifying to competitors and to upstarts who 
would trespass upon its market. In the manufacture of an ordinary 
Mazda light, the General Electric Co. uses less than a score of patents, 
yet the number of its grants exceeds 300. The imperium of the 
United Shoe Machinery Co. is barricaded by some 6,000 patents. 


Dupoiit, Hartford-Empire, RCA-Victor have piled patent on patent 
to se(nire against invasion the whole ranjre of their activities. 

In business, as in war, a vigorous offense is the best defense. A 
portfolio of patents provides sanctions which, if the staying power is 
not lacking, will last out a long campaign. Not the least among the 
weapons which it has called into being is the infringement suit. It 
has become accepted practice for a concern to harass its competitors 
with threats ; and, if threats do not deter, to take to law.^^ In 1894, 
for instance, the Eastman Kodak Co. brought an action against the 
Boston Camera Co.; its initial move vras to secure a preliminary 
injunction against the m.anufacture and sale of its rival's products. 
In the struggle, the temporary staj' Avas the trump card, and the ulti- 
mate outcome almost an irrelevance. Although the injunction was 
eventually lifted and the aggressor adjudged to have been the real 
infringer, the mischief had been done, and Boston Camera was per- 
suaded to transfer its ownership to Eastman Kodak.^^ A repetition, 
with variations, of this ruthless strategy" had its effect ; within 4 years 
it had won for Eastman a virtual monopoly of the field of photog- 
raphy it had staked out for itself.^'' 

A similar instance is presented by the United Shoe Machinery Co. 
The basic inventions go back before the Civil War; they have been 
refreshed from time to time as needed. In an involved series of trans- 
actions almost all the patents which have to do with making the 
machines by which shoes were made — dominant and ancillary, seques- 
tial and competitive, along the horizontal and along the verticalline — 
were gathered under a single ownership. United, continuing a prac- 
tice of long standing, chose to lease rather than to 'sell outright 
its machines. Since as patentee it could dictate the terms upon which 
its technology could be used, it became overlord to the shoe industry. 
At the time the Government launched its suits against the corpora- 
tion. United had pending against competitors m.ore than 100 actions 
for infringement. Out of the total it was able to win only 25 suits ; 
yet many who could not be downed in court succumbed to the financial 
drain of protracted litigation. The Plant Co. was heavily entrenched 
behind its own patents; its series of gi-ants comprehended the entire 
process of manufacture. But the infringement suit is no simple 

^ In general, threats of suit will not give rise to an action for damages or an injunction 
unless the plaintiff can show actual bad faith. The practice of threatened suit against 
users of products manufactured by a competitor has been condemned, however, by the 
Federal Trade Commission and by the courts. Cases against the Racine Paper Goods Com- 
pany, 164 Fed. 85 (1905), affirmed 177 Fed. G.31 (1909) ; the National Harrow Company 
{Adrian, Piatt and Company v. National Harrow Com.pany), 121 Fed. S27 (1903) : and the 
National Cash RegUster Co. (U. 8. v. Patterson), 205 Fed. 292 (1913), disclose the popu- 
larity of the practice in the first two decades of this century. See also United Electric 
Company v. Creamery Package Co., 203 Fed. 53 (1913) ; Clip Box Manufacturing Com- 
pany V. Steel Protected Concrete Company, 209 Fed 874 (1918). A certain tactic serves 
its turn, and when it is definitely outlawed another is contrived to take its place. As late 
as 1921 the Federal Trade Commission was issuing cease and desist orders against this 
type of practice. Annual Report, F. T. C. 1921, p. 449, complaints Nos. 126 and 224 ; 
ibid. 1919, p. 60, complaint No. 29 ; ibid. 1918, p. 75, complaint No. 10. 

^= See U. 8. V. Eastman Kodak Co., 226 Fed. 62 (1915), pp. 68. 69. 

18 The Kodak Co. was adroit at using superior economic power to facilitate a patent 
control which was then employed to continue its coercive activities. (1) By means of 
contracts Kodak persuaded its licensees to admit the validity of its patents and thus 
estopped them from further challenge in the courts. This is a common practice followed 
by such reputable concerns as Columbia Phonograph. United Shoe Machinery, Weed Tire 
Chain, General Electric, and American Optical. (2) In instances a Kodak license was 
conditioned upon the payment of rovalties on cameras which did not embody any of the 
Eastman processes, U. 8. v. Eastman Kodak Co., vol. 7, p. 3481, Defendant's Exhibit 35. 
In consequence (a) the prices of competing cameras were based upon double royalty pay- 
ments ; (b) Eastman retained an eriuity, graduated to the payment it induced, in its com- 
petitor's patent; and (c) the licensee was induced t! use the Eastman patents rather than 
subject himself to pay double tribute. 


bludgeon. In its employment the technique of the boycott has been 
caught up, and all who patronize the recalcitrant firm mark them- 
selves as "contributor}' infringers." For a time the independent held 
its own. But action's against the company itself — and against its 
customers — had their cumulative effect and in the end the rival busi- 
ness was brought under the hegemony of United.^" Its competitors 
were no longer able to challenge a strategic position, barricaded by 
resources for the long fight and the will not to stop short of ultimate 
victory. As one by one rivals have come to its terms, its bottleneck 
has become a national institution.^^ 

The infringement suit moves within a wide orbit; it can, within 
many situations and in many distinct ways, promote the cause of 
monopoly. If the demand is to crush an enemy or to take over his 
business, it is a handj' Aveapon. If, instead, the desire is "to live 
and let live," it becomes a handy club with which to dictate terms. 
In not every instance is it feasible — or even desirable — to eliminate 
ev£ry hostile unit. The concentration of control has an ugly sound; 
and public relations dictate at least an appearance of competition. 
Wisdom concurs; for a field devoid of the shadow of rivah*y pre- 
sents an invitation to trespass. It is enough to limit the other fellows 
to "a fair share of the market." Legal action — or its threat — can 
be used to bring other devices of accord into play. After all bank- 
ruptcy for, annexation of, playing ball wath the enemy are alterna- 
tive methods for abating a relationship which carries a financial 
threat. It may be better to absorb than to kill off; it may be even 
better to reduce to dependence than to absorb. Dominion is their 
common goa'l; the choice among them, a question of expediency. 

As the overlord extends his power, a number of practices may be 
employed to maintain the imperium. The situation is made to order 
for the corporate person who seeks to fortify monopoly with letters 
patent. By their sanction he incorporates his authority into arrange- 
ments which constitute a government for the trade. The license with 
terms, the exclusive franchise, the control of resale price, the use of 
block-price schedules, the imposition of conditions in respect to un- 
patented materials, the quota arrangement are practices to be main- 
tained along the channels of marketing. Of such usages, to be em- 
ployed singly or in elaborate designs, there can be no scarcity. If one 
plain fails, or encounters a veto in court, another can quickly be con- 
cocted to take its place. A failure in resourcefulness alone can put a 
stop to so obliging a strategy. 

And the sanctions by which competitors are overcome can be 
used against the public itself. An ancient adage unites with modern 
medicine to make immunity the perfect answer to attack. The Gov- 
ernment issues its patents conferring exclusive rights ; and their recip- 
ients, when hailed into court charged with monopoly, produce their 
letters as warrant for their activities. The protection accorded the 
invention is cunningly stretched to cover art, process, materials, 
business unit, marketing channels, associates by contract. It goes 

" The incident, still subject to acrimonious dispute, has become a classic episode in the 
concentration of wealth. It had far-reaching implications ; for instance, it played a sig- 
nificant role in the hearings on the confirmation of an appointment to the United States 
Supr(>me Court. See Senate Hearings on Louis D. Brardeis, 64 'i Cong.. 1st sess. 

^' The author has been afforded access to an unpublished manuscript by McClellan Butt 
on "The Pattern of the Shoe Industry" in which the trade practices of United are set forth 
in detail. 


out, as a kind of magic, to sanctify all it may touch to the third or 
fourth remove. It engenders a resistance which puts every transac- 
tion, whose essence or incidence concerns a patent, wdthout the law. 
Its trend is to cut up all technology, or as much of it as enjoys 
legal protection, into holdings which lie outside the province of 

Ingenuity, always ready to enlist in the pursuit of gain, awaits only 
its occasion. If before 1890, the usages of restraint seem strangers 
to the patent-system, it is because no attack on its preserves had 
revealed their presence. ^^ The passage of the Shennan Act sounded 
the alarm and corporations were quick to apprehend the rising legal 
danger. Almost at once they began to fortify the practices at which 
antitrust might thrust with sanctions derived from letters patent. In 
this humane endeavor almost every rule, device, concept known to the 
law — lease, contract, agency, outright purchase, corporate reorganiza- 
tion, integration — was harnessed to the writ of the Government to 
create exemption from its attack. From the law reports can be ex- 
tracted an array of "plans" — varied, ingenious, colorful, dramatic 
enough to stage a spectacular parade. At the height of the movement 
a Federal judge could make the patentee lord of all he surveyed^ 
find him free to do as he pleased with an absolute of property which 
was his own, discover that the law did not impose upon him a stand- 
ard of fairness and exempted him fi"om the obligation to do justice. 

The result of all this was to drive a barrier between current reality 
and legal presumption. In theory the grant assumes the individual 
inventor, a contribution to a cleveloping art, the invocation of law 
to assure to its author the just reward of his personal creation. It 
takes no account of the rise of the corporation, the character of the 
act of assignment, the shift in the system of usages under which it 
is called upon to operate, the alien tasks imposed by its new busi- 
ness master. But legal fiction can become raw material to a living 
institution. Sheer unreality — if only it has currency — is an asset 
crying to be turned to account. As the assignee, the corporation 
claimed "the exclusive right" of "the sole and true inventor." It 
substituted the pursuit of gain for "the progress of the useful arts" 
which the grant was intended to serve. Thus it set about appropriat- 
ing a judicial blessing upon the struggling man of genius to the 
security of an industrial empire. 

As currency the letters circulated in another domain and at other 
than their original value. But if courts were inclined to indulge the 
myth that the patent held the place in the national economy it occu- 
pied as late as 1840, it was not for those whose concern was money- 
making to set them right. If the Congress neglected to bring its 
instrument into accord with prevailing conditions, it was not for those 
who could turn its omissions into hard cash, to write modernity into 
its lines. As current fact was promoted into legal fiction, the cor- 
poration did no more than take acquisitive notice of the backward 
state of the legal art. 

1" Resale price maintenance was at the time already coming into vogue ; it is referred to 
in the debates upon the Sherman bill. On the floor of the Senate the question was raised 
as towhether it was outlawed by the proposed measure. 



Almost exactly a century separates the Patent Act of the First Con- 
gress from the antitrust mandate of the Fifty-first. A span of just 
about 100 years lies between the first attempts of the courts to grapple 
with the problem and the current demand of the Department of Justice 
that the Government's letter be restricted to "its lawful orbit" and the 
supremacy of the general law be restored in the province of invention. 
These half-century marks— 1790, 1840, 1890, 1940— have little casual 
significance, yet their regular beat makes them convenient dates on 
which to hang an analysis of the rights accorded "the true and sole 

A private stake in a public domain in its very nature involves a clash. 
It is to the Government a consideration made over to induce the prog- 
ress of the industrial arts. It is to the patentee a right in the invention 
from which during its life other parties are to be excluded. ■ The Gov- 
ernment seeks to make finite what it gives up; the patentee seeks to 
enlarge his privileges as far as he can. To him the letter becomes an 
instrument of security, .a weapon of industrial attack, a shield against 
action by the state. From the very first in England and in the United 
States, the grant has been used to insulate its holder against the risks 
and rigors of competition. As handicraft and individual enterprise 
have fallen back before the machine process and the corporate estate, 
the grant of patent has made its response. Its significance inheres in 
the usages converging upon it ; and, as business has intruded vrith its 
folk-ways, its identity and its place in the national economy have been 
changed. Accordingly the very issue of private claim against public 
equity — which over and over again the courts have been called upon to 
entertain — can be reduced to no set terms. Again and again the ques- 
tion has been restated even as they were attempting to answer it. 

In any domain of the law the first sheaf of decisions is of utmost 
importance. Emerging from cases of first impression they give direc- 
tion to the lines of doctrine. Yet it often happens that commitments 
are made when^the implications of positions cannot be fully explored 
and even -before the issues are all in. Invention has been a changing 
fact in a dynamic society and even the wis'dom of judges has not al- 
ways been able to reach across the decades fully to comprehend the legal 
instrument they were decreeing for its protection. They could antici- 
pate, but not with concretions, the position which technology was to 
have in the economy. They lacked instances out of which to create 
pictures of net-works of restrictive trade practices woven about patent 
grants. It was upon the legal level that they encountered industrial 
arts in transit; the distinctive learning which they brought to their 
deliberations was in. the law, rather than in industrial analysis or 



science. In the law they were, according to their several bents and 
experiences, very differently versed. There was the line in the Consti 
tution and the provisions of the statute which gave it effect. But this 
was vague and lacked signposts to usher a command through specific 
situations. Guidance must come from the general law; and like the 
Bible the general law is an august corpus whose treasures are so 
ample as rarely to disappoint the man who seeks its authority. 

As destiny would have it, the patent in its initial bow presented to 
the United States Supreme Court an issue in private law. The first 
cases raised questions of procedure and conflicts over personal 
equities. Their primary concern was such enigmas as the validity of a 
defective grant and the type of action available to a part assignee. 
Only on their fringes, in a concern wdth "novelty" and '"conception," 
did ideas basic to the patent system appear. Of the 10 patent actions 
heard before 1840^ several contained rudiments of doctrine subse- 
quently to have weighty influence on the direction taken by the patent 
law.^ Only 2, however, discuss specifically the relationship of the 
inventor to the public generally; only one gave the jurists an oppor- 
tunity to expand the patentee's obligations to society.'- No issue con- 
cerned with trade practice can be discerned in any one of the 10 cases. 

The exception bears the intriguing title of Pennock v. Dialogue. 
Its question of law was whether the invention had been put to public 
use prior to the application for patent; and, if such were the case, 
whether such use was to be construed as an abandonment of his "ex- 
clusive right" by the inventor. An argument given a proper start 
can as often as not be depended upon to look out for itself. In need 
of a norm, Mr, Justice Story, who spoke for the Court, went directly 
to the Constitution. To him it was obvious that the dominant con- 
cern of the patent system was the promotion of science and the useful 
arts. The reward was of secondary importance ; and, if the end were 

iThe cases are Tyler v. Tuel, 6 Cranch 324 (1810) ; Evans v. Jordan, 9 Cranch 199 
(1815). The case holds that a patentee possessing a renewal patent may abrogate any 
rights possessed by an unlicensed user of the patented machine even though the latter 
has commenced use prior to the grant of second patent. The case, while never cited for 
the proposition, presages a later separation of use as a right independent of possession or 
ownership. Evans v. Eaton, 3 Wheat. 454 (1818) ; Evans v. Eaton, 7 Wheat. 355 (1822). 
Here the Court struck down a patent containing claims broader than the scope of novelty. 
As an incidental point the Court asserts as one of the purposes of the specification in a 
patent grant, the conveyance of information to innocent users who might otherwise be 
infringers. Evans v. Hettich, 7 Wheat. 453; The case is a companion case of the Eaton 
litigation. Ex parte Wood, Wheat. 603 (1824) ; Keplinger v. De Young, 10 Wheat 358 
(1825). The case, the first on contributory infringement in the Supreme Court, found it 
permissible to contract for the manufacture of watch chains on a patented machine, even 
though rtie purchaser of the chains knew that such manufacture constituted infringement. 
Had this doctrine been applied in the General Talking Pictures case, infra, p. 80, the de- 
cision would almost certainly have gone the other way. Pennock v. Dialogue, 2 Peters 1 
(1829). This ease, filscussed in the text, holds further that a novel invention, once given 
to the public, cannot he recalled in the form of a patent. Grant v. Raymond, 6 Peters 218 
(1832). This case held it permissible to reissue a patent and estop from further use the 
builder of a machine which, while outside the claims of the original grant, was covered 
in the reissued letter. Shaw v. Cooper, 7 Peters 292 (1833). This case regarded a reissued 
patent a continuation of the original grant, but held that such reissue could not take from 
the public that of which they were fairly in possession — a doctrine suggested in the 
Pennock case. 

'^Pennock v. Dialogue, 2 Peters 1 (1829). In Grant v. Raymond, 6 Peters 218, 241 
(1832) the Court, through Chief Justice Marshall, declared that in construing patents and 
patent laws inventors .should be libeially treated. See also to the same effect Winans v. 
Denmead, 15 How. 330, 341 (1853). The dissent of Mr. Justice Campbell, with whom 
concurred Mr. Chief Justice Taney, and Messrs. Justices Catron and Daniel is illuminating 
(p. 347) : "To escape tlie incessant and intense competition which exists in every depart- 
ment of industry, it is not strange that persons should seek the cover of the Patent Act, 
for any happy effort of contrivance or construction ; nor that patents should be very fre- 
quently employed to obstruct invention, and to deter from legitimate operations of skill 
and ingenuity. » • » Fullness, clearness, exactness, preciseness, and particularity, in 
the description of the invention, its principle, and of the matter claimed to be invented 
will alone fulfill the demands of Congress or the wants of the country. * * ♦ In my 
judgment, the principles of legal interpretation, ag well as the public interest, require that 
the language of this (the Patent) statute shall have its full significance and import." 


attained without the use of the instrument, there was nothing to worry 
about. It followed — almost if not quite "of course" — that public use 
before its issue was fatal to the exclusive character of the grant. A 
quarter century later, through Mr. Justice Daniel, this holding was 
underlined. The "remuneration of genius and useful ingenuity is a 
duty incumbent upon the public." Yet "the rights and welfare of the 
community must be fairly dealt with and effectively guarded." There- 
fore "consideration of individual emolument can never be permitted to 
operate to the injury of these." ' The two judgments imposed upon 
the patentee the obligation to act in the general interest. 

On each occasion the office of the patent in the commonwealth was 
proclaimed from the bench. In each opinion it was stated that re- 
sponsibilities were mutual; that the duty of the patentee was com- 
mensurate with the privilege granted by the public; that without reci- 
procity the obligations of contract were binding upon neither party. 
It was specifically declared that "actions by the patentee detrimental 
to the rights and welfare of the community could not support a con- 
tinuation of the monopoly grant." The theory of judgment was that 
the patent derived its value from the contribution which the inven- 
tion made to the general welfare. In a word, privilege was the instru- 
ment of policy. 

A shift to a more legalistic level was no conscious choice of the 
court. It could talk about patents only as cases came along; it could 
discuss them only in respect to issues which they presented. If domi- 
nant questions did not come along to keep major values to the front, 
the bench conscientiously ground such a grist of small grain as fouiid 
its way to their mill. So decisions on lesser matters usurped the place 
of .primacy, blurred perspective with their immediate importance, and 
left in the reports sentences later to be endowed with an increment of 
fresh meaning. On such a plane many strands' of the law may con- 
verge upon the issue ; precedents are as diverse as the subjects to which 
they relate. In his choice of approach, category, doctrine, the judge's 
result is locked away. The very wealth wherefrom to choose invited 
jurists to take acceptable paths. 

The first of such cases, Wilson, v. Rousseau* reached its judgment by 
-reference to an act of Congress. A grant of patent had in due course 
been renewed. Under the original instrument the patentee had as- 
signed the right of use without imposing restrictions. No such license 
had been issued after the renewal; the patentee insisted that rights 
bartered away expired with the grant which gave them validity, and 
sued for infringement. A line of flawless dialectic had it that a deriv- 
atiA^e privilege could not survive the original right from which it 
stemrned. Yet the court, elevating a Federal statute above such an 
exercise in logic, decided the other way. A provision of the patent 
law of 1836 accorded to all outstanding assignees and grantees the 
right of use under the renewal. The decision did not tax the ingenu- 
ity of the Court ; Mr. Justice Nelson had only to cite the statute and 
record the decision.^ 

^Kendall v. Winsor, 21 How. 322, at p. 329 (1858). 

*4 Howard 646 (1846). Mr. Justice McLean, Mr. Justice Wayne, Mr. Justice Woodbury 

''24th Cong., sess. I, ch. 357 (1836), "an act to promote the progress of useful arts, and 
to repeal all acts and parts of acts heretofore made for that purpose." Approved July 4, 
1836. Nelson added public policy arguments to his statutory interpretation (pp. 683-684), 
but these lacked the clarity of Taney's presentation. 


But where Congress had decreed, the Court could supply reasons. 
Six years later, in Bloomer v. McQueiaan^ Mr. Chief Justice Taney 
fitted out the legislative act with a proper rationale. The man pur- 
chasing a machine for use acquires all rights essential to its operation. 
In its entirety the mechanism becomes his personal property. To him 
its value depends upon the employment to which it is put ; in no wise 
is it dependent upon whether others are excluded from its use. Unless 
he can acquire the article outright, he has no incentive to purchase. 
He has no interest in possessing a mechanism which at a certain date 
is physically able to carry on yet legally goes dead on him. A ma- 
chine, with function intact and legality impaired, is a phenomenon 
too incorporeal for the ordinary man to contemplate. In consequence 
an assignment is a complete liquidation of the patentee's interest in 
the manufactured product. The purchaser is free from all limitations 
to which the patentee may later become subject. 

No dichotomy of common sense against legal compulsion disturbs 
the general lines of the argument.'^ The next two cases to come along 
do. little more than give added authority to the ruling.^ But in a 
third case,^ the Court rather deliberately restricts the province 
within which the patent enjoys legal protection. A patentee had 
restricted the licenses which he issued to geographical districts. A 
buyer had .taken a patented article across the boundary line and 
had put' it to work in forbidden territory. In the Millinger case, 
Mr. Justice Clifford, exalting a ruling into a generalization, had 
scribbled, "By a valid siile and purchase the patented machine be- 
comes the individual property of the purchaser; and" note the 
consequence— "is no longer especially protected by the laws of the 
United States, but by the laws of the State in which he is situated." ^° 
Mr. Justice Miller, speaking for the Court and enlarging upon this 
dictum, broke down the legality of territorial arrangements, at least 
in respect to use. 

It was an easy jump from Taney's rhetoric to Miller's ruling. Yet 
a year earlier a breach had been decreed in its rationale and a con- 
fliciting holding set down. In Mitchell v. Hawley ^^ the patentee 
had licensed the manufacture, use, and sale of his felting machine. 
In the contract it was specified that the privilege assigned was not 
to extend beyond the original grant, and that any conveyance of a 
manufactured machine was to l^ upon the same terms. A purchaser 
from the licensee had continued to use the purchased machines after 
the original letter had ex:pired and a renewal had come into effect. 
He was hailed into court as an infringer to discover that the doctrine 
of Bloomer v. McQuewan^ upon which he relied, was not pertinent 
to his conduct. Mr. Justice Clifford, with an appreciation of the 
orthodox relation of the whole to its parts, argued that the buyer 

•14 Howard 539 (1852). 

''Bloomer v. McQuewan, op.,cit. at p. 549-550, "♦ • * the laws of the United States 
• • ♦ of the State/' The reader must not be confused by Taney's employment of'the 
rhetoric of federalism. The .histice uses the idiom of constitutional law, yet the economic 
meaning is perfectly clear. The invention,- as embodied in the particular machine, was no 
longer sublect to legal protection. If it should be rfesold, the right to its full employment 
would doubtless pass with title. Th^ States, of course, were doing nothing to give eflfect 
to the statute on patents beyond its proper Federal orbit. 

« Chaffee, v. The Boston Belting Co., 22 Howard 217 (1859) ; Bloomer v. Millinger, 
1 Wallace 340 (1863). 

* Adams v. Burke, 17 Wallace 4p3 (1873). Bradley, Swayne, and Strong, justices, 

^"Bloomer v. Millinger, 1 Wallace 340, 351 (1863). See Bloomer v. McQuewan, op. clt. 

"16 Wallace 544 (1872). 


couki possess no more ample equity than the seller could give him. 
Since the vendor's rights were circumscribed by contract, like limi- 
tations were imposed upon the purchaser. Moreover, if there was 
doubt, the law imposed upon the vendee the burden to. prove that the 
person from whom his rights derived was able to convey a good 
title and unrestricted use. Since that challenge had not been met, 
the Court was powerless to help the unfortunate user.^- In the in- 
stance the Court failed to come to grips Avith the issue in patent rights 
which the case presented. Instead,. Clifford argues as if it were a 
private suit, to be resolved by. reference to the severities of the law 
of sales. In the opinion he ignores the McQuewan " holding, dis- 
penses with citations, omits the practical approach of Taney, avoids 
the broader perspective of contract doctrine. He seems unaware that 
his line of argument is out of step with the march of holdings; and, 
even when it came into the open a year later, he did not seem to 
recognize the logical schism.^^ That another branch of the law might 
apply, and the restriction be accounted void as against public policy, 
he does not recognize.^^ 

These are the primary decisions; a couple of follow-up cases pro- 
vide a fringe of comment. In Wilson v. Simpson,^^ a simple set of 
facts was before the Court. Knives in a planing machine — they 
wear out with amazing rapidity — were replaced by the purchaser 
without leave of the person from whom he had bought. In words 
enlisted in the service of abstraction, the issue was whether renewal 
of parts, or recomposition of materials, to form an equivalent of 
a patented mechanism, constituted an infringement of the grantee's 
exclusive right. The dialectic of decision was made to pivot upon 
an antithesis between "replacement" — or "restoration" — and "recon- 
struction." Restoration was no more than obsolescence plus renewal. 
As a process for keeping the machine alive and in operation it was 
an attribute of use. Reconstruction, on the contrary, was taking 
the wreck of that which had once been a going machine and creating 
it anew. The court, through Mr. Justice Nelson, held that where 
the substitution of new parts was made necessary by "natural proc- 
esses of wear or injury," the act of the user was "restoration" and 
not "reconstruction." It was therefore not subject to the domina- 
tion of the patentee. 

" It is of note that the certificate given the purchaser by the licensee contained the 
terms of limitation under which the licensee operated. This the court held to be notice to 
the purchaser of the restrictions under which the title to the four machines was conveyed 
to him. 

" Clifford mentions the McQuewan case in the general .summary of the law with which 
he inti-oduce.s his opinion. It plays no part in the syllogism which settles the issues. 

" The attitude of various .iustices indicates the failure of the Court to grasp the larger 
issues which from the vantage point of our day. are clearly visible. In spite of all he 
.says here, Clifford concurred in the opinion of Miller in Adams v. Burke, op. cit. p. 5-i, 
a, year later. Strangely, too, in that case — neither in Miller's opinion nor in Bradley's 
dissent — is any mention made .of Mitchell v. Hawley. op. cit. p. o4. 

"The issue, with the elaboration of trade practices on the theme of the patent grant, 
was later to assume major proportions. It is perhaps too much to ask, even f a .insticf. 
to look ahead to the problems with which we are currently faced. But it is of interest in 
passing to note that the culmination of the Clifford doctrine appears in the opinions of the 
Supreme Court, via Butler and Brandeis. JJ., in Oeneral Talking Picttiren Co. v. 
Western Electric Co., 304 U. S. 175, 305 U. S. 124 (1938). In the of Sanitary Manu- 
facturing Co., 226 U. S. 20 (1»12), Motion Pictures Patents, 243 U. S. 502 (1917) the 
Court has apparently swung far away from the position taken here. But the sales 
doctrine, supported by the logic of the whole and the part, has its intermittent 
immortality, and it might as well have been Clifford J., instead of Butler. J. and Brandeis. 
J., who spoke for the Court in the General Talking Pictures case. E'er a discussion of these 
later eases, see pp. 65^70, 84-85 below. 

w Wilson v. Simpson, 9 How. 109 (1850). 


A similar problem arose three decades later in the Cotton-Tie 
case}'' Metal ties licensed under a patent for use "once only," were 
purchased as scrap, recombined with metal strips, and made to 
duplicate the invention. The 'Court, through Mr. Justice Blatch- 
ford, held that such an act of renewal was "not repair of the bond 
or the tie in any proper sense"; that it did not present a replace- 
ment of temporary parts destroyed in use; hence that it was not 
governed by the holding in Wilson v. Simpson. The line between 
might be nebulous; it might by the forces which shape legal doc- 
trine be pushed one way or the other yet the formula with its 
antithetical categories had been called into being. 

Three of these judgments became classic. They were the kind 
of foci from which radiate lines of doctrine and courses of action. 
In Nelson's opinion in the Eousseau case. Mr. Justice Wayne found 
authority for the proposition that the thing patented is the thing 
iovented.^* The result was to leave any innovation not named in 
the grant at large, and presently to dispel the modesty of the ap- 
plicant in the statement of his claims. He ceased to resist the tempta- 
tion to encroach upon the common art in staking out the privileged 
demesne In Adams v. Burke^ Miller set it down that the rights to 
make, to vend, to use, are quite distinct things, which in severalty 
can he disposed of as seemed to the patentee good. His simple 
statement invited the elaboration of the license which reposes in the 
grant into an intricate structure of personal and corporate equities. In 
the McQuewain case., Taney had asserted that "the franchise which 
the patent grants consists altogether in the right to exclude every- 
one from making, using, or vending the thing patented, without 
permission of the patentee." In summary he added, "This is all he 
obtains by the patent." The word "franchise" is significant ; ^^ it 
makes the writ a kind of a license to put the invention into use: 
and supplies canonical authority to the judge who holds that the 
exclusive right — plenary as it may be within its domain — is pent 
within narrow boundaries. Two of these leads unite in the develop- 
ment of an intricate institution about the patent grant; the third 
is an injunction to the courts to trim from legal privileges all arti- 
ficial growth. 

No compulsion from within accounts for these rulings. The series 
of early decisions exhibits the jurist's craft in its variety. A num- 
ber of techniques are separately employed to approximate a similar 
result. In Pennock v. Dialogue., Mr. justice Story makes a line in 
the Constitution his reference; in Wilson v. Rousseau., Mr. Justice 
Nelson invokes the words of an act of Congress. In Bloomer v. Mc- 
Qvswan, Mr. Chief Justice Taney explores the nature of the property 
interest which passes with title; in Adams v. Burke .^ Mr. Justice 
Miller puts contract to the front and holds that once "a patentee or a. 
person having his rights sells a machine or instrument whose whole 
value is in its use, he receives the consideration for its use and parts 

"Cotton Tie Co. v. Simmons, 106 U.-S. 89 (1882). 

^ Nelson took his statement from Mr. Justice Baldwin's opinion in McClurg v. Kingsland, 
1 Howard 202 (1843). 

"Here is the germinal line for "the franchise" idea of the patent. It is easy enough, 
If lines a little askew may be straightened and an occasional exception indulged, to super- 
impose such a pattern upon patent holdin§:s. The point is that it is superimposed : it 
would accord with reality if generally the justices wno spoke for the Court conceived of 
a patent in franchise terms. The discussion above has indicated several rival concepts, 
and the growing complexity of patent usage has not decreased their number. 



■with all his rights to restrict its use.^*' In contraot, in Mitchell v. 
Haidey, Mr. Justice Clifford does not choose to employ any of these 
approaches and falls back upon a syllogistic logic ■which at the time 
■^-as quite at home in the domain of sales. It is to him a license 
rather than a machine -which is passed on. and his concern is to 
keep the certificate in strict accord with the po^wer to issue. 

Yet differences in legal rhetoric cannot conceal an underlying 
rationale common to all the cases save one. It . aF largely in con- 
nection Avith use that the Court first encountered the patent grant. 
If the dominant -word in quest of definition had been '■•make" or 
"vend." the result could have been little different. The three infini- 
tives—to make, to vend, to use — are prongs of the same legal right. 
In use the accord falls upon the aspect furthest removed from the . 
inventor's art: it concerns a limitation upon privilege that carries 
least hazard to the advance of science. But. the piece from the Clif- 
ford ■workbench aside, the Court in all the cases and over a period of 
yeai^. exhibits a disposition to construe the patent grant narro-wly.^' 
Although each communicates his reasons in his o-wn legal idiom, 
the values ■which in case after case run to judgment are much the 
same. Only in the Chaffee and the Millinger decisions does the stnicr 
ture of the opinion remain frigid. In all the others the spokesman 
for the bench broadens his premises to make easy the course of his* 
argument. In tlieir march legal reasons obey the dictates of policy. 

For the half-century, 1840 to 1890, the patent la^w was shaped by 
these early holdings. As with the first of their kind, they were 
recited over and over again as of unusual authority. As new cases 
came along, they supplied the norms of reference. As novel issues 
■were pi-esented. from between their lines principles were drawn forth 
tt) guide deliberation to its result. Again and again sentences from 
the texts were cited with appropriate gloss as later oceasions came to 


The law of patents was off to its start. In the usages of assign- 
ment and license: in such germs of doctrine as use, public interest, 
replacement; in a group of such concepts as sale, contract, property, 
franchise ; in the pioneer fjpinions of the Court were all the elements 
needed for the erection of an edifice of equities and a lordly dialectic. 
A national economy, impelled by a dynamic urge toward a destiny 
unknown, was creating industries, marketing structures, trade prac- 
tices. The rule of catch as catch can touched off conflict and sup- 
plied the courts with cases. The executives of business wei-e adept 
at making the most of judicial holdings. If jurists did not foresee, 
in the fullness of its detail, the institution which was to gro'^;' up 
about the patent grant, its architects shaped their edifice to the very 
words of the law. 

From days of old the law has accorded a man the right to do as he 
will with his own. But the same law has limited "'.i s own" to the things 
it lias permitted him to do. An early case had decided that a patent 
belonged to itsvowner for the purpose of bein^. i sed: and if, like the 

^ Adfimf! V. Biirle, op. cit., supra, p. 456. 

=Wt is of interest that the broad grounds taken by Stoiy. Nelson, Taney, and Miller, 
JJ.. tend to a narrow coiistiuction of the instrument, while tl • severe lines of Clifford, J., 
serve to b-iad.Mi its privili;;es. 


ten talents in a napkin, it was laid away, its owner's title was subject 
to a rapid legal obsolescence. But pi"ofits often come by way of moth- 
balls ; and in £he face of the words of the court,-^ once again a person 
attempted to suppress his invention and to keep his legal rights in it 
alive. And again a court held that a patent which its owner refuses 
to make available runs counter to the clause in the Constitution which 
grants its exclusive right as consideration for the promotion of the 
useful arts. It insisted that "patents so held are entitled to scant recog- 
nition at. law, though necessarily to some, but to none whatever in 
equity." ^^ Yet technology was becoming formidable; pressure was 
persistent; despi e !:s cogency, this view could not hold its own 
against a tide sweepmg in the other way. 

It was, however, not until more than a century after the first patent 
act that the right of suppression came into the patent law. A button 
fastener, a case not of first impression, and an inferior Federal court 
conspired to turn the tide. In a famous suit, a learned bench of three — 
Lurton, Taft, and Hammond, JJ. — gave legal sanction to a practice, 
most useful to corporate enterprise.^* The opinion qf Lurton, con- 
curred in by his brethren, is a finger exercise in logic, which makes ex- 
plicit a result skillfully tucked away in the premises. The reach of 
the patentee's privilege is not explored ; its content not examined. It 
is enough that his title is ''exclusive." The invention is his property — 
but there is no consideration of the nature of property, of the equities 
into which it is organized, of the appearance in motley which it makes 
before the law.^^ The holding of Hoe v. Knapp was brushed aside as 
dictum, unsupported by the natural and inherent powers ^iccorded the 
recipient of the grant; the word "exclusive" is read as absolute; the 
riglit is a functionless sort of affair ; no reference is made to the norms 
provided by the Constitution. Instead, the power' of the patentee is 
"so clearly within the constitutional provisions in respect to private 
property that he is neither bound to use the discovery himself nor 
permit others to use it." In short, the i"eal issues were not argued; 
the things argued were not issues. 

The judgment was not outstanding at the time; it was what came 
after which made it a turning point for the law.^^ Its opportune 
timing and the distinction of the bench presently brought it pres- 
tige.^^ And, since it was in step with the course of business events, 
corporations seeking to secure their estates, found it useful. If,, 
however, it was to circulate at face value, it needed the imprimatur 

82 //oe V. ifnapp, 27 Fed. 204, 212 (1886). 

^Evart Manufacturiuff Co. v. Baldwin Cycle Chain Co., 9 Fed. 262, at p. 265 (1898). 

^ Heaion^Peninmlar Button Fastener Company v. Eureka Specialty Company, 77 Fed. 
288 (1896). 

2* It is of note that Taney, C. J., and Lurton, then judge, alike approach the patent 
as a property aiid arrive at almost antithotieal results. In Bloomer v. McQuewan, Taney 
encounters the machine in the hands of its purchaser; in the Button Fastener case, 
Lurton's focus is the perquisite of the grantee. Taney's concern lb with a property in 
chattels, such as the State law seeks to define ; Lurton's in a right wltlch seems to lie 
beyond the province of government. 

28 Whatever forces were to mold it, at the time the law was plastic as clsy. What 
seemed axiomatic to one Federal .ludge was anathema to another ; each argued' from his 
own assumptions and diflerences in postulates were not submitted to the furnace of judicial 
consideration. To give to the right to suppress the sanctity of the order of nature, and 
thus to elevate it above the command to use, is the declaration of an article of faith. At 
the time the due process doctrine was coming into the ascendency and Lurton's opinion is 
pitched in the key of invoking its sanction to halt an inroad upon property. 

" Taft moved on into a distinguished executive career culminating in the I'josidcncy. 
In that office Jie appointed his old colleague Lurton to the Supreme Court, who in Henry v. 
A. B. Dick Co., 224 U. S. 1 (1913), recited from that high bench his theory of the patent 
as plenary property. Later Taft himself became Chief Justice and more than an echo of 
the logic of the Button Fastener case is t* be discovered in his opinion in U. H. v. General 
Electric Co., 272 U. S. 476 (1926). See pp. S0-X2. below. 



of the body who could say the ultimate word. Although there was 
a dozen years to wait, an almost identical issue was brought before 
the Supi-eme Court in "the second paper bag" casei.^^ . The bench, by 
the hand of Mr. Justice McKenna and in a slightly different key, 
gave its consent in writing to the act of suppression. It was evident 
that the patentee could preserve the exclusive character of his grant 
only through power to prevent its invasion. It followed that the 
owner of an unused patent was entitled to an injunction against 
the invader. The court, however, could not be quite forthright about 
it, and in a mood of peradventure accorded a bow to the common 
good. As its spokesman put it, "whether, however, a case cannot 
arise regarding the situation of the parties in view of the public 
interest, a court of equity might be justified in- withholding relief 
by injunction, we do not now decide." But McKenna did not detail 
the circumstances which might require a different decision and imag- 
ination does not readily supply them. 

An obvious qualification occurs. In the legal vocabulary conspiracy 
is a naughty word ; at sight of it verbal distinctions are touched off. 
The owner of a patent — whether inventor, assignee, or vicar by 
license — may suppress his creation; but he must not conspire with 
others to do so. The liberty of contract has by the courts been 
accorded the widest of orbits. But in the Yale and Towne Co. 
case^^ it is set down as an incident to, rather than an essential of, the 
exclusive right of which the Constitution speaks. As a thing apart — 
a bargain between two or more parties to keep a novelty out of 
use — it is neither consistent nor inconsistent with the rule of property 
by which non-use is justified. In so nebulous a state the obligation of 
contract cannot cling to the Government's grant for support. It was 
thus, stripped of sanctions, left exposed to attack under the Sherman 
Act as a restraint of trade.^ 

In these and kindred cases the Court has stopped short of grips 
with reality. By it the right to suppress an invention has been up- 
held,^^ favorably commented upon,^- and acknowledged by omis- 
sion. ^^ Here is enough of judicial authority to be dubbed a doctrine 
and to call an industrial usage into play. A mere 9 patents are 
employed in the construction of the ordinary electric lamp ; less than 
40 are called into play iiv producing the most complicated lighting 
apparatus. Yet General Electric gromids its licenses upon a reci- 
tation of more than 300 separate grants. Many inventions are ac- 
corded tlie imprimatur of the Patent Office, j^et few are put to work. 
, Tlie basic processes are no longer subject to legal protection; and 
these, with improvements of Avhich no use is made, are quite enough 
to fit out with an adequate technology firms which might enter the 
industry. But free enterprise halts before the dominant patent posi- 
tion lield by General Electric; the threat of infringement suits deters 
the inde])endent from the venture. 

A position alike strategic and anomalous is held by the United 
Shoe Machinery Co. The element of sheer creation has long ago 

^Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U. S. 405 (1908). 

29 Yale and TowneLock Co. v. Blount Mfp. Co., 166 Fed. 55 (1909). 

3«The holding toiaches off a number of issues. If by contract a single party acquires a 
number of patents in order to suppress, is the purchase illegal? The act of suppression?' 
What part does intent play? If demanded, how is it to be proved? 

•'" The Paper Ban Patents case. suDva. 

^Benicnt v. Harrow, 186 U. S. 70 (1902), p. 90, accepting the statement of the Button 
Fastrrnrr case as law. 

" U. .9. V. General Electric, 272 U. S. 476 (1926). 


faded from its technical processes. The art of the super-cobbler, 
however, still maintains its pristihe freshness in more than 6.000 
patents. The concern is no kindly General Electric \^'hich throws 
crumbs from its huge loaf to the little fellow. Its system of police, 
with suits against competitors and against all their customers, is 
eternally vigilant. It allows no break in the wall it has erected about 
the market for shoe machinery. Just now United is pushing an 
action for contributory infringement against the Wilson Co. of Ohio, 
a domestic shoe manufacturer. It alleges that a heeling machine 
employed by the independent infringes the McFeely Patent No. 2 
which it owns. The- mechanism in question is manufactured by the 
Moenus Co. of Frankfurt, Germany, one of its few competitoi-s in 
the world, and is based upon the principles of McFeely Patent No. 1 
now expired. So slight, however, have been the changes in No. 2, 
that the original design has virtually been repatented.^* The slight 
modifications have been deemed grave enough to warrant an action 
by United. 

Instances such as these can be endlessly and engagingly recited. 
They display not only a host of techniques not allowed to come into 
use, but likewise industrial arts fenced off against trespass. As a 
stimulus to the advance of technology, the competition between firms 
is short-circuited. Invention is made to wait upon such incentives 
as come into play in the maintenance of a corporate estate. When 
in 1910 United Shoe acquired the Plant patents, it exacted an agree- 
ment sterilizing Plant's capacity for invention and forcing him to 
abandon the field of shoe machinery. Its current position rests upon 
similar agreements with other inventors whose contrivances it has 
taken over. A modest indulgence in improvement has an adequate 
complement in the rigorous use of the infringement suit; it can stay 
at the head of the procession without having to respond to the urge 
toward creation. The maintenance of the status quo prompts it to 
strike down inventive talent which rears its head elsewhere. As 
United used its patents to vest its interest, it imposed a taboo upon the 
incentive to invent.^^ 

As the corporation acquires its closed domain, the individual in- 
ventor is frozen out.^^ The law conceives of an industrial art as an 
accumulation of techniques. Each step is based upon the last, each step 
invites the next step. The monopoly of the domain, within which in- 
vention is supposed to be made, not only delays novelties and arrests 
the rate of advance, but it may, in part, or even as a whole, create a 
situation hostile to new ideas and throw a barrier across the develop- 
ment of a technology." The use of frequency modulation, in spite of 

3* Compare this situation with that disclosed in Bassick v. Hollingshead, 298 U. S. 415 

3* For the .series of steps through which an instrument has asserted its independence of 
policy, note Mitchell v. Hawley, supra; the Button Fastner case, supra; Bement v. Harrotc, 
supra; U. 8. v. General Electric, supra; and most recently — though the case is a little oflf 
its time beat — General Talking Pictures v. Western Electric Co., 304 U. S. 175, 305 U. S. 
124 (1938). . 

3*" Only one major improvement has been made in shoe machinery in the past 20 years ; 
and the so-called Compo cementing machine emerges in another corporate domain. With 
a patented cement it makes possible an effective competition with the older sewing 
machines. Yet, without the protection of the Dupont interests the Compo machine could 
not remain on the market. 

3' Now and again courts have recognized, though usually In an aside, that an accumula- 
tion of grants may be a -barrier to the furtherance of trade, especially when a portion of 
the holdings may represent something less than a valid claim. In Pope Mfg. Company v. 
O-ormally, 144 U. S. 224 (1892), Mr. Justice Brown, by way of dictum, stated (p. 234) : 
"It is as important to the public that competition should not be repressed by worthless 
patents, as that the patentee of a really valuable invention should be protected in his 


its revolutionary contribution, has had the hardest sort of going. It 
has been at the mercy of large chains, whose radio broadcasting has 
been established upon an inferior technolog}'. Television has been 
so closely controlled by the radio interests that in recent years its 
progress has lagged far behind its experimental decade.^* 

All of this stands out sharply in retrospect. The bother is that 
it was not before the Court when its ruling was made. An act of 
suppression does not Avear an innate moral or legal quality. It may 
be legitimate, devoid of ethical character, a menace to the public 
interest. It all depends — and the content of that it is the duty of the 
judiciary to explore. There is a zone where non-use is fully justified. 
A number of inventions, with little to choose among them, lead to 
the same result. Not all can be put to work ; if a birth control thins 
their ranks, it is to keep the more virile alive. There is a domain 
where legal justification can be driven only with the greatest difficulty. 
The record and the film exhibit rather different techniques ; the mazda 
bulb and the fluorescent lamp proceed from distinct scientific bases. 
A rivalry between competing processes provides the environment most 
favorable to the progress of the art. Between lies a province where 
justification poses a conflict of .values. Grants held by rivals are a 
menace to a corporate venture ; it is cheaper to purchase and put on 
the shelf than to seek validation of the technology in use through 
a series of interminable law suits. In such a situation the principle 
of business conduct is perfectly clear; the holding which justifies it 
is of the most dubious legal value. 

In their approach to suppression the courts have exhibited a naivete 
quite uncharacteristic of their deliberations. The genius of the 
law lies in the detail which it brings to its designs. As case follows 
case, its way is slowly, almost painfully, to prick out the lines. The 
rule grows out of the instances and is refashioned by them. It is 
foliated into a series of statements adequate to the variety of situa- 
tions (o which it must be applied. An edifice of holdings attests 
the accommodation of contract to the spectrum of circumstance of 
which the bench readily takes notice. In an established subject like 
property, equities — each of which is pent within finite limits — form 
a veritable hierarchy. The whole body of doctrine places a caveat 
upon the abstract and the universal; its essence lies in its meaning 
in the instance. In industry and in public policy there is no such 
thing as suppression-in-general. For courts to deal with it as a single, 
indivisible entity is to rule on a level on which the problems do not 
lie. Where the call is for a discriminating attack — a process to which 
the law is habituated — it is met by the single rule that a man can do as 
he will with his own. xVnd "liis own" in such a rule has no analogy 
in the law of real property ; its like can be found only in the absolute 
which in its heydey dominated the due process clause. 

The pedigree of the rule will not bear too strict a scrutiny. It does 
not stem from the sanctions upon which the patent system is built. 
It makes no use of the norm of reference provided by the Constitu- 
tion; it overlooks the instrumental character of the Government's 
grant. No warrant for it is .set down in the patent statute, and there 
is no provision there from which it may be deduced without the aid 
of a very involved dialectic. It has no support in earlier judgments; 

s8 Frank C. Waldrop and Joseph Borkin, Television : A Struggle for Power, Wm. Morrow 
& Co.. New York (1938). 


on the contrary it rides in the face of the precedents. It moves on 
the level of the universal to which the law of real property hardly 
aspires. It is not engendered by the contact of principles with an 
emerging actuality. As announced by Lurton ^^ and justified by 
McKenna,*° its root seems to be a rather primitive norm of ownership 
v/hich somehow has escaped into a more sophisticated age. But its 
line of descent is broken, and it stands out in sharp contrast to its 
legal setting — a monument to the failure of the Court to entertain an 
issue upon the plane of function and reality. 

As a landmark of the law, one could wish for it deeper roots and a 
more legitimate origin. The law is never at its best when its rule is 
set down before the facts are in, before the issues are laid bare, before 
the what-difference-it-makes is explored. The rule has become a tool 
of business enterprise, a weapon with which to guard the frontiers of 
the corporate estate. It has helped to free invention from service to 
the developing industrial arts. It invites a situation in which paths 
of inquiry can be blocked and inventions-which-might-be choked 
off before they are made. It has become tlie premise of other legal 
doctrines by which the Government's grant is more firmly bound to the 
pursuit of gain. As a man becomes free to do as he would with his 
own, invention can promote the progress of the useful arts only as it 
served the cause of monopoly.*^ 

iMMCNrrr by contagion 

In the law a doctrine does not live alone ; like all things of earth, it 
begets other doctrines after its own kind. Use and nonuse seem to be 
poles apart; yet the liberty to withhold a thing from use has been 
invoked to justify the imposition of conditions upon its employment. 
It is set down, in the name of logic, tliat the whole comprehends the 
part, that the greater includes the lesser. It is copied out of the re- 
l)orts that the patentee possesses the liberty to withhold his invention. 
It is, accordingly, said to follow — as if the matter were sheer mathe- 
matics — that the owner may release device or process upon his OAvn 
terms. Again and again lawyers have urged ;•- again and again 
jurists have accepted this most plausible of all non sequitnvs." The 
corpus of patent decisions i,s replete with attempts to give validity 
to this dubious "therefore." As it becomes dominant or recessive, the 
privileges conferred by the Government-s grant ai-e enlarged or con- 
tracted. Right to suppress is commuted into a right to restrict. 

An invention never goes it alone. As it is put to work an assort- 
ment of materials and supplies, of processes and techniques get "har- 
nessed to it. The novelty is patented; the articles and accessories 
used with it may or may not be protected by the law against trespass. 
A concern which is intent upon securing the highest possible return 
from its patent, does not overlook the possibilities of profits in these 
correlative goods. If both are patented, he can establish a single closed 

^° Heaton Peninsula Button Fastener Co. v. Ewreka Specialty Co. supra. 

^ Paper Bag Patents case, supra. 

*i Note that in the cases in which the rule is laid down, the argument bess the question. 
The real issue is the definition of one's own ; but neither Lurton nor McKenna attempts 
(lofinition. Each by assumption endows it with a fullness of meaning adequate to the 
result. u 

'-This is the argument in Bemcnt v. Harrow, supra, pp. 294, 295. The march of the 
arguiiiont is not noatly categorized but broad premises are clear. 

'•' Tilt" Kiittotil'dstcncr rasr. supra: licmcnt v. Ilurrmr. .•^upra : United Stiitcs v. United 
Shoe Machinery Co., 247 U. S. :!2 (1917) ; VviteA States v. General Electric Co., supra. 


market about machirxe and materials. If the patentee can specify 
himself as the sole source for non-patented articles, he can establish 
an exclusive market in articles which enjoy no legal protection. He 
asserts his authority through the license to make or use his machine ; 
and to his compulsion his customer will not submit without a struggle. 
The patentee claimed to be monarch of all he surveyed, and his own 
survey extended to all that his grant could be made to touch. It was 
directed to unpatented goods and services employed in keeping his 
invention in operation ; to unpatented goods produced by the patented 
machine ; to unpatented goods created through a combination of pat- 
ented mechanisms.** In respect to first category there has emerged a 
considerable body of holdings; in respect to the other two, judicial 
inquiry has been scant and halting. 

The Albany Paper case was the first to test the patentee's control 
over unpatented goods.*^ The Albany concern held patents to a paper 
ejecting device. The machine was sold to purchasers of the Albany 
paper roll, which had been designed for use with the. patented ma- 
chine. No licenses were issued by the Albany company and no restric- 
tive covenants were imposed u])on the vendees in respect to the use 
of the ejecting mechanism. The Morgan company contrived a roll 
suitable for use with the device and became an alternate source of 
supply to owners of machines. The Albany company sued for con- 
tributory infringement.*^ In holding against the plaintiff, Mr. Justice 
Brown invoked a simple norm of contract. In parting with the use 
of his machine the patentee had value received; in consideration he 
gave up the right further to restrict its utilization. The only ques- 
tion left was whether the replacement of an unpatented roll in a pat- 
ented device constituted restoration or reconstruction. The roll, it 
was true, was an indispensable part of the machine in operation; the 
paper and the apparatus of ejection might, as a single mechanism, be 
subject to a combination patent. Yet, upon the facts, there was not 
here the kind of thing which the courts had called re-creation. Upon 
the basis of authoiity. the spokesman for the Court pronounced the 
Morgan company free of contributory infringement.*^ 

Although the spokesman for the Court holds his argument to its 
path, he cannot refrain from an aside. The contrary holding would 
accord the patentee the benefit of a patent upon an unpatented article. 
Such a result, he insists, was never contemplated by Congress; nor 
was it to be condoned through resort to the necromancy of dialectic. 
And some 3 years later, in the Folding Bed case,*^ the rationale of 
his decision was underlined.*^ Here it was held that there was no 

*' The -doctrine of replacement or reconstruction — pp. 55-56, supra — has beou a handy 
weapon for. the courts when confronted by these problems. If the use of unpatented 
materials in a process amounted substantially to a duplication of the patented combination, 
-SI pretty problem arose. The exclusive right to make, no more than the esclu.sive riiiht to 
use, Kives ground for controlling the use of unpatented materials. 

*^ Alhanu Paper Co. v. Morgan Envelope Co., 152 U. S. 425 (1893). 

**lt rested its argument heavily upon Cotton Tie Co. v. Simmons, supra, wJiich had held 
re-creatiou so as to duplicate a patented mechanism an invasion of the exclusive right to 

*' The activity fell clearly without the category of re-ci-eation ; henco the Cotton Tie caxe 
was not in point. Wii.son v. Simpson was the Court's chief reliance ; Bloomer v. McQuctvan 
and .AdaiiLs v. Burke were also cited. 

*» Kcelerr v. Slundnrd Fnldinfj Bed Co., 157 D. S. 059 (lSn5). Mr. .Justice Brown, 
progenitor of the Albany Paper Co. doctrine, was unable to follow this extension of his 
own position. With liim in dissent joined Chief Justice Fuller and Mr. .lustice Field. 
The aljsolule conveyance of the patented mechanism is the common donominalor of the 
.\lbany decision and the Keeler holdinu. 

^''The ju.lgment anticipated the line of decisions which hit hard at resale price main- 
tenance: Bauer v. O'Donnell, 229 TT. S. 1 (1912); Straiix v. Victor Tall.'DK/ Machine 
Co.. 243 IT. S. 490 (1917) : Boston Store v. American Gramnphonc Co.. 24G U. S. ■** (1917). 
See pp: 73-74 below. 


intent "to deprive a patentee of his just rights," because "no article 
can be unfettered from the claim of his monopoly without paying 
its tribute." But the Court was of opinion that "one who buys 
patented articles of manufacture from one authorized to sell them 
becomes possessed of an absolute property in such articles, unrestricted 
in time and place." And it concluded that the "inconvenience and 
annoyance to the public" which an opposite result would occasion 
"are too obvious to require illustration." ^° 

At this point the Button Fastener case,^:^ obtrudes brusquely to in- 
terrupt the even tenor of a doctrine on its way. In the situation pre- 
sented to the Court, the machine was patented, the materials employed 
in its operation subject to no legal protection, the purchaser bound 
by license to use exclusively the staples furnished by the vendor. A 
competing concern, which was pressing the sales of its own materials, 
was by Judge Lurton and his colleagues held guilty of contributory 
infringement. The opinion tacitly accepted the authority "of Mr. 
Justice Clifford,^^ and was carried along by the novel doctrine of "lib- 
erty of contract" which was just then elbowing its way into the due 
process clause.^^ The embarrassment of the Albany decision was re- 
moved by distinction ; the Keeler opinion, with its impulse to throw 
the instant ruling into reverse, was put to one side. The learned 
judge was not immune to the consideration of policy ; but the policy 
with which his mind was filled was the capacity of the business com- 
munity to regulate its own affairs. That a patent was an instrument 
of government to be held within its ambit did not obtrude deeply into 
a judicial commitment to laissez-faire. It was to him enough that 
"high considerations of public policy are involved in the recognition 
of a wide liberty in the making of contracts." " 

Once off to its start, the doctrine of liberty of contract for the pat- 
entee easily gained momentum. To a lay mind it might seem to clash 
with the doctrine drawn by Brown from the law of property, that 
seller transferred to buyer an unclouded title. But the conflict be- 
tween holdings drawn from kindred branches of the general law did 
not seriously disturb the resourceful jurist. In the Leeds and CatUn 
cme ^^ Mr. Justice McKenna showed how freedom in imposing terms 
upon the vendee was in strict accord with the Court's former utter- 
ances. By inventing a distinction between "active" and "passive" ele- 
ments in a patented combination, he tossed the Albany doctrine to one 
side. The record disks supplied by Leeds and Catlin were active ele- 
ments in the operation of the Victor phonograph ; the paper supplied 

^" Note a rhetoric employed by Mr. Justice Shiras in which absolute is set asalnst 
absolute. In such a clash the only way of resolution is to limit each to its proper province. 
In such an endeavor perplexing questions are bound to arise. For instance, "whethsr 
a patentee may protect himself and his assiKnees by special contracts brought home to 
the purchasers, is not a question before us, and upon which we express no opinion. It 
is obvious, however, that such a question would arise as a question of contract, and not 
an one under the inherent meaning and effect of the patent laws." Ibid., at p. 666. In 
other words, such a restriction must stand or fall by the law of contract ; the sanction 
of the patent cannot be invoked to help it toward validity. 

" Hcaton-Peninsula Button Fastener Co. v. Eureka Specialty Co., supra. 

"^Mitchell V. Hauler, supra. 

w Sec "The Tath of Due Process" in The Constitution Reconsidered, edited by Conyers 
Reed (10.(8^ 

^ Button-Fastner ease, supra, p. 294: "In considering any question in respect of re- 
straints upon the liberty of contracting, imposed by principles of public policy, we should 
bear in mind that very high considerations of public policy are involved in the recognition 
of a wi'le libt^rty in the making of contracts" (citing with ai)provnl the statement of Sir 
(Jeorgo Jessell in Reoisterinn Company v. Sampson, L. R. 19 Eq. 402. 46,')). 

"Especially is this (Jessell's) caution applicable when we sit in judgment upon the limi- 
tations which a patinifee may put upon the use of his invention." 

^ Leeds and Callin v. Victor Talking Machine Co.. 21.3 U. S. .325 (1909). 


by the Morgan Co. was a passive article. Activity, rather than a 
patent, was — at least for the instant case — the thing. The Court 
added that the unpatented state of the records did not bring the matter 
within the orbit of public policy or in any way affect the decision. 

In due course Judge Lurton became Mr. Justice Lurton. To the 
United States Supreme Court he brought his rationale upon the patent 
license; and almost at once he had an opportunity to recite it from the 
high bench.^^ The Dick Co., a manufacturer of patented duplicating 
machines, tempered its sales with qualifying conditions. By a notice 
attached to the instrument it stipulated that the purchaser took title 
subject to the restriction that it "may be used only with stencil, paper, 
ink, and other supplies manufactured by the A. B. Dick Co." Henry 
manufactured a special ink which he marketed through the regular 
channels of trade, and which could be and was used with the patented 
machine. In a logic which tolerated neither alternative nor perad- 
venture, the learned jurist declared that "if the right of use be confined 
by a special restriction, the use not, permitted is necessarily reserved 
to the patentee." It followed that "if that reserved control of the use 
of the machine be violated, the patent is thereby invalid." At this 
point a qualm obtruded and was dismissed with the line, "This right is 
deducible from the nature of the patent monopoly." But the monop- 
olj^ — note the selection of an absolute as the question-begging word — 
can stand a little support from authority. And to show that it "is 
recognized in the cases," Lurton regiments to his holding the whole 
array of previous judgments. In a word, intent, and notice are suffi- 
cient in themselves to define what a patentee gives up — and what lie 
retains — in the sale of his machine.^" 

Such a post was too. advanced to be held. That a patent was a 
monopoly; that its owner could release it and still hold whatever 
equities in it he chose ; that his control endured after his machine had 
gone out into the wide world and had been caught up into the usages 
of a going economy was on its face a little extreme. Its departure 
from reality could not long withstand a corroding demand for qualifi- 
cation. In the very year of Henry v. Dick, the Court was compelled 
to make a strategic retreat. In the Bafh-tuh ca-^e.^^ contracts 
grounded in patent rights were employed to dominate the trade prac- 
tices of enamel ware manufacturers. The issue had general signifi- 
cance; for the association in the building trades was intent upon 
affecting a brotherly accord among its members — yet keeping clear 
of the anti-trust laws. 

^Henryv. A. B. Dick and Co., 22iV. S. 1 (.1912). 

"-'' It is in order to recite in the margin tlie cases in the lower courts which follow 
the decisions in "Button Fastener"' and "Dicli" and hold that it is permissible for a patentee 
to control the matewals and supplies employed in the oi^eration of his machine : 

Commercial Acetylene Co. v. Autolux Go., 181 Fed. Rep. -387 ; U. S. Fire Escape 
Counterhalance Co. v. Joseph Halsted Co., 195 Fed. Rep; 29o; United States v. ^Yinslow, 
195 Fed. Rep. 578 ; Consolidated Rubber Tire Co. v. Republic Rubber Co., 195 Fed. Rep. 
768 ; rarsona Nonskid Company Limited, et al. v. McKinnon Chain Company, 196 Fed. Rep. 
218 ; Lovell-McComiell Mfg. Co. r. Waite Auto Supply Co., 198 Fed. Rep. 139 ; Winchester 
Repeating Arms Co. v. Buengar, et al., 199 Fed. Rep. 786 ; Cro^cn Cork c6 Seal Co. v. 
Brooklyn Bottle Stopper Co., 200 Fed. Rep. 592 ; American Graphophone Co. v. Pickard, 
201 Fed. Rep. 546 ; Walfham Watch Co. v. Keene, 202 Fed. Rep. 225 : Winchester Reoeatinf} 
Arms Co. v. Olmstead, 203 Fed. Rep. 493 ; Robert H. Ingersoll & Bro. v. M'Coll, 204 Fed. 
Rep. 147. See also : Cortelyou v. Lowe, 111 Fed. Rep. 1005 : Cortelyou v. Lowe, 114 Fed. 
Rep. 1021; Cortelyou. V. Carter's Ink Co., 118 Fed. Rep. 1022; Broderick Copyaraph Co. 
V. R6per, 124 Fed. Rep. 1019; Mavhew v. BroderiOk Copygraph Co., 137 Fed. Rep. 596; 
Broderick v. Mayhew, 131 Fed. Rep. 92; Cortelyou v. Johnson, 138 Fed. Rep. 110; and 
Cortelyou v. Johnson, 145' Fed. Rep. 933. 

^Standard Sanitary Mfg. Co. v. U. 8., 226 U. S. 20 (1912). The cross-licensing aspects 
of the. case, engaging as they are, are not in point here. 


The incident served to sharpen the eyes of the Court to the indus- 
trial scene. The spirit of cooperation brooded over the whole affair 
and judges were tempted to whisper "conspiracy." In speaking for 
the Court, Mr Justice McKenna made a polite bow to the holding in 
the Dick case^ then proceeded to eliminate the tenets upon which that 
decision rested. Freedom of contract is limited to what is "necessary 
to protect the use of the patent or the monopoly which the law con- 
ferred upon it." It is true that "rights conferred by patents are very 
definite and extensive." But no more than other rights did they give 
"an universal license against positive prohibitions." The agreements 
in question clearly "transcended" the need for protection ; they "passed 
to the purpose and accomplished a restraint of trade." They crossed 
the line of judicial tolerance, for "the Sherman law is a limitation of 
rights, rights which may be pushed to evil consequences." 

The shifting attitude is even more manifest in the Motion Pictwre 
Patents case decided 5 years later.'^ Although the supplies in legal 
questions were negatives — and hence active elements in the operation 
of the projecting machines — the doctrine of Leeds v. Catlin was ac- 
corded a silent repose. Instead the holdings which Lurton had re- 
jected or conjured away now became the head of the legal column. 
Not content with this, Mr. Justice Day, the spokesman for the Court,, 
did a little probing of his own toward fundamentals. "The exclusive 
right granted in every patent must be limited to the invention de- 
scribed in the claims." It is "not competent" for the owner to "extend 
the scope of the patent monopoly." The law accords him no power 
CO restrict "the use of it to materials" which, although "necessary to 
its operation" are "no part of the patented invention." Such practice 
finds "no warrant in the patent law." And, in words which have a 
familiar ring, he concludes "the cost, inconvenience, and annoyance ^° 
to the public which the opposite conclusion would occasion forbid it." 

But situations are never alike; issues are created by the strategy 
of advocates; the clash of values against the industrial back-drop 
presents no single and recurring picture. It was too early for the 
doctrine thus announced to come to rest. The relapse, came with the 
United Shoe Machine^^ caseS'^ The United produced a complete line 
of shoe machinery ; every operation in the whole technical process was 
covered by a patent. The machines were never sold outright but 
leased to manufacturers of shoes upon a royalty basis. In the con- 
tracts were restrictive clauses, the most important of which forbade 
lessees to use the machines "in the manufacture or' preparation of 
footwear which has not had certain essential operations performed 
upon it by the other machines leased from the lessor." Mr. Justice 
McKenna, who wrote the opinion of the Court, gave full cuiTency 
to the distinction between sale and lease, discovered scant resemblance 
between the arrangements in /Standard Saiiitai^y and those in question 
here, and allowed United to do as they would with machines still in 
their legal possession. The "tying contracts" were to him bargains 
quite of a kind with those which men ordinarily make in putting 
property to use. 

A critical study shows the holding to rest upon insecure foundations. 
The suit was instituted hy the Attorney General against the written 

'^ Motion Picture Patent Co. v. Universal Film Co., 243 U. S. 502 (1917). 
*° Compare Albany Paper Co. v. Morgan Envelope Co., supra ; Keeler v. Standard Folding 
Bed Co.. supra. 

« United Shoe Machinery Co. v. V. B., supra. 


objection of the President.^^ In the preparation of the case the Gov- 
ernment was hampered from within. A conflict over strategy attends 
the course of the litigation; the action is replete with moves which 
properly are no part of the process of litigation. Upon the appeal the 
Solicitor General, ignorant of the industry and confused on issues, 
conceded where he should most valiantly have contended. Pressed 
from the bench and unacquainted with the record, he admitted that 
the patents gathered under the auspices of the corporation were com- 
plementary and not competitive.^^ As luck would have it, the issues 
had to be argued before a bench of seven and the decision turned upon 
a single vote. The judgment had the support of less than a majority 
of the full bench.^* In respect to the issues of law, the evidence in- 
dicates that the two who did not sit would have voted with the dissert- 
ers to form a majority of the Court. Views came to be set down as 
official when five out of nine were unwilling to go along. 

Thus intrudes the adventitious to deflect the law from its course."' 
A sheaf of questions which the decision might have put to rest still 
await settlement.^^ If, within the confines of the case, the law is to be 
found, it doubtless appears in the dissenting opinion of Mr. Justice 
Day. "There is embraced in the patent grant the right or privilege 
to make licenses and agreements covering the use of the machines 
patented so long as such agreements are not in themselves unlawful." 
But "the right or the privilege" — note the implication in the shift of 
terms — ^^ "to make restrictions is controlled by the general principles 
of law." Hence the patentee "may not make contracts in themselves 
illegal"; he is "certainly" not "authorized to make contracts in viola- 
tion of other statutes of the United States." In a word, the authority 

'^ At the time William Howard Taft was President ; George W. Wickersham, Attorney 

93 An unpublished manuscript by Irene Till, "The Strange History of the United Shoe 
Machinery Cases" subjects the course of litigation to critical review. 

"Neither Mr. Justice McReynolds nor Mr. Justice Brandeis sat. McReynolds had 
been Attorney General during the pendency of the suit. Brandeis had once been attorney 
for United and had thrown up his retainer because of the unethical practices of the 

<»The patent policy of United was a prompttr of sec. 3 of the Clayton Act. This 
visits the law's condemnation, upon attempts to control patented or unpatented goods, 
wares, machines, or devices used in connection with a patented mechanism wliich has 
been leased or sold. The case discussed here arose unde)' the Sherman Act, but in a later 
case brought under the Clayton Act the tying agreements sustained here wefe struck 
d6wn. United Shoe Machinery Co. v. United States, 258 U. S. 451 (1922). 

A series of cases arising under this section, have in various ways limited the remote 
control of the patentee over his product. Note International Business Machines Corp. v. 
United States, 298 U. S. 131 (1936) ; Standard Fashion Co. v. Magrane Houston Co., 
258 U. S. 346 (1922) ; Oxford Varnish Corp. v. Alt and Wihorg Corp. 83 F. (2d) 764 
(1936) ; Stanley Co. v. American Tel. and Tel. Co., 4 F. Supp. 80 (1933). For holdings 
more or less out of accord with the general prohibition on "tying agreements" see hedr- 
sall Butter Co. v. Federal Trade Commission, 292 Fed. 720 (1923) ; Pick Mfg. Co. v. 
General Motors Corp., SO F. (2d) 641 (1935); Sinclair Refining Co. v. Federal Trade 
Commission, 276 Fed. 686, affirmed 261 U. S. 463 (1923) ; Vulcan Manufacturing Co. v. 
Maytag Washer Co 73 F. (2d) 136 (1934). 

9* Sec. 3 of the Clayton Act is used as a corroborative support of the judgment in the 
Motion Picture Pater\ts case. But, so far as search reveals, their words have never 
been applied to restrictive licensing arrangements. Under the general law of property 
a lease is usually a larger interest than a license and g. fortiori the lessor would seem 
to be subsumed in the congressional mandate. The failure to apply the doctrine seems 
to be due to the character of the interest rather than to any distinction between lease 
and license. Sec. 3 refers to tangible objects, whereas licensing Is directed primarily 
to relationships, obligatioBs, and like intangibles. In both the Motion Pictures Patents 
case and Lord v. Radio Corporation of America, 24 F. (2d) 565 (1928), the words "lease" 
and "license" are used interchangeably. 

«' The term "right" in the Constitution is not that of the constitutional lawyer of a 
century and a quarter later. There were lawyers in plenty but almost no legalists, among 
the fathers. The word is used in a broad sense as befits the document. It antedates the 
sharp, separation between right and privilege ; and since it comes by grant from the 
state, more nearly approximates the latter than the former. At the time it was coming 
to be used for liberty in the ancient sense, as, for example, a man's libery to perform an act, 
exact a fine, claim a due. Another word was necessary, since liberty was then on its way 
toward the abstraction we now know. 


conferred by letters patent is under the general law and comes up 
sharp at the frontier of the Sherman Act.®^ 

The immediate future belonged to the dissent rather than to the 
opinion which was set down as that of the Court. As the years 
passed a sharper perspective came. The Constitution had imposed 
upon Mr. Justice Holmes no mental statics, and gradually the per- 
quisites of property gave way to considerations of policy in his atti- 
tude. Although in Motion Picture Patents he had dissented and in 
United Shoe Machinery had been with the nominal majority, he spoke 
for his Court and to an opposite result in Heyer v . Duplicator. '^'^ 
Heyer was the manufacturer of gelatin bands suitable for employ- 
ment in the machines of the Duplicator Co. His legal adversary, 
shrewd to fortify his legal position, had taken out a combination 
patent on bands and machines. The grant was reflected in a license 
agreement which bound the products together in use. Holmes es- 
capes the Leeds and Catlin judgment; there a right to insert new and 
separate elements in a patented mechanism was in question ; here the 
issue concerns no more than the right to replace worn-out parts. 
This matter accomplished, it is easy to fall back upon the venerable 
case of Wilson v. Simpson for authority. And with an agile pen 
to attend him upon the way, the rest of the going he finds easy. As 
his strokes come into place the distinction between Albany Paper and 
Leeds and Catlin is obliterated and tacitly he accepts the decision in 
Motion Picture Patents against which he had rebelled. '^^ 

It is, however, far easier for the Supreme Court to lay down the 
law than it is for the lower courts to follow it. Cases, like charac- 
ters in a play, possess their personal identities; each in background, 
situation, arrangement, issue presents something distinctly its own. 
Every resort to laAv involves specific motions before the Court. Cur- 
rents of opinion from above always encounter obstacles and as often 
as not the rate of their descent is unhurried. In spite of Motion 
Picture Patents reinforced by Duplicator^ a number of Federal 
judges continued to uphold restrictive agreements grounded upon 
patents. The adroit legalism, by which deference was shown to the 
words of opinions from above yet their spirit was flaunted, present 
a superb exhibit in logomachy. * A statement of law, concerned with 
an intricate matter of technology, does not invite judicial opinion de- 
void of the possibility of misunderstanding. Parties who were will- 
ing to hazard litigation could always find lawyers who would construe 
former holdings to accord with their desires. '^^ Even where an ad- 
verse result was to be found, many patentees continued to impose the 
tying clause in the hope that their superior bargaining position would 
dissuade rivalsf rom risking the expense of an appeal to the courts. 

<» "That rights granted under a patent do not authorize the making of contracts in 
restraint of trade, or monopolizing, or tending to monopolize trade and commerce in 
violation of the Sherman Act was held by this Court in Standard Sanitary Manufactur- 
ing Co. V. United States, 226 U. S. 20." Mr. Justice Day, dissenting, ibid., at p. 74. 
There is little doubt that the two justices who did not sit would have concurred in the 
statements quoted here in text and footnote. 

«> Heyer v. Duplicator Mfg. Co., 263 U. S. 100 (1923). 

'"Holmes wrote a dissent in Motion Picture Patents, in which he made out a rather 
better case for the holdings in A. B. Dick and Co. v. Henry and Heaton Peninsula Button 
Fasner Oo. v. Eureka Specialty Co. than their author had done. 

'"■ For examples of the art by which holdings can be made to serve an alien cause, see Electric and Manufacttiring Co. v. Diamond State Fiire Co., 268 Fed. 121 
(1920)', and the lower court decisions in the Carbice, infra, and the Leitch, infra, cases. 


In respect to the unpatented products of a patented process," there 
are liardly enough holdings to support a line of law in the text. In 
recent cases the Court has set down broj^d grounds of policy which 
would seem severely to limit the manufacturer's right. In the Mo- 
tion Picture Pate/nts case, it was stated that the "patentee is restricted 
in the use of the invention as it is described in the claims of his 
patent.'' ^^ Such use would not contemplate apparently the control 
of an unpatented product which results from the application of the 
patented invention, but only that control which is directed to the 
mechanism itself. And in the recent Philad case, a circuit court ob- 
jected sharply to a method of doing business by which a patent was 
used as if it covered unpatented articles.^* To the contrary the right 
of the patentee to control the incidences which ordinarily attend the 
sale of a manufactured ware, at least if it emerges from a combina- 
tion of patented elements, still has the support of the General Elec- 
tric case?^-' Against this clash of rationales may be set down three 
recent judgments. The owner of a brick-transporting machine may 
not impose quotas and resale prices upon the bricks which emerge from 
his process of manufacture; the decision treats the patented device 
as though it were a patented process.^'' A manufacturer may estab- 
lish resale prices upon unpatented baskets which are the product of 
a patented basket-making machine.^^ It is conceded, for the purpose 
of the suit, that "restrictive covenants may include a commodity 
which, though not covered by a patent, is a product of a patented 
process." ^^ What currently is the law can hardly be spelled out from 
such vagrant holdings as these. At the moment the unpatented ware 
is in quest of its freedom. 

In the last decade the decisions of the Supreme Court have left 
little doubt about the general trend of the law. The, holdings in 
Standard Sanitary and Motion Pictures P<atents^diV^ in the ascendency 
and the propositions they contain circulate at something like face 
value. A trio of recent judgments have made firm their foundations, 
filled in their omissions and fortified their authority,'" It now appears 
to be settled that the patentee may no longer dictate in respect to 
accessories to be employed in the operation of his machine. His power 
over the unpatented product of his patented process is in sei'ious lega 

" As early as 1846, however, it was decided that an assignment of an exclusive right 
to make and -use, and to vend to others within a given territory only, "did not apply to 
the vending" out of the said territory (of), the planks, boards, and other materials, the 
product of the (patented) machines." Simpson ct al. v. Wilson, 4 How. 70f). Mr. Justice 
Nelson delivered the opinion. Nelson stated further that "the Court have no dorfbt 
♦ * * that the restriction in the assignment is to be construed as applying solely to 
the using of the machine. There is no restriction, as to place, of the sale of the 

" Motion Picture Patents case, op. cit., supra, 515. 

■'* Philad. Co. v. Lechler Laboratories, Inc., 107 F. (2d) 747 (C. C. A. 2d, 1930). p. 748. 
Reliance WfJs placed upon the authority of the Leitch and the Carbice cases cited below. 
The quotation is : "In both the Carbice case and the Leitch case the emphasis was on 
the fact that the articles handled by the alleged contributory infringer were not covered 
by the patent, and on the further fact that the patentee by his method of doing business 
was using his patent as if it did cover such articles." 

■^ U. 8. V. General Electric Co., 272 U. S. 476 (1926). 

''« American Equipment Vo. v. Tuthill Building Materials Co., 69 F. (2d) 406 (C. C. A. 
7th, 1S34), citing the Motion Picture Patents case as authority. . 

'''' Straifjht Side Basket Corporation v. Webster Basket Co., 82 F. (2d) 245J (C. C. A. 2d, 
1936), citing Bement v. Harrow and the General Electric case. 

■8 V. 8. V. Standard Oil Co. of Indiana, 33 F. ((2d) 617, 630 (D. C. N. D. 111. 1929). 

'* The cases are Carbice Corporation v. American Patent Corporation, 253 U. S. 2T 
(1931) ; Leitch Manufacturing Co. v. Barber Co., 302 U. S. 458 (1938) ; Ethtjl Gasoline 
Corp. V. United States, 309 XJ. S. 436 (1940). The trend In the lower courts runs the 
same way ; see e. g., American Lecithin, Co. v. War field Co., 23 F. Supp. 326 (D. C. 
N. D. 111. 1938) : J. C. Ferguson, Inc.. v. American. Lecithin Co., 94 F. (2d) 72 (C. C. A. 
1st, 1938) ; Philad. Co. v. Lechler Laboratories, Inc., supra. 


jeopardy. The tying clause has ceased to be %'alid ; the lines by which 
remote control is exercised seem to invite the scrutiny of the courts. 

Whatever happens, no violence will be done to legal maxims. The 
greater right comprehends the lesser — that is if it is included within 
it. But if the rights are different in kind or the lesser gets tangled up 
with an alien thing, a respectacle adage must withdraw to the side- 
lines. Whatever the course of judicial events, a man will continue to 
do as he will with his own. But, in respect to the exclusive right of 
the invention^ his own — as against tlie other fer?^''s and the public's — 
is, still in need of its boundary lines. Every n^L i to his right; and, 
lest they collide as the whole exceeds the sum of the parts, the law must 
decree proper orbits. 



As a law abiding person, the corporation accords respect to a letter 
bearing the seal of the Government. Its habit has been to take a 
patent for a little more, rather than somewhat less, than the signor 
intended. If on occasion it has been skeptical of a document issued 
to another, it has more than atoned in the extravagant regard ex- 
hibited toward its own instrument. It has not allowed its privilege to 
atrophy; instead it has sought zealously to make the most of the 
exclusive right entrusted to it. It has, over the years, elaborated a 
simple permission into a mighty code of perquisites and immunities, 
clever in their conception, subtle in their justification, effective in their 
operation. As elements of an elaborate design, they are easy to com- 
prehend; as an organic whole, they present a corpus of authority as 
formidable as it is bewildering. 

If the patentee is to translate his exclusive right into dominion of 
an industrial province, he must be up and doing. So far as he can 
liring it about, his authority must replace the open market in the con- 
duct of his business. If he can esta,blish ''consumer acoe})tance" for 
his product, a control over its price promises financial solvency and 
industrial security. So he decrees schedules which are to attend his 
product at every point at which it changes handstand presents to the 
courts the question of the patent as a legal sanction for resale price 
maintenance. If its owner can draw a cordon around the protected 
process, does his authority move with the product along the marketing 
channel to its ultimate destination ? The ruling, stemming- from Nel- 
son and Taney ,^ which limits the grant to the privilege strictly con- 
veyed, caff be invoked to deny such an authority. The right of -sup- 
pression — and the inevitable lesser comprehended within the gi'eater — 
can be used to uphold it. Its logic, even after its own eclipse, may 
continue to serve, if its doctrinal progeny are off to a hardy start. 
Fact, too, bends principles to its Avill; and unexpected situations com- 
promise approaches, dilute rules with their contraries, and dictate 
intermediate positions. In the raw the issue holds enough of pull and 
haul to cause any doctrine to pass through a complete and disorderly 
cycle before coming to rest. 

Although not* first in its line,- the Button Fastener rase presented 
the starting-point for doctrine. Upon it as groundwork Avas rested a 

^ Wilson V. Rousseau, supra ; Bloomer v. McQuewan, supra. 
_, .See Fowle v. Parke, 1.31 U. S. 8.8 (1889). which hnd paid, thronch Mr. Chief Justice 
Fuller, that -'relating as these contracts did to a compound involving a secret in its 
preparation; based as they were upon a valuable consideration, and limited to the space 
Tvitnm which, though unlimited as to the time for which, the restraint was to operate, we 



right "inherent in the patent grant" to establish for the ultimate pur- 
chaser — no matter how many transactions away — a fixed price. In a 
departure from Bloomer v. McQucwan, Judge Lurton separated the 
use of the machine from the machine itself. So long as the patent was 
valid, the title to the machine passed by sale, but an equity to deter- 
mine how it was to be used remained with the owner. The purchaser 
of the machine, "subject to restricted use takes the structure with a 
license to use the invention only with staples of the patentee." That 
the machine is sold "through jobbers, and not directly to those who 
buy, is immaterial;" for the "jobber buys and sells subject to the re- 
striction" and vendor and vendee alike "have notice of ^he conditional 
character of the sale." ^ 

The want in ^uch a holding is not in amplitude. For a time the But- 
ton Fastener case set the standard for orthodoxy ; from its corpus could 
be drawn reasons to sustain almost any privilege claimed by the pat- 
entee. It is easy, by a kind of contagion, to carry the owner's tight gTip 
over his invention to all goods which emerged from it or which were 
defined by the claims in the letters patent. The articles had passed on, 
to 'the jobber, to the wholesaler, to the retailer, into the general channels 
of merchandise. Yet the patentee had an equity which ran on with 
the chattel and the legal right to decree its price from hi^ citadel of 

Once the right to restrict was granted, the course of the doctrine was 
headlong. Types.of remote control became mere species of a very virile 

£enus. A long string of cases in the following decade assumed the 
rurton premises, drew forth their implications, and proceeded to find 
resale price maintenance within the law.* In the Edison case phono- 
graphs sold subject to restrictive covenants "governing and controlling 
the sale of the same,", were .disposed of by the Edison company with- 
out proper respect for the limiting provisions. The court, taking 
the path blazed by the Button Fastener case, found purchase by 
Pike, without adherence to the restrictive covenants of the vendee, 
an infringement of the patent.^ And, through a tacit acceptance of 
the authority of Mr. Justice Clifford, it reached the conclusion that 
the rights possessed by the vendee were derivative and in scope could 
not exceed the power which the licensee could lawfully pass on.® The 
conditions prescribed had not been complied with; the purchaser's 

are unable to perceive how they could be regarded as so unjustifiable as to justify the 
court in declining to follow them. 

"The venders were entitled to sell to the best advantage, and in so doing to exercise the 
right to preclude themselves from entering into competition between purcnasers ; and the 
purchasers were entitled to such protection as was reasonably necessary for their benefit. 
» * * The policy of the law is to encourage useful discoveries by securing their fruits 
to those who make them. If the public found the balance efticacious, they were interested 
in not being deprived of its use, but by whom it was sold was unimportant." 

Note the hidden premises and the broad principles of freedom of contract. The last- 
quoted sentence also contains at least a suggestion that suppression of patents may be 

3 Heaton-Peninsula Button Fastncr Go. v. Eureka Specialty Co., supta, ppi 290, 291. 
Th^ position^ssumed by Judge Lurton was in result that taken by Mr. Justice Clifford in- 
Mitchell V. Hawley. That Clifford's view was not so assured as Lurton's is evident in his 
subsequent support of the Burke doctrine. 

^ Among representative cases are Harrison v. Glucose Co., 166 Fed. 304 (1902) ; Victor 
Talking Machine Co. v. The Fair, 123 Fed. 424 (1903) ; Dr. Miles Medical Co. v. Gold- 
thwaite, 133 Fed. 794 (1904) ; Dr. Miles Medical Co. v. Piatt, 142 Fed. 606 (1906) ; Dr. 
Miles Medical Co. v. Joyner Druq Co., 1'40 Fed. 838 (1906). 

» Edison Phonograph Co. v. Pike, 116 Fed. 863 (1902). 

" In other words, keeping a qualification upon the public interest in its place is used to 
justify a further qualification of the public interest. 


title was invalid; his attempt to strip of conditions and convey 
amounted to nothing short of contributory infringement/ 

The case of The Fair ^ exhibits a kindred attempt to ground the law 
of patents upon an elusive concept of property. The Fair, a Chicago 
department store, had bought a quantity of phonographs from a job- 
ber, who had purchased them from the manufacturer under a strict 
agreement, but had failed to pass along the re ^rictions with the goods. 
Nonetheless, The Fair was held guilty of contributory infringement in 
disposing of the article at a price lower than that established by the 
owner of the patents. The court discovered" an implied notice, stated 
that conveyance without imposition of the license restrictions fell short 
of a good title, and by a slightly different journey arrived at the result 
reached in the Edhon case. 

Although these decisions had repute, they were not destined to en- 
dure. A ruling which takes account of all the values which come to 
judgment is likely to stand. One which exaggerates certain interests 
and ignores those which are in opposition runs the risk of being upset. 
In tliis series there was no sudden change; rather a number of hold- 
ings on particular situations and then a discovery that the trend had 
been set in reverse. In a suit which concerned Peruna — a cure-all which 
rode into popular favor on the anti-alcohol wave — a circuit court found 
invalid a simple contract designed to fix the resale price of proprietary 
medicines.^ Then, in the Bobhs-MernU case,^° the right of the pub- 
lisher to pass along his prices with his books was struck down as an 
extension of copyright beyond the intent of Congress. The argument 
was easily shifted from copyright to trade-mark, and in the famous 
Dr. Miles ease, the court declared that license and notice attached to 
trade-marked articles did not escape the antitrust laws." 

At this point appears the Bauer case.^" A drug "Santogen" was pat- 
ented; the goods were passed along a vertical channel; all handlers 
were licensed ; a covenant bound alT parties to follow a price-list de- 
creed by the manufacturer. O'Donnell, a pharmacist in the city of 
Washington, departed from the prescribed schedules and was sued 
by Bauer for infringement. The court, mindful of earlier holding 
and far from intent upon the button fastener, held that "a patentee 
\yho has parted with a patented machine by passing title to a pur- 
chaser has placed the article beyond the limits of the monopoly se- 
cured by the patent grant." ^^ A little later another round in the bout 

■^ In the course of its argument the Court impliedly read notice and good faith into the 
Mitchell V. Hawley doctrine. Here the purchaser had notice of the restrictions and his 
attempt to escape, on the theory of purchase for use — Adams v. Burke, op. cit. — offended 
the Court's sense of propriety. In essence the "good faith" is that evoked by Butler and 
Brandeis, JJ., in their opinions in the General Talking Pictures case a quarter of a century 

8 Victor Talking Machine Co. v. The Fair. 123 Ted. 424 (1903). 

"John D. Parkand Sons v. Hartman, 153 Fed. 24 (1907). Patent medicines are under 
some judicial suspicion. Justices are not too tolerant of attempts to profiteer in 'le 
instruments of health. It is impossible to assess more than gen' .ully the incidence of 
such intangibles upon decisions. See also Jayne v. Ladir, 148 Fed. 21 (1906). 

w Bo6bs-Jl/emJJ Co. v. Straus, 210 U. S. 339 (1908). Straus is, of course, R. H. Macv 
& Co., whose war with the publishers over the retail price if books has gone through many 
legal battles and is still raging. 

]^Dr. Miles Medical Company v. John D. Park and .ii ,is, 220 U. S. 373 (1911). The 
opmion written by Mr. Justice Hughes, is not clear-cvt. It moves bv way of technicali- 
ties and much is made of the possibility that the pric -< itter may not have assumed con- 
tractual obligation or have been served with proper nc.ic ,>. For he may have obtained his 
supply, not through the legitimate marketing channel jc itrolled by the manufacturer, but 
along some lateral line from another dealer. Like s- many of Hughes' opinions, the 
reasons given are far narrower than the positions take 1. 

^^ Bauer et Cie v. O'Donnell, 229 TJ. S. 1 (1912). 

^2 Again the Clifford doctrine becomes recessive: aid again Bloomer v. McQueusan, 
Adams V Burke, Chaffee v. Boston Belting Co., and K .e.' r v. Sanitary Folding Bed Co., are 
reinstated as the law. . " -^ 


bet-vvoen tlie retailer and the publisher was staged, and the court in- 
sisted that "it cannot be successfully contended that the monopoly of 
a copyright" is "any more extensive than that secured under ihe ])at- 
ent laAv."' ^^ A quadruple play of copyright to trade-mark to patent 
to copyright covers the front. The right to vend under restriction 
is limited to original sale; an end is put to verticid ])rice control 
through patents; covenants which run with the patented good run 
against public policy.^^ 

But the patentee is a hardy soul, whose coiu'age did not falter be- 
fore these judgmentf Tf direct control went in tlie face of the law, 
circumlocution cou.ld ^e mployed in ^ts stead. A license agreement, 
through whose elaborate formalism title was not allowed to ])a^s, 
might vault over judicial hazards and attain the objective.^'^ All who 
bought, passed along, or used Victor goods — no matter at wliat degree 
oT remoteness from the manufacturer — were licensees, though factu- 
ally the jobber ■was the concern's ultimate customer. Thus the indi- 
vidual never came into legal ownership of the phonograph in his 
living room or even of the records he played u[)on it. were 
leased to him for art indeterminate ])eriod by the ]>atentee upon con- 
dition that they were to be used together and that no product of 
another manufacturer obtrude. For an arrangement so conducive to 
music appreciation the court could find no more fit name than "eva- 
sion." It discovered on the part of the manufacturer an indulgence 
in a "perversion of terms" with the aim of retaining to itself benefits 
which pass wi£h the alienation of pi'operty. 

The prohibition was strengthened — and the way of evasion rien- 
dered more dilRcult— -by the Boston Store decision.^' Here the manu- 
facturer made his sales ot patented products to dealers conditional 
upon their maintenance of resale prices to jobber customers. Their 
practice rested upon a gossamer network of seasoned legalisms, which 
the Supreme Court refused seriously to entertain. The arguments, 
by which the company attempted to save their plan from the con- 
demnation which the law had visited upon schemes directed to the 
same end, were too fine-spun for the naked eye of the Court.^* The 
distinction was made to rest upon "a mere question of the form of 
notice of the patented article, or the right to contract solely by ref- 
' erence to such notice." Its subtlety in difference "disregards the fun- 
damental ground" upon which "the decided cases must rest"; and it 
is therefore "devoid of merit." 

Public policy had taken the saddle, venerable holdings were caught 
up; ^^ and by 1920 it was accepted that the patentee who had bar- 

^* Straus V. American Publishers' Association, 231 U. S. 222 (1913). Again, of course, 
Straus is R. H. Macy & Co. 

"The case of Keeler v. Standard Folding Bed Co., 157 U. S. 659 (1895) — a little off the 
chronological beat — is worth a note in passing. The decision follows the reiisoninj; of 
earlier cases; and concludes that a vendee of a patentee did not infringe the rights of .the 
patentees assignee by selling the purchased articles in the tenitory "belonging" to the 
assignee. The case, in fact and holdini, is substantially that of HobMe v. Jennison, 149 
U. S. 3551 (1893). The Keeler holding is verbally broader than the facts warrant; but in 
theory it accords with the later decisions which outlaw resale price maintenance and limit 
the patent control over unpatented goods and services. The meaning and trend of the opin- 
ion are given perspective by the dissent of Mr. Justice Brown, the creator of the doctrine 
of the Albany Paper Co. case. 

la Strovs V Victor Talking Marhine Co., 243 U. S. 400 (1017). McKonna. Holmes, and 
Van DevTiuter, Justices, Uissented. 

" Boston Store v. American Gramophone Co., 246 TJ. S. 8 (19171. 
^' Note- particularly liaUcr v. O'DonneU, and Victor Tailing Machine Co. v. Straus, supra. 

'° Supra. Note the breadth restored, nt-^ for the moment, to the patent g:ant by the 
decisions In the General TalHnq Pictures cases. 


tered away his chattel had allowed its price to pass beyond his con- 
trol. It also appeared clear that the use of legal prestidigitation to 
circumvent the Court's holding was waste motion. A neat trick in 
respect to contract, posted notice, license agreement, jobber Arrange- 
ment was all right if without legal resort it could be made to work; 
but the courts were not to be expected to lend their sanctions to its 
enforcement. The law, with strict impartiality, might keep away 
from the issue; but it could not be invoked to secure to the owner of 
a grant a lordly oversight of the channels along which his goods 
moved to market. 

Enterprise, however, is not to be stayed by closed judicial doors; 
other techniques than resort to the law were at hand. If the courts 
were unwilling to continue the job, business concerns might look after 
their own marketing systems. The right of the vendor to select his 
own customers seemed to be untainted by legal flaw. If they were 
not too obtrusive about it, in decisions to deal or to refuse to deal,' 
concerns might police their own trade practices. Among these 
pioneers in "self-government for industry" was the Colgate Co. Its 
products — soaps, toilet preparations, sanitary articles — were all trade- 
marked; a large number emerged from patented processes. About 
them the company proceeded to elaborate a closely guarded system of 
distribution. The scheme for the selection of customers consisted 
of (1) the circulation among distributors of price-lists; (2) veiled 
threats to withhold supplies from erring tradesmen; (3) demands fot- 
information about the activities of irresponsible distributors; (4) 
requests for assurances that dealers were respecting the recommended 
schedules; (5) the maintenance in a "suspended list" of the names of 
firms found jruilty of price-cutting; and (6) a refusal to sell to those 
whose unethical actions placed in jeopardy the marketing arrange- 
ments of the company. In spite of its industrial privity, the plan 
was hurled into court. ^° In its justification ancient and obvious rules 
of the law were plead. A concern could not be forced into business 
relations against its will. The judiciary had no power to order a sale 
to a party with whom tlie company did not choose to deal. The Clayv 
ton Act liad declared that nothing therein "shall prevent persons en- 
gaged in selling goods, wares, or merchandise from selecting their 
own customers in bona fide^ transactions and not in restraint of trade.^^ 
The issue, of course, was whether the marketing plan, in detail and 
persuasion, Avas in restraint of trade.' It was not easy to cry mo- 
nopoly, for every article had to make its way against a rival good 
which did not bear the Colgate trade-mark. 'So the court was con- 
tent to beg the question and in disregard of its tightness to hold the 
entente of usages immune to legal attack. 

If the issue had been the selection of customers, pure and unde- 
filed, it might have ended here. The scheme, however, was suscep- 
tible to other uses; as it hit its stride alien objectives might smother 
the prestine end. To sit in an ivory toAvor. to contemplate one after 
another the names in a catalog, and to accept or reject with the aid 
of IMoody's manual, a standard of morality, or without reference to 
norms altogether, is one thing. To set up an orthodoxy of market 
usage, to implement it with an information service, and to ostracize 

^U. S. V. Cohiate Co.. 250 U. S. .SOO (1010). 

=iNote also the cases of United ^tate» v. A. Schradrr A Son. Inc., 252 U. S. ^5 (1920), 
and Frcii and i^on. Inc. v. Cudahji PncUng Co., 256 U. S. 20S (1921). " 


all who do not conform — especially if the scheme is reduced to writ- 
ing — is something quite different. The Beech-Nut case " presented 
the plan Avorked out in such detail and backed by such a punch that 
duress could not escape notice. A system of private police was vis- 
ible, without resort to the spectacles of inference, and the Court was 
compelled to call the arrangements illegal. The edge, however, was 
thin; and lower tribunals could not always escape confusion in fol- 
lowing the dictates of the bench above.-^ 

A shift had already occurred in resort to the law. If the courts 
covild no longer be invoked to lend their auspices to restraint — on the 
theory that they were giving effect to patent rights — the corporation 
was quite ready to police its own marketing channels. The effect of 
the Beech-nut decision was to teach wariness rather than to induce 
surrender. Since it was exposed to antitrust, the scheme had to be 
constructed so skillfully and operated so smoothly as not to exhibit 
a picture of duress which might be taken into court. It is, however, 
a bit awkward to dodge the law rather than use it as a club; and 
the quest for sanctions was not to be abandoned without giving 
ingenuity one more try.-* 


• As the patentee attempted to drive his control vertically down 
the marketing channel, he did not neglect the horizontal line. His 
corporate estate was threatened from left and right by grants from 
the Government which invaded the technical domain which he wished 
to preempt. If such claims could be quenched, driven into narrow 
reserves, or become the property of a mutual accord, danger of a 
flank attack was removed. Secure in an exclusive right to all the 
techniques which made up his industrial art, his dominance over the 
distribution of his product became less vital. As he won protection 
against rivals, he could afford to relax his authority over his retail 

The ordinary conduct of business often suggests a pooling of pat- 
ents. A number of inventions are no more than kindred ways to the 
same end; a concern acquires the several patent^, puts the fittest to 
w^ork, or unites elements from several into a process which is better 
suited to its task than any. A number of inventions make up a single 
production process; if they are to be used efficiently, they nuist be 
used together. If there were no law to limit, condition, or forbid, the 
usages of business would impel coi-porations to seek to acquire com- 
peting or complementary patents held by adverse interests. Th2 
simplest way to an amalgamation of patents is by purchase " or by 
merger under a single control.^** But where access to technology is 

''Federal Trade Commission v. Beech-Nut Paclcinri Co.. 257 I^ S. 441 (1922). 

28 The lower courts, as well as businessmen were in something of a fuddle. In the 
Kecch-Xut case, the Circuit Court of Appeals for the Second Circuit, 264 Fed. 88;i, had 
expressed difficulty in seeing any diflferonce in their effects ujjou restraint of trade between 
a tacit understanding and a written agreement. And so it held Itself bound by the 
Colgate holding and was reversed. 

« U. a. T. General Electric Co., 272 U. S. 476. See pp. 80-82 helow. 

^f* The Eastman Kodalc Co. presents an example of the dominance of an industrial 
technology by purchase. But purchase was a single device in the strategy. The aggressor 
softened the potential "seller by pn action at law before offering terms. Westinghouse and 
countless others have us?ed this everyday legal device to mal?e secure their technical 

=» The United Shoe Machinery and the General Electric Cos. are outstanding examples of 
the acquisition of dominant patent control through the merger of numerous small com- 
I)etitors. The National Harrow Co. ofl'ers another illustration. 


the life of trade and separate enterprises are willing to lose neither 
their identities nor their inde^Dendence, a more feasible method must 
be found. The need is met by the device of cross-license — itself an 
invention of the first magnitude in turning inventions to account. 

A "pool" exhibits a complex of motives, usages, results ; it presents 
a variable api^earance to the law.^' A number of corporations hesi- 
tant to submit their clain^s to the ordeal of law, enter into a mutual 
agreement to cross-license all patents. The accord may include all 
the firms in the industry, a select few, or only the dominant two. It 
may make the industrial art? common property, decree the conditions 
of access to the technology, or barricade the trade in behalf of the 
self-elect. Or a number of individuals may severally pos,sess legal 
claims to interdependent parts of a process; and a common control 
may be essential to the creation of a product which represents the 
current state of tlie art. Or the pool may serve as instrument for 
the creation of a monopoly and as armament again^st legal attack. Or 
most likely of all, as affairs go in not the trimmest of worlds, all of 
these urges with varying heat may find expression in the same scheme. 

It is insisted that, if there were no pooling of patents, the modern 
receiving set would be a mere ideal; the airplane, an entity just out 
of reach, still inchoate in a hundred separate inventions. It is claimed 
for petroleum and the automobile that the pool widens the techno- 
logical base, makes existence tolerable for the little fellow, and pro- 
motes good will within the industry. It beats rights which belong to 
countless individuals into a mutual interest and enlists diverse tech- 
niques into a common adventure in production. To the contrary it 
is argued that the monopoly which results gives little incentive to the 
rapid advance of the art and stands as a barrier against the shift of 
technology to a new base. In support General Electric and the Alumi- 
num Corporation of America are cited for their failure to accord to 
invention a real opportunity. Motives good and bad, lawful and 
illegal, often walk hand in hand. An understanding which avoids 
a resort to laAv and insures a better product may accomplish quite 
other things. It may decree a stop to the competitive struggle and 
make a gift of security to a business enterprise. It may bring financial 
stability to the independent so long as he is content with the niche to 
which he has been assigned; it may create a scaffold wherefrom the 
elect may build a price floor. 

The pool is no current novelty — though in these latter days it has 
been fitted out with all modem improvements. As early as 1856 a 
group of Howe, Singer, Wheeler and Wilson, and Grover and Baker 
found it advantageous to bury their differences over claims in its 
technology to the greater good of the sewing machine industry. A 
union of grants promised to recoup the losses of promotion and to 
save the expenses of an impending legal campaign which threatened 
to exhaust the resources of all the hostile parties. A licensing system 
was established ; and lest the charity of any of the parties go unre- 
warded, a royalty of $15 was decreed for each machine sold. Pres- 
ently, however, a falling market exerted its pressure, and a vision 
appeared of a larger intake through a lower price which would bring 

^ In terms of sheer rhetoric the pool has a decided advantage over purchase and merger. 
The cross-license agreement presents the appearance of equality among the participant 
industrial interests. It eliminates the stigma of dictatorial domination which character- 
izes more overtly suppressive techniques. Even if overlordship continues to exist, it 
smacks far more of noblesse oblige than of blitzkrieg. For example, compare General 
Electric with ALCOA or RCA with Kodak. 


the machine within the reach of lower income groups. It was not easy 
to maintain the closed preserve against the increasing pressure from 
outsiders who wanted to barge in. Yet the fortifications withstood 
invasion until the expiration of most of the basic patents in the 

It was 20 years after the sewing machine pool disintegrated be- 
fore the first legal test of such an arrangement reached the courts. 
A number of independents had pooled their patents, organized the 
National Harrow Co., established a conceit of action in marketing 
their products. A chiseler in their midst, one Hench by name, dis- 
l)osed of goods in whose fabrication the mutually owned technology 
had been employed at prices lower than those named in the agree- 
ment. .A suit was instituted by the company against the offending 
member; the circuit court failed to discover contributory infringe- 
ment.^^ It had no disposition to question either the validity of, or 
the monopoly conferred by, any of the patents. But it refused to 
endow a series of patents in lockstep with the legal innocence which 
singly they possessed. Especially since the record clearly indicated 
th^t the several grants had been combined for the very purpose of 
restraining trade. 

But where one bench was blind, another could see. A kindred 
issue presently came before the United States Supreme Court.-^ A 
license had been extended to a manufacturer by the same company, 
organized by a number of firm's for the specific purpose of holding 
patents. The agreement recited that products were not to be dis- 
posed of on more favorable terms of payment or delivery, or at 
prices lower than those established by schedules which were at- 
tached to the contract. In speaking for the Court, Mr. Justice 
Peckham drew his inspiration from the current fount of authority, 
the Button Fastener case. His opinion is significant not for what 
he said, but for the things which he took for granted. He accepted 
the Harrow Co. as a legal entity, imposing restrictions upon licensees 
whom it met in bargaining as independent parties. He voiced the 
familiar the-whole-comprehends-the-part argument. The patentee is 
legally competent to exploit his grant free from interference. It 
follows tliat if the patentee licenses his invention, he may impose 
such regulations as he chooses. The right to . control price is an 
incident of his right to sell. He takes it for granted that the articles 
in respect to which restrictions were imposed were themselves the 
subject of ])atents. All of these matters are assumed; not one Avas 
subjected to judicial scrutiny in the light of the situation which 
the case presented. The motif of liberty of contract obtrudes and 
sweeps all before it. 

But so backward a position was not easily held. If propriety forbade 
it to be overruled, ingenuity suggested a Avay around. In the Yale 
and Towns case^^" which came along a little later. Judge Brown recog- 

'^ National Harrow Co. v. Hench, 83 Ffifl. 36 (1897). S<?e also ifarroio v. Quick, 67 Fed. 
130 (ISO')) ; Harrow v. Hench, 76 Fed. 667 (1896) ; Harroto v. Hench, 84 Fed. 226 (1897). 
^Bement v. Harrow, 1S6 U. S. 70 (1903). .^ , 

3" In Blonnt Manufacturing Co. v. Yale and Towne Mfg. Co., op. cit. supra, p. •^9, the 
Bcment case was distinguished. The latter did not Involve a combination of patentees who- 
were attemptinR to restrain trade beyond the limits of their grants. The Bcment case was 
later distinguisiied in Hemington-Rand, Inc. v. International Business Machines Corp., 
3 N. Y S. (2d) 515 (1937) at p. 519 : In the Bement case "the only contracts which were 
bL'torc tlie Coui-t * * * wore the aKre<'ni»-nt.-< called 'A" and ■B." Seo /{ubhe.r 'I'ur 
<f Wherl Co. V. Milwaukee Rubber Co., 154 Fe<i. 358 (1907) : Indiana Mf'i. Co. v. 
Threshing Co., 154 Fed. 865 (1907). The latter cases accept a distinction between a general 
pool and" the Bement case, but arrive at a dilforont result from the Yale and Towne case. 


nized the dichotomy of the patent and antitrust, chiseled the vague 
conflict into specific questions, and in an extended opinion attempted 
to resolve the issues. In a chapter of judicial liistory, studded with 
citations,^^ he recited the circumstances under which the patent grant 
conferred a plenary authority. And he discovered a legal gulf between 
its unsummed parts and the integrated structure. In the instance, 
"the owners of distinct patents each agreed to restrain its own inter- 
state trade." The monopoly, accordingly, "arises from the combina- 
tion and not from the exercise of rights granted by the letters patent." 
And, since "as a part of a plan to monopolize the commercial field, 
competition is eliminated," tlie Court was of "the opinion that the 
contracts are in these particulars obnoxious to the Sherman Antitrust 
Act." In the "coaster-brake" case, the same reasoning prevailed. The 
several manufacturers, entrenched behind the solid front of their 
patents, had decreed production quotas and noncompetitive prices. 
The Federal court through Hazel, J., found that "the license agree- 
nients were resorted to as a subterfuge to aid in stifling competition 
in trade and commerce." ^^ 

Notvljowever^jintil the Standard Oil case went up,*^ was tlje issue of 
the patent pool presented squarely, naked of all other restrictive prac- 
tices. A series of cross-licenses had been employed by their owners 
to combine various oil-cracking patents into an integrated pool. 
Standing in close formation upon their exclusive rights, the members 
as a single body had imposed upon the members as individual licensees 
restrictive covenants. Although a positive influence was exerted ovet 
only 26 percent of the national volume, half of the cracked gasoline in 
the domestic market was brought under control. The price of the 
product emerged from a formula with many terms, and the influence 
of such an arrangement could not be set down with mathematical ex- 
actness. Into the hypothetics of the causal role of a single factor among 
the host which far-flung circumstance brought into play, Mr. Justice 
Brandeis did not choose to go. Instead he spoke for a Court whose 
concern was a simple problem of legal procedure. He had no quarrel 
with the decisions which held "that lawful individual monopolies 
granted by the patent statutes cannot be unitedly exercised to re- 
strain competition." ^* But, however, it might be otherwise, in the 
particular instance, "no monopoly or restriction of competition in the 
business of licensing patented cradling proces^^es resulted from the 
execution of these agreements." The presumption was of innocence, 
mere combination did not shift the burden of proof, evidence of posi- 
tive wrong-doing was absent. The agreement imposed no undue re- 
straint upon interstate commerce. 

Thus the Court refused to sanction or to condemn in blanket-terms 
the practice of cross-license.^^ A compound of exclusive rights, each 
of which was unquestioned, did not insure validity; an array of 

31 His argument made much of Bloomer v. McQuewun, and deftlv turned the Paper Bag 
cases to account. 

32 U. 8. V. New Departure Mfy. Co., 204 Fed. 107 (1913). With increasing reliance upon 
them, the Standard tianctary. Motion Picture I'alents, Hench, and Yale and Tou-ne cases 
were upon the way toward becoming canonical. 

33 U. 8. V. Standard Oil Co. {of Ind.). 283 U. S. 163 (1931). 

"Citing Hench v. Harrow; Blount Mfg. Co. v. Yale and Towne Look Co.; Standard Sani- 
tar.i/ Mffi. Co. v. U. 8.; Motion Picture Patents Co. v. Universal Film Co. 
^^ ^^ In Lynch v. Magnavox Company, 94 F. (2d) 883 (1938), 'the court stated (p. S90) : 
'* * • if the purpose of a plan is to effect a monopoly, or to fix prices, or to impose 
otherwise an unreasonable restraint, then the (Sherman) act is violated by use of any 
means to that end, including a cross-licensing arrangement.*' • 


grants in solid phalanx did not in itself decree invalidity. The 
public interest may, or may not, be served by the patent pool; service 
or disservice depends upon the reach, the character, the usages of tlie 
controls Avhich the process of cross-license brings into being. The 
union of grants creates a situation which makes easy the imposition 
of restrictions; but restraint itself does not inhere in reciprocity in 
the use of inventions. The elements out of which it is to be formed 
are all to be found in recent judgments; yet a definitive rule for the 
cross license has not yet been declared by the Court. The patent pool 
and restraint of trade are often found together, yet legally they are 
severable. As an instrument, a common access to an industrial art 
is neither good nor bad in itself. Its legal quality depends upon its 


If the national economy had been cut to blue-print, the lawof pat- 
ents today might be reduced to definitive statement. But general 
language gets touched off by concrete cases, w^hich as they pass pre- 
sent a parade of unlike situations. In these the controls exercised 
by the patentee radiate along intertwined lines which do not fall into 
a design of the horizontal crossed by the vertical.-^^ Rulings, liow- 
ever valid against the records which called them forth, are viewed 
with suspicion as they wander across the years or into alien indus- 
tries. It is, accordingly, quite enough to set down some five judg- 
ments, so recent and authoritative as to enjoy wdde currency. As 
points they give directions to a trend — so far as the trend is set by 
the Courtis decisions. 

The first, oldest, and most perplexing of these is the General Elec- 
tric caseF As long ago as 1911 the company had experienced a bout 
at law. The Department of Justice had sought to dissolve its combi- 
nation with National Electric and to break up its patent dominance 
over the industry.'^ In response to attack it took over the affiliate 
company — a move which it had hesitated to make; possessed itself 
of fresh patents to replace those whose life had expired; and, by a 
system of licenses, set about making secure its own corporate estate. 
Access to the technology which it controlled was the ticket of admis- 
sion to the industry. Quotas were assigned to itself, to Westinghouse, 
to the independents who lived by tolerance. A division of labor was 
decreed in respect to aspects of the manufacturing process. Precau- 
tions were taken to prevent any break in the structure of quoted prices. 
The retail outlets Avere made agents, and title was retained by G. E. 
until the lamps — themselves subject to no patent — had passed into 
the hands of the ultimate user. The government of the industry 
was equipped with an effective system of police. Economic necessity 
and a cordon of contracts supported a grand adventure in corporate 

»> It is only in the unusual case that various restraints, which have been conjured up by 
patentees to protect a dominant industrial position, exist separately. Almost every 
license or lease agreement contains some combination of patent suppression, pooling ar- 
rangement, price-tixing agreement, or extended dominion over unpatented products and 
wares. The mixture of articulated legal rationalizations which support tliese combined 
arrangements cle.ios categorization ; the adroit manner in which the arrangements them- 
selves skirt tlic prohiliitory doctrines of the courts is a reflection on the inadequacy of 
judicial bodies to meet the legislative problems involved in defining patentee power. 

^17. S. V. General Electric Co., 272 IT. S. 476 (1!)26). 

^ 1 D. & J. 2fi7 D. C. N. .7., (inil). 

s^Tor tbo historv. dtt.iil, and industrial office of "the G. E. plan," .«!eo pp. OS-IO-S, below. 

oonce>;tration of economic PO\yER gl 

An antitrust action, instituted by the Government, brought the 
scheme to the attention of the Supreme Court. The catalog of 
trade practices, in vogue in tlie industry and argued in the briefs, 
found little reflection in the opinion which Mr. Chief Justice Taft 
wrote for himself and his concurring brethren. *° It constituted a 
fabric of market usage which presented to the law a docket of issues 
to which the Court had never given answer. Yet because of its com- 
plexity, a failure to entertain questions which were posed, an inability 
of members to come into agreement, or an absorption of the bench with 
a single aspect of the case, almost all of these enigmas were pushed to 
one side. In his narrow confines it was possible for the jurist to make 
his approach from the vantage point of "to make," "to vend," or "to 
use."" But, passing up alternatives for reasons which he does not 
disclose, Tafc finds the issue in the right to sell. Upon this he takes 
his stand and in respect to the situation before the Court, he explores 
its correlatives.*^ 

In spite of a parade of "theref ore's-', Taft broke no new ground. 
Once before the Court had construed the privilege conferred by patent 
in respect to the horizontal control of price. And in that case," the 
restrictions had been placed directly upon patented articles, whereas 
here they were imposed upon the unpatented end-product of a comple- 
ment of patented processes. In his opinion Taft does not recognize 
this distinction'; nor does he suggest that a reward more closely in 
accord with that contemplated by the Constitution might be obtained 
through a clean-cut provision of royalties. Instead the Chief Justice 
argues that a patentee "conveying less than title to the patent" may 
grant "a license to make, use, and vend" for "any royalty, or upon any 
condition, the performance of which is reasonably within the reward" 
he is "entitled to secure."' If he "goes further and licenses the selling 
of the articles," he may impose restrictions upon "the method of sale 
and the price," provided "the conditions are normally and reasonably 
adapted to secure pecuniary reward for the patent monopoly." ** 

The General Electric decision is a triumph for rhetoric. The law 
ceases to bother over Avhat is done and poses its decision upon the 
proprieties by which it is accomplished. If the manufacturer had 
parted with the title to its products, its scheme of marketing'might 
have been without the law. But, since retailers were its agents, since 
wares were its own until they passed into the hands of the ultimate 
purchaser, surely it had the right to name the price at which the con- 
cern itself was willing to part with its oAvn propert3^ Thus the Court 

" There was uo dissent in the General Electric case, a most surprising circumstance in 
view of the fact that Taft, Holmes, Brandeis, McRej-nolds, and Stone were among the 
justices then on the bench. 

^^ The distinction goes back to the case of Bloomer V. McQuewan. In A'lams v, Burke, 
Miller spolie of the substantive rights to mal^e, use, or vend, which might be granted 

" There were reasons, of course. The doctrine of use, upon which an earlier bench had 
relied, had become outmoded; yet its values for public policy were retained. Another .ap- 
proach, however, could be made instrumental to the industrial authority of the patentee 
which the Court sought to holster — the doctrine of sale. The premises granted, the logic of 
legality — which might have done rather well in a suit between private parties— moved 
upon a nuich higher critical level and came to affect a concern with public interest. 

*^ Bement v. Hairow, op. cit., supra. 

** Although one scheme of licensing is pronounced legal and distinguished from that 
struck down in Dr. Miles Medical Co. v. Park, supra., on the specific ground that General 
Electric was making the retail sales and there was no' question of its right to fix the 
prices at which it disposed of its own goods, it is hard to see why Taft's argument could 
not be applied with equal validity to the Dr. Miles arrangement. The Chief Justice 
suggests that in both the Dr. Miles and the Standard Sanitary cases, the very purpose 
was to restrain trade. But .the question of such an Intent is the very issue presented — 
and not met — here. 


revealed a procedure by which the patentee might respect recent de- 
cisions and yet keep his product his own so long as he wished to subject 
it to remote control. 

The judgment transcended the issue to which it was addressed. 
General Electric^had invoked agency as a device by which to make 
legal a marketing scheme grounded upon patents. In his opinion 
Taft allows agency to usurp the case,^^ and leans very little, if at all, 
upon the grants from the Government.*^ As the manufacturer be- 
comes the vendor in the ultimate transaction, he opens the way for the 
fixing of prices, for unpatented as well as patented goods. The rulin'g 
is, of course, circumscribed to the distinctive scheme of legal and mar- 
keting usage then before the court. If manufacturing concerns 
could regiment their marketing systems to the G. E. agency pattern, 
they would seem to be immune to the law. • If they could not, ingenuit}' 
and resource still had their work cut out."^ Recent holdings are dis- 
regarded; dialectic has no traffic with puttie policy; the law dis- 
tinguishes where there is no difference in fact ; an authority is created 
to become an anaesthetic to more severe holdings of the Court. 

Yet, in spite of support to the cause of restraint, the General Electric 
decision is soiiiewhat off the judicial beat. Three very recfent cases have 
gone far to restore prestige to rejected doctrine. In the Carhice case.^^ 
the Court knowingly probed former utterance to discover and make 
explicit the values which should shape the law of patents. A trio of 
propositions lays afresh an ancient groundwork. First, an attempt of 
the patentee to secure a reward from the supplies employed in the 
operation of his machine, rather than from the invention itself, has 
no legal support. Socond, such a limitation upon the contractual 
freedom of the patentee is not mitigated by "the peculiar function" 
of the protected device nor by the unique charter of the materials used 
with it. And, third, the exclusive right assured by the grant can go 
no further than tlie invention as described in the claims. 

In a later case '" the Court itself had occasion to construe these 
propositions. The Barber company was the owner of a patented 
Toad-building process. This it permitted road buildels to use with- 
out charge so long as they purchased from it an unpatented emulsion 
which the pi'ocess called for. The Leitch company also manufac- 
tured and clistributed an emulsiorr which served the purpose just as 
well. The suit for contributory infringement thus concerned a mat- 
ter which lay on the fringe of the holding in the Carhice case. There 
was "no sale of the process" subject to patent; no legal "relation 

" Note that the judgment is set down by an uBUsual alliance among justices. Biandels 
and Holmes, J.I.. had favored resale price maintenance as an elementary proposition. 
Neither had grounded its validity upon, patents and neither needed a concept of agency to 
help it into the law. Taft's argument — which is not their argument — moves toward their 
conclusion : and, since he Is going their way, they accept his rationale. 

«« Note, especially Taft's handling of Citations. He admitted that Motion Picture Pat- 
ents, overruled the Henry v. Dick case, and discredited the Button-Fast en&i- case. But, he 
argued that Mr. Justice Peckham"s discussion of the rights of the patentee in Bem,ent v. 
Harrow! was fundamental. IMoreover, the use of the Button-Fastener decision was not 
essential to the result ; it could have served only an a fortiori purpose. In effect the Buttorh- 
Fastener judgment is in revised terms reinstated, although technically allowed to remain 
upon the shelf. And the Bauer decision is in fact overruled, although nominally allowed 
to stand. 

" The breach was repaired by the fair trade laws of the several States and by the 
Miller-Tydings amendment to the Sherman Act. With the Infirmity removed, resale price 
with no aid from patents, could be imposed upon the most remote distributor. 

** Carhice Corporation v. American Patent Corporation, 283 U. S. 27 (1931). 
. « Leitch Manufacturing Co. v. Barier Co., 302 U. S. 458 (1938). 


whatever existed" between the patent-user and the patent-owner.*^" 
The proprietor of the grant received no direct revenue from his in- 
vention. In a short opinion, which reversed the lower court, Mr. 
Justice Brandeis held that there had been a contributory infrmge- 
nwnt. He went verbally btyond the Carbice holding to state that 
limitations upon the patentee are "inherent in the patent grant" and 
that no form of legal words could validate that which is an obvious 
attempt to control the market in unpatented wares. The constraint 
upon the patentee applies, "whatever the nature of the device by 
which the owner of the patent seeks to effect such unauthorized 
extension of monopoly." 

The two cases recall the original nature of the patent grant; a 
third brings price-fixing squarely back into focus. The Ethyl Cor- 
poration — whose stock is held by General Motors and Standard Oil of 
New Jersey — is the manufacturer of a patented fluid used to prevent 
knock in gasoline. The material is a dangerous poison and was dis- 
tributed to refiners who process their gasoline in accordance with 
conditions set by the patentee and dispose of it through retail outlets. 
The jobbers operate under licenses, terminable at the will of the Ethyl 
Corporation. Although nominally they are silent on price, the 
licensor was by no means unmindful of the virtues of a close accord. 
When the scheme was subjected to the scrutiny of the United 
States Supreme Court, ''the facts of the case" indicated that the ordi- 
nary standard of judgment in respect to the renewal or the cancela- 
tion of a license was the jobber's compliance ^vith "the marketing 
2)olicies and prevailing practices of the petroleum industry." ^^ 

In the opinion of the Court, Mr.. Justice Stone probed to the heart 
of the matter. Conspicuous among "controls which the Sherman Act 
prohibits and the patent law does not sustain is the regulation of 
prices 3,nd the suppression of competition among the purchasers of 
the patented article." In the instant case the scheme was not lim- 
ited to a mere selection of customers or to a mere refusal to sell. 
Nor were the conditions shaped towards "stimulating the commercial 
development and financial returns of the patented invention." " 
Rather they were directed toward "the commercial development of 
the business of the refiners and the exploitation of a second patent 
monopoly not embraced in the first." The patent on the cracking 
process was one thing, the patent for the use of tetraethyl lead quite 
another — at law each must stand upon its own bottom. "The patent 
monopoly of one invention • may no more be enlarged for the ex- 
ploitation of a monopoly of another than for the exploitation of an 
impatented article, or for the exploitation or promotion of a business 
not embraced within the patent." 

'"The lower court. Barber Asphalt Co. v. Stulsi Sickles Go.. 89 F. (2d) 960 (1937), made 
much of the distinctive situation. It is of note in passing that it does not differ materially 
from the arrangements made by Colgate to dictate the resale price of its wares (op. cit. 
supra, p. 75), Here, however, upon the right to select customers was grafted a contribu- 
tory infringement action against vendees of their customers. And the forms of the two 
actions were different. Here a concern sought to employ access to the courts in the Main- 
tenance of its marketing arrangements ; there a concern was content to police its own 
marketing channels and was warding off an attack by the Government for restraint of 
trade. In the two decisions — all other cases aside — the Court forbade the use of a legal 
sanction without creating an exposure to a legal attack. 

^ Ethyl Oasoline Corp. v. United States, 60 S. Ct. 619 (1940). A combination of 
regular gasoline and the patented fluid was patented by the Ethyl Corporation. It was 
under this patent that refiners produced the patented gasoline which was sold to jobbers, 
and It was upon this indirect patent relationship that Ethyl attempted to justify Its 
imposition of retail prices. 

S3 rrijg (jaae ija^ }jaj j(.g prelude in copyright. In support of its judgment, see the opin- 
ion of the Court, also written by Mr. Justice Stone, in Interstate Circuit Co. v. U. S., 
306 U. S. 208 (1939). 


The case seems clearly to point the trend for the law of patents. 
The owner of the grant, declared the Court, "may grant licenses to 
make, use, or vend, restricted in point of space or time, or with any 
other restrictions upon the exercise of the priA'ilege granted." *^ 
Biit, by a. condition attached to the license, ''he may not enlarge his 
monopoly" and thus acquire some other power "which the statute 
and the patent together did not give." The Ethyl case appears to 
dispose of block price arrangements, at least in case of sale. And 
it seems to rob the verbal symbols of the General Electric decision 
of much of their content. ^^ Its rationale moves toward halting the 
use of patents as an instrument of restraint. 

The march of decisions is never quite straight; and the line of 
cases just discussed is marked by a break. The Talking Pictwres 
case, which preceded the Ethyl decision by 17 months, exhibits the tend- 
ency of doctrine to revert to kind.^^ Western Electric was the owner 
of an amplifier capable of multiple employment. It licensed a num- 
ber of manufacturers restricting each to a particular use. Talking 
Pictures purchased amplifiers from a concern bound by a restrictive 
covenant and used them in a way for which the vendor was forbidden 
to manufacture. The patentee went beyond his licensee to the user 
and brought suit for contributory infringement;"^* 

In the majority opinions — on hearing and rehearing ^"^ — the argu- 
ment is substantially the same. The buyer had purchased with knowl- 
edge of the restriction and hence was bound by its terms. Since sale 
of the amplifier for a purpose not comprehended in the license was in- 
fringement, purchase with knowledge constituted contributory in- 
fringement. How it would be if the defendant had acquired the tubes 
in open market, the court said not, for the sale was never such as to 
bring the tube into "the ordinary channels of trade." The essence of 
the argument was the contention that since the patentee has power to 
refuse a license, it followed that he had the lesser power to license on 
his own conditions.-'' It is an elaboration of the severe logic of the 

"Note again the shift of tlie court from "right" to '•priviloge." In support of Stone 
it can be argued that it was the usage of the word "right" which bad gone astray and that 
his word "privilege" is in accord witli original moaning. 

" It does not, of course, alter the decision in Brement v. Harrow except by implication. 
This judgment permitted the existence of price controls on patented articles disposed of 
through a legitimate licensing agreement. 

'>^ Western Electric Co. v. ralkhi./ Pictures Co., 305 U. S. 124; 304 U. S. 175 (1938). 
The cases are intellectually further apart than the dates would indicate. Black alone 
among "the new justices" took part in the first dtcision ; in the second. Reed also par- 
ticipated Reed once and Black twice dissented from the opinion of the Court. In the 
Ethyl c'ase, four "new justices" took part and all concurred in the opinion of the Court, 

M^c Eijslish cases liave pushed the letter patent into tlie categoiy of chose in action or in- 
corporeal chattel. Differentiations have been made between lights "to make, use, assign, and 
vend" and the product resultant from their application. A way is opened for a sepniation of 
privilege from function ; a suggostion portends an alternative to the Oencral Talking Pic- 
tures case. Yet the English holdings have been 'in furtherance of greater patentee protec- 
tion ; the privilege of nonuse is preserved ; the validity of restrictive covenants upheld. The 
march of consequence has not been materially different from that in the United States. See 
Edwards v. Picard (1900), 2 K. B. 903; British MiitGscope and Bior/raph Co. v. Homer 
(1901) 1 Ch. Div. G71. 

" The original opinion of the Court was by Mr. Justice Butler ; the opinion, following 
reargument, by Mr. Justices Brandeis. 

"Such a proposition, from which the Court's whole argument flows, seems to beg the 
question. la brief it recites that tlie whole must comprehend the part, witliout spec'ifying 
what the whole is. It makes an absolute of a property right and erases the limitations 
on a privilege given for a purpose. Yet, by decisions of the Court, the rights of the owner 
of a patent are limited to the privileges which it conveys. He cannot impose upon a 
licensee restrictions wisich do not inhere in the grant he possesses. His freedom to "do 
as he will with his own" stops sharply at the barriers upon restrictive use described by 
public policy. Outside his limited monopoly, the covenants, the licenses, the arrangements 
by which the invention is turned to account are subject to the general law. The freedom 
to grant or withhold does not define the identity of the thing given. The effect of the 
contention, therefore, is to raise a question rather than to take a stand on a rule of law. 
The real issue — the issue in the instant case — is what the limits of the privilege are which 
by license the owner of a patent farms out to another. 


law of sales which goes back to Clifford ^^; a rejection of the doctrine 
as set forth by Taney ,^^ that the authority of the patentee stops with 
sale for use. The Carhk-e ease, held the court, was not applicable, 
since there had been no attempt to extend the patentee's monopoly to 
unpatented wares.^° 

In able dissents, Mr, Justice Black laid bare defects in the opinions. 
He used the Carbice and kijidred holdings to undermine the founda- 
tions of th6 Court's argument. Mere notice, unless its concern was. 
with a right sanctioned by the law. was devoid of legal effect. As an 
expression of the doctrine of good faith it could not create for the 
patent owner an equity which without it he did not possess. In con- 
sequence once the articles were disposed of for adequate consideratioUj 
the interest of the patentee Avas terminated. That was the holding in 
the Albany case, sustained by a long line of decisions.''^ Butler and 
Brandeis alike come to the case as if it were devoid of a general in- 
terest and as if as a private action it were subject to a single approach. 
Black is content to meet them' upon their own ground and to show 
how legally exposed is their position. Yet his attitude is clearly 
determined by larger values; a private action does not declare a 
moratorium upon considerations of public policy. 

Thus, today as yesterday, the emergent law of patents streams from 
two opposing lines of development. A doctrine, reaching back to 
Taney, would severely limit the exclusive right of the invention and 
strike down all conditions upon use. Another stemming from Clif- 
ford would offer to the j^atentee all the reward he could secure through 
the exercise of freedom of contract. As situations differ, as cases 
come in volume, as unlike minded men sit in judgment, paths may be 
narrow but they are not straight. A doctrine gets the support of con- 
tradictory reasons; a trend becomes obscured by cross-currents of 
opinion. Almost every decision leaves its tracings upon a legal pat- 
tern not yet clearly defined. Judicial freedom is a gift of trends 
which close, move apart and converge upon cases which must be 
judged. Currently th.e Court enjoys a liberty to shape, as seems to it 
good, the law of patents. 

^Mitchell \. Hawley. Argument and holding are in accord with the Button Fastner 
cajie and Henry v. A. B. Dick Co. 

^» Bloomer v. McQuewan. 

*>T!ie continued pushing of Leeds and Catlin to one side as not in point indioates an 
actual abandonment by the judiciary of the Clifford doctrine as stated In Mitchell v. 
Hau-ley. With the exception of the opinion in General Tailing Pictures no salutes to 
the departing doctrine have been fired bv the Supreme Court since the Dick decisia,n. 
Leeds and Catlin itself has frequently been distinguished. Heyer v. Duplicator (op. 
cit supra, p. 68; the CarUce case. op. cit sucra. p. ^2). Rpcen*^lv it wns held not in 
point in Bassick Co. v. Hollingshead Co. (298 U. S. 415 (1936)). There the Court refused 
to permit a patentee to claim furt'^er dominance of an invention through a patented im- 
provement ■which altered neither its principles of oneration.s nor construction. In accord 
are McOrath Holding Corp. v. Anzell (58 F. (2d), 20'5 (1932)) ; Bassick Mfg. Co. v. Adams 
(52 F. (2d), 38 (1931)). 

'>^ Albany Paper Co. v. Morgan Envelope Co.; Standard Sanitaru Mfg. Co. v. U. S.; 
Motion Picture Patents case. For earlier decisions see Bloomer v. McQuewan; Bloomer v. 
Millinger; Adams v. Burke. 



The identity of a thing depends upon the uses it serves. As it ex- 
changes masters, it undei^goes a change of character. As the patent 
was made over by the inventor into bondage to the corporate estate, 
it put on the ways of business. It became a v>-eapon in tlie competitive 
struggle; was employed to defend and push forward frontiers; was 
thrown up as a barrier against legal attack. As a title to technology — 
without access to which it was impossible to carry on — it was used as 
a fence with which to malce secure the preempted domain and as a sanc- 
tion upon which to ground the government of an industry. Its origi- 
nal task of promoting the useful arts had to patch up such a truce as 
it could with the acquisitive duties thrust upon it. A docket of some 
five widely selected cases — the telephone, the electric lamp, beryllium, 
the glass bottle and the automobile — indicate its unique developmejit 
in response to offices variously thrust upon it by the national economy. 

In the beginning the telephone was a toy ; today it is the stock-in- 
trade of the world's largest nonbanking corporation. It derives, in 
almost apostolic line, from the telegraph ; and as soon as dots and 
dashes made orderly passage along a wire, men began to hunt for a way 
to transmit articulate sound. The older suggested the newer invention ; 
the climate of technical opinion invited the quest; the search could 
hardly have gone unrewarded. As early as 1854, only 14 years after 
Morse had obtained his patent, a certain Bourseul came close to a 
theoretical ... ' tion of the problem, "Suppose that a man speaks near 
a movable disk, sufficiently flexible to lose none of the vibrations of 
the voice ; that this voice alternately makes and breaks the connection 
with a battery; you may have at a distance another disk which will 
simultaneojiisly execute the same vibrations." 

Idea invites design; and a few years later Reis invented and manu- 
factured a device by which musical tones could be transmitted ; but 
his make-and-break variations were too gross to reproduce the delicate 
vibrations created by vowel sounds. His instrument could be — and 
lateir was — used to transmit the human voice, but only through the 
application of a bit of knowledge which was presently to be supplied. 
As he began to tinker- with it, Alexander Graham Bell made no at- 
tempt to increase the sensitivity of Reis' telephone. Instead he took 
his cue from an eifect discovered quite by accident and varied the 
strength of a feeble but continuous current to secure vibrations. 
When a year later ^ he applied for a patent, he had not yet succeeded 
in transmitting distinctly the human voice. But the idea had been 

^The exhaustive study by the Federal Comnuinications Conimission of the American 
Telephone & Telesiaph f"o.. carefully checked, is the priniarv source of information. 
' The dates are 1875 and 1876. 



captured and the result awaited only an instrument to be perfected by 
a mechanic. When later the patent fell under the scrutiny of the 
Supreme Court, it was argued that Bell did not realize the significance 
of his discovery and had asserted essential claims after a rival inventor 
has shown their importance. The contentions were not sustained — 
though the brethren on the bench were far from a single mind as to 
who it was, if it was a single person, that had invented the telephone.^ 

What conception Bell had of his own invention signifies little, 
for it was not unique and did not go unchallenged. On the same 
day that he applied for his patent Elisha Gray, of Philadelphia, 
fil6d a caveat and described a similar instrument Avhich also used 
a variable resistance to alter the strength of a continuous current. 
Gray's patents were exploited by subsidiaries of Western Union 
and became the subject of an infringement suit brought by the Bell 
interests in 1878. But, before the court could distinguish the gen- 
uine from the spurious letter, the parties compromised their dif- 
ferences. Western Union acknowledged the validity of the Bell 
claims, licensed Bell to make use of all the Gray patents, and with- 
drew from the field. It agreed to pay 20 percent of the cost of 
all new patents developed or acquired by Bell; in return it was 
to receive 20 percent of all Bell's rents and royalties. Thus a 
merger .of competing patents was effected without leave from any 
public authority and the question of priority betAveen them was never 
judicially settled. How much of the technology was public, how 
much subject to exclusive right, and who was justly entitled to so 
much as was novel will never be known.* ^ 

Electricity was ready to reveal its secrets; in a land of tinkerers 
many had commerce with it; and two parties did not exhaust the 
claims to invention. A bitter opponent of the Bell interests was 
the Peoples Telephone Co., which produced a patent issued to Dan- 
iel Drawbaugh, a rural mechanic. A combat at law ensued; 366 
witnesses were called for the parties: the trial ran for 3 years. It 
produced evidence that Drawbaugh, working independently at 
Eberly's Mills, Pa., had invented a telephone which anticipated 
Bell's by seyeral years. On appeal and by a majority of one vote, 
the Supreme Court upheld Bell's claim to priority. Drawbaugh 
had not applied for a patent until he had seen Bell's on exhibit 
at the Philadelphia Centennial in 1876; the delay of several years 
was considered proof presumptive that the claims were dishonest. 
Three of the seven justices who sat, however, were convinced that 
Drawbaugh hit upon the essentials in 1869 and produced a satis- 
factory instrument in 1871. If one more judge had been similarly 
persuaded, or if there had been a full bench of nine, the invention 
might have become a part of the public domain.^ The four votes 
by which the Bell grant was sustained are less than a majority of 
the Court.'' Thus, a single vote of an incomplete bench decreed- 

sThe Telephone case^ [126 U. S. 1 (1887^. 

* Note the dying statement of Gray : "The history of the telephone will never be fully 
written. It is partially hidden away ia twenty or thirty thousand words of testimony and 
partly lying on the hearts and consciences of a' few whose lips are sealed, some in death 
and others by a golden clasp, whose grip is even tighter." Federal Communiciirions Oorti- 
mission. Investigation of American Telephone &. Telegraph, exhibit 19S0 p. 2. 

^ More than 2 years had lapsed between Drawbaugh's invention and his application, so 
the patent could not according to statute issue. 

» Mr. Chief Justice Waite, who was "the ma.iority." arose from a sickbed to deliver 
the opinion of the Court. It was his last appearance; he returned to his death bed. 
Motion was later made for reconsideration and was rejected on tho ground that no mem- 
ber of the majority who sat — now 3 Justices in a bench of 9 — had changfed his mind. 


the foundation of exclusive right upon which the structure of the 
telephone industry of today rests. 

The Bell interests were now in a position to assume the offensive. 
One powerful opponent had been bought out; another had been van- 
quished in legal combat ; a sanction had been accorded its claims by 
the highest court in the land. In 16 years it instituted more than 600 
suits for infringement of its patents. In most ir tances, however, the 
defendants came to terms before trial and only 12 cases were carried 
so far as to elicit written opinions. The most stubborn competitor — 
the American Cushman Telephone Co. and its licensees — withstood 
more than 200 actions before bowing to the onslaught. A period of 
expansion arrived; the telephone became an essential of business en- 
terprise ; the course of events presented to the patentee — whoever may 
have been the inventor — a rich harvest. The instrument of the prog- 
ress of science had become a weapon for the pursuit of gain. 

The Octopus is not politically the best lov^d of American mammals. 
Opinion ran strongly against the rising monopoly ; it insisted that the 
invention might still be recognized as public property. But a last 
chance of recovering the lost province was tossed away in a fiasco by 
the Departm^ent of Justice.'^ A promising rival to Bell was the Pan- 
Electric Telegrapli Co., owned largely by prominent Democrats, who 
feared suits for patent infringement. Offense is not an untried de- 
fense; and wliile Attorney General Garland — who as luck would have 
it owned 10 percent of the stock of the concern — was away on vacation 
his Solicitor General acted. Alleging that the invention had been 
anticipated and pleading irregularities in the Patent Office, he in- 
stituted suit to annul the Bell patents. When the situation came to 
light. President Cleveland reprimanded the indiscreet official — and to 
avert a scandal the case was dropped. 

But complaints continued to pour in and the issue was referred to 
L. Q. C. Lamar,® Secretary of the Interior, who was without pecuniary 
interest. After a thorough investigation he recommended a new suit. 
Already a congressional investigation had been ordered; but, in spite 
of its j)endency, it was decided by the law arm of the Government to 
proceed in a Federal court in Ohio before a judge who was regarded 
as a "patent smasher." As it happened, he died before action could be 
taken. But the commitmelit had been made and suit was filed with 
his successor who, as an ungracious fate would decree, had been a col- 
league of the Attorney General in the Senate. Then a technical diffi- 
culty obtruded ; the Bell interests had no official place of business in 
Ohio, and their lease of equipment was not deemed sufficient to war- 
rant service of process there. So the case was dismissed for want of 
jurisdiction. Another suit was filed in Massachusetts; the trial couct- 
ruled against the Government ; as a party without interest no cause 
of action was open to it. The decision was reversed on appeal; the 
suit for annulment was free to go to trial. 

In the meantime the dominant question had eached the Supreme 
Court in the private infringement suit meiitio k d above. The Court 
upheld the validity of the Bell patents. In hole ing that Reis had not 
anticipated Bell, it knocked the main prop fio' i under the argument 
upon whic h the Government had hoped to rr [\ for annulment. This 

'^ See Homer Cumminirs, Federal Justice (1037), pp. 29 -''le. 
lAunis Quintiis Ciiiciimatus. later (1888-93) Mr. Justic I. imar. 
204040— 41— No, 31 7 


left for the Government only the Drawbaugh claims; and, since they 
had also failed to pass judicial scrutiny, it was driven to discover new 
evidence. But it hoped that changes on the Court might aid its case 
for annulment. Five days after the private suit was decided, Mr. 
Chief Justice Waite was dead. This left the six of the seven who had 
sat on it divided three to three. Mr. Justice Gi-ay, who had not sat, 
was expected to support the contentions of Bell, as he had in an earlier 
suit in a lower court. The new appointee, Mr. Justice Lamar, would 
probably adhere to the opinion he had formed as Secretary of the In^ 
terior. ■ A. presumptive line-up of four to four made the new Chief 
Justice, Mr. Fuller th'^ crucial man. If at the trial victory could be 
achieved, he alone i n ppeal would have to be persuaded to score 
ultimate success. 

So the Government returned to its attack in the Federal court in 
Massachusetts. There, as was to be expected, the case floundered for 
several years; a record of some 12.000 pages was built up; and — the 
issue became moot by the expiration of the patents. It was, however, 
politically not safe to abandon the suit and, now devoid of legal sig- 
nificance,"^ it dragged" on. In 1895, Attorney German Harmon, reluc- 
tant to move 3^et n6t daring to close the chapter, asked the advice of 
Congress. That august body refused to receive the buck so gra- 
ciously passed, and not until 10 years later was the case dismissed — 
of course, "without prejudice." The issue was long-since closed. The 
sole and original inventor may or may not have had his reward. A 
number of events conspired together to create a judicial result which 
will probably remain freighted with legal doubt. But the Bell pat- 
ents did secure the imprimatur of the court — and their owners had 
corporate work at which to set them. 

While the Government w^as beating a dead horse, the private inter- 
ests were up find doing. If the. sanctions which they held were for 
limited times, other inventions might be used to prolong their life. 
So, in a renewed attack upon the independents, the Bell Co. made 
the Berliner patent on the microphone their main reliance. The 
application had been filed in 1877 and manufacture of the appliance 
was begun in 1879. The ritual of squabble and delay — rendered more 
deliberate by the ceremonial touch of Bell — held the matter in the 
Patent Office until 1891 when the grant was issued. The device had 
already been loiown to commerce for 12 years and its legal protec- 
tion, was now to extend to 1908. Again the Government sued for can- 
celation — and again divided counsels and political timidity confused 
the attack. An initial victory for the Department of Justice was 
followed by a reversal in the court of appeals and the refusal of the 
Supreme Court to restore the originat judgment. In the case the issue 
of public interest is not clear and the minds of jurists may have wan- 
dered down paths which official opinions do not record. At the time 
many persons regarded the existence of competing telephone com- 
panies as a nuisance and even judges, by argument and experience, 
had been exposed to the case for integration. As a symbol of a single, 
unified, efficient system of communication, the Berlinger microphone 
may have found the legal way easier.^ At this crisis, however, help 
came to the Government from without. A private suit for infringe- 
ment provoked a shrewd and stubborn resistance; and defense suc- 

• V. 8] V, American Bell Telephone Co., 167 U. S. 224 (1897). 


ceeded where aggressive attack had failed. The Berlinger claims 
were construed narrowly, as covering no more than an earlier con- 
struction already outdated, and henceforth valueless as a weapon of 
offense. A few years later an affiliate of Bell, the Western Electric 
Co., renewed the attack, attempted to perpetuate the control by suits 
for infringement in the use of telephone apparatus — and failed in 
its actions. Valid or invalid, patents had during the formative days 
of the corporation served well the cause of concentration of wealth. 

As it became established, the patent came to serve the Bell empire 
as a weapon of defense. Its grants could not be employed to strike 
down alternative methods contrived by independent equipment com- 
panies; but, where it could not suppress, it could lay tribute, and by 
1908 Western Electric was authorized to sell apparatus to nonasso- 
ciated companies. It could likewise be used to forge an impenetrable 
legal armament about its expanding frontiers. The character of its 
business forced the concern into researcli; and outside inventors, 
anxious to have their devices put to work and seeking the best bar- 
gains the}^ could drive, came first to Bell. A single patent leaves 
a business enterprise exposed; a net-work of them — with its intricate 
questions of law, fact, and technical norm — provides a bulwark which 
it takes strategj-, financial resources, and determination to break 
tlirough. Such a barricade against legal attack Bell was in position 
to build. The closely-guarded Pupin inventions permitted a close 
control over the growing field of long distance telephony. A series 
of patents gave control over radio tubes, which were permitted to 
reach the public for noncommercial use only. A substitute for the 
concatenation of gadgets which "make up the automatic exchange 
could hardly be improvised by an independent. Around and between 
the strategic inventicms a fabric of lesser patents was woven. So 
strong became the defense, that over a period of years only a single 
judgmoit has been won against Bell — and that for the sum of 1 cent. 

Ill 1907 the Bell System fell under the dominance of the investment 
bankei'S. A change in strategy attended the coming to power of the 
houses of Baker and Morgan. Capital passed into the strategic place 
formerly occupied by technology, and the arts and wiles of high 
finance were called into play. In instances it was cheaper to buy 
out independents than to fight them; in others it was more feasible 
to deny access to funds than to press the infringement suit. Finance 
suggested an easier, less expensive, far surer way to abate a nuisance. 
The blow was delivered from under cover and was not subject to 
judicial leview. Patents were most important in the "long lines" 
department, where they became a legal support to boycott and tribute 
alike. There Bell had a constant opportunity to harass independ^ 
ents. It could refuse to connect the lines for long distance calls or 
it could agree to joint service and exact the lion's share of the tolls. 
Its closed communion was later somewhat tempered by threats from 
i%antitrust. And since 1919 it has sought the cooperation of the lonely 
independents who survive in fighting the lowering of rates by com- 
missions and legislatures. It is not that as an instrument of cor- 
I)orate strategy the patent has been abandoned. It is rather that since 
the iuA-estment banker brought in a kit of readier tools, its importance 
has declined and it has become a reserve weapon. A suit for infringe- 
ment — witli its capacity to wear down and exhaust the resources of 


the little fellow— is always at hand, if more humane ways should fail. 
Its imminence makes the devices or high finance double effective. 

As its fortified frontiers have been advanced, the Bell imperium 
has arisen. The American Telephone & Telegraph is alike holding 
company and overlord. Western Electric manufactures and markets 
equipment. A nmnber of regional concerns — the New York, the 
Southern New England, the Chesapeake & Potomac, the Ohio — pro- 
vide telephone service within their sharply bounded territories. In 
addition they provide a dominant market for the output of Western 
Electric. By the ownership of patents, a maze of licenses, the ties 
of corporate structure, the concerns are bound to each other and to 
the parent company. Policies are decreed from general headquarters 
and executed upon the field. Rates for calls, prices of apparatus, 
changes in equipment, the steps in the research program, the times at 
which inventions are to go into use — all these are decreed from on 
high. A system of absentee landlordism prevails; and through its 
long lever of authority every error in judgment at the top is magni- 
fied as it takes its course down the corporate structure.^ The organiza- 
tion is too rigid, toe! ponderous to open the way for trial and error, 
experiinentation with rates, adaptation to local conditions. Over-all 
investment is the dominant power in an unwieldly financial system; 
unless upon its face it promises an increase in profits, the innovation 
has tlie hardest sort of going. It is not enough that over the years 
progress has been made. The real question is its sluggish pace and 
the severe limits of its range.^^ 

So close a corpoi-ation finds it difficult to maneuver; nor can it, 
without serious shock, put into operation advances in the industrial 
arts. Its pace is not that at wliich a science would freely move for- 
ward in a laboratory ; for inquiry Avoars the .livery of a pecuniary 
master. Nor is its tempo set by the market, where product is bettered 
or method improved to gain a competitive advantage. An innovation 
may have to wait years before getting its opportunity ; and a burst 
of creative effort stands little chance of breaking the dams about 
vested interests which hold it back. There must be enough of novelty 
to keep the industry locked against outsiders who may freely employ 
processes no longer subject to legal protection. But the newcomer 
must blast his way into markets already largely pre-empted; and, 
without access to them, capital is hardly to be had. As the sover- 
eignty of Bell has become recognized, there has been less and less need 
to drive invention forward at a breathless pace-. The record of the 
company has responded rather accurately to such a norm of 

Facts, of course, are not available for a complete picture of the 
belated appearance of new techniques. Delays have attended the 
introduction of many improvements; many innovations, up to the 
present at least havebeen suppressed. After an extended investiga- 
tion the Federal Communications Commission discovered a number 
of serious lapses, shown by this table. 

»» For an analytical study of bureaucracy in business, of which tfie American Telegraph 
& Telephone Co. is a brilliant example, see Marshall E. Dimock and Howard K. Hyde, Bu- 
reaucracy and Trusteeship in Large Corporations (Temporary National Economic Commit- 
tee, Monograph No. 11). . 







1. Subscribers' station ecjuipment: 

(a) Anti-sidetone circuit 






(6) Desk hand telephone set 


(c) Combination hand telephone set 

1 11 

(d) Wall hand telephone set 

' 30 



3. Automatic exchange switchboards: 

1 15 



(c) All relay or cross-bar - - 


(d) Semiautomatic or remote control toUboard and direct toll line 


' Still not available at the time of the investigation. 

Here there is evidence that striking delays have habitually at- 
tended the introduction of new apparatus. In 1934 the empire of 
Bell was lawfully possessed of some 9,255 patents; of these, 1,307 
had never been put to use because of "no public necessity indicated." 
Reasons good and sufficient — at least by reference to the criteria of 
money-making — jnay justify the company's action. The po\nt is that 
the public interest is not a factor, in the judgment to release, defer, or 
suppress. And the set-up keeps out of play the very impulses which 
the patent system is intended to release. In many instances a deci- 
sion not to use is a sacrifice of the common good Avhich it was the 
very purpose of the constitutional grant to secure. Yet from the 
judgment of the corporation the public has no appeal. 

At one point of time stands the original patent granted to Alex- 
ander Graham Bell; at another the industrial empire known as 
American Telephone & Telegraph. In the creation of the impe- 
rium, sanctions emanating from the Government have had a stra- 
tegic role. Bell may not have been the true inventor; the letters he 
received may still be beset with legal questions; the grant to Ber- 
liner may have been pushed beyond its original orbit; a series of 
later grants may have been put to uses for which they were never 
intended. It is enough that the corporation enjoyed legal protection 
during its critical period when the telephone was coming into use 
and squatters had to be ejected from a rich commercial opportunity. 
Once the domain had been secured and barricaded, the patent could 
retreat from a dominant to a recessive place in strategy. The cor- 
poration then could employ the techniques of high finance to ward 
off attacks, seize markets frqm independents, and consolidate its gains. 
But the bludgeon of an infringement suit was at hand if nimbler 
weapons failed. Once it had clothed itself with assumed rights, it 
found no hazard in a developing technology. Its only task was to 
divorce invention from the promotion of the useful arts and tame 
it into bondage to corporate profits. Along that line it fought and 
won the good fight — and the patent became enemy to the very purpose 
of its being. 


The conquest of night is a matter of many beginnings. An accept- 
ance of the dark; a flicker frorrfa blazing log; the dim rays from a 
tallow candle ; an adjusting of the wick, a cleaning of the chimney, 
a pouring of kerosene— these were but a parade of makeshifts. The 


torch is thousands of years old; the basin lamp of shell or glass, with 
its indispensable wick, goes back at least a thousand years before 
Christ. The Argand oil lamp, which increased combustion by the 
use of a chimney, appeared in 1787, The gas jet bright enough to 
make the candle ashamed of itself came along in 1821. Yet from 
none of these things, nor yet from the mating of one of these ideas 
with another, did the bright filament in a vacuum tube descend. As 
a method of illumination, electricity is an immigre which claims no 
kinship with the venerable ways of lighting. As a .flash of light- 
ning it was known from the earliest of times; as an experiment with 
a Leyden jar it was popular toward the end of the eighteenth cen- 
tury; as an impulse of energy to banish impinging darkness it ap- 
pears only half a century ago. Now only a turn of the finger is 
necessary to produce a light for reading by the fireplace or to light 
up a doctor's inspection of some hidden part of the human body, to 
allow walking as by day under giant electric arcs, or to make" a base- 
ball field or an airport assume the radiance of sunshine. 

To the mass of Americans Edison's invention in 1879 is the starting 
point. If one must be accurate, bows must be made to Sir Humphrey 
Davy and Sir Joseph Swan ; and the trail, running through the work- 
shop of Michael Faraday, is lost in the digressive research of a hun- 
dred years before. However, it was the American who took bits of 
useful knowledge from many sources and after trying out various 
permutations of facts and hunches at last hit upon a lamp which 
dimly would work. His invention was a carbonized cotton thread 
operating in a very high vacuum maintained by a one-piece all-glass 
globe. A year later carbonized bamboo fiber filament was subsiituted, 
whicli in turn by 1904 was being replaced by tungsten filament. To- 
day more than 96 percent of all incandescent lamps employ tungsten 
as the filament. 

As a giver of light, the new device was in its own class; 'but only 
slowly did it make headway against its rivals. Any house, at small 
expense, could be fitted out with oil lamps fi'om the nearest general 
store. But for electric lights it had to be wired and a connection had 
to be established with a power line. The householder rarely had the 
capital to move outward; a public utility would Jiot move inward 
imtil it was sure of enough consumers to guarantee a return upon 
a substantial investment. The new invention found a velcome in the 
"better communities of the cities"; in time it invaded the small town 
and the slum; it hovered tantalizingly just within and just Avithout 
the reach of country population. By 1934 only 11 percent of Amer- 
ican farmers had access to electricity; in 6 years the fraction had 
risen to 25 percent. But so arrested was the invasion that from 1890 
to 1920. 7.000,000 lamp chinmeys were manufactured annually and as 
late as 1937 the's production reached 1,000,000. Only as electric 
current led the way could the incandescent light follow. 

An electric bulb is a simple everyday article. The original ])atent 
has liad a chance to live out its span of life three and a half times 
over. Yet 60 years after its invention the right 1o mainifactui'e has 
come into the hands of two corporations. Tlie concentiation of con- 
trol is the result of a series of moves. The Edison Electric Co. was 
formed to put to use the original patents. A number of others — 
Brush, Stanly, Spregue, Northern, and Fort AAlaync — managed to get 
footholds in the trade. AVestinghonse got its start and its bargaijiing 


position from its possession, of patents for alternating- current and 
arc lights. General Electric was formed through the absorption of 
lesser concerns by the old Edison company. From 1897 to 1911 it 
maintained a cross-licensing agreement with Westinghouse. which it 
virtually dominated through a board of patent control. 

These early contacts pointed to a dual overlordship of the industry. 
General Electric and Westinghouse alike held exclusive rights which 
were adjacent ; the two fragments of technology were complementary. 
Each possessed something of value to the other; it was inevitable that 
they should get together; their larger understanding, which contains 
many provisions with which to make eifective a system of cross- 
license, is a scheme of government for the industry.^" Some 37 com- 
panies, all under the mandate of the great powers, are engaged in the 
manufacture of the article. The great majority, employing about 
15,000 workers make lights with tungsten filaments; a number, a prod- 
uct with carbon filaments; and a few, vapor lamps. General Electric 
and Westinghouse also manufacture as well as license others to manu- 
facture; in addition they produce electric goods — devices, apparatus, 
machinery — of all sorts and types. General Electric operates five 
plants and Westinghouse two; five other concerns are authorized to 
use the same patents. The production of the two corporations and 
their dominant licensees amounts to 90 percent of the national output. 
Independents — licensed companies operating plants in the vicinity of 
New York City — account for the remaining 10 percent. 

Manufacture, however, has something of the meaning it has in 
the automobile industry. General Electric is firm in the faith of 
efficiency; long ago it installed the assembly line; its production is 
the putting together of parts. And Westinghouse has followed a 
little more timidly the same trail. The licensee is beholden to the 
patentee for essentials of the ware; for the glass bulb, he must go 
to Corning; and three or four other concerns are sources of supply. 
The possibilities of permutation are well understood; and bulbs, 
bases, inert glass, and tungsten filament may be drawn together into 
many forms. There is — or at least there can be — a lamp to satisfy 
every need. 

Yet variety and quantity production are not good companions. A 
lamp-for-every-use demands an intricate process; the assembly line 
moves towards a uniform product. The industry has. with the zest 
of a new gospel, gone in for standardization. In 1900, for example, 
there were in the home 175 different kinds of bases and sockets; 
they have today been replaced by a single type. Ninety percent of 
the lamps are manufactured for one of two voltages and 99 percent 
are included in four voltage classes. Six standard lamps, varying 
from 15 to 100 watts, survive where 45 once covered the same range. 
Lights for special purposes have been crowded to the sidelines where 
they can be made to bear the cost of more diffused methods. An enor- 
mous saving in expense has attended the regimentation of production; 
a substantial portion has been passed along to the consumer. 

Although a mere container, the glass bulb holds a strategic point. 
For more than 30 years all bulbs were hand-blown; the art was avail- 
able to all willing and dexterous enough to use it. In 1912 the glass- 

J" In' Europe, likewise, control of incandp.scent bulbs bus been concentrated into the hnnrls 
o. four companies. An international accord keeps the alien wares out of the American 


blowing machine was introduced, and in 1927 the advent of the 
perfected Corning machine led to the automatic production of all large 
bulbs. It is hard for a layman to appraise the novelty which lies in 
such a mechanism. As he sees it in operation, he respects mightily its 
intricacy and efficiency; it hardly, occure to him to ask whether, after 
all, it is not an imposing combination which may be broken down into 
a basic invention sujjported by a number of rather simple mechanisms. 
The enormous output heightens further his sense of awe. One Corning 
machine, if operated continuously, has a potential daily, output of over 
800,000 bulbs ; in 1937 the domestic production of lamps ran to some 
800,000,000. Yet the raw material of the glass is all but costless; the 
unit expense of blow^ing is but a fraction of what it was in the days of 
the handicraft. A method open to all has been succeeded by one closely 
guarded; still the price of bulbs currently hovers at about one-third 
of the 1921 level. The older method is as much a matter of common 
knowledge as ever it was — but access to an obsolete technology is no 
admission ticket to the industry. 

Thus an exclusive right in another technology has reinforced the 
wall of patents about the industry. Ever since 1913 a series of li- 
cense agreements have maintained enduring bonds between General 
Electric and Corning. General Electric employs the Corning proc- 
esses to manufacture bulbs in its OAvn factories. Outside this shel- 
tered domain Corning enjoys an exclusive right to the entire field. 
In tbe sale of bulbs it divides its customers into two classes; the 
first consists of General Electric and the companies licensed to manu- 
facture bulbs under its patents; the second, of some 26 independent 
or non-licensed manufacturers. The system is not proof against con- 
centration; the little fellows turn out less than 10 percent of the 
domestic product. 

If these lines are being read by artificial light, the chances are that 
the bulb is frosted. For in recent years the clear bulb has rapidly 
yielded ground to the new type. General Electric owns the Pipkin 
patent, by which the frosting is applied to the inside of the glass, 
and it has accorded a conditional license of the process to Corning. 
The latter concern can make and vend bulbs to business firms li- 
censed by General Electric to pioduce incandescent lights but not 
to others. Accordingly the independents can purchase only clear 
bulbs from Corning and must, upon terms dictated by General Elec- 
tric, have them frosted in their own plants or by other companies." 
A single independent manufactures frost bulbs under a patent issued 
in 1924. At the fringe of the industry a small firm fabricates minia- 
ture bulbs and sells them to a number of independent miniature lamp 

An entente such as General Electric-Westinghouse-Corning " must 
look well to its diplomacy. It is of little account to unite at home 
if an influx of goods from abroad can disturb the terms of the 
harmony. A measure of protection is found in distance and freights, 
exchange restrictions, differences in technical specifications, which 
keep the article from abroad from finding a home here. The tariff 
is an ancient weapon for guarding the home market; but the domi- 
nance of overhead which makes dumping profitable has robbed it of 

" If done without the consent of General Electric, there Is a question whether such 
an Inside frosting is not an infringement, for the Pipkin patent is not on the process but 
on tiie result. 

"For a discussion of Corning's place in Hartford-Empire see pp. l*^?, 115, below. 


much of its former efficacy. In many industries, it has for prac- 
tical purposes been superseded by an understanding between domestic 
and foreign producers. This has the advantage of erecting a wall that 
cannot be jumped, resting upon an understanding between gentle- 
men, and keeping the Government out of private preserves. If overtly 
it took the form of a conspiracy in restraint of trade, it would be 
open to legal attack.^^ But as a method of securing to their owners 
the full returns from the exclusive rights which they hold in patents 
a brotherhood which stretches across the seas rests upon another 
footing. Such an arrangement bottomed upon legal sanctions ren- 
ders protective duties obsolete. As respects electric lights the tariff 
has significance only for independents. 

The general accord holds each producer to his lawful territory. 
General Electric is not formally a party to the international under- 
standing. The cartel, however, falls in neatly with the territorial 
pattern of the dome,stic industry. Its foreign business, which lies in 
a province apart, is handled through a subsidiary, the International 
General Electric Co. The latter concern enters into agreements with 
foreign corporations in respect to the pooling of information, the 
exchange of licenses, the putting of local bounds to competition. In 
addition the parent corporation has financial interests in a number of 
foreign concerns and is bound by the mutual obligations of contract 
to some of the constituent members. Westinghouse, too, has a legal 
existence abroad as the Westindiouse Electric International Co. ; and 
the two subsidiaries abroad exhibit the same friendship they cherish 
at home. A kinship of interest finds expression in an array of bar- 
riers along national frontiers over which the electric lamp cannot 
vault. Although the United States produces as many bulbs as the 
rest of the world, combined, its exports are very small. And less than 
1 percent of all the incandescent lamps used in this country are im- 
ported,' these consist largely of hand-blown bulb3 in shapes and colors 
not ordinarily produced here. The companies of the several nations, 
in the cause of progress and the pursuit of gain, share with each other 
their technical advantages and guard for themselves their domestic 

Thus, .secure from attack from abroad. General Electric can 'devote 
itself to regimenting the home market. It sells to large purchasers- 
automobile manufacturers, office buildings, manufacturers of electri- 
cal goods — ^by contract, although delivery may be made by its agents. 
With such concerns its relations are continuous and not immune to the 
reciprocity which prevails in big business. In the sale the quoted price 
is maintained ; yet a discount may lie concealed in some term of the bar- 
gain or in another transacton between the parties. The public buys 
in open market 4rom retail outlets — department, hardware, electric 

"Yet the arrangement may well be subject to antitrust action under sec. 73 of the 
Wilson Tariff Act, 15 U. S. C. A. 8, which states : "Kvery combination, conspiracy, trust, 
agreement, or contract is hereby declared to be contrary to public policy, illegal, and void 
when the same is made By or between two or more persons or corporations either of 
whom, as agent or principal, is engaged in importing any article from any foreign coun- 
try into the United States, and when such combination, conspiracy, trust, agreement, or 
contract is intended to operate in restraint of lawful trade, or free competition in lawful 
trade or commerce, or to increase the market price in any part of the United States of 
any article imported or intended to be imported into the United States * * *." The 
non-eiport clause in the licensing arrangement raises an interesting question. Is a con- 
tract not to export an agreement in restraint of trade? And, on another plane, if the 
Constitution forbids the Congress to impose a tax on exports, how is a restraint upon 
exportation by private understanding legally to be justified? Compare also the practices 
in vogue in respect to radio amplifiers as revealed in the case of General Talking Pictures v. 
• Western Electric, 305 U. S. 124 (1938), pp. 84-85 above. 


supply, five-aiid-ten, and drug stores — which liave been appointed as 
distributors. Almo?t all of these are designated "A" agents, who are 
jiermitted to 3ell only to the general trade. A few are known as "B'* 
agents, who sell to "A" agents, to certain consumers named by General 
Electric, and to some of the large purchasers bound to it by contract. 
The "B" distributors, who in 1938 numbered some 500, are without 
doubt genuine agents. But to apply the same time to the 68,000 retail 
outlets is to invoke a legal sanction to justify remote control. In 
whatever fiction of the law it may be set down, the goods are in fact 
sold by the producer to the retailer; and the arrangements between 
the parties, save for the use of the word "agent," are those of sale. At 
the time the scheme came into being, the manufacturer wished to fix 
the resale price and the law forbade;" the magic of agency was in- 
voked to retain title and all the rights which go with it until the sale 
to the user had been made. In accordance with its agreement Avith 
General Electric, Westinghouse ha,s established an identical scheme 
of marketing. The other concerns licensed to manufacture may sell 
outright to distributors; the small trickle from the factories of the 
independents goes directly to the retailers. 

A mercantile magic lies in the legal word "agency .'' Its necro- 
mancy was intended to enthrone a practice which the fair trade acts 
later pronounced law^ful. The investment of the manufacturer stops 
sharply at the bounds of his own demesne ; his authority reaches out 
to encompass the whole market. He escapes the risks, yet fixes the 
prices of the goods and secures to himself the channels of trade. 
Sales of large lamps are made by General Electric and Westinghouse 
on assignment; the title flits directly from manufacturer to consumer, 
passing the retailer by.^^ The companies issue standard lists, which 
enumerate types and sizes and specify the resale price of each. To 
"agents" allowances of from 27 to 43 percent are made in graded 
discounts, depending upon the aggregate value of sales in a given 
period. A proviso of the schedule allow^s a discount of 20 percent 
upon all lamps in standard packages to purchasers not under 

The trend toward standards has shaped the price list. Until a 
new antitrust suit recently appeared in the offing,^' the retail price 
for most types of lamps of 100 watts or less- were 10 and 15 cents. 
These prices applied to about 90 percent of all large lamps sold in 
the Uijited States. Although relative efficiency is not accurately to 
be measured, these prices are clearly lower than for similar lights 
produced elsewhere. An exception is Japan in which a 60-watt lamp 
sells for about 7 cents in American money. Here and there small 
producers establish their own retail prices, usually at a figure a 
little lower than that set by the two dominant concerns.'^ General 

" The arrangement antedates the fair trade acts of the several States and the Miller- 

TydinKs (iniendment to the Sherman Act. ^ „^^^, „ A„a or, on 

^ See the discussion of United States v. General Electric Co.. 272 I . S. 476, pp. 80-82 

18 The fiction of agency demands the term "discount." As a sale the equivalent would 
be set down as a mark-up. , , , ^ ^ ^ , .t,. • 

" A new list just issued quotes lower prices. It probably reflects, not only the im- 
pending threat of antitrust, but also the trend towards fluorescent lighting. A parallel 
incident is the recent drastic cut in the prices of phonograph records. In^the latter case 
the article had doubtless been priced out of its market, but the threat of music-on-hlnis 
was a contributing factor. It is of note that in both instances the new technology is the 
property of concerns who own the old. , j, .,■ , ^ ^ • 

18 A small differential, in favor of the independent or the unadvertised brand, is a 
widely prevalent usage of American business. In a case respecting milk, it was by the 
T'nited States Supreme Court held quite proper for a legal sanction to be given the lower 
„..:„„ „,.„ A,.A t-v.^ .vior, ■,„>,,. ic of a cnninotitivo Hi.jn Hvn iifn frp III the market. 


Electric and AVestinghouse alike exact a rigid conformity to sched- 
ules. Each of the two independently expresses its will; the schedules 
differ in form, style of type, printer's flourish. Yet by some higher 
telepathy the prices recited are identical. 

The reason, of course, runs hack through a scheme of licenses, to 
"the exclusiA'e right" in an industrial art. The original Edison patent 
expired in 1896. An addition of a trio of basic inventions made by 
outsiders renewed the armament of legal sanetions.^^ At the moment 
the patents Avhich fence in a closed preserve may be described as 
improvements upon improvements. As the original idea is elaborated 
into greater and greater detail, a single letter is succeeded by several^ 
and each of these gives way to a number. There is extant today no 
single patent for an electric lamp or for the process by which it is 
made. The gi-ants from the Government are for component parts or 
fractions of them, for steps in the process of production or variations,- 
great or small, near or remote, upon those steps. The sanctions upon 
which the scheme of marketing rest are the patents accumulated during 
the last 17 years. To the use of all of these, six companies have been 
given access; the Westinghouse company is known as "A" licensee; 
the other five, as B licensees. 

The "A" license was granted by General Electric to Westinghouse 
"as of" the 1st of January 1927.^° It is "non-exclusive," embraces 
several hundred patents, and provides for the addition of all added 
during the term of the agreement. The arrangement is to continue 
not only during the life of the patents held at the initial date, but so 
long as any patent resulting from an application then pending re- 
mains alive. It proAddes that sales by Westinghouse must not exceed 
25.4 percent of the total sales of the two companies.^^ Up to this 
amount Westinghouse is to pay General Electric a royalty of 1 per- 
cent; and, if the specified quotum is overrun, the royalty is stepped 
up to 30 "percent of the aggregate receipts from the excess in sales. 
The "leadership" of General Electric is acknowledged ; it has authority, 
over prices and terms of sale of its cooperative rival. In the unortho- 
dox competition, the licensee cannot offer greater compensation or moie 
favorable terms to his distributors than the patentee from whom he 
derives his right. Nor is he free to choose his own retail outlets; the 
licensee cannot appoint "as agents persons or companies of whom the 
licensor affirmatively disapproves as being irresponsible representa- 
tives." Conformity is, of course, the test of responsibility. Nor is 
the overlordship of General Electric limited to its own affairs. It not 
only has corporate access to the Westinghouse patents, but it can also 
grant rights to their use to its own licensees. The recipients, however, 
in their production are not to exceed the amounts they were allowed 
to sell on the last day of the calendar year 1927. In the agreement 

" In 1912 the Just and Hanaman patent covering the use of tungsten filaments was 
ac(iuired ; in 1913, the rights in the Coolidge patent which increased the ductility of the 
tungsten wire. Three years later General Electric was assigned the Langmuir patent 
whiih substituted for the Vacuum inside a non-incandescent gaseous atmosphere. A com- 
bination of these three patents furnished a lamp of greater intensity with a lower energy 

^ There was a preceding agreement whose terms were not substantially different. The 
agreement of 1927 was a solidification of General Electric's position. In it the company 
capitalized its legal victory of the year before. United States v. Oenetral Electric Co.. 
272 V:B. 476 (1926). 

f To be quite exact it is 25.441 percent. It has been impossible to discover just how 
this figure was arrived at. In all probability i>ercentages were worked out from sales in 
bimiH preceding period taken as a base. 


the grant of the license by Westinghouse is set down as "part con- 
sideration" for the license ^yhich General Electric gives in return. 

A much less elaborate understanding marks the "B" licenses. Uni- 
formly they limit sales to a specified percentage of that of the issuing 
company and upon such a volume provide for a royalty payment ot 
3I/3 percent. If, in any calendar year, any licensed concern exceed the 
specified amount by more than 5 percent, an additional royalty of 20 
percent is imposed upon the excess as penalty. In these agreements no 
prices are fixed by General Electric; but royalties are based upon a 
general schedule which serves alike as a warning against "chiseling" 
and as a reminder of what prices are reasonable. Finally, as with 
many well-known goods produced for chains or mail-order houses, the 
trade-mark is withheld.-- Although he employs the process, the licen- 
see is not permitted to use the name or symbols of the patentee, such 
as "G. E.," "Mazda," or "Edison." The prohibition comprehends ad- 
vertising, sales, and the ware itself.-^ 

All of this was, or at least was formally in legal issue in the General 
Electric case?^ Although the court's decision ^^ left its marketing ar- 
rangements undisturbed,-'^ the company proceeded to fortify its already 
fortified position. The corporation was already the owner of three 
patents — one of 1912 to Just and Hanaman, the basic patent for the 
use of tungsten filament in the manufacture of electric lamps ; ^^ the 

" The manufacture by Goodyear of tires to be sold by Sears, Roebuck under another 
trade name is the classic example. F. T. V. v. Goodyear Tire & Rubber Co., 304 U. S. 188 
(1937) t 101 Fed. f2d) 020 (1939) ; certiorari denied 308 U. S. 188 (1939). 

^ A brief summary of the restrictions imposed by General Electric upon its licensees may 
be set down in the margin : 

(a) The licensee agree.s to limit production according to an express formula. Penalties 
in the form of increased royalty payments are imposed for failure to observe the quotas 
established by covenant. Under certain conditions the patentee's license may be revoked. 

(b) The licensees agree fou the duration of the covenant to admit the validity of any 
General Electric patent included within the arrangement. 

(c) Royalties paid to General Electric are imposed not upon specific patent grants but 
upon "sales" of the unpatented incandescent lamp. 

(d) In the case of "B" licensees "sales" consist of the total number of lamps produced. 
Actual sales by the "B" licensees are unimportant in the computation of royalty payments. 

(e) Royalty payments for "B" licensees are based upon a percentage of the retail price 
charged by General Electric in disposing of its own lamps. "A" licensees covenant to 
observe General Electric terms, prices, and conditions of sale in computing royalty 

(f) "A" licensees are subject to the same distribution plan as is followed by General 
Electric. An "A" licensee may not select as a distributing agent anyone of whom General 
Electric aflBrmatively disapproves. 

(g) Licensees are not permitted to dispose of any independent element used in the 
construction of the incandescent electric lamp, presumably Whether this element is covered 
by a General Electric patent or not. 

(h) Licensees are required to refrain from producing or manufacturing light bulbs, 
tubing, or caneglass. 

(i) Li<;ensees agree to to General Electric all patents useful for the production 
of the incandescent electric lamp. General Electric, in turn, can license these to its sub- 
licensees. "B" licensees agree that their cross-licenses shall continue for the duration of 
the patent grant .so licensed despite the possibility of an intervening termination of the 
basic General Electric agreement. 

'* United States v. General Electric Co., 272 U.S. 476 (1926), and see pp. 80-82 above. 

^ It is rather interesting that the decision represents <i position far more favorable to 
resale price maintenance than even the National Recovery Administration was willing to 
assume. What the fair trade laws have done is to obliterate the distinction between sale 
and agency and to put back of the trade-mark the sanction accorded by the courts to the 

2" Some time before it was put into effect, General Eledric (submitted its system of 
"agency" to the Department of Justice for an opinion upon its validity. The official 
answer was so hedged about with silences and peradventures as to bo noncommital. A 
lower court rebuked Justice for letting the matter pass when its attention had been called 
to it, and the I'nited States .'Supreme Court held it. at least as a point in the corporation's 
favor, that the Government had not acted. An argument that weighed heavily with the 
bench was that under valid patents Westinghouse held its rights from General Electric, and 
that equity commanded protection for the price structure of the patentee against a 
possible break-down by its own licensee. 

^'The Just and Hanaman pa<-ent on tungsten filaments, aniednted by the invention of a 
metalized carbon filament in 1904, proved twice as efficient as previous conductors. Its 
fragility militated against general use, however ; and it remained for Coolidge to add 
improvements making production commercially feasible. The Just and Hanaman invention 
had its origin in Austria-Hungary and was assigned to General Electric in 1912. The, 
patent on the improvement, a contribution of Dr. William D. Coolidge, a member of its i, 
research staff, was assigned to General Electric in 1913. 


Cooliclge patent of 1913, covering a process of manufacturing tungsten 
filaments, by which their tensile strength and endurance is greatly in- 
creased; and the Langmuir patent issued in 1916. which is for the use 
of gas in the bulb by which the intensity of the light is substantially 
heightened. The three patents cover completely the manufacture of the 
modern electric light with the tungsten filament and secure to the 
General Electric Co. the monopoly of their making, using, and vending. 
The three patents, powerful as they were as props, were not possessed 
of life everlasting; they were due to expire in the years 1929, 1930, and 
1933 respectively. So to them was added the Pipkin process, by which 
through a double method of etching, the inside of the bulb was frosted^ 
thus increasing its tensile strength by some 20 percent and at least 
changing — if not improving — the quality of the light. The applica- 
tion liad made no claim of a new method for creating the inside frost ; 
it asserted only that its employment with certain types of glass con- 
tainers created a ncAv result. But where invention left off, advertising 
could be invoked to carrj^ on. A notion was implanted in the public 
mind that without frosting no lamp was fit for its function, and against 
a general belief it was impossible for an independent to go. And 
since licensees were expressly forbidden to manufacture glassware for 
use as bulbs, they were forced to obtain the product upon General 
Electric's terms. As a further bond in the maintenance of an alliance 
of corporate estates, the right to produce the frosted bulb was assigned 
to Corning, who denied the product to all but General Electric licensees. 
The company has shifted its strategic base from filament to frosting. 
By the Pipkin patent claim is laid to every frosted bull) and to every 
process of frosting which meets minimum specifications for strength 
aijd brightness. It was only after repeated objection (hat the applica- 
tion was granted ; yet its validity has, withstood the technical ordeal of 
litigation.^^ Economic necessity and the cordohs of contract support 
a great adventure in industrial cooperation.-® 

The hope of overthrowing the system of marketing by a thrust at 
the patents upon which it rests is likely to prove illusoi-y. The Pipkin 
patent is now little exposed to attack. If an action for its cancelation 
should be brought by the Government, it would be little more than 
the initial attack in an arduous and protracted campaign. If it should 
prove successful. General Electric has only to rest its license, with its 
imposing ^edifice of conditions, upon a series of other patents. If 

^ On tests in two district courts, the patent was found invalid. In each instance the 
judgment was reversed upon appeal by the circuit court. Since the two circuits did not 
disas^'ee. no fiDpeal lay to the Supreme Court. . 

2» General Electric was not the only beneficiary of its legal victory. The path opened — ■ 
or At least not closed — by the Court's decision was plainly marked. Among the first to 
capitalize upon judicial utterance was the optical goods industry, which revised its licenses 
to include fixed vertical price schedules for patented wares. To secure compliance with 
contracts on the part of firms tempted to chisel, an elaborate system of espionage is set up. 
A far flung campaign of advertising established consumer acceptance for its products. 
Those who passed along the goods either kept faith with their superiors in respect to price 
schedules or presently they departed the business. 

The Phelps-Dodge Corporation possesses exclusive rights in the B-X cable. The article 
is patented ; when manufactured it is armored and employed in transmitting electrical 
impulses. The grant is held by a subsidiary of the corporation, the National Electric 
Products Co., which issues licenses to various producers of electrical equipment. Among 
restrictions imposed are zone prices established upon all products distributed within the 
United States. In any territory the prices charged by all manufacturers are the same; 
the differentials in transportation due to different points of origin are absorbed by the 
producers. Firms may compete for customers, but uniformity in schedules of deliVered 
prices makes it impossible for consumers to shop around for better bargains. The patent 
may or may not be valid, the marketing arrangements not beyond legal question. Yet the 
popularity of the cable and the dominant financial position of the patentee prevent the 
restrictive covenant from being questioned in court. 


this should fall, the company still i? not caught short on defenses: the 
ease with whidi new patents are granted insures no failure in the line 
of supply. So long as the current electric light endures, and variations 
may be rung on its simple themfe, there can be no dearth of sanctions. 
For the possibilities comprehend patents on the product, patents on the 
process, patents on the machinery which support process and product. 
The defense could even retreat beyond the electric-lamp industry 
itself. The patents which converge upon the Corning bulb are a stra- 
tegic height far in the background ; an independent could not reach a 
sizeable volume without access to intricate machines; the things that 
make the things that make the incandescent bulb are a kind of house 
that Jack built. The fluorescent lamp, resting upon another prin- 
ciple, offers a competing technology ; but somehow patents to the new 
process have fallen into the hands of General Electric.''^ As the art 
of lighting develops, it has the resources for the long fight; it can 
continue indefinitely to lose battle after battle and still win the cam- 
paign. Even a sudden and radical shift in technology need not bring 
to Jit an imminent threat. 

If, however, patents are not vulnerable, there are other points of 
attack. It can be urged that the grants do not cover the finished prod- 
uct but only the elements from which it emerges. It would seem to 
follow that-, so far as the patent is the sanction,^^ General Electric 
■cannot fix the price of the Mazda lamp, but only, of its several parts. 
It is, therefore, outside its legal orbit in fixing the prices of lamps sold 
by Westinghouse and its own retailers. It is, likewise, currently 
open to question whether the agency which saturates the marketing 
channel is genuine. If the term is no more than a mask behind which 
to hide price-fixing and is wanting in the substance which distin- 
guishes buyer and seller from principle and agent, the credentials of 
the vending vicar may have vanished into thin air. Lastly it may be 
urged that the grant — no matter how unquestioned its validity — 
carries no authority to abate competition between licensees or to regi- 
ment theil- affairs. The exclusive right, like the power of the Patent 
Office, stops at the line marked out by the general law. 

Along one of these three paths will proceed any future attack 
upon the legality of the General Electric's marketing sys*^em. No 
one seriously challenges the value of bigness in an industry exploit- 
ing to the full quantity, production and the assembly line. But big- 
ness is finite; and the question is where, as the instrument of low 
unit cost, its limit lies. If the giant corporation rode to market 
on efficiency alone, it would be under no necessity to hedge in its 
channels against invasion by the independents. It could charge 
reasonable royalties upon genuine inventions and leave to the inde- 
pendents — with small factories and limited arteries of distribution — 
their own salvation. In an entrenched position, fortified by gigantic 
resources,- General Electric should be immune to competitive dis-" 

*> A question alike of legal interest and of concern to the general public, is whether the 
antitrust acts allow' or forbid the ownership of competing technical processes by the same 

31 It is to be remembered that in the Oeneral Electric case, the right to fix the resaje 
price is grounded upon agency and the validity of the contract. The patent is 
subsumed, since only th'oiigh the exrhisive riulrr which it confers is thi ratenteu able to 
dictate his conditions. The fair trade acts might be used by <Teiieral Klectric as a defense 
unless thoy contain provisos limiting their application to trade-marked goods wh.ich are in 
active competition with non-trade-inarkod goods. In an antitrust suit, no su<'h dDfcnse 
would be available, since the Miller-Tydings amendment contains such a proviso. 


advantage. Its studied attempt to impose handicaps upon its rivals 
raises a presumption against its jDrofession of efficiency.^^ 

There is here no quarrel with the prhnary intent of the patent 
law. The inventor — or his assignee — is worthy of his reward. The 
issue starts where privilege is pushed beyond the royalty. If the 
licenses issued by General Electric were stripped of their regulatory 
features, a free market might be restored to electric lamps. If, 
instead, it should prefer not to license at all, but to retain all 
manufacture within its own hands» the same result mi^ht follow. 
Independents would challenge the validity of doubtful patents 
rather than face extinction. Or they would take inventions whose 
patents have already expired and graft upon them ingenious im- 
provements of their own. The refusal to deal might give a powerful 
stimulus to the development of some alternative method for the 
conquest of darkness. Science has many leads to offer ; and a closed 
door might be a signal to adventurers to follow them. It may be 
that the gas-filled bulb should long ago have become obsolete. If 
fluorescent lighting is ever given a fair chance at development and 
access to the market on terms which allow real competition, the Mazda 
lamp seems headed for the museum. And who can say what illumi- 
nation might follow some lead which the laboratories already offer. 

The advantages of large-scale production are fixed by the tech- 
nical process itself. In automobiles — the case which has become 
classic — there are three large concerns. In electric lights a single 
corporate control lies heavy over a large number of factories. A 
change in marketing arrangements demands no revisign of the sys- 
tem of production. A return to competition decrees no pulveriza- 
tion of the industry into small bits. The fealty of the 
manufacturer rests upon conditions in his license which have little 
to do with putting an invention to work. "The bondage of the 
retailer derives from a subtle distinction which the court has been 
persuaded to play with the word "agency." The marketing scheme 
fails of validity by reference to its derived intent of promoting the 
progress of the useful arts. 


As a metal with a past, beryllium goes back to the days of Nero; 
as an article of commerce, its history covers a scant decade. A pro- 
moter, Andrew V. Gahagan, set out to develop synthetic metals; -in 
1030 a staff in his employ added small quantities of beryllium to 
copper and nickel and developed alloys of astonishing properties. 
A chisel of beryllium-copper can cut structural steel and has three 
limes the tensile strength of duralumin, the metal previously best 
adapted to airplane construction. A 1-inch bar of beryllium-nickel 
can support a load of 15U tons, and springs made of it have never 
been broken by fatigue. A watch composed of these allows has 
been dropped from an airplane at h height of 3,000 feet and only the 
crystal had to be replaced. An exploitation of the properties of 
beryllium alloys has been a recent triumph of German airplane 

^- As this goes to press, the Antitrust Division of the Department of .Justice has begun 
United States v. Oeneral Eltctric Co., District Court for District of New .Jersey. Chil No. 
1364. alleging that 12 corporate defendants have combined to fix noncompetitive prires. 
to restrict production artificially, and to control the business of Independent manufact .urcrs. 


The metal, the fourth lightest of all elements, is found in many ores, 
the deposits of which are quite widespread. The methods by which 
it can be isolated and purified are reasonably inexpensive. The great 
barrier to its commercial use h^fs been the difficulty of fusing it with 
other elements. Its specific gravity is only half that of water and when 
melted it tends to float upon the surface of other molten metals. It 
was the pioneer work of Gahagan's technicians which in this country 
opened the door to industrial use. 

When patents were applied for, Gahagan discovered that Siemens 
& Halske, one of Germany's most powerful corporations, had pre- 
ceded him. Through its subsidiary, Hereus Vacuumsehmelze, it had 
secured patents on processes leading to the same result. When Gaha- 
gan sought "cooperation," to avoid a long and costly struggle in the 
courts, he discovered that the foreign concern had assigned all it? 
rights to the I\Ietal & Thermit Corporation, an American company. 
The transfer was purely nominal. The German firm had feared dis- 
crimination against aliens in the Patent Office and had taken steps to 
push forward their claims under domestic auspices. Gahagan, how- 
ever, took the fiction for the reality ; persisted in overtures to Metal 
& Thermit, who were powerless to deal ; discovered after 3 years where 
real ownership lay. 

Once informed as to the situation, Gahagan found it easy enough to 
come to terms with his competitors. Through a deal consummated 
in Germany, the two parties made their patents mutually available; 
each agreed to pay to the otlier a royalty on his sales. In a division 
of the world market Gahagan received exclusive rights in America and 
Siemens was given a free hand in Europe. Thus for each of the prov- 
inces, and without an act of Congress or any legislative body, a tariff 
w^all was erected. The American Corporation had the hemisphere to^ 
itself, enjoyed protection against all rivals, was independent of foreign 
competition in fixing of prices. In return it was compelled to sacrifice 
sales abroad, to abandon an outlet for the products of x^merican capi- 
tal and labor, and to forego a plant expansion which later miglit have 
proved a national asset. The threat of litigation conspired with the 
usages, of license to convert an international competition into two 
land-locked domains. 

If the United States has condoned so vagrant an employment for 
patents, some other nations have been less tolerant. Some time after 
the agreement, when Gahagan was on his way to Germany, he was 
requested to stop in England. Although he knew of rio British holders 
of his securities, he complied with the request. Then for the first time 
he discovered that one of his directors was holding stock for a Mr. 
Jamieson, the chairman of the board of the Vickers Co., a dominant 
concern in munitions. Jamieson, he discovered, nad knowledge of his 
arrangements with Siemens which he had assumed to be quite secret. 
Jamieson stated that, if a war should cut off the supply of tin from 
Bolivia and the Malay States, beryllium could be used as a substitute — 
hence that it was of great military importance to Britain. He 
announced that Vickers, Kolls-Koyce, and other manufacturers of 
armament were willing to purchase from the United States, but did 
not choose to become dependent upon any alien European cartel. 
Therefore Jamieson demanded that Gahagan abrogo; the provision 
in his agreement with Siemens which forbade Ameri' an production 
for, or sale in, the English market. When Gahagan protested his. 


inability to escape the obligations of contract, Jamieson replied that 
he would take care of it. 

The words were no idle boast; at once the qiiestion moved from a 
corporate to a semidiplomatic level. A little later when Gahagan 
went into conference with his German associates, the initiative was 
taken by one Frederick Giller, an "unofficial r-^presentative" of the 
British Government. If the market in th© Un: .ed States was closed 
to it, England intended to develop its own beryllium industry. It 
was true that the patents which it had granted to Siemens were an 
obstacle; and, since the country was not at war with Germany, it 
could not confiscate them. But recourse could be had to a statute 
which provided for a compulsory license to make, vend, and sell where 
the patentee suppressed his invention or neglected to go into produc- 
tion.^^ At this threat the Germans — with the reluctant concurrence 
of their government — agreed to the proposed modification of the con- 
tract. The Beryllium Corporation of America was permitted to sell 
to a British company which in turn was to sell to the British arma- 
ment makers. Nevertheless, the victory for Britain was not complete. 
Siemens reserved to itself the power to cancel any order of which it 

All was quiet along the international front until England's decla- 
ration of war. The British Isles became a province of American 
beryllium; orders were placed and delivered; the commerce fell into 
a regular groove. But, as hostilities began, the German veto came 
into play. Siemens stood on "exclusive rights" granted by the United 
States Government; the Beryllium Corporation was its licensee; the 
contract recited the conditions of manufacture and sale ; the patentee's 
veto over shipments to Great Britain was clearly denominated in the 
bond ; if the terms of its license were flouted, it would institute suit 
for infringement. The Beryllium Corporation apparently is selling 
to England despite this order from Siemens. It therefore faces a 
possible suit for infringement or injunction whenever Siemens decides 
to act. Thus a private understanding, resting upon letters patent, 
was in eflPect allowed to insert a proviso in a Federal statute. An 
act of Congress allows the business firms of the country to sell 
to any nation, provided the buyer comes here, pays cash, and car- 
ries the goods away at his own risk.^* The amendment, inserted with- 
out being referred to the two Houses, allows one nation to veto ship- 
ments to another nation with which it is at war. 

- In the meantime American beryllium moved along a tortuous 
path. It was, if not the metal, at least a metal of the future. A num- 
ber of enterprising individuals began production. None were of a 
size to challenge the Beryllium Corporation, and it was too busily 
engaged in pioneering to seek to eject petty trespa^sers.^^ Now Ga- 

^ Patents and Designs Act of 1907, § 27. 

^ Neutrality Act of 1939, as amended, 22 U. S. C. A. 2451 

3= Note in the Hearings of the Temporary National Ecomnic Committed Part 5, p. 2049, 
the following colloquy : 

"The Chairman. Do you the committee to underst r\ 1 the Beryllium Corporation Is 
not enforcing its patent rights? 

"Mr. Gahagan. We haven't tried to yet. 

"The Chairman. X)o you intend to? 

"Mr. Gahagan. Yes, sir. 

'■The Chairman. And if and when you do enforce th' S( patent rights, you will practi- 
cally have complete control of the industry, is that correc ? 

'/Mr. Gahagan. That is what I hope to have. 

'The Chairman. And these competitors could not cc ii/ite with -^ou unless they had a 
license from you, assuming that the courts upheld the ff ::t: ? 
Mr. Gaha'-'-sv. Thnt is ri^ht " 


hagan has indicated that there is a limit to his patience; but his con- 
fidence in the character and broad^ boundaries of his grants is not 
shared by all the members of the trade.-""' And, until tliey are sub- 
jected to the fire of litigation, it is impossible with accuracy to define 
his rights. 

If Gahagan should invoke the law. he is likely to encounter diffi- 
culties. The Masing & Dahl application, filed by the German affili- 
ate, was originally w^ritten to cover t!ie heat treatment of beryllium- 
copper, no matter what other metals might be added. In an inter- 
ference proceeding, however, the Patent Office Innited the claims to 
exclude any othei m* ^al whose addition substantially altered the prop- 
erties of the alloy . coreover, at ihe same time, a patent was granted 
to a certain Corson for the treatment of beryllium -copper containing 
nickel. This patent was assigned to the Electro Metallurgical Cor- 
poration, a subsidiary of Union Carbide & Carbon, under whose 
license, Brush conducts its business. Since Brush does not sell to 
fabricators who employ the Masing & Dahl process, it does not 
regard itself as vulnerable to Gahagan's attack. 

Although the law has not been invoked, there have been rumblings 
of an impending conflict. As early as 1935, one Ferdinand A. Ker- 
tess, the American representative of Deutsche Gold- und Silber- 
Scheideanstalt, A^diich had purchased Siemens' beryllium interests, 
wrote to Dr. Sawyer, of the Brush Corporation, suggesting "pri- 
vately" that "it would be a good thing for all of us" if, like good 
Americans, Brusli and Gahagan should get together. He suggested 
that one of the concerns should produce beryllium and the other manu- 
facture alloys. Such a division of products promised "extensive prof- 
its" to all concerned. He was careful to state that the objective of 
liis proposal was not "the elimination of competition" but rather 
"scientific cooperation" and "lower costs of research."^' Then with 
a rhetorical flourish, he reminded Sawyer that his rival held "im- 
portant key patents"; insisted that "for the moment it can be disre- 
garded whether such possessions meant a tight monopoly"; and 
warned that for "another manufacturer" to "disrespect them" would 
"certainly" involve "lots of trouble and cost." But Dr. Sawyer was 
uninterested; as yet litigation did not impend — and there were the 
antitrust laws. 

A little later another attempt was made to bring the folkways of 
the German cartel into the American industry. On this occasion the 
apostle of cooperation was a Dr. William Rohn, a pioneer in beryl- 
lium. He had graduated from scientist to head of the Heraus-Vac- 
uumschmelze Co.. a subsidiary of Siemens. In a conference Sawyer 
was told by Dr. Ilohn that Brush had been guilty of unethical con- 

^Di-. Charles Sawyer, of the Brush Beryllium Corporation. Hearings of the Temporary 
National Economic Committee. Part 5. n. 2137. 

"Note the persistence with whicli Kertess elunfr to the cause of science: 

"Mr. .\RNOLi). Tlien you say if you. for instance, could come to a comparatively loose 
agreement with Beryllium Products Co.. your compiiny handling the matter, do you mean 
handling the matter refers to research? 

"Dr. Yes. 

"Mr. .Vrxold. Or whether you could make up your mind to acipiiie shares, you have to 
acquire shares in order to protect the research? 

"Dr. Kektess. Yes. 

"Mr. Au.Noi.n. And you also meant bv the word profits, resc^'irch? 

"Dr. Kertess. Y'es. ' . 

"Mr. Ar.vold. So handling the metals, handling the alloys and acquiring shares and 
profit^ all refer to research? 

"Dr. Kektes.s. Only." — Hearings. Temporary National Economic Committee, Part 5, 
p. 2075. • 


duct ; that it Imd sold products in the European market at prices below 
those quoted b}- the Continental cartel: that its behavior at home was 
little it any better than abroad. The insistent Dr. Rohn boasted of 
effecting a merger between five or six British companies and cited as 
proof of his magic a oO-percent increase in the prices of their prod- 
ucts and regular dividends. Dr. Sawyer was no more moved by an 
appeal to profits and the proprieties than by the former argument 
for research. 

But, while impulses fvom abroad played upon Sawyer and the Brush 
company, its competitor was not idle. American Beryllium Avas busied 
with the promotion of its products. An obvious customer for its 
copper alloy was the American Brass Co., the fabricatirrg subsidiary 
of Anaconda Copper. An agreement between the two parties made 
American Brass the exclusive outlet of Beryllium Products foi^ a term 
of years and fixed the price at $25 per pound. After. 2 years, as a 
prod to its own salesmen, American Brass permitted purchase by the 
Riverside Metal Co., a competitor. Then a misunderstanding brought 
a cloud over the agreement. In spite of a clause providing for a re- 
duction as volume increased, American Brass boosted its price for the 
fabricated metal. It also announced that it would purchase no more 
alloy, since the stock on hand was enough to last a year. When Ga- 
hagan protested, another motive came into the open. He was told that 
American Brass was not interested in pushing a product which would 
compete with its established business in phobpher bronze. Its prices 
for sheet, wire, and rods fabricated of beryllium-copper give evidence 
of keeping the faith with its own product. In spite of sharp decreasies 
in the price of the allov itself, tliey show an upward trend from 78 
cents per pound in 1932 to $1.10 and"$1.30 a pound in 1939. 

Tlie outlet for the new metals was through the copper industry. 
American Brass dominated this market; the ways of the trade made 
it the price-leader. Riverside, the other important fabricator, had 
no alternative but to follow the prices, without regard to its cost or 
]n-ofits. In 1939 Amei'ican Brass delayed adoption of its new price- 
lists until the matter had been thoroughly discussed with the president 
of Riverside. The executives of the companies agreed that the future 
of beryllium-copper depended upon a reduction in price down toward 
that of phospher bronze. One witness testified that there was a pro- 
posal to pass on to the consumer 10 cents of the 18 cents reduction in 
the cost of the alloy. A representative of American Brass could 
recall mention of no such figures. The exchange of price-lists was 
freely admitted ; a letter in the files of American Brass referred to a 
list of "recommended"' prices as having been "suggested by" River- 
side's president. The market for Gahagan's product had, through 
the usages of patent and license, been played into the hands of parties 
interested in a competitive product. 

Along with this came another discouraging blow. After it had 
become an accomplished fact. Gahagan learned that Brush was selling 
to American Brass. As a consequence, he was forced to reduce his 
prices to Riverside and other customers. Since these reductions have 
not been passed along, the effect has been to divert income from Beryl- 
lium Products to its vendees. Accordingly the concern contemplates 
an extension of its operations into the field of fabrication. Although 
this may increase the demand for beryllium, it will not relieve the pres- 
sure of Brush's competition. The antidote is a vigorous campaign 


for infringement against all fabricators who employ Guhagan's heat 
treatment withont coming to terms' with him, taking liis license, and 
purchasing his beryllium. As yet this has not been undertaken ; but 
the moves by Kertess and llohn toward cooperation indicate that 
parties who may be concerned regard tlie threat as ominous. 

Here is a case of an infant industry. A number of synthetic 
metals, possessed of an unusual combination of qualities, promise to 
win for themselves a large place in the operations of industry. The 
products are of great significance for a program of national defense. 
It is imperative that experimental work go forward: that future 
need be anticipated in plant capacity ; that, when emergency impends, 
the trade shall be ready to deliver. Here is a distinctive opportunity 
for the patent system to perform its office in the national economy. 
Yet, from this instance alone, a glowing testimonial could hardly be 
written to its capacity to promote the progress of science and the 
useful arts. Its work is most manifest in the realm of foreign rela- 
tions. Official grants have sei-ved as a foundation for an interna- 
tional cartel which has divided territory, restricted output, fixed 
prices. It has created a pawn to be caught up in the game of com- 
petitive nationalism. At home the new metals have come under the 
control of concerns Avhose dominant interest is in enlarging markets 
for old ones. A rivalry between Gahagan and Brush, in the produc- 
tion of beryllium, is short-circuited by the solid front maintained by 
the fabricators. A domestic situation, in which the privileges ac- 
corded by patents are set against closed channels of trade, gives a 
strange twist to the competitive design; 

The competition is itself an anomaly which marks tlie youth of 
the industry. The relation of Beryllium Products and Binish will 
not bear reference to any norm of expectation. At home patents a^e 
a continuing -threat to any independent who incurs the disfavor of 
Gahagan's company. Yet so far the threat has not developed into 
the action. The conduct of the larger concern still reflects more of 
the pioneer than of the promoter; the company is still far more a 
personal venture than a corporate instrument of money-making. The 
validity of the patents has not yet been verified by litigation; no 
statement of their scope can be set down with certainty. The atmos- 
phere which envelops is not one of brotherly accord, yet every party 
in interest hesitates to touch off a lawsuit. All know that litigation 
will demoralize the industry; that the issues will drag wearily 
through the courts ; that, by reference to technical standards, the out- 
come is unpredictable. It is only through such a preponderance of 
resources as to exhaust adverse parties that certain victory is to be 
won. As like as not unity will come from without. The situation is 
ripe for the appearance of a mighty corporation whicli will wield ' 
the technique of high finance in the cause of the united front. It will 
stake out an estate, consolidate claims, pocket the reward decreed by 
the law for the inventor. A great market beckons, certificates of 
privilege are in circvdation ; American business will prove untrue to 
the spirit of acquisition if it fails to turn opportunity to account. 



The glass container against the automobile throws patent practice 
into sharp relief. One industry has exploited fully the official grant 
which the other has regarded somewhat as common property. The 
two cases mark the extremes; between them lies almost all that is 
comprehended in current usage. 

The gentlemen in the glass container industry have long been de- 
sirious of security. The raw material is to be found almost every- 
where; the capital required is not excessive; labor which can be fitted 
to the task is widely available. ' And, in spite of the formidable ap- 
pearance of the machine, the art of bottle-blowing is comparatively 
simple. All of the requisites, save one, are in easy reach of all comers. 
Were technology free, the industry would be wide open — and prob- 
ably as chaotically competitive as women's dresses or bituminous coal. 
Yet, because of the closely guarded process of fabrication, a fence 
shuts in the industrial domain. A number of units — which once 
were inclined toward trade war — have found their places in an empire 
which bows to a single authority. Hartford, home of the Hartford 
Empire, is the capital ; Corning, of the Houghton Associates, and 
Muncie, or "'Middletown." of the Ball Brothers, are leading provincial 
cities. And Washington, D. C, the domicile of the Patent Office, is 
a kind of treasury, too remote to disturb with a will of its own, yet 
near enough to supply every necessary support to an entente cordial 
which runs on. 

The glass container is a commodity after its own kind. It is not, 
like dates, or pork, or hides an article which nature provides. It is 
not, like cloth or shoes or spectacles, fabricated to serve a distinct 
human need. It did not, like ice cream, the radio, or tobacco create 
its own demand. Instead, goods of many kinds had to be packaged 
or they could not go to market, and the instrument of glass, because 
of cheapness or convenience, replaced other containers of wood, paper, 
or metal. The article, accordingly, enjoys an unearned increment 
created by forces not of its generation. The canning of frtiits and 
vegetables on the farm called forth the Mason jar. The decree of 
pasteurization outlawed the peddler's dipper and evoked the glass 
bottle. The coming of prohibition drove the outlawed liquid from 
mug into receptacle and stimulated the sale of bottled soft drinks. 
Repeal brought back — not the pitcher and the family entrance — but 
the beer bottle. 

A primitiA-e art, resting upon "blowing by hand," could hardly 
withstand such social trends. As early as 1905— 'a point of time more 
than twice the life of a patent away — Owens had developed an auto- 



matic suction machine for making glassware; a little later Hartford- 
Faij-mont patented a gob-feeding device which served the like pur- 
pose. At the same time Corning was perfecring a machine process 
for making glass bulbs. The tliree large concerns did not have to 
create a market for their j^roducts; they had only, with the rights 
whicli their patents gave, to go forward and possess it. They had 
little to fear from others; for the ancient art could not compete with 
the new technology. They did not. except to keep their grants alive, 
have to improve their methods. The only threat w^as a practical sub- 
stitute; and it was slow in coming.^ The companies could — so long 
as basic patents were periodically refreshed — continue to supply a 
rapidly expanding market. If neighbors should attempt to barge in 
with the same process or product, the courts could be invoked to 
arrest the trespass. A stop was called to all competition from out- 
siders — in glass containers or in glass machinery. The field belonged 
to the three; ar.d. had tliey chosen, the Titans might have battled for 

Each cast longing eyes over the whole of the promised land — ^but 
in the end they did not so clioose. A sliarp boundary was drawn about 
a great empire by the series of patents; the companies had to appoint 
their own lines between provinces or leave them to the courts. In 
driving into the other fellow's territory the stakes were high but the 
costs and hazards were heavy. It was a game at which all could play; 
every foray was sure to be followed by reprisals: offense was certain 
to be the best defense. In 1915, Corning and Hartford bowed to the 
cost of litigation; a cross-licensing agreement gave to Hartford the 
field of glass containers and to Corning the realm of bulbs and specialty 
wares. The rapprochement presently' led to an anschluss; and in 1922 
the two concerns entered into a full-fiedged pooling agreement. At 
the time, Hartford-Fairmont was reorganized as Hartford-Empire; a 
controlling interest, 59.5 percent, in the new venture went to the stock- 
holders of the old Hartford-Fairmont Co.; 40.5 percent went to the 
Empire Co., a subsidiary of Corning, which in turn was controlled by 
the Houghton family. Their minority interest, however, received 
recognition in the right to name four of the nine directors of the new 
corporation. The common accord, in respect to production and price, 
was continued. The first act in the welding of the empire was 

Owens, however, had to be faced and Owens occupied strategic 
heights. It had found that Hartford's gob-feeding process was a 
menace to the sales of its suction machinerj' ; so it had begun to buy 
up gob-feeding patents in preparation for an economic battle to be 
waged with legal weapons. In 1923 it instituted a suit for infringe- 
ment against one of Hartford's licensees — the initial attack in an 
arduous and uncertain campaign. The parties took one long look at 
the hazardous way ahead, another at tlie richness of the prize to be 
won, and decided to divide the spoils. Except for the rights which 
Owens held in the suction process, each was licensed to make use of the 
patents of the others. As respects the suction process it was agreed 
that OAvens should not assign its rights: Hartford should not license 
certain machinery without Owens' consent : Owens should not employ 
its patented process to manufacture products competing with Corning. 

^ The paper container lias made inroads and is now displacing somewhat the milk-bottle. 
But it must be made far more dni'able and air-tifrht to become a serious rival. A metal 
container has made some headway as a substitute for the beer bottle. 


As mutual consideration Owens ayus to i)ay royalties at Hartford's 
lowest rate ; Hartford was to turn over 50 percent of its di^'isible income 
less $600,000. The alliance was to be supported by equal contribution 
to a war cliest which was to be drawn upon for the acquisition of pat- 
ents and the prosecution of suits for infringement. The second act 
in the welding of the empire was complete. 

Next a blitzkrieg was directed against the independents. They were 
harassed with suits for infringement, which kept them occupied, 
drained their resources, disorganized their markets. In the end they 
had to capitulate and accept the settlement dictated by the alliance. 
Their patents — not yet invalidated by litigation — were taken over by 
Hartford. Such as were left in business were compelled to accept li- 
censes from Hartford and to pay a tribute of which Owens received a 
share. In instances the threat of a bout at law was enough ; in others 
independents or their customers had to have their days in court before 
they were willing to capitulate 

Along with these events went a move to domesticate the patents to 
the acquisitive arts. A research staff, widely publicized as an instru- 
ment of technical advance, was given the task of improving the proc- 
esses of production. All innovations were duly patented, but not so 
promptly put into effect. As others came forward with inventions, 
Hartford intervened, and the proceedings were protracted until the 
lesources of the applicant were completely exhausted. It caused its 
own novelties to linger around the Patent Office for years, thus de- 
ferring the date of issue and thus prolonging the life of the protection. 
One basic patent, for which application v>as made in 1910, did not 
emerge until 1937: thus a grant which should have run its course by 
1927 retains its validity until 1954. A similar device, but fitted out 
with a narrowed claim, was in 1928 accorded letters patent which 
expire in 1945. Yet, although its life terminates then, protection runs 
on because of the longer grant. Thus for Hartford legal sanctions 
have been kept alive as the patent has been harnessed to the balance- 

The venture into imperialism was vigorously pushed by Hartford 
and associates. After a running fight of several years, Hazel-Atlas 
came into the entente. The runner-up to Owens lost its independence 
and was assigned its place in the empire. And Hartford's divisible 
income — which included royalty payments on the Hazel-Atlas pat- 
ents by its former competitors — was now sjjlit three ways. Next 
Thatcher and Liberty, large manufacturers of milk bottles, came in ; 
agreed to pay royalties; and received preferred treatment. Next their 
competitors were forced to take out licenses; and, in order that the 
market might not be spoiled, to accept production quotas fixed by 
Hartford. Last of all. a preemptory invitation was extended to Ball 
Bros. They had long been manufacturers of fruit jars, held the 
dominant position in the field, and lay entrenched behind their own 
patents. Ball continued to use tlieir own process; agreed to pay 
royalties on inventions of which they made no use ; and received as- 
surance that no new licenses would be granted which encroached on 
tlieir territory. The third act in the welding of the empire was now- 

The monopoly had been fashioned : its lines sto(^d sharply out. Con- 
cerns with, power were accorded appropriate places; the small fry- 
were treated as nuisances to be abated. An analysis of the ioti] 


American production of glass containers reveals the design con- 
sciously wrought into the pattern of the industry. It shows Owens 
with 38.03 percent of the total output; Hazel-Atlas, 16.89; Anchor- 
Hocking, 8.01; Thatcher, 2.87; Ball Bros., 3.75; some 33 other licensees 
from Hartford, 27.05; and 3 independents with 3.40 percent. Thus 
of the total, Hartford is overlord to firms with 96.60 percent of the 
entire output. Of the 3 independents 2 are now being sued for 
infringement. And the authority of the sovereign, with its power to 
grant or deny access to the channels of trade, rests upon documents 
issued by the Federal Government. 

Hartford has thus become benevolent despot to the glass container. 
Only by its leave can a firm come into the industry ; the ticket of ad- 
mission is to be had only upon its terms; and from its studied deci- 
sion there is no appeal. The candidate must subscribe to its articles 
of faith ; he must not be a price-cutter nor a trouble-maker. So long 
as he lives up to its rules he may run his own business as he -pleases. 
He may be as wasteful or as efficient as he pleases within his own 
establishment; but he may not make his customer the beneficiary of 
his efficiency. He enjoys a freedom under authority; the concerns 
are severally members one of another; independence must not go so 
far as to put a brother concern in financial jeopardy. 

One who seeks induction into the mystery of bottle-making must 
present himself before "the character committee" of the sovereign 
company. He must persuade it that he is a man of integritj^, that 
his financial position is secure, that his economic ideas are sound. 
But, however elegant his qualifications, he can scarcely hope to be 
accepted unless there is room for him in the trade. For admission 
does not depend upon probity and pecuniary competence alone; nor 
is it fixed by those automatic checks and balances of the market which 
are "the balance-wheel of capitalism." Rather the issue belongs to 
the politics of industry and turns upon how much comp'etition is 
best for the competitors. The company prides itself upon its com- 
plete information, its ability to gage the market, the neatness with 
which it accommodates its licenses to an increase in the demand for 
the product. Its avowed intent is, not the protection of vested in- 
terest against the newcomer, but doing nimbly and promptly what 
the market haltingly and clumsily would otherwise have to do for 

The empire is not opposed to competition ; but it seeks to further 
normal, and to escape "ruinous competition." ^ For that reason 
"Hartford inserts restrictive provisions in its license. Whether con- 
cerns came in willingly or were conscripted, each was assigned its 
demesne. In general, the initial standard was the status quo. Each 
firm was permitted to manufacture the products and was accorded 
the share of the market to which it was accustomed. But it is not 
easy to arrange a number of parts which just grew into an orderly 
scheme, and in the process readjustments were necessary. A number 

- Nofo the followiiifr pxclianirp betwppn IMr. Hugh Tox, for the Dppartnient of Justice, and 
Mr. I<\ Goodwin Smith, of the Hartford Empire Co., before the Temporary National Eco- 
nomic ("ommittee. Hearings, i'art -!. )». 41;! : 

"Mr. Cox. The effect of that kind of a policy i.s to protect the existing manufacturers of 
milk hotfles fiom competition, fi-om newcomers in the field, is it not? 

"Mr. S.\UTii. No; 1 don't like to i)Ut it that way. It is to protect the present mnnu- 
facturi'rs. to make money, and to produce milk bottles cheaper." 

» Ibid, p. 427 ; 

".Mr. Smith. It has never occurred to me that our policy maintains a price. I would 
say that our policy has prevented ruinous competition." 


of companies had to give up their minor wares; the overlapping of 
products was reduced to trimmer lines; and members too weak to 
dictate terms had to be content with what was offered. Rarely was 
a licensee permitted to extend his former domain. To such gener- 
osity "he has no right because he has never been in the habit of 
producing that ware" and his business was not "in that particular 
line.'' But no absolute ban was placed on expansion. If a licensee 
Avished to take advantage of "some particular situation," Hartford 
could be depended upon to do the decent and reasonable thing.* 

The restrictions take a variety of forms. Limitation by type is 
universal ; and containers of the same type may be distinguished by use. 
Fruit jars used for home canning and by commercial packers may 
look alike, but for purposes of the license they are distinct wares. 
The sale of the one for a purpose to which the other is ordinarily put 
would be a violation of the law of the industry. Such respect is 
accorded the division of labor that a concern is permitted to fabricate 
bottles for chocolate milk, with the condition that they are not to 
be sold to dairies. Precaution adds the postscript that under no cir- 
cumstances are they to serve as containers to unchocolated milk. The 
Buck Glass Co. is authorized to manufacture wine bottles for sacra- 
mental purposes only. The operations of the Sayre Glass Works are 
to be restricted "to such bottles, jugs, and demijohns as are used for 
vinegar, ciders, sirups, bleaching fluids, hair tonics, barber supplies, 
and fluid extracts." Likewise Florida Glass Manufacturing Co. must 
fashion its containers so skillfully that they may be filled, only with 
mayonnaise, peanut butter, preserves, sirup, and honey. Knox Glass 
Bottle Co. is allowed to make only amber ginger ale bottles; Mary 
Card Glass Co. only blue glass containers; Carr-Lowry Glass Co. only 
opal colored products. ' Hocking Glass Co. may not make products 
M-eighing more than 82 ounces; and Baurens Glass Works, Inc., is 
licensed to provide bottles for castor oil and turpentine, but none to 
exceed 4 ounces in capacity. 

It is impossible to reduce such restrictions to a simple table. The 
criteria of classification are so numerous and so variable that an enu- 
meration of all the instances is necessary to recite the story.^ Broad 
fields such as milk bottles, beer bottles, and fruit jars are not 'always 
left intact; narrow domains are often cut up into small holdings. A 
number of manufacturers are permitted to sell only to specified cus- 
tomers; one company may not ship his products outside the States 
of "Washington, Oregon, Idaho, and Montana, and the Territory of 
Alaska." Where a single concern has an exclusive license to manu- 
facture a single type or for a specified use, output demands no formal 
control. Where two or more produce the same product, there must 
be an orderly sharing of the market. To such an accord a system of 
quotas is directed, which may be fixed either at a specific number of 
units or at a given fraction of the total output. But, no matter how 
devious the specifications, they hold no confusion and no source of 
discord. Each fief has its exact place in the pattern of the industry. 

* Note the respect accorded the amenities among gentlemen — ibid., p. 407 : 
"Mr. Smith. * * . * if some particular situation arose where you might say, almost 
as a matter of courtesy, if he wanted to make just a small quantity of that particular line 
of ware for a particular concern, we say, 'AH right, go ahead,' and we added that right to 
his license," 

' It is said that in drawing a complaint against the Hartford Empire Co.. attorneys in 
the Department of Justice made repeated attempts to throw all the restrictions into a 
graphic table which the eye could easily take in. They were estopped by the number and 
variety of the criteria employed and had to fall back upon a recitation instance by instance. 

114 concp:ntkation of econoaiic power 

The net result is a business despotism. The free play of the mar- 
ket hafi been replaced by the controls exerted from the directors' 
board, Hartford Empire is the creation of the dominant companies 
and represents tlieir interest. The smaller concerns exist by its suf- 
ferance; and for them it establishes the conditions of busir.ess life. 
Its license — granted, revised, revoked at the pleasure of the cor- 
poration — is the riirht of its possessor to his trade. Its control runs 
out, through its affiliates, to comprehend all with whom they do 
business. In many instances it decrees that all who use a certain 
type of glass container must purchase from a single firm. In others 
it fixes the terms of ultimate sale and leaves to the processor of the 
product no option but to take or to refuse the bargain. The network 
of conditions attaching to license constitutes a scheme of an-ange- 
ments under which the various firms carry on. If it is a "self-govern- 
ment for industry," it is an industry in which consumers, who must 
pay the bills, have little voice, and in which tlie various members 
share in proportion to their financial strength. 

In Hartford -Empire the lines of a corporate estate appear in 
bold relief. As phial, fruit jar, beer bottle, the ware is the most 
ordinary device. Its raw materials are omnipresent ,' it demands 
little manual skill from labor; its technical process is easily mas- 
tered. Yet it has become a dominion unto itself, hedged off from 
invasion on all sides. An order, a government, a system of law has 
been constructed for the whole industry upon the grant of letters- 
patent from the Federal Government. In a series of moves, the 
cor})oration has made itself sovereign; usurped the operation of the 
market : nrade dependent provinces of each concern it has taken in. 
It appoints to each its product, decrees its pric*, limits its output. 
Its powers of police cx)mprehend many feudal estates; it levies toll 
upon every industry which must make use of its product. Its do- 
minion extends to every aspect of the trade and its system of police 
is far more effective than that of any arm of the Government. Its 
authority — which rests upoji a giant from the United States — is far 
broader than the Supreme Court has been willing to accord to a 
sovereign State of the Union.^ 

It is easy enough to recit« a case for Hartford Empire. It has 
come into being in response to a demand for order within the industry 
and st>curity to its firms. In glass containers, conditions do not 
invite , a well-behaved competition; to allow the trade to remain 
open to all who wish to enter it is to invite chaos. Firms would 
rush in, capacity to produce would quickly outrun the capacity to 
absorb. A concern, met with a falling demand for its product, 
w'ould seek to produce other wares. The advantages of specializa- 
tion and quantity production, with their attending efficiencies, would 
presently be lost. As production fell back into a multiple process, 
costs woiild rise and higher bills would eventually be thrust upon 
the public. There would be a constant threat to solvency; the 
periodic epidemics of bankruptcy would fall upon all alike. In the 
end the plight of the glass container would become like that of 
textiles, dresses, or soft coal. All lines would fade from the trim 
design of the industry. All who have a stake in its operation would 
liave to pay for an emergent disordei'. 

<■■ Vfi/- ,^fnt€ fee Co. V. Lichn'nn. 28.5 U. S. 2rt2 (1932). If the nctivities of Harford 
:iiil>irp are Icnal. a grant of pauiit has nii amplitiulp of authority in excoss of the police 
ower enjoyed by the several States.. 


The scheme is a barrier ajxiiinst industrial confusion. The creation 
of a structure accommodated to the task to be done is affected with 
a public interest. As the modern system came into being. Statutes of 
the Realm repeatedly sought the well-ordering of particular trades. 
If somewhat later the whole matter was left to the market, it was 
because competition was regarded as competent to impose design 
and purpose. In glass containers it is no longer able to do so, and 
all that Hartford-Fairmont. Corning, Owens and others have done 
is to provide a substitute for its magic. For such an undertaking 
they need an official warrant, and letters patent are the best to h»e 
had. They have set up. as their creature, Hartford-Empire, M'hose 
office is to have and to hold patents. To it they have assigned their 
various rights and it has been charged to invent, to contrive, to im- 
prove, but at such a pace as to keep alive a few basic patents. If 
perchance it now and then strays from the promotion of the industrial 
arts, it is to serve the more im})ortant cause of an industry, whose trim 
lines make it a model within the national economy. 

It is idle to blame the architects for their industrial structure. Their 
concern was the pursuit of gain ; they took the way of money-making; 
and if they made the road broader than legally it ought to have been, 
a public authority should appoint bounds. It may be that competition 
which served well enough an industrial system just hitting its stride 
is no longer appropriate — but the law of the land does not say so. It 
may be that a political should succeed an economic order in the conduct 
of trade ; but if so, it should not ride roughshod over the little fellow, 
nor should it impose taxation without representation upon the con- 
sumer. If there is to be a government of industry, it should be a 
responsible one. Its task is to mediate between interests at stake, not 
to conduct the trade as if it were the property of a party. A sanction 
has been diverted from its accredited office to serve a private cause. A 
corporation has usurped the function of the market and has become 
sovereign of all that touches its product ; as an authority, liable only 
to itself, it lords it over a gigantic domain. In glass containers, 
I'etat, c'est Hartford Empire. 


In a sense the automobile has been patented 175,000 times, yet a 
relative peace prevails along the technological front. One-fifth of all 
applications for patents have to do with some part of the mechanism 
for keeping the motoi- car going. Nowhere does the net-work of over- 
lapping claims, all nominally legal, more vividly invite stalemate and 
litigation; nowhere has the system sown in more fertile ground the 
seeds of its own destruction. Yet for a quarter century a kind of 
truce, not without overtones of suspicion, has prevailed along the 
corporate frontiers of the industry. And the arts which converge in 
production have developed without the great to-do which attends the 
clash of private claims. 

The quiet has been due to an attitude which is at once nonchalant 
and practical. It is an expression in common-sense of a free enter- 
prise which in less than a generation converted a luxury into a neces- 
sity; which, as a latter day miracle, wove the motor-car into the 
very fabric of American culture and made its use an as])ect of ever}'- 
day-life. The ix)licy dates from a declaration of independence by an 


upstart, who had won a modest acclaim as a racer, was intent upon 
making and vending his own car, and refused to pay tribute to an 
overlord who claimed the technical province as his own. For a lawyer 
turned engineer had a patent on the whole automobile, and insisted 
that legally the right to produce was at his pleasure. The "legiti- 
mate" trade consisted of firms which possessed his licenses, whose; 
security was constantly threatened by the fly-by-nights. By the 
owner of the Selden patent Henry Ford was firmly told that he was a 
poor risk; that as a person he was unfit for the responsibilities of 
manufacture ; that his flivvers were a disgrace to the dirt roads upon 
which they ran. The purchaser of one of his not-yet-tin-lizzies wa^ 
threatened with a suit as a contributory infringer of the patent on the 
internal combustion engine. In those days— near yet far off — a cor- 
porate estate sought to be established ; litigation raged along the fron- 
tiers of the closed industry ; Henry Ford discovered patent rights to be 
an obstacle to personal initiative. 

If he had been good at books, Henry Ford Avould doubtless have 
called himself an individualist; nor would he have resented the 
epithet "rugged." He knew, or thought he knew, his modest destiny ; 
he wanted to exercise his right to practice the trade of his choice; he 
was not going to be stopped by a stranger who waived letters from 
the Patent Office. He would not accept the credentials at face value; 
he felt sure they could not survive judicial scrutin}-. For as long ago as 
1879, one G. B. Selden, a patent lawyer of Rocliester. X. Y., applied 
for tlie basic automobile patent. His claims comprehended tlie whole 
motor-car — all complete with parts, apparatus, mechanism, gadgets. 
It was a sglf-propelled vehicle comprising steering wlieel. a liquid 
hydrocarbon engine of the compression type with the engine running 
at a speed greater than the driven wheels, a disconnecting means be- 
tween the two, and a body adapted to either persons or goods. In 
effect, these were rather broad claims, written in terms of technical 
categories rather than specific devices. As steam, compressed air, 
electricity fell by the wayside as sources of power, and the internal 
combustion engine gained the victory, the enveloping claims covered 
any motor driven b}' gasoline. With a patience born of shrewdness, 
Selden did not urge unseemlj' haste upon the Office. He Avas, with 
an occasional amendment of his petition, content to let it lie for 16 
years. And not until 1895 was his patent granted. 

Froiji early days the rising industry was troubled with squatters. 
On November 4, 1899 — 4 years after the patent was issued — Selden 
granted an exclusive license to the Electric Vehicle Co. It promptly 
asserted its rights, and, with a vigor greater than it put into its 
product, it brought suits for infringement against imauthorized man- 
ufacturers, their dealers, and their ctistomers. An action, the out- 
come of which for a time promised to be decisive, was in 1900 lodged 
against tlie Winton Motor Carriage Co. After 3 years of skirmishes, 
which fell short of any general engagement, the Winton Co. acknowl- 
edged the validity of the Selden patent and acquired a license 
to manufacture thereunder. In a short time 16 other leading manu- 
facturers threw up their defense, recognized the patent, and took 
out licenses. 

They joined with 13 other concerns which had already been 
licensed to form the Association of Licensed Automobile Manufac- 
turers, which promptly embarked on a campaign to terrorize the in- 


dependents by enforcing to the limit the claims of the Selden patent. 
A levy of li/4 percent of the catalog price was enforced upon the 
members; the fund thus raised served ther" double purpose of policing 
the grant and paying the royalties which were its due: The right to 
license had come to be vested in the Electric Vehicle Co., whose 
instrument the association was; its committee was allowed to der 
termine to what new concerns the company's license was to be 
granted. The right to the trade was now in the hands of those 
with whom the newcomer must compete. In a word, so- far as the 
licensee could exercise his authority, the industry was closed. 

The spirit of enterprise, however, was not yet balked. A united 
front was to be met by a united front ; and, in 1905, 19 concerns which 
had asked no one's leave to make and market, founded the American 
Motor Car Manufacturers Association. Although the usual profes- 
sions of benevolence, mutuality, and good works were put forward, 
its real purpose — as every member understood — was a concerted de- 
fense against, the "legitimate" industry. A long series of legal con- 
troversies between licensees and trespassers ensued ; and on September 
19, 1909, the Federal court for the southern district of New York 
upheld the validity of the Selden patent." As a result the organiza- 
tion of independents dwindled to its end in the following year. But 
a very determined member, Henry Ford, refused to accept the de- 
cision and appealed. In 1911, in a radical decision almost unprece- 
dented in its industrial effects, the Circuit Court of Appeals held the 
Selden patent was to be sharply restricted and that Ford was not an 
infringer.* An industry never tightly locked against the newcomer 
was thus formally thrown open. 

Thus a distrust of patents was engendered ; and the circumstances 
of an industry just off to a dominant place in tlie economy drove it 
home. The bumptious persons who I'lad forced their way in were none 
too respectful of privilege ; they had scored a triumph over vested- in- 
terest; their experience was easily di,stilled into an attitude toward 
the whole system. They wanted to drive ahead hard and patent litiga- 
tion moved at a pace far too slow for their purposes. Their scanty 
capital did not permit manufacture in the ordinary sense; they had 
to limit their operations to puttino; parts together; and the assembly 
line is not a vantage point from which to contemplate the virtues of an 
inaccessible technology. Patents came into play, not so much in De- 
troit, South Bend, Flint, as in places where the components of the auto- 
mobile were made, and there they were seen as a hazard to production. 
The price of the motor-car had to be brought down, its market en- 
larged, its use brought to lower and lower income groups, to the good 
end that volume be kept up, unit cost be kept down, and the stream 
of outward bound cars be kept moving. A scrupulous observance of 
patent protection was a ceremonial for which the industry could find 
3cant time.^ 

''Electric Vehicle Co. v. Duerr, 172 F. 923 (1900). 

' Cblumhia Motor Car Co. v. Dtierr. 184 P. 893 (1911). It i.'s a littTe surprising to find the 
conflict terminating so abruptly. Suit might have been filed in another jurisdiction, and If 
another circuit court could have been persuaded to sustain the patent, an appeal mieht have 
been taken to the Supreme Court. Th(> contrast with the Bell patents is startling; one 
judginent closed an industry, the other opened an industry. Yet it is difficult to discover 
criteria in terms of which 1he decisions went different ways. A resort to practical stand- 
ards is more nsefyl : the telephone, far more obviously than the automobile, invites a unified 

'For a graphic account of the conditions under which .^h? industry got its start, and 
which early got written into its habits and structure, see Mark Adams, "The Automobile — 
■'>-„.P^'^''y Becomes a Necessity," in Walton Hamilton and others, Price and Price Policies 
(1938). pp. 27-81, 


Out of experience, policy is born; and a chapter of history lives 
today in the usages of the Ford Motor Co. The concern applies for 
patents on its inventions ; it musf do so, or else it would leave its tech- 
nical frontiers ^xposed to raid or even to invasion. But it treats it^> 
industrial arts as if they were common knowledge and makes no use 
of them as counters in the competitive game. Licenses are freely 
granted to all responsible parties ^° who can turn the techniques to 
practical account and no royalties are demanded. Its letters patent 
are held in reserve as a defense against attack; they are never em- 
ployed in aggressive warfare. Since parts are purchased and assem- 
bled, a large number of suppliers are bound to Ford by contract. The 
manufacturers of parts are encoiu-aged to develop new methods and to 
improve their products. But in his agreements with them, royalties 
are not to be accounted an expense of production. No inventor, or his 
assignee, is permitted to sit back and claim a return for effort which 
has become sterile. Ford clings to the maxim that every man must 
be up and doing; and he yields no place to a person whose concern 
has come to be the exploitation of his product rather than the im- 
provement of his process. Even today the structure of the industry 
accords little with the kind of blue-prints which investment bankers 
draw ; " its trim lines are not overly blurred by a superimposed struc- 
ture of privilege. 

Ford has allowed 92 of his patents to be used -by others. In turn 
he has made Use of 515 patents which were not his own. Although 
the ritual of the license has been duly fulfilled, no money has passed 
for value received and the frontier has been' freely open to the passage 
of useful knowledge. The company has not escaped litigation; from 
1926 to 1938 some 350 threats of su,it for infringement have come in ; 
and of these some 60 have materialized as actions in court. But, in 
spite of its disregard of the prevailing mores, Ford has not done badly. 
For the period it has lost only one suit in a court of last resort. The 
flood of threats is a vivid ' illustration of the dangers which attend 
business enterprise in a domain where the industrial arts are sus- 
ceptible to rapid advance. The policy seems to have served the com- 
pany — and the public — well. There is no evidence, that the progress 
of technology has not been as rapid as in kindred fields where grants 
have been fully exploited. 

The policy of Ford has spread to the industry. A trade associa- 
tion, composed of most of the remainder of the industry, was formed — 
for cooperation, to keep the industry open, and against private prop- 
erty in the industrial arts.^- From the first it was agreed that patents 
were to go into a pool upon which all might freely draw and that no 
royalties were to be paid. To this end a cross-licensing agreement 
was executed by almost all the members. Ford, who had fought the 
court fight alone, held formally aloof, although in practice he went 
along. Packard which held patents which it did not wish to share 

" One wonders If Ford is setting up a standard of financial respectability which 
Initially he himself was unable to meet. In an unsuccessful attempt to liguidate the case of 
U. S. V, Hartford Empire (No. 4426 D. C. N. D. Ohio), by consent decree, it is sad that the 
defendant offered freely to license all "responsible" parties and that Thurman Arnold*. 
Assistant Attorney General in charge of the Antitrust Division, having in mind Ford and 
the Selden patent, refused. 

\ "In the notorious case of the reorganization of Dodge Bros., the industry has had 
experience of investment control. In a competitive niarltet the r-=i>rganized company . 
could not support the Inflated capital structure and Chrysler had to rake over. 

" After some eight changes in name, it is now known as the Automobile Manufacturers' 


became a fellow-traveler, cooperated with the Association, was g^iven 
access to the inventions in the pool, and was charged for the privilege. 

The first agreement was made in 1915. and terminated in January 
1925. The signatory firms delegated to the association the power to 
grant licenses and shop rights under all letters patent save such sls 
were expressly excepted. The technical domain was wide ; it covei-ed 
inventions useful in the manufacture of motor vehicles, their parts, and 
accessories. There was no provision for royalties. The general idea 
was that, since many co)itributed and all were free to use. each took 
out more than he put in. The articles of covenant comprehended not 
only current patents but all to be acquirecl during the 10-year period. 
As the years passed, the concerns — the few survivors among the many 
which had made the start — won strategic positions. In response the 
usages of the pool underwent change. The march toward responsi- 
bility is refiected in four succeeding agreements. 

The first extension was for a 5-year term. It went into effect on 
January 1. 1925, and included patents owned or controlled by the 
members signator}' as of that date. IJut custom from Avithout mildly 
obtruded as a proviso that patents acquired during its life were 
not to be comprehended within the agreement ; they were, however, 
included after the 5 years had elapsed. Thus the industry accom- 
modated legal usage to its requirement — tb.e 17 years specified by 
sf atute were cut to half a decade. A second renewal, executed in 1930, 
prolonged the term of the pool to 1935. While it included grants out- 
standing at its initial date, it made no provisioji for others Avhich 
might come into being during its life. A third renewal, echoing even 
more faintly the spirit of the early adventurers, folloAved to continue 
the arrangement to the begiiniing of 1910. It includes no ])atents 
act][uired since 1930. exempts grants controlled by a signatory not 
itself engaged in assembling paits into tlie fiirished motor cni\ and 
does little more than make available to all its members inventions 
which have already been put to common use. . In addition design 
patents are excepted as well as inventions capable of being put to 
use in trucks, tractors, ambulances, and fire-engines. A fourth re- 
newal, in itself a mere makeshift, extends the arrangement and main- 
tains the pool as of January 1. 1930. Its intent is to afford a fresh 
review of the whole subject, to discover if possible terms upon which 
a larger luimber of patents can be brought under a nnttiial control. 

In successive movements the theme is developed diminuendo. In 
bald figures, the pool included 547 patents in 1915: 1,006 in 1925; 
1,687 in 1930. Of the total, 1.058 Avere still alive at the begining of 
1935. As the years pass the members tend to contribute, not j>ioneer 
inventions, but improvements. A plausible argument is ])ut forward 
for withholding novelties: large expenses have been incurred in re- 
search laboratories and testing grounds: a skilled personnel has been 
assembled to advance the industi-ial art; unless the company is al- 
lowed to recoup, such investments will dry up. The dominant im- ' 
puis? is doubtless zeal in the competitive game. The days of the con- 
version of lower income groups to the use of the automobile are ovei-; 
current sales are a replacement of old cars. A company must at all 
costs hold its old customers: there is little room for growth except at 
the expense of the other fellow.^-^ Accordingly a manufacturer is 

.."Sales, of course, differ from year to year. But the variation follows tlie poiirsi- of 
tne national income. The result is not tliat people use cars in fat venrs and kivc tlifiu 
up In lean ones. Instead they hasten, or defer, the time when the old car is runuil in 
on a new one. 


loath to surrender an invention which will enable a rival to duplicate 
his own offering. He is likely to keep for himself a patent so long 
as it has currency as a talking point. Nor does the Christian zest 
for holding all technical knowledge in common easily survive the 
resolution of the industry into the Big Three — Ford, Chrysler, Gen- 
eral Motors — and the independents. As between unequals, the quid 
pro quo of all business activity becomes elusive. As of the 1st of 
January 1930, General Motors had contributed 518 of the 1,687 pat- 
ents in the pool. The executives of the hustling industry would 
probably regard 17 years as a reflection of a tempo truly medieval; 
but they have come to appreciate the value of technelogical protec- 
tion during the period they can turn a really significant invention to 

The problem is further complicated by the structure of the indus- 
try. Since in its formative decade it got started that Avay, the "man- 
ufacturer" assembles a miscellany of parts w^hich come from various 
points. Accordingly the art of fasliioning a motor-car is a composite 
of. technologies which are practiced in the most diverse of shops. The 
overlord at Detroit or Pontiac or Racine sits at the hub of a process 
of fabrication which stretches out web-like. His connections may be 
enduring; yet they are established upon contract and his sources of 
supply gire -independent corporations. Thus useful knowledge comes 
into play, largely within the provinces of the , imperium, removed 
from the direct control of the overlord. Here is a fault-line in the 
topography of the automobile which it is hard for a patent pool to 

It is easy to visualize — as an abstraction — an ideal system for the 
industry. An accord,'which establishes free access to all technology, 
is decreed by the lords of the assembly line. Then each manufacturer 
writes into its contract with every corporation which is a source of 
supply a clause binding it to transfer to the association the power to 
license its' patents on parts. But equities are far too tangled and 
stubborn 'for so idyllic a solution. A patent runs for a minimum of 
17 years; the contracts between assembler and parts maker are not 
always durable; a surrender of the patent privilege is rather more 
than even a superior bargaining position can dictate. The parts 
makers are in deadly competition for the favor of the manuf achirers ; 
it is rather too much to expect one to swear away his competitive 
advantage, especially if he has put money and trouble into the inven- 
tion. The manufacturer and a parts-maker may each have patents 
upon different features of the same mechanism and, where the line is 
nebulous, each may feel that the other is invading his preserves. Even 
if the necessity of getting together may prevent litigation, suspicion 
will not down. In such a situation equivalence in the exchange of 
equities is hard to effect. If a manufacturer extends to other manu- 
facturers rights to a patented process, and if they employ it vicari- 
ously through their own corporate sources of supply, the parts-manu- 
facturer may obtain cross-licenses without giving anything in return. 
In the arrangement reciprocity might be lost, and one manufacturer— 
who had held his own inventions back — might be in position to bring 
a suit for infringement against another whose patents he was freely 
using. A general pool among parts-makers would provide an escape 
from such problems. But they are far too numerous, too different in 


size, too varied in technical task to play even formally and with resr^r- 
vations at the game of cross-license. 

Against such difficulties rapid headway is not to be made. General 
Motors has taken over the assets and the business of Delco. If it 
should be compelled to put the Delco patents in the pool, they would 
become available to other motor-car manufacturers and their sub- 
sidiaries. Thus they would become available to Delco's competitors — 
such as Electric Autolite — without licenses in return. Since the pat- 
ents are employed in the manufacture of other products than auto- 
mobiles, a patent arrangement for the industry ramifies far beyond 
its confines. Against such severities a mitigating factor is "a great 
deal of cross-licensing" by motor-car manufacturers outside the scope 
of the agreement. The throw-back in this is that such bargains are 
made on the basis of mutual self-interest, and are therefore likely to 
stop short of letting a serious competitor in on a novel invention. The 
leading executives, however, recognize that current usage has strayed 
far from primitive practices. The trend sits oddly upon an industry 
whose patent pool a decade ago was cited by the Secretary of Com- 
merce as the outstanding achievement of any trade association. The 
reconsideration of the problem, now going forward, may spell the 
death of the agreement or its rebirth in another form. 

All insistent question is why not a return to the early way of Henry 
Ford. If his experience has been happy, why should not other pro- 
du'-ers. one by one or in concert, imitate his example? Can the policy 
be carried over, or does its success rest upon factors peculiar to his own 
organization? It may be that the headlong ingenuity of the Ford 
engineers defies j^ateiU restraints: Or the sheer size of the company 
and the iron will which directs its resources may endow it with powers 
to drive straight ahead. And the awe which it has inspired gives it a 
great bargaining advantage and causes partsmakers, general opinion, 
and even public officials to defer.^* In its heyday, in an open com- 
petitive struggle, it all but monopolized the low-price field. Its way 
was that of the pace-setter; and habits of thought developed during 
the period of its dominance live on.^^ Its patent policy is a single 
expression of its spirit of non-conformity. Ford's individualism 
has made him regard technical novelties as common knowledge. For 
if he takes what he wants dnd licenses freely, if he does not exact and 
refuses to pay tribute, if he brings no suits for infringement and 
figlits with all his resources those brought against him, what of legal 
right and lawful sanction is left ? To take out patents only as defen- 
sive barriers against attack is to pay lip service to a system to which 
one accords no devotion ; to refuse to pay royalties is openly to commit 
a breach of the patent proprieties. 

If then it pays Ford to be heteradox, why is it not to the advantage 
of others ? In one of the most patent-inviting of industries, a domi- 
nant manufacturer allows his rivals free access to his inventions — 
and yet remains one of the Big Three. There are, to be sure, other 
advantages — a huge accumulation of capital, an organization geared 

" Note that the attitude on patents Is but a single manifestation of a pioneer individ- 
ualism, bord has bepn antiunion and has had -epeated battles with the National Labor 
Kelations Board. He was violently opp">»sed to the National Recovery Administration; 
}s set asamst "paternalism"' : .md has not hesitated to challenge statutes of various kinds 
■^'"Jch are expressions of the public control of business. 

■^A p.sychologist may Wonder if a thought-pattern developed by Henry Ford as an 
automobile racer lived on when he became a manufacturer of motor-cars. 

294640— 41— No. 31 9 


to high momentum, a name that has become another word for effi- 
ciency the world over. But, with liiany other giant concerns, restric- 
tion forges the armament behind which technology struts its creative 
role. Invention is promoted, patents are bought up, business enter- 
prise is fortified by a monopoly in the productive process. Others 
msist that progress in the useful arts is impossible without the ex- 
clusive right that the law confers; that experimenfal work would 
never be undertaken if its results were available to all. The life his- 
tory of the Ford Co. is no abstract argument; it is a practical demon- 
stration to the contrary.^^ 

A part, at least, of the Ford policy has been carried over to the 
industry. It is hard to think of a form of cooperation between 
competitors which has brought as much benefit to the public as the 
cross-licensing agreement in respect to the automobile. To the ex- 
tent effective, it has assured to every buyer the incorporation of the 
latest improvements in his motor-car, whatever his choice; it has. 
guaranteed to him the latest and the best of motor transport. He 
has been freed from judgment upon intricate points in competing 
technologies, very imperfectly manifest to the naked eye; it has en- 
abled him to make iiis choice, where he has a greater competence, by a 
comparison of aesthetic qualities and facilities for comfort. He is free 
to choose the car with gadgets and style to his taste without putting 
in jeopardy his demand for a reliable instrument of transportation. 
The price he pays does not have to carry a heavy burden of expense 
for litigation; 'royalties do not exceed $2 per motor car. The mem- 
bers of the trade are freed from the trouble and expense of struggling 
with patent problems. Their whole energies can go into improving 
their product, perfecting the process of manufacture, devising metli- 
ods 01 marketing. Since 1915 there has not been a single lawsuit be- 
tween, or involving as adverse parties, the concerns in the trade. 
Many small companies have enjoyed free licenses to hundreds of in- 
ventions, in instances without a single patent given in return. A 
heterodox chapter challenges the whole theology of the patent system. 

"One would have b-'en told in advance thit if all members were a;iowe(l ."coess to :i 
common technology, competition would have been a dull game for lack of anything tt> 
play up. Yet in automobiles it has been intense and has rovercrt a wide zono; In human 
affaii'b it is not always possible to tell clearly which is cart and which is horse. It may 
be that the lack of novelty in technology caused rival concerns to discover "talkiii!; 
points" elsewhere, or the discovery of talkiug-points in respect to style, gadgets, and 
trade-in, make patents less of a card in salesmanship. The point is that a commnn shar- 
ing qf advances in the technical arts does not cramp the advertiser's style or spoil tl'e 
market adventure. The product is sold to the ultimate consumer : it must make its 
appeal within a zone of tolerance fixed by the psychology of the buyer. In landing a 
prospect, advertising and trade-in allowance are of more account than the devices of 
technology. In such a market Industrial supremacy does not rest upon patents. 



A dichotomy, which represents no one's conscious intent, marks the 
nature of the patent. At law, as statute and Constitution attest, it is 
a letter which certifies invention and rewards the inventor. In fact, as 
the stories just recited indicate, it has become an asset to business, a 
fence about the corporate estate, a weapon of competitive strategy for 
private industrial government. Its character has been transformed 
as it has come into a strategic office in the national economy. In view 
of the currency which it has and the employment thrust upon it, it is 
pertinent to ask how the "letter" comes into being, what sort of strug- 
gles center about it, how and by whom it is validated. 

'J'he patent involves tl?e creation of a privilege, a definition of a 
domain from which others are to be excluded. But if others are to be 
kept away, it must be made certain tliat they have no rights within 
the given area. So, in the fixing of boundaries, a trio of claims whicli 
may confiict must be passed in review. A -'letter" must not issue if 
some otiier was t!ie first or true inventor; the lines must be sharply 
drawn so as not to encroach upon adjacent patents; no part of the pub- 
lic domain of technology can be comprehended within the writ. And — 
lest it be forgotten — the grant is to technical progress as a means to. 
an end. 

In a more primitive society, every great advance may be hailed by 
royal writ or legislative act. In an industrial culture, where claims to 
discoveries come thick and fast, some must be set up whereby 
to recognize and certify the genuine novelty. The matter requires- 
norms for invention, a personnel learned in the technical arts, a pro- 
cedure leading to decision: The very purpose of the grant suggests 
the norms. The invention must extend the frontier of useful knowl- 
edge ; no equity can be conferred in respect to devices and process in 
vogue ; innovation cannot lie in a merely mechanical application of old 
principles; it must, however meager the contribution, exhibit some 
spark of creation. To guard against private parties laying claim ta 
devices or processes already in use, an act of Congress limits the grant 
to a "new and useful art, machine, manufacture, or composition of 
matter, or any novel and useful improvements thereof." In the ad- 
ministration of a matter so intricate, this simple formula has been 
resolved into a set of "principles," which themselves have become a, 
structure for the creation of an elaborate web of distinctions and 

An administrative process is essential to he application of so 
simple a formula in so tangled a world. An if ency called the Patent 
OflSce has been set up to pass upon the val.c-ity of claims. But in 



order that rights, even in the making, may be carefully guarded, a 
Geries of appeals runs up, to the United States Supreme Court itself. 
In the realm of patents, even less than almost anywhere else, ''general 
principles do not decide concrete cases." At best they furnish values, 
point directions, supply convenient pegs on which to hang decisions, 
A host of factors play upon their evasive terms; a multitude of con- 
siderations collide within their protective framework. So long as 
the times change and the minds of men differ, no inflexible rule can 
govern the granting' o a patent. The examiner, the board of appeals, 
the Colirit of Customs and Patent Appeals, are unlike in attitude and 
outlook, in grasp of technology, in disposition to be lax or severe. It 
is rather to be expected that low^er Federal courts should differ from 
each other and should not always see eye to eye with the Patent 
Office, and that the Supreme Court should bring to the matter an 
Olympian understanding to which no lower tribunal can rise. 

As an issue goes forward, expense accumulates and doors are harder 
to crash. Such is the way of litigation, and the patent appeal finds 
the way upward unusually hard. It is the rare application for a 
patent which gets to"a court;' and a hearing by the Supreme Court is 
little niore than a statistical possibility. A num^ber of conditions con- 
.spire to hold discretion within the Patent Office. The task of apprais- 
ing claims has been entrusted to it by Congress; as with other agencies 
of administration, only a strong presumption that the action talcen 
■exceeds the broad bounds of official discretion warrants review. A 
business risk attends the appeal ; a heavy expense is incurred in a 
technological gamble; an indulgence in litigation is a luxury which 
few going concerns can afford. For the run of earthly affairs, legal 
procass is a secondary resort ; in the ordinary instance the decision 
of the Office as to whether the letter shall issue is final. Once the 
invention is certified, the chances are that the issue will tiot be re- 
opened. The patentee goes his way, exploits his grant, and levies 
his toll — until his right collides with another patent or some stubborn 
individual persists in using the knack as if it were common property. 
Bother and expense suggest compromise, and procrastination suggests 
no challenge to the administrative judgment. 

The Patent Office, therefore, is the custodian of the general interest : 
and, save in the exceptional instance, the public must look to it for 
protection. Upon the norm of patentability — as it interprets and 
applies it — rests access to useful knowledge and sanctions with wliirh 
to restrict freedom of enterprise. In the Patent Office negligence, 
ignorance of technology, muddled judgment may, in its effect, choke 
the channels of industry. Let it relax its diligence at any point or 
for a moment, and a segment of the common fund of knowledge is 
blocked off for at least 17 years. For, once the writ issues, the patent 
cannot be canceled except upon a showing of fraud.^ The patent law 
in action is made explicit in the thousands of existing grants. As it 
■confuses its. facts or mistakes its norms, it puts into circulation letters 
for which there is no constitutional sanction. It issues, as it were, a 
false coin of privilege, with no ready process at hand to retire the 

Yet its process of decision has not been geared to the magnitude of 
its task. The grant of patents on the level of detail invites a flood of 

1 The equivalent of cancelation may eiif rge from some other legal process. .\ suit for 
infringement, e. g., falls because the "Invention" is held to be devoid of novelty. 


applications. The grist aggregates between sixty :\nd ninety-tive 
thousand cases a year; the serial numbers of patents granted nov>- run 
to 2,000,000. A functional consideration of all applications is out of 
{he question. The Patent Office can take no account of motives: what- 
ever the applicant's purpose, his papers are routed through the accus- 
tomed channels. It is conditioned, by tradition and training, not to 
look beyond the point at which the letter issues. Yet, with its range 
of inquiry severel}' limited, it must keep up with its work. For the 
deluge will never abate ; and a hurried survey, in terms of mechanical 
likeness to what has gone before, is the most that can be given. Upon 
such a plane not even the closest supervision could cause the staccato 
beat of acceptance or rejection to fall into a fixed technical rhythrii. 

Even upon such a level it is no mean task to maintain vigih\uce. 
The Patent Office vras set up before the nature of its responsibility had 
been disclosed; its structure has not, by legislative act, been recast to 
accord with, its place in the national economy. It must skillfidly 
dispatch a huge volume of business; its decisions give direction to the 
whole course of industrial development. The character of its high 
command should reflect its function; a large professional staff should 
have maturity, competence, wide experience, not only with all the 
provinces of applied knowledge but with the wider range of scientific 
inquiry which lies behind. It should be able to entrust only the detail 
of its work to persons of routine or clerical competence, in tlu- sum 
of its decisions, it promotes or retards the industrial arts and decrees 
the technology of tomorrow. It should serve the Nation in the way 
a research organization serves a business venture. 

Tlie Congress, of course, has made no such provision for the Patent 
Office. I^s funds have been scanty, its, personnel poorly-paid, its staff 
insufficient for the Avork. It has had to resort to makeshifts to cari-y on ; 
and as its task has grown in size and scope, these niakeshifts have grown 
into an institution. Its salaries have not been adequate to hold skilled 
scientists within the O n-erinnent. Before the depression an examiner's 
period of service was about 5 years — just long enough to pick up some 
training, v/in a law degree from night school, and make a connection: 
M'itli a private fimi. His stay was often oniy a step in his career; his 
desire to get ahead,' a consequent temptation not unduly to exalt the 
common. good. In recent years the turn-over has been snialler, the ten- 
ure longer, the caliber of the staff higher. The group of examiners has 
annually to pass upon a minimum of 60,000 applications, a load which 
runs to 12 per person per week. Even the best of men must falter 
under such a burden ; the usual item iuA'olves an extended research 
into an intricate body of technology^ yet only a few hours can be 
given to it. 

It is idle to expect perfection, or even a high standard of perform- 
ance, under such an arrangement. The examiner can note the claim, 
glance at the specifications, conduct a casual inquiry, draw on his expe- 
rience for anything in point, and allow or reject the application. If he 
ceitifies a true invention, the patent issues, without appeal, review, or 
further ado. If he finds some of the claims valid, the petitioner may 
have his patent by canceling those rejected ; or he can appeal the rejec- 
tion without jeopardy to any of the rights allowed. Unless the exami- 
ner is new at his task, there is little supervision of his work by his 


The procedure is far too circumscribed to take account of all the in- 
terests concerned. The public is a party ; yet, save in the person of the 
examiner, it is without representation. As custom has it, the claim to 
a patent starts with a presumption set in its favor. The applicant is 
entitled to his grant unless the examiner can clearly show that he is not. 
If the letter issues, it is assumed to be valid unless the adverse party to 
a suit can show beyond a reasonable doubt its lack of merit. An indi- 
vidual wishes to reduce to private ownership an aspect of the common 
arts. Yet at law the presumption is set in his favor and there is no 
adequate opportunity I'or rebuttal. It is impossible to think of an- 
other situation in which a part of the public domain is sworn away so 

Nor do other parties in interest have adequate opportunity to an- 
swer. Tliose who hold adjacent grants are concerned in the outcome, 
yet formal notice is not accorded them. The application is kept secret ; 
neither application nor letter is made public until the patentee -chooses 
to disclose his invention. If claims are discovered to encrocch upon or 
to conflict with grants outstanding, the conflict is resolved by cancela- 
tion or disallowance. If information about the pending application 
^ets out, other parties who are of interest may object. Action on such 
protests is at the discretion of the examiner. The resulting inquiiy does 
not fall into the form of a legal process; the protestant is not an adverse 
party ; he is quite without rights which he may assert. Si]ice the whole 
procedure is forbidding, there is no wonder at the small trickle of 

If the examiner finds any of the claims invalid — as an .aspect of 
common knowledge, within the domain of an outstanding grant, 
wanting in invention — he disallows and gives his reasons. The ap- 
plicant then has 6 months to amend and to fortify his papers for 
another examination. Until recently the cycle of rejection, revision, 
reexamination could run its round almost indefinitely. No^v the ex- 
aminers are attempting to make an ultimate disposition of every appli- 
caaon no later than the third examination.- Yet the overworl^ed stail 
is some months behind on its docket, and judgment is an extremely 
procrastinating affair. The issue, too, is not to be simply posed; 
technology is intricate; an invention stands in a number of lines of 
development. The subject can be approached from many angles ; the 
claims can be written up in many forms of langiiage. Accordingly, 
the writing and the rewriting of the application is itself an art ; and 
an ingenuity, which makes claims far broader than they appear to be, 
is rarely unable to put the case in another way. The contest is a most, 
uneven one; the public interest is represented by an examiner who 
can rarely give more than half a day to the matter ; the private interest 
by skilled attorneys, whose time and resources are limited only by the 
ability of their client to pay fees. 

A final rejection by the examiner is no ultimate. If the applicant 
has the will, the time, and the money, he can appeal. His plea is 
heard by a group of 3 chosen from a panel of 9 who make up 
the Board of Appeals. In form the appeal is an action against the 
examiner; the record goes up, accompanied by a learned argument 
that the judgment below should be reversed. The heating occurs 
usually about 1 year after the final rejection. The process is saved 
from a break-down by the small number of appeals — about 1,800 out 
of an annual grist of 60,000. In more than two-thirds of these the 


examiner is affirmed and in only a fraction of the others are the 
applicant's claims fully sustained. 

The process is strictly a one-way affair. It is the private party who 
is accorded a second hearing; the public interest is entitled to no peti- 
tion for review. Thus the examiner whose disposition is to allow 
claims will seldom be called before the Board of Appeals and will have 
a high record for making the correct decision. The examiner v. ho is 
prone to reject borderline claims runs the risk of a low batting aver- 
age. By office tradition, a record of reversal in more than one-third 
of the cases raises a presumption against the examiner's competence. 
Thus in the scales of justice the private right ^yeighs far more heavily 
than the public interest. The organization is geared to whittle away at 
the common fund of useful knowledge. 

Even an adverse decision by the Board of Appeals does not exhaust 
the applicant's moves. In the Court of Customs and Patent A])peals 
he may lodge an action against the Commissioner of Patents. Judg- 
ment is rendered not as m open court after full hearing but on the 
basis of the record built up below. The procedure consumes another 
12 to 24 monthsj not more than 80 to 120 cases a year go this route ; 
and in perhaps four-fifths of 1;hem the examiner is affirmed. The 
number of appeals is limited, not so much by legal obstacle as by the 
prevalent opinion that the procedure is waste motion. In the appeal 
the court stands by the severities. It limits its consideration to allega- 
tions of error; it refuses to go behind or outside the record; it admits 
no new evidence. It has by patent lawyers been referred to as a rubber 

As a result frustrated genius has resort to an alternative procedure 
provided by statute. It brings suit against the Commissioner in the 
District Court for the District of Columbia. There, after the manner 
of a court of first instance, a full dress trial may be put on, all matters 
at issue may be fully explored, and the line between old and new evi- 
dence is obliterated. The district judges, whose experience with tech- 
nology is casual, are regarded as more lenient than their brethren upon 
the Court of Customs and Patent Appeals. For the last year their 
record is 58 affirmations, 22 reversals, and 16 judgments affirming in 
part and rejecting in part. 

At this point appears a curious quirk in the law. So long as the 
matter moves in the regular channels only the private party can 
appeal. But once it is taken to an outside tribunal it falls under 
ordinary legal usage, and from the decision of the district court either 
side may appeal. As a matter of practice, however, the Patent Office 
exercises its privilege only when a question of law is raised and not 
when the jud^ent does no more than reverse the decision of the exam- 
iner. Thus, m judging the validity of the privat'C claim, the interest 
in the preservation of the public domain is nowhere formally pre- 
sented; and, at the only place where there is a move for a remedy 
against improvidence in making grants — a stage reached only in the 
exceptional instance — the guardian of the people's rights is silent. 
From the Federal district court only 26 cases went to the Court of 
Appeals for the District of Columbia last year. From its decision 
either party may, if it can secure certiorari, t.ake the issue to the 
Supreme Court. But such an appeal is among the faintest of human 


Such is the usual procedure when the issue is patentability. The 
fireworks are really touched off when two applications concernino- an 
identical invention reach the Patent Office at the same time. Then 
claims collide, and the question of priority becomes insistent. If the 
examiner is of opinion that two applicants are claimino: the same 
invention, lie will declare an interference even though the claims are 
differeritly worded. He even suggests to each party the language em- 
ployed in the claims of tlie other in order that tlie issue of priority 
may be sharply joined. If both persist in standing by their guns, each 
is required to attest under oath the date at which his invention was con- 
ceived and reduced to practice. The statement of each applicant is 
then submitted to the inspection of the other. About 1,000 cases of 
interference are set up each year — roughly less than 2 ]3erceiit of the 
total number of applications. Of these fully two-thirds are disposed 
of ])y concession, cross-license, or estoppel — where tlie oath of one party 
establishes priority for the other. Less than one-third survive this 
process of comparison or bargaining — at which the public interest has 
hardly a look-in — to be decided on evidence. In such instances, how- 
ever, interference proceedings are bitterly contested; and honesty fre- 
quently becomes a dominant issue, since often inventions come into 
being too gradually to be dated, and proof of the approximate time is 
in the possession of a party who has an interest in distorting the infor- 
mation. As issues of testimony become dominant, the question of 
patentability recedes. 

As with other decisions of the examiner, an appeal lies. But. unlikt- 
the case in which the applicant has been refused his grant, it goes up 
as an adversary proceeding. Hence the Patent Oliice is neutral; tlie 
question is which of the two combatants is to be accorded a privilege. 
In respect to interference, a wider choice in legal process is aA^ailable. 
A p'arty not satisfied vrith the result may go direct from the review in 
the Patent Office to a Federal court. Here he is not limited to the 
District of Columbia; his suit may instead be brought in any district 
in which he can establish residence of the otjier party. If inventors 
gird for legal combat, its course is likely to be protracted. The average 
is 2 years if the pai'ties accept the examiner's decision, 3 years if they 
go to the Board of Appeals, and 41/0 years if it is carried into couvi 

Such figures, how-ever, are abstractions and fai] to reveal the detail 
of bother and circumstance which attends the ordeal. A rcceiit case, 
excej)tional 'to be sure, is none the less brimful of the possibilities 
which may be touched off. An application for a grant v>as filed 
with the Patent Office in 1921. After a long and eventful history 
marked by disallowance, amendment and disallowance, the claims 
were eventually rejected. The decision of tlie examiner was upheld 
by the Board of Appeals. In 1928 suit was filed in the district court, 
and in 19-31 the decision of the Commissioner was reversed. As the 
action was brought the application became public, whereupon two 
other parties whose claims had been under consideration since 1920 
and 1922, respectively, asked that an interference be declared. There- 
upon—after the decision in the district court — the Patent Office 
acceded to the request. In the course of a hearing which lasted for 
more than 4 years, a record of 4,700 pages was accumulated. In the 
end the examiner awarded priority to the claim filed in 1921 ; he was 
affirmed by the board of review of the Patent Office. 


An action was thereupon brought m a district court by a losing 
party. It was heard by a judge who had never previously tried a 
patent case. The trial lasted 7 weeks, the record ran to 2,300 pages, 
the examiner's determination was upset. Recourse was had to the 
Circuit Court of Appeals, whose judgment has not yet been handed 
down. The parties have alread}^ revealed their intention to seek cer- 
tiorari from the Supreme Court. The statutory life of a patent is 
17 years — and 19 years have elapsed since the filing of the applica- 
tion of 1921. And all of this has to do with the mere granting of the 
letter; in a suit for infringement, all the issues are likely later to be 

Of late, efforts have been made to speed up the work of the Patent 
Office. The number of applications pending has, within the last few 
years, been reduced from 180,355 to 116,041; the number whicli have 
lingered around for 5 years or more has been cut in half. Exam- 
iners have been urged to attack their dockets with dispatch and not 
to allow the would-be patentee to daily along with amendment after 
amendment. A special status has been decreed v.hen the applicant 
makes oath that he will begin "to make and vend'' as soon as his 
patent is granted. In 457 of such cases, 247 patents have recently 
been issued which have resulted in investments aggregating almost 
$9,000,000. The putting to work of some 167 of these new inventions 
has extended employment to 14.413 persons. Against the dimen- 
sions of the national economy such sums have little magnitude, but 
they are symbols of earnest intent. They evidence a quickening of 
tempo rather than a revision of current usage. The procedure which 
attends the patent grant still awaits streamlining; the currency of 
privilege which emerges still demands a more exacting scrutiny. 


The grant, easily or arduously obtained, does not attest the valid- 
ity of the patent. It is little more than a certificate which .gives to 
its holder the right to go into court and sue for infringement. The 
Government does not underwrite its own letters ; if the patentee him- 
self is sued, his "letters" accord no certain title of property- in the 
area which they fence off. Competing claims are to be settled by 
resort to law, and in the legal combat the courts must determine for 
themselves, case by case, at what value the paper currency from the 
Patent Office shall circulate. 

The task of the court is to stake out and validate a private claim. 
Yet the creation of individual rights within the domain of technology 
would not seem a promising venture. An elementary thing like a 
landed estate in iee simple is not without its legal bothers; if such an 
equity is complicated by lease, easement, contingent remainder, life 
estate, future interest, covenant that runs with the land, it can set for 
the judiciary very bewildering problems. When crafts stood sharply 
apart, the occasional invention had its distinct identity. In the early 
days of the machine, when a patent encompassed the whole of a tech- 
nical process, the thing to be protected was rather sharply finite. Even 
then, there were border-line cases ; but private claims invited clean-cut 
legal recognition. 

Against the technology of today no such sharpness of line is pos- 
sible. A single technical process cuts across a dozen industries ; a dozen 


processes must be strung together to turn out a single ^ood. A patent 
is granted, not for the ]>rocess but for the novel variation ; not for the 
machine but for its improvement. An idea comes out of the iiir: in 
spite of its germinal character, it cannot be patented. A scientist tames 
it into a principle of chemistiy or biology ; it is still too much at large 
to invite legal protection. A technician reduces it to a contraction, or 
imprisons it -within design or blue-print: it is now an invention and a 
patent can be applied for. The industrial art, enriched by the creative 
work of pioneers, is public domain; a personal claim may be recog- 
nized in an aj^plication Avhich is derivative. The result of the scientific 
work is free to all; the bit of tinkering at the end of the experimental 
journey may create property for the tinkerer. The legal task is clearly 
to isolate the private claims which are legitimate from the fund of 
common knowledge in which the}? are set. Where the}' collide, it is to 
prefer one to another or to drive a boundary between them. If each 
method of production were separate and distinct, the task would be 
perplexing. But with a score of industrial arts converging upon the 
same technical area, it presents to the law one of its most baffling 

The appeal to law is usually by way of a private action.' A patentee, 
aggrieved or aggressive, brings suit for infringement and between the 
t\\o parties the issue is drawn. A number of others may be drawn in, 
as cases for contributory infringement are launched against the 
licensees of the defendant. But there may be other outstanding grants, 
close enough to anticipate or broad enough to include that Avliich is the 
spearhead of the legal attack. And parties may withhold from the 
current fray patents which are issues within it. A question always 
present is the encroachment of the private gTant upon the public do- 
main ; yet it lies dormant unless it is to the advantage of one of the 
litigants to raise. It is not customary for the Government upon its own 
motion to move for a cancelation of a grant or for a limitation of the 
area which it covers.^ It may take a number of cases, each with its 
narrow legal question, to dispose of the technical issue. The matter 
instead of being presented as an entity is fed to the courts piecemeal. 

* Historically and at the present time statutes neither grant nor deny to the (iovern- 
Dient the rijirht to institute patent annulment suits. Only -the long tradition of judicial 
interpretation as modified by the American courts governs the situation. In the older 
cases the power of the English Crown to revolce its franchises, its letters patent, on sub- 
stantive grounds through application of a writ of scire facias and quo warrauto was carried 
ov(>r to jUiis country by the bill in equity (Motcry v. Whitney, 14 Wall. 4.34 (1871) : I . .'^. v. 
American Bell Telephone Co., 128 U. S. 315 (1888) ; U. 8. v. American Bell Telephoae Co., 
150 U. S. 548 (1895)). Although the Bell cases employ the language of fr.-uul, the plain 
indication is that the Government, bearing mit the analog.v to suits by the Crown, may 
have a course of action on patentability or prior use. The 1888 Bell case, reversing 
the lower court's opinion (32 Fed. "91 (]SS7 » ),. held a statute unnecessary in permitfing 
the Government to sue. In the third Bell case (U. S. v. American Bell Telephone Co., 
1()T U. S. 224 (1897)), the Government sought to attack tlie Berliner patents upon the 
ground of fraud in the Patent Office and failure of invention. The Court refused to permit 
the substantive attack by the Government, asserting that the invention was the paten tee's 
"absolute property" ; and that although he is bound by all the provisions of the law. in 
resi>ect to incidents of ownership in which he is not bound he has an absolute right to 
the benefits of his exploitation of the patent. The Government may not impose its will 
other than by legislative command and the substantive question of a patent s validity is 
outside the declared scope of the statute. The broad verbalization of this opinion may 
have had a marked effect upon the Government's attitude. Two subseciuent ;ittempfs 
to test the validity of patents on substantive grounds have been held questionable by the 
courts. In U. S. v; Standard Oil Co. of Indiana (33 Fed. (2d) 617 (1929)), the opinion 
states, "This court is divided representing the right of the Go\ernnient to attack the 
validity of the patents in thpse proceedings. We are satisfied, however, that we may 
inquire into the prior art to asc»»rtain the scope of the claims of the various patents 
involved." In U. S. v. Porcelain Appliance Corp. (Equity 1640. P. C. of D. of Ohio. 9 
Sept. 1926. opinion unreported), the court noticed but did not resolve the guesriou of the 
Government's right of suit. 


■ The process of linv is always sedate; in respect to patents it is most 
decorous. The plaintiff has the advantage of strategy; he may select 
from his arsenal the specific grants with which to press his cause; 
he may also, if liis business activities or those of ^lis opponent are 
far-flung, choose the Federal court in which to lodge his action.^ 
As judgment is rendered, the decree without further to-do is bind- 
ing only within the district. Whether his plea has been granted or 
denied, the plaintiff may enter a fresh suit in another district ; and, 
almost without limit, he may enlarge possibilities by varying the pat- 
ent upon which he relies and the person against whom he proceeds. 
The defeated party may, of course, ask for a review by the Circuit 
Court of Appeals; but its decision binds only witliin its jurisdiction. 
And as a rule the Supreme Court limits its certiorari to cases in 
which two circuit courts have reached opposite conclusions about the 
same patent.^ Thus strategy has multiple opportunity ; m addition to 
on and up, a large number of lateral moves is possible; a definite an- 
swer may be indefinitely postponed ^ an issue can hardly be settled if 
a party, equipped with ingenuity and financial resources, wishes to 
keep it alive. 

If the process were fitted out with adequate norms, the task of the 
judiciary would not be easy. Their lack imposes upon the courts an 
almost impos-sible task. From tlie first, private disputes oyer inven- 
tion have concerned an amorphous sort of thing called "patent- 
abilit3\" They have embraced such issues as novelty, utility, con- 
ception, disclosure, prior employment; the propriety or irregularity 
of the process from which the grant emerged: the host of contractual 
questions which dance about assignment. In respect to offer and ac- 
ceptance, the adequacy of consideration, the decorous march of proc- 
ess, tlie coiuts can hold with as much certainty in patent litigation as 
elsewhere. But in respect to novelty, the true inventor, the priority 
of claims, the modicum of originality essential to invention, or the 
line between the novelty and the established art, the jurist's art is not 
at its best. 

A task such as this I'equires excellence in its standards. The set in 
use is a heritage from days of petty trade, worn thin and blurred 
from constant employment. A thing can be patented if it is novel, 
is the author's invention, is not in common use, has not been antici- 
pated, and finds expression in a machine or a technical process. '"Pat- 
entability"" then is an aft'air of many factors and its terms are rather 
values to be brought to judgment than criteria by which an answer 
at large is to be captured and made articulate. No sharp line sepa- 
rates creation insight from mechanical twist. Nor can a boundary be 
placed at the end of conmion knowledge and the beginning of innova- 
tion. Where two or more have stumbled upon the same invention, or 
separate novelties are only variations upon the same technical theme, 
or the innovation is the same old thing plus, nothing compels a cer- 
tain decision. The riovelty may depart grossly or subtly, in substance 
or in for-m only, from the process in common use. When there is 
alike sameness and difference, "anticipation" is not beyond peradven- 

»Vcnu(', of course, is limited by tbo statute. 28 U. S. C. A. 100, which pennite suit 
wherever the defendant has infringed and has a regular place of business. The point is, 
that as business enterprise now goes, a number of locales meet the condition. 

♦Bnt.see SchHber-achroth v. Cleveland Trust Co., 305 U. S. 47 (1938). where certiorari 
■was granted because concentration of the automobile Industry in the sixth drcnlt made a 
confliet of decisions unlikely ; and Mackay Radio v. RCA. 306 U. S. 8G (1938). wlj«re cer- 
tiorari was granted because the two parties were the only members of the Inrfusinv. 


ture; with an art which is forever developing there are no instru- 
ments of i^recision with which to determine the inventor's own. 

No more than an approacli toward certainty can attend tlie apjilica- 
tion of such norms to a modern technolog}'. A score of patents en- 
compass the making of a pair of spectacles; fix, if you can 20 points 
at which the flash of an inventor's genius could have appeared. Two 
distinct processes account for the production of glass containers: but 
upon the themes of "the gob" and "suction" a thousand variations 
have been composed. The original patents for shoe machinery ex- 
pired years ago ; the industrial art currently stands frozen, the prop- 
erty of a single concern, in an arsenal of patents. The accepted norms 
are uncertain enough when applied in the grand manner to sharply 
distinguished techniques. They can have little fixed meaning on the 
m^'opic level upon which patent protection currently moves. 

In addition, the institutioji of justice itself presents its difficulties. 
Its equipment of procedure, standard, rule, conies from a realm far 
removed from technology. As cases come along, since none will exactly 
fit, they have been met with a confusion of ap'proaches and concepts. 
The logic of the hnv, for all its rigor, is of little help; for logic can 
do no moi'e tlian keep straiglit an argument which is off to. a right start. 
Suits have to be heard seriatim before judges Avho differ in vision, 
viewpoint, tolerance. A general fitness for the bench does not «>f 
necessity comprehend proficiency in the industrial arts. Specific com- 
petence demands induction into a mystery. As suits come along, the 
fact situations are not of a type, and a number of technologies must be 
passed in review. The very language in which plea and argument are 
expressed is unfamiliar; the advocate, intent upon touting up a would- 
be invention, makes it all the more mysterious by resort to "highfalut- 
ing" terms.^ One could hardly expect to find all jurists hewing a 
precise line as they face such imponderables as "isotopic cracking." 
"fluorescent radiation," or "frequency modulation." And back of each 
suit lies a distinctive cluster of usages, which is an industry in opera- 
tion, only chance fragments of which ever get into evidence. The 
judges have to decipher, from documenrs never intended to reveal it, 
the scope of the patent and the employment to which its owner puts it. 
As they meet the motley parade, the courts can do no more than their 
best with the facilities at hand. They make whatever they can out of 
grant, blueprint, testimony, technical rigamarole. They attempt to 
set in order the course of events, to unravel a knotty problem in impu- 
tation',* to capture a conflict of interests that lies beyond the frontier of 
legal learning. As with more haste than seems to him wise, he must 
yield to a crowded docket and close the case ; consistency is to be ex- 
pected only from the omniscient jurist. And, with many judges on 
many benches deciding suits, an urge toward electicism can hardly be 
kept dormant. 

Nor have the courts found it easy to keep up with the patent. If 
business enterprise has been abreast of the times in turning the grant 
to account, judges have been slow to appreciate the novel place which 

° For example, the inertia of a fly-wheel is set down as "the property of a weighty 
mass" (Altoona Public Theatres v. America?!. Tri-Ergon Corp., 294 U. S. 477 C1934)). 
Tiie ordinary safety-razor Made becomes, "A blade liaving a non-circular opening sub- 
stantially centrally disposed to retain the blade in shaving relation to a guard member, 
said blade having means spaced from said opening to cooperate with a clamping member 
to retain the latter in shaving relation to the blade independent of the guard member" 
(Essex Raxor Corp. v. Gillette, 299 U. S. 94 (1930)). Such examples are elementary; 
but at least they faintly suggest the possibilities. • 



it now holds in the national economy. At the beginning their concern 
Avas with the indnstrial arts still in the service of handicraft or only 
beginning to serve the machine procfess. As the situation changed, 
the older conditions lived on, frozen into precedents upon which judges 
drew f(jr decision. The sole inventor, who finds life precarious in tlie 
pi-evailing industrial climate, still lives on in the law reports and his 
impulses still operate in an uncomplicated universe which now oc- 
cupies a faded page in history. Tiie fact of as ignment — Avhich has 
made of the patent a thing bej'ond legislative intent — is likely to be 
passed over in silence; the corporatio?i seeking to maintain its estate- 
is treated as the man of science demanding his reward. The doctrines 
of old, divorced from the circumstance which called them into being, 
are marched toward fresh objectives. The taming of the ])atent to 
money-making was v,ell along before the judiciary discovered the now 
captivity. Suits whose implications made them cases of first im- 
pression were disposed of as if they were no more than next items in a 
recurring series. A new statement of the law had already gathered 
momentum before the change in direction received judicial notice. As 
awareness came, standards for correction could n'<t emerge, all at on.ce. 
The decisions of the courts, in a period in Avhich their materials wevi' 
n;al!euble, became a factor of consequence in imposing rigid lines 
up(;n the design of the economy. As trends, took their course, it be- 
came increasingly difficult to subordinate to the public interest an qx- 
cliisi\e right which had passed into the bondage of business enterprise. 
All aloiig tlve way the attitudes of different benches impose a checked 
pattern upon the law. Some judges are regarded as sympathetic to 
}>atent lights; others are looked uixju ns "patent smashers." In gen- 
e»al. tolerance is most e^•ident in the district court, charity declines 
a: ap})eals move upAvnrd. For 1933, a typical year, the Federal Digest 
six.'ws tii-^ f(.)ll' wing dispositioji of cases involving the patent grant:'' 





Valid and infriDged 

Invalid i, 




Its rule of review sharply restricts the number of cases which reach 
the Supreme Court.' In the decade 1930-39, some 30 suits, in which 
the question of validity Avas directly raised, came before that tribunal ® 
and invoh-ed 27 sei)arate grants. One was held valid and infringed, 
2 were held not infringed, and 24 were lield invalid. The dominant, 
reasons for the declaration "null and void" were lack of invention, 15 
cases; inadequate disclosure, 3; prior use or anticipation, 2; delayed 

"Decisions of the cinMiit courts are inort^ likplj- to ho rf-portcd than thosp of flio district 
courts. The district cdurts found patents valid and infrinwd in ;;» percent of Uio cases 
wh'lf the circuit courts did so in onlv IS iiercent of the cases. 

"Sec. 240 fa) of the .Judicial Code. 2S V. S. C. 347 (a). Rule .S8 of the revi.wl rules 
of the Supreme Court, .'iOG I'. S. Tlfl (J0v!8). pives reasons which niav su),'!?est the ^rant 
of n writ of certiorari, chief among: which is a confl-ict hetween the decision below uiui 
that ot another circuit court, or between the decision below and a former decision of Ihe 
Suiirenie Court itself, or the presence amon',' the issues presentcnl b.v tlie suit of an inipoi-- 
tant and undecided Federal question; 

'A number of ollici- p'llcnt cases, raising procedural guestions, were also iH'fo'c the 


disclaimer, not a "manufacturer," claim inadequate, narrower claim 
accepted, 1 each.® A striking, but exceptional case involved the com- 
mon gi'ease gun in automotive lubrication.^" The petitioner having 
made an improvement in pi^-fitting, was awarded a grant covering the 
combination of fitting, grease gun, and base coupler. Out of some 
300 cases in the lower courts the patent w^as held valid and infringed 
in all except 1. After this impressive record a suit was lost in the 
third circuit, certiorari was granted, and the patent held void by the 
Supreme Court." The higher the issue, goes, the gi-eater the concern 
ie^st private equities be established at the expense of the public domain. 
It would be difficult enough, with legal process at its best, to mediate 
the conflict of claims. So attenuated a procedure pan hardly accord 
rigid definition to private rights. The appeal to law invites a sprawl- 
ing, protracted, hazardous ordeal. The uncertainty of the norms, 
the technical character of the matter, the clumsiness of justice away 
from its native habitat accentuate the difficulties of ordinary legal, 
settlement. As they are addressed to scientific matters, legal concepts 
lack clear contours and legal considerations are too intertwined to 
reduce a zone of discretion to an inescapable point.. Precedents ap- 
plied to dissimilar technical situations keep, up appearances rather 
than emanate authority. It may be that every question would win its 
rightful answer if only it could extract a final word from the last 
appellate tribunal. It may be that by an all-encompasSing oversight 
the Supreme Court could pound a miscellany of holdings into a code 
of patent law. But it is a rare ca^ei that gets so far and our highest 
bench accords only casual attention to legal aspects of technology. 
As usage goes, the last word rests with the circuit court ; and in respect 
to "these abstract questions of invention and infringement," it has — 
by one whose eminence on the bench accords with his competence at 
the bar— -been called "the court of ultimate conjecture and final 
error." 12 


A procedure creates a scheme of usage in its own likeness. The par- 
ties who must employ it sense its quality, experience its restraints, dis- 
cover its loopholes. In serving their own interests they will attempt 
to use to advantage every technicality and to capitalize upon every 
shortcoming. The letters which emanate are cards; to insist that they 
be not played is to disparage the zeal which attends busmess enter- 
prise. A number of results stand sharply out. 

The most obvious, perhaps, is the low standard of invention. The 
grant of a patent cannot be pent up within a formula; the elements 
which are requisite cannot be specified in norms which the mathema- 
tician would call precise/, the issue of novelty is too qualitative to be 
caught up into terms of more or less. Of necessity it involves an act 

^The primary reason is tabulated where more than one is given. The Supreme Court 
for the 10-year period found patents valid in less than 4 percent of its cases. It should 
be added that the run-of-mine is rather carefully screened, and laacbinfj «ur Wj^h- 
•est tribunal have, as the process of law goes, a relatively high presumption in their favor. 

lo^Bossic& Mfp. Co. v. R. M. HolUngshead Co., 298 U. S. 415 (1935). 

" "The question, then, is whether, "by this method, the patentee by Improving one ele- 
ment of an old combination whose construction and operation is otherwise unc'-ansed. 
may, in effect, repatent tlie old combination by reclaiming it with the improved olerftont ■ 
substituted for the oH element." The judicial answer is "no." Mr. Justice Roberts, 
for the court, ibid., p. ^25. 

"Charles Evans, later Mr. Chief Justice, Hughes. The address is to be found in 12 
J. Pat. Off. Soc. 292 (1929). 


of discretion, and circumstance decrees a wide zone of tolerance for 
judgment. There is no formal brake upon the flood of applications; 
attorneys can be found who will serve tli'e' independent inventor with 
the fee contingent upon success; ^'^ the corporate estate is always pressr 
ing for more and more grants. Any old contraption that bears or can 
be affected with a taint of novelty gets its chance. The examiner faces, 
petitions in a stream which relentlessly bears down upon him. The 
case for the grant is before him ready-made, in technical, factual, 
eloquent terms. The case contra he -must work out for himself with 
only a fragment of time in which to find his issues, do his research, 
put liis findings together. It would be strange if a host of applications 
were not granted from the sheer want of rebuttal. The arrangements 
under Avhich he works makes it easier for the examiner to say "Yes" 
than to say "No." He is as little prone as another man needlessly to 
get his neck out ; as review goes, if he says '"No," there may be an 
appeal. AA'hile if lie says "Yes,'' no challenge to his competence ensues. 
Ilis affirmance is likely to be reversed only in an action for infringe- 
ment : and M-hen years in the future a court may so decree, his con- 
nection with the case will be dim. In such a process it is impossible 
to hold lo rigid technical requirements. To such a petty level has the 
business descended that a patent has been issued for an indentation on 
the head of a screw, and the cross-slotted screw has been buried beneath 
a collection of patents. The term novelty is applied to innovations of 
so feeble a character that anyone having occasion to use .the art would 
think of them. The most meager trace of cerebration puts a privilege 
at large. In a democracy without sta)idards all ideas look alike. 

Almost as obvious is the disposition to extend the patent beyond its 
statutory life. In literal terms the inventor enjoys no protection until 
after his letter issues: but it is quite common to mark an article with 
the legend "patent applied for"; and the private assertion of owner- 
ship, especially if made by a formidable corporation, is not without- its 
psychological value. Again, if action on an application can be de- 
ferred, the terminal date for the privilege may be pushed forward. 
The devices for delay have been refined into an art of procrastination. 
A petition is filed ; after a decent period it is withdrawn and amended ; 
as decision impends, the application is re- revised through as m? ny 
editions as interest dictates or officials will tolerate. In many instances, 
vital claims have been held back, to be added later ; specifications have 
been erroneousl}' set down to secure a rejection — without, of course, 
prejudice to the renewal of the application. * 

At such a game one party is better than another ; and earnestness of 
effort is not unrelated to financial power. As to average stay statistics 
are not too revealing, for all items — whether of great or of little conse- 
quence — count alike. The more deliberate consideration obviously 
attends the germinal invention ; and, as the technology of deferred 
judgment has been elaborated, the period of pendency has length- 
ened. Thus the patent for the first typewriter was issued within 1 • 
month ; for the McKay stitcher, within 2 months; the three-wire system 
for distributing electricity, within 3 months; the sewing machine, 
within 4 months; the Goodyear welt and the process for vulcanizing 

^ But it Is said that at present the number of applications handled on a contingent 
basis does not exceed 10 and may be as low as 5 percent of the whole. A number of 
lawyers run a sort of pool for '11 coniors. finding their p'art'ce profilabl<> if they win 
a certain ratio of their oases. The percentage was once far larger; Its falling off Is due 
-to the passing of invention from Individual into corporate hands. 


rubber within 6 months; and the cash register and the sewing machine 
all complete within 11 months. In contrast, note the prolonged deJaj' 
in extending official sanction to inventions basic to a number of stra- 
tegic industries. The steel indiistry is today threatened with domi- 
nation by a sheaf of seven Gi'eene patents which have tarried in the 
Office for 5, 7, 7, 16, 8, 14, and 5 years, respectively. The automobile 
industry is dependent for access to the techniques of stai-ting. lighting, 
and ignition upon the Riker and Heany patents, which it took the Pat- 
ent Office 16, 8, 8, 9, 9, 10, and 14 years to validate. The Cowles patent, 
essential to every automobile wheel, was under consideration for 15 
yea'rs." The three Gabelmann patents, which have made the calculat- 
ing machine what it is today, were in process of issue for 26, 20, and 22 
years. And th-e Fritts patent, by which a sound track is emplanted on 
film, entered the Office in 1880 and made its triumphal exit in 1916, 36 
years later. A century ago a major invention was under official scru- 
tiny' for hardly 8 months; now in respect to the significant invention 
the ritual of inquiry runs for more than that number of years. 

But if official birth can be delayed, production may likewise be 
deferred. , A corporation, having secured Its rights, has control over 
its invention. So long as the concern dominates the market, it has no 
compulsion to pi.t its novelties into rse. Upon them patents are ?p- 
plied for^ for the iising of the application fixes a date and establishes a 
presumption. It i-enders i:\valid claims by others who cannot estab- 
lish priority by th-e most incontrovertible evidence. Production, how- 
ever, awaits some event which invites the debut of the improvement — ; 
the need of a new talking point, a revised -vare to tap a fresh mrrket, 
the expiration of the older grant. A strategy which shrewdly conceives 
a time schedule for a series of improvements confers a con.timious pro- 
tection.^5 The life of each invention is finite, yet the art is caught up 
into an enduring bondage. A plus somehow set down turns a l7-year 
span into a fragment of immortality. 

As its life-span may be Lengthened, so may the would-be patentee 
reach bacK through time to validate his invention. An application 
is filed on an idea in the clouds; the claim is set down rather in terms 
of end-result than of technical process. It is kept pending for a 
period of years in the hope that the applicant — or someone else — may 
invent something which falls within the form of words. If he is 
lucky, and that day arrives, a new application is filed — as a "continua- 
tion" or a "continuation in' part" of the first — in which is set down 

1* Nott — np. 116-117, above — the Selden patent for the automobile — application filed in 
1879, pateat granted in 1S95. 

"About suppression much is heard but little proved. It will not be denied that there 
exist many patents which are going unused. But, it is urged, there are legitimate reasons 
for their nonuse. In 19:?4 the Bell System reported to the Federal Communications Com- 
mission (Ex. 1980, p. 121) that 54 percent of the 9,2.34 patents which it owned or con- 
trolled were not in use, giving these reasons : 

Development incomplete tiOS 

Practical application depends on other developments 2.">7 

Awaiting the determination of commercial application (iG(» 

Superior alternative available 2, 12G 

No public necessity 1, 307 

As to the 2,126 patents for which Bell thinl<s there is a superior alternative, it must be 
realized that industrial uliase has been substituted for the .ludgment of the market-place. 
The- 660 which want practical application and the 1,307 for Avhich there is "no public- 
necessity" are in a similar category. The "B^l> System is judge, prosecutor, and jirry ; 
the public, whose convenience is purportedly served, is not even consulted. It is 
difficult to place confidence in a private decision, not subject to review and made by an 
Interested party. Whether such a practice is suppression or is given .a more charitable- 
name does not obscure the fact that techniques and products are denied the opportunity 
of proving their value In the only forum where success — rather than speculation — deter- 
Tilnes the result. 


some deticriptioiM3f the new application. The later invention takes its 
(late from the earlier process; and, even though in fact another may 
have been first, his foresight assures to the applicant his priority.^® 
The practice — for which the statutes seem to give no warrant — is com- 
mon among large corporations. A grant in perpetuity is not possible, 
so ingenuity must make as much as it can of the sojourn of the 
application in the Patent Office. 

As its life-span is subject to control, so can 'the grant be broadened 
or narrowed. In the application the claims are as miportant as the 
specifications which support them. The applicant claims a little more 
than he can possibly get ; the adverse party will through interference 
attempt to wliittle those claims down. A coujile of applications may be 
filed by separate persons who represent tlie same interest ; aiKl out of a 
sliam fight may come a victory that has substance. An interference 
may be faked to make the application public and to draw into the 
open all competing claims. Then, to the hazard of outsiders, the ■ 
original api:)]icant may cUnend his claims to comprehend all that they 
I'ossess. Tlie little fellow is usually short on fands; if he is lured 
into interference, he may have to retire penniless and leave the field 
to liis rival. In a venture so acquisitive the amateur is always at a 
disadvantage; the cards are held and wliat to do with them is best 
understood by those who pla^" regularly. 

Nor does revision stoj) with issue: the identity of the grant is forever 
subject to change. A statute ))rovides that "reissue" riiay be used to 
( liiLiinnte a defect occasioned by ''inadvertence, accident, or mistake." 
Upon sucli a wai'rant an ingenious practice has been established. An 
'UAention is essential to tlie uianulVicture of some |>ariicular article. 
A patent to it is declared by a court to be invalid despite the protest 
of the ownei' that it is without blemish or flaw. The independent, 
gioa.ling over liis victory and his free access to technology, is suddenly 
cojifronted by a new barrier. The patentee has gone to the Patent 
Office, made oath, and represent-ed that he now finds "inadvertence, 
accident, or mistake" in the procurement of his grant in the very re- 
spects in which the court has discovered invalidity. The patent for 
the same invention has now — after many years— just been reissued. 
Thus, with a change in technical language, the campaign is once more 
renewed: and, since there ig no limit to the number of such reissues, the 
struggle may run on through many battles.^^ The reiterated beat 
of a single patent may be just as effectiv'e as a series of separate patents 
in persuading an opponent to surrender or to retire from the field."^* 

'"An outstanding example is the practice of General Electric in respect to the Coolidge 
ihaihU' tuniisten patent. General Electric Co. v. Del'oicst KAdio Co.. (17 Fed. (2d) iK) ; 10'J7), 
In that r-!ise the patent applied for in 1012. purported to he a "continuation" of prior appli- 
cati'tns. tlie earliest of which was filed July 2. lOflti. Tiinssten, was n(>ver duetili'/ed until 
1»'»8, when a patent therefor was issued in Eurojie. This seems to liave anticipated the 
('ooli(l;,'e invention, the application for which was not tiled until some 4 years later. Yet 
the presumption in favor of the foreign patent was overcome by the assertion of General 
Klectric that the Coolidse date of invention due to 'the continuum'' was 100(k Thus its 
\alidity had lie-^ii sustained bv a Federal <-ourt in General Elect ir Co. v. Independent Lamp 
<(• irire Co., 267 Fed.' 824. It is of note that the Judtie :Mor i who sustained this early 
patent struck down the later one. 

"An application for reissue may be made at any time w.tMn the life of the original 
prant. It must, however, be applied for without unreason.' ul.; delay after the necessity 
therefor is made l;nown to the patent owner. A court has 'je d that if the attempt is to 
broaden, a delay of. 2 years after issue ift presumed to estal.ti h laches in seeking reissue. 
But siH-h a presumption may be overcome by a recitation o," onvincint; facts. 
. "In IlnzeUine Corp. v. Ahramf<. 79 Fed. 2d ;!2r. (lO:?.")), t e Circuit Court of Appeals 
tor. the Second Circuit found the original icrant to be ip- a d for failure to a 
patentable invention. A reissue was tlien obtained upon .'i ec tation— somewhat meaner — 
of "inad\ert('nce, accident, or mistal;e.'' The reissued pat' n' I'as since been sustained by 
the Circuit Court of Appeals for the Sixth Circuit. De/r./i? Corp. v. .'fnzc.ltine Corp., 48 
U. S. P. (J.. fiC, (10411. 

2!i4c,lt»— Ji V, ■>-. ___io 

238 concp::ntration of economic p(jwer 

Nor does the patent stay put as it is kept alive. As venue is 
changed or an appeal is taken, the Invention in question may change 
its character. To that end the device of disclaimer serves adroit use. 
Before ,1837, if it were adjudged that the owner claimed more than 
was rightfully his, the patent was void. But it seemed imfair foi- a 
man to lose all just because in his enthusiasm he had enlarged some- 
what the bounds of his discovery; so Congress provided that a prompt 
renunciation of invalid would protect the valid claims. The usages 
of the courts in giving effect to legislative intent has not been uni- 
form ; some have been inclined to insist upon a disclaimer straight 
upon the heels o*^ : V adverse decision; others to allow the matter to 
ride until the u'.;iniate judgment is in. In a diversity of attitudes 
laxity has its opportunity; and the practice now is to permit the 
patentee to postpone the moment of decision until a judgment for 
damages or a permanent injunction is appealed; and, if the defendant 
fails to appeal, to postpone the disclaimer as long as he chooses. In 
the meantime, a person can use the invention found invalid only 
upon peril of being sued in another circuit which may. of course, 
find the claim valid.™ 

In its act Congress contrived a very flexible device. In its use or 
nonuse, in the choice of the occasion for its employment, the dis- 
claimer became an important tactic. Nor were its terms immune to 
endowment with strategic puqwse. As its words were variously 
written, so variety marked the technical demesne which was sworn 
away. A common practice came to be the recitation that the pat- 
entee waived claims thus-and-thus, except as they might l)e read so- 
and-so or except in respect to this-and-that. In filling in the blanks 
of so generous a formula, the original claim was completely rewritten: 
and adepts in its use could, in the fonn of paring claims down, in 
effect enlarge" them. Then with the original grant minus — or is it 
plus ? — the disclaimer, the old issue in a novel form could be filed in 
another court. And the disclaimer might be interposed between the 
decision in the district court and the hearing on appeal; and thus, as 
the amended document clearly showed, the question reviewed above 
would differ from that answered below.-° Such possibilities, which 
the resourceful attorney exploits, keeps the issue evasive even as 
courts come to grips with it. With such weapons, giant concenis may 
engage in equal combat, but it is difficult for the small co^npany to 
contrive a defense against such an attack. 

A ci these — and kindred — practices make the patent grant a specu- 
lative card in business enterprise. A money outlay is necessary to 
pat an invention to use, and the investor encounters no sui-e-fire 
proposition. He may perhaps be skilled in manufacture and smart in 
marketing, yet run the risk of failure in using a technical process 
■ which in tJie end may turn out not to be legally his. As the purchaser 
of real-estate has the title searched, often going as far back as the 
original grant, so the company seeking to exploit a new technology 

"• In 1911 an amendment to the Judicial Code— sections 128 and 120, 2S T^ S. C. 2:^5 
and 227 — permitted appeal from a refui?al of au injunction and made possible a review 
of the district court's action. In E7isten v. Simon, A'ichrr d- Co.. 282 V. S. 445 (1030), 
the Supreme Court decided that a patentee must either appeal or promptly disclaim the 
Invalid part of the grant. It is hardl.v ne'cfessar.v to remark that sucli ;i decision did not 
automatically convert itself into uniform practice. Moreover, the decision was set at 
naught by tliiit in Triplett v. Lowell and Dunnwre, 207 U. S. (538 (10;!<>). 

2' A beautiful example is presented l)y a case involvin,"? the Celaurae Corporation of 
Anienca. now pending before the Circuit Court of Ap|ieals for the Second Circuit. 


lias search made thvoiicrh all the giants of patents. It is no simple 
quest, for there is no comprehensive classification of the industrial 
arts; a number of trends converge to tlie same point ; a line of develop- 
ment spreads out fan-shape. Specifications are niimerous and intri- 
cate; the inquiry faces many diverse trails. Unlike real property, 
the search can never be conq)lcte. It may. if meticulous care be em- 
ploye<l, encompass all grants which are of record; but, since applica- 
tions pending are for the most part kept secret, there' is a zone not 
easily to be entered — always with the chance that it holds something 
hostile to the patent the applicant wants to put to use. As with the 
decades technology becomes more intricate, the risk is greatly in- 
creaj-j^d. At pres-ent a patent is, save to the established business unit, 
a gambler's chance. 

As a result a businessniust arm itself to meet the patent hazard. It 
cannot afford to be caught using a technique to ANhich it has no valid 
title. A ne-at bit of tinkerhig — as well as a great invention — carries' 
its legal perils; and the corporate enterj^rise can ill afford to give 
mighty concern to so petty a matter. l>ut a contrivance — however 
v.anting in creation — is a means of raising an embarrassing ([uestion 
and there are always men Avho l.ove to reap wliere they have not 
sown. A usage very like to the strike suit — brought by a person who 
has bought a share of sUx:k for purposes of litigation only — has come 
into being. A patent is secured for its nuisance value; the patentee 
lives by levying a tribute upon an industry. The practice is notorious; 
how widespread it is only a comprehensive inquii-y can reveal. 

Far more common is the use of the patent in the comDetitive struuirle. 
The ex parte character of the process yields year after year its vintage 
of letters. As the matter goes, there is no certain way by which state- 
ments can be verified, specifications checked against operation, exag- 
geration or even fraud exposed. Grants issue which could never sur- 
vive the fire of rebuttal; even where inventions do not go into produc- 
tion, the letters which accord protection circulate. Thus relative effi- 
ciency in a rivalry for markets is compromised by sanctions which the 
(iovernment has utteied. Since the validity of these, if ever they 
are called into question, is to be determined by a bout at law — an 
ordeal in which survival gyes to thelcng purse — the ga)ne may be won 
through cards which later are discovered to be without value. So long 
as this situation persists, the technical frontier mnst be guarded. And 
concerns, large and small, are compelled to look well to their patents. 

So long as a minority can play at it, there is no escape from the 
ex|)ense of competitive aimament. General Motors professes the faith 
of free trade in technology. Yet its passive attitude has not given it 
immunity from the struggle. In the decade 1927-37 its Detroit office 
reports 660 "interferences" in respect to technical rights. It records 
its experience with the self-starter as an instance oi recurring diffi- 
culties. The device, invented by Kettering, it early acquired, ])ei-- 
fected, aiid put to use. Meanwhile a certain Heaney applied for five 
patents within the same domain. For 15 years he kept matters pend- 
ing and gradually enlarged his claims to include every aspect of the 
starting and lighting system. It is, of course, impossible to judge be- 
tween his invention — which came to be Delco-Remy — and General 
Motors without an exhaustive technical inquiry. The point is that 
the patents were granted when only 2 years of their span of legal life 
should have remained; the clash broke over inventions which long ago 


sh«iil(l linve beei'. added ro the public domain. In the end General 
Motors paid out .-(;00,0()0 and acqui'i*ed. a license. It may well have 
rt'oardod the sum as the price of abating a nnisance. 

The technical frontier, accordingly, becomes the line of struggle. 
A concern attc-mpts to fence out, and then to fence in, the adversary. 
Research is conducted and patents secured to block off a competitor's 
progress. In studying a rival's ware, one concocts improvements which 
force him to stay without boundaries. If a barrage of these is skill- 
fully laid down, the enemy possesses a vanishing domain. A kindred 
strategy marks defense; every change, even every possible change, in 
the method of production is fortified by legal sanctions against tres- 
pass. A campaign demands constant vigilance, a complicated tech- 
nology, an adequate war chest. As a concern grows in power, it tends 
to concentrate technology in its own hands. The cost of the struggle — 
in bother, expense, slowness of movement, arrested development — ^to the 
business community may be titanic. Yet, so long as patents may be 
used as weapons of competition, all who are in interest must carry 
on the conflict. 

Business enterprise gets caught up in the struggle. Rival firms in- 
sist upon their researchers getting out more and more patents; con- 
cerns have been known to specify that so many per season shall be 
sought. A single basic device may have a hundred improvements 
gi'ufted upon it. A technical process which has no meaning except 
in its integrity may be broken up into a dozen inventions. And, as 
creation descends into the sheerly mechanical, it takes mathematics 
to specify the number of permutations of given elements which are 
))ossible. Nor is thereany defiiiite jfrocecbire for ridding the opej'ation 
of the economy of patents which are legally dead. A novel twist may 
give to an old invention a new lease of life; an improvement may 
freshen a familiar into a novel process. A high birth rate goes along 
Avith an almost invisible mortality. All growth and no obsolescence 
does not make a healthy institution. 

In so intricate a situation, the race is to the swift and tlie battle to 
the strong. A concern, exploiting its exclusive right to a process, 
may build up a monopoly in a product. It may add ingeniiity to 17 
years and make it equal a long immunity from competition. As 
the sole practitioner of an art, it has an. exclusive opportunity to 
translate experience into invention. A series of patents, neatly artic- 
ulated and accurately tiiued, may be made to carry cm indefinitely. 
Eventually the corp(n-ation may enjoy such secui'ity that its grants 
from tlie Govermn,ent ai-e no longer needed for active service. The^ 
patent to Morse for the telegraph, expiied before the Civil "War; yet 
Western Union — with Postal as its liitle sister — carries on. That 
McCormack once had a patent is now a fact in, history; yet almost 
all reapers are now made by the International Harvester Co, In 
1880 a patent was issued to Edison for an electric bulb; tlie sha<lo\.' 
has lengthened into the substance of General Electric. The original 
patents on shoe machinery had run their coui-se before most ))ersons 
now living were born; the process is still blanketed by official 
grants — and over it United is an absolute sovereign. The Bell 
patents gave to the struggling tfelephone it;s start; it matters little 
today to American Telephone & Telegraph — at least in respect to its 
ordinary service — whether its devices are patented or not; in either 
event it would enjoy an exclusive right to their use. An invention 

<'()X(ENTflATl(1N (»F KC< tXOMIC POWER ]^41 

may open a new art; the patent upon it may serve for decades to 
exclude the public. A domain supposed to be opened by the demise 
of a grant may remain firmly locked. An instrument designed to 
encourage invention may hold it in shackles. 

Thus a scheme <^'t industrial usage has been establislied upon n 
grant from the Goveinment. If such a servitude for the patent is nor 
prohibited by law. at least no statute warrants it. Tlie antitrust acts 
might have been emploj-ed to hold the grant to iis rightful ambil. 
But for two decades after its passage the courts proceeded as if there 
were no Sherman Act.=^ As if the v>ords themselves were isolated 
from the Avorld of affairs, the early, fumbling holdings — in wliich 
the later issues did not ap))ear even upon tire side lines — were treated 
as leading cases. Tlie situation created by antitrust stinudus and 
acquisitive response was slow to win recognition upon the field ol" 
combat. Whei n number of ideas of old were equally within reach, 
the courts could fit their dialectic to their findings; where docti-iiu'-; 
from afar lost momentum, an appeal to the order of nature. su])ple- 
mented by an exercise in logic, was made to supply the deficit. Wher< 
legal ideologies came into conflict, the issue Avag resolved by logom- 
achy, by inclusron and exclusion, bj' the art of rationalization. 'J'he 
"exclusive right" of the jiatentee became "the patent monopoly." and 
this was converted into a one-way street along which no tresj)assers 
might go. Reality. t!ie elimination of competitive oi)portunity, the 
revision of a passive inventor's right into an aggressive commercial 
weapon was ignored as irrelevant. 

The challenge L'^ the questionable value of the cui'rency by wiiich 
systems of private govennnent carry on. If all patents went to tlie 
courts, were subjected to a like scrutiny, and only those validated went 
ilito circulation, current usage might at least rest upon legal sanction. 
But delay,, uncertainty of outcome keep the great mass out 
of court ; a skillful use of well-known techjiiques can pile up costs and 
prevent suits. Appeal, the new case, the revision of the instrument, 
the shift from grant to gi-ant make available resources the only limit 
to the number of moves. The little fellow thinks at least twice before' 
sending a legal challenge. Even between concerns of substantially 
equal strength there is reluctance to make a move which nniy well 
prove the first battle in a long campaign. Hesitancy is undei'written 
by gambler's odds which cannot be calculated; for procedures, how- 
ever irrelevant, may prove disastrous: and the way of the judge in a 
patent case, like that of serpent upon the rock, is jMist understanding. 

Accordingly parties at odds are disposed to avoid the costs of legal 
struggle. As they move toAvard peace, everything favors the part^ 
strategically placed, well supplied with funds, e({uipped Avith i-esoiuve- 
ful attorneys. On occasion a little fellow may bring a strike suit and 
expect to be bought off. Now and then an independent of indomitabK' 

-^ Only one important c.<sp involving the patent as a justification for the nsagcs of restvaint 
came to tbe courts before 1890. A second case, Fowlc v. I'm!:. i:!l T'. S. K8 (ISSO). in\w)lvo(l 
a trade sciret. the niauiifactiirc of a pa. nt inidicin",'. wliifh lia'l Iipmi siirronndrd liv vcstric- 
live covenants. Thn Court held Ihat in respect to th- sei et ihm.pss ihe use of ron'tracts to 
limit comp<Mition did not fall within the coinnion-law prohihition av liiist restraints of trade. 
The case bas some importance because it bobs up in the (l.l)atp< v.hCM preceded ibe pn'^saw 
of the Sherman Act. In lSK(i. a case dec'ded li.v a circuit ceu't r;iiseil ♦;!,■ issue of tb^- notaise 
of a patented machine. The u.itenree btid si;p'j:-essed !)era"s. .1 the ■. \|> "!-■ (^j ilinnae and 
the irreatev profit to be (ie;ivp(! from the older ii;.)'b:ne-: Thr i;,nn Ik Id su-h an .■•.t c-n- 
trary to the spirit of .\rt. I. sec. S, subsec. of (be < 'onstitnlioii. It .-,t,r, d tliat patentee 
IS -'bound to use the iiiventlon himself or to allow olher.-i to use it o;i nasoiiab:.' and equi- 
table terms." Hoe v. 2T Fed. 204 (ISRC). A d-cision of the Sup-eioe Cairr -JO viars 
later ,wa.- to a contrary i-ftect. Pappr Ban Patents cmc, 210 U. S. 40," (1008). 


will may persistently refuse to res])e<:t a dubious validity which blocks 
him from his trade. But the urge toward an accord among all who 
;ire concerned is strong; and since letters patent are an asset, lik > 
stock ownei'ship, an exclusive control. acc?H> to investment funds, the 
general disposition is to cash them in for what they are worth. Tlni- 
settlement moves toward m.erger and monopoly. 

It is impossible to estimate the financial damage and the denial of 
opi)ortunity which ^attend curi-ent arrangemeiits. If he wishes to 
settle, the little fellow can sometimes convert the cost of a prospective 
suit into an advantage. But if he wants to fight, or if the larger con- 
cern is bent upon making impregnable its monopoly, it is easy to see 
M-here the balance lies. A studied legal attack at well chosen points 
exhausts the resources of the advei-sary. The action breaks down be- 
cause the weaker party is no longer able to carry on. Then a private 
agreement is induced on dictated terms or the bankrupt litigant — who 
may Jiave been the victor in court — accepts his fate. If the inde- 
pendent refuses to come to terms, he usually falls a victim to a w-ar of 
attrition. If as an ultimate fact a patent is found valid, the court 
cannot reach back through time to com])ensate all who were sul)jected 
to heavy loss or put out of business by tentative defeats. Thus settler 
ment moves toward union, merger, monopoly. 

Thu9 the process of validation goes on — with only on occasional 
resort to the courts. All wdio have, or insist they have, le;gal grants 
are parties to it. If the terms of settlement lack an authoritative 
judicial reference, they reflect with some accuracy the relative staying 
powei^ of those who subscribe. The process of bargaining is much 
too intimate to allow any consideration of the public interest. But, 
in an absence of legal challenge, a presumption is set down in favor of 
the patent thus certified and all that may be done in its name. The 
superior bargaining position of the patentee is adequate rebuttal. 
The judgment, despite its irregidar origin, is likely to stand as firmly 
in fact as if it had emerged from judicial pi'ocess of law. The j)rivate 
government of many an industry' rests upon credentials accepted as 
valid by the trade although they have never been exposed to the ordeal 
of trial in open court. One can only speculate about the number of 
grants at large, which supply privilege with sanctions and yet could 
never sur^nve judicial scrutiny. 

All of this impinges heavily upon the common good. In theory, 
inventors go forth in quest of novelties and, after enjoying an exclusive 
lease for a limited time, they add their own discoveries to the common 
store. In fact, righ^ pass from technicians to corjjojate estates and, 
ai-tificially refreshed as needed, are not relinquislied until long after 
their statutory life has expired. The result emerges, almost as of 
couj'se, from a process of grant and validation to which the ])ublic is 
not a party and in which it is not formally rev)resented. Interest, 
pressure, technique are skillfully and persistently used to obliterate 
its rights, and against them it can employ no con.nler-strategy. The 
grant of letters-patent has strayed far from its constitutional purpose 
to sei-ve the coi-porate estate. Vet, in r^s})ecl to the great mass of 
patents, the law has never been iiivoked. The certificate from the 
Patent Office passes at face value; or, if it is challenged, validation 
wa^its upon the agreonent of interested parties. In such cases the 
currency of ])rivilege circulates upon the presmnption that it is legal; 
and, so long as values are fixed by financial slrengtlu the fact accords 


■with the presumption. Yet the host of decisions — official and pri- 
vate — are a factor of consequence in shaping the character of the 
economy. It all leaves the man scrupulous about the sources of 
authority quite bewildered. He is hard put to it to derive the prevail- 
ing system from act of Congress or constitutional intent. 



It. is a far cry fi-oin 1787 to 1941. rtiul tlie signing of the Coiisiitution 
aiul the )'eport of the Temporary National Economic Committee lie 
\A-oi-lds apai-t. Over the decades the usages of American democracy 
liave traveled fast and far. But none liave gone farther or moved 
fastci- tlinn the clustei' of usages \vriic!i make up the patent system. 
The ultimate reference, "to promote the progi-ess of science and the 
useful arts" persists — somewhat obscured by a judicial gloss written 
over the original text. The relevant statutes have departed little from 
ihe original act of Congress; in the variety of provisions which amend- 
ment put into place there is little that would have taxed the eight- 
eenth century understanding. Yet the patent-s.ystem-in-action is an 
affair that was never designed and which only an elaborate explanation 
could make clear to the gentlemen wlio on an hi'^toric occasion gathered 
at Philadelphia. 

To insist that the patent has strayed from its original office is not 
to condemn. An institution, e^'en an American institution, is not 
immune to the law of- growth. As circumstance takes its course, 
adaptation is the price of survival ; to speak of its changing identity 
in only to say that a thing lives. Tlie grant, as the Fathers knew it, 
is gone beyond recall. Their useful ai-ts and their economy are not 
our usefid arts and our economy; and an instrument whose office it 
i:s to mediate between them could not retain its original nature. The 
(juarrel is rioi that there has been departure — that was inevitable/ It 
IS rather that change has been guided by no conscious policy. As pri- 
^•atc interests harnessed patents to their own service, the Government 
remained inactive. As a stream of decisions enveloped the sanction 
in novel usages, a guiding purpose remained off-stage. 

If at the moment "the patent question" seems monumental, long 
years of neglect have made it §o. As issues were ignored, they were 
postponed; as the industrial system took its tumultuous course, they 
accimiulated into a mighty docket. It is now much too late for the 
occasional stitch in time by court and Congress. The problem de- 
mands a series of attacks upon a number of Jcsels. The machinery of 
issue needs to be modernized. A resort to law needs to become a more 
certain and efficient instrument of justice. The terms of the grant 
need to be brought into accord with the conditions out of vrhich inven- 
tions currently spring. The rank growth of custom, by which sanc- 
tions are held in bondage to vested interests, needs to be trimmed away 
or subdued to the public interest. And a conscious policy needs to ap- 
point for the patent its proper place i}i the national economy. Although 
Avays and means present numerous alternatives, the direction is clear. 



All that needs to be done cannot be done at once. Knowledge, analysis, 
intelligent prescription must determine the pace at which a reform, 
running far behind schedule, can hasten on its way. 

The easiest level on which to move is administration. There short- 
comings have been most fully explored, the way ahead most definitely 
cliarted, opinions drawn most nearly into accord. A host of indi- 
viduals,^ the Connnissioner of Patents, the Science Advisory Board, 
the Temporary National Economic Committee have all made recom- 
mendations.- A number of these are intended to speed up the process 
which leads to issue. The public use which may precede the applica- 
tion should be limited to 1 year; the time allowed the applicant to copy 
claims froni an issued patent to assert the priority of his own invention 
should be reduced from 2 years to 1 ; the applicant should — unless a 
connnittee grants an extension — ranswer the Patent Office within 30 
days, not 6 months. The period between initial filing and the expira- 
tion of the patent should in no instance exceed 20 years.^ Lest it occa- 
sion undue delay, all cases of interference should be passed upon by 
three examiners and there should l)e no review by a board of appeals. 
All applications for reissue and the renewal of a patent^-usually upon 
the allegation that process or design has been radically changed — ■ 
should be prohibited. These suggestions, based upon wide experience, 
are reasonable and have been or should be translated into' law.* 

Yet speed is of no avail unless the Patent Office has facilities for a 
high level of performance. To that end the first essential is an ade- 
quate appropriation. Funds alone do not insure efficiency, but they 
provide the means with which to secure and retain a high-grade per- 
sonnel. With a staff which in tradition and competence rises to its 
task, more exacting criteria may be set, more bother taken to lay all 
issues bare, more effort given to safeguarding the public domain. If 
Congress is reluctant to make provision out of its general revenues, 
other sources might be looked to. No one can deny that patents as 
a whole have been rather profitable to those who have secured thein. 
If the system has paid its own way, there seems no reason why it 
should not maintain the expense of its own upkeep. The difficulty 
in making it self-supporting is in fitting the financial burden to the 
ability to pay. The heavy expenses are in respect to issue. It was 
once argued that fees, commensurate with the 'care whicli ought to be 
taken, could hardly be imposed upon application, for the inventor, 
whose* dollars have gone into experiments, comes seeking protection 
completely broke. As the corporation has replaced the natural person 
in seeking grants, the objection has lost its force. Yet if application 
is a poor moment at which to strike, a later occasion is more inviting. 
If the invention is successful, the patentee can afford to pay a tax 
which increases over the years or is graduated to the volume of produc- 
tion. If it is not, an inability to meet the impasse might free the 
channels of trade of patents which are dead. And the mere prospect 
of the tax ought to rid the docket of a deluge of petty claims. The 

1 A summary of recommemlatlons by various individual.s is to be found in ch. VI, of 
Lyon, Watkins, and Abrnmson, Government and Economic Life (1939). 

2 A series of suggestions has also been put torward by a special committee oi^tne 
National Association of Manufacturers. But-at this writing the report has not been 
publi-shed and tlie author has not seen its text. , a tt- -> ^i>„,.e .^^.f <v,» 

' It sometimes happens that all material issues have been resolved after o years, yet the 
elimination of slight inaccuracies under tlie montlis' rule may extend it much lonKer 

*In the closing hours of the 76tb Cong., 1st sess., tvyo of these proposals (abolishing 
■ renewals and limiting prior public use), and three bthers similar to them, became law. ihej 
are 53 Stat. L. 1212, 1298, 1212, 1213, and 1264. 


detail of the scheme of charges would have to be worked out with 
realistic care.^ Yet a prime essential is a separation of the genuine 
novelty from the spurious: and the system is well able to bear the 

At present the use of patents is enmeshed in a network of legal 
instruments. Inventors assign patents to corporations; corporations 
lease them out to other corporations; all sorts of terms and conditions 
attend the lease. Such arrangements may do no more than put an 
invention to use; they determine the amount and distribute into shares 
the revenue wdiich it yields; they provide meclianisms tlirough wliich 
technology is indentured to money-making. The grant appoints lines 
to the private claim and, through usage wliich derives from the result- 
ing contracts, its boundaries may be changed. The legal documents 
which the letter brings into 'being are thus of as much concern to the 
public as they are to the persons who sign them. It follows, almost 
as of course, that all assignments, leases, and documents correhitive 
thereto, should be public records. Congress should, therefore, require 
all instruments giving effect to a patent to be filed with tiie Federal 
Trade Commissiijii, where they can be consulted by all who are, or 
come to be, in interest. The very fact of publicity will cause concerns 
to use -greater care to hew to the line and will constitute an effective 
instrument of police. In addition Congress should instruct the courts, 
in all legal controversies, to treat as null and void all contracts in 
respect to patents not so filed. 

As yet the line between the jiatent privilege and the general law 
is not clearly defined. The patentee insists that his "exclusive" is an 
absolute right; the Go^'ernment retorts that ail rights are subject to 
(he general law and that letters patent create no immunity to antitrust. 
A large body of industrial practice is in accord with the claim of the 
])atentee; the trend of judicial decision seems to favor the Govern- 
ment's position.'' The matters in dispute may be settled by a further 
appeal to the courts. Cases involving restrictive covenants, in all 
their sweep and variety, should be pushed forward as expeditiously 
as possible by the Department of Justice. The patentee and the li- 
censee are just as much entitled as public officials themselves to knov/ 
what they can and cannot do under the law. Such cases have' a con- 
cern that transcends the issue between the parties; they present the 
occasion for the clarification of public iwlicy. So the Government 
should be loath to settle out of court — even if in the instance it secures 
all for which it asks. Before the next step is taken it is imperative 
to discover what the law currently is. 

It may be that the law now accords all that public policy demands. 
If so, its clear exposition by the courts ought to be enough. If it 
does not, recourse must be had to Congress for further legislation. 
A privilege from the Government, in derogation of the public do- 
main, must be held to its orbit. But if Congress is to act, the de- 
cisions of the courts must lay bare current defects and reveal what 
amendments are necessary. Restrictions in respect to capacity, ter- 
ritory, output, price, and ware may or may not at present be legal. 
The lavf may now forbid a concern which controls and employs a 

' In- a number of European countries the patent grant is made a source of government 

'•Ethyl Gasoline Corp. v. U. &., 309 U. S. 4?.6 (1940) ; Interstate Circuit, Inc. v. U. 8., 
306 U..S. 208 (1939). 


certain tcclin':)l(.^y to (jvcn a competiijo- techn<)loi>y whuji p)'oi.'eed> 
from another base. But, if, it does, it is not written beyond any 
possibly misunderstanding in the law reports and only a suit for 
divestment can clear the matter up. A corporation, which enjoys 
a monopoly of process and product, may be within its lawful rights 
in putting away in mothballs radical inventions; bat the decisions 
on the subject are not of recent >intage and may long ago have "ex- 
hausted" such "vitalit}'" as they once pcjsses.sed.' Trade practice is an 
intricate aifair; the- frontier betvreen what may be legitimately written 
into a license and what the general law of trade forbids is irregular 
and attenuated. A number of points must be fixed to determine its 
present contours.. 

The doctrine of restrictive license is a mushroom, grow^th on the 
law. The legal arguments have been fuzzy, framed by private 
suits; the court decisions are not fully considered and display no unity. 
The "law" has been fashioned of unpromising material; the treaties- 
and hnv journals have tried to make sense of the stuff at hand; 
Congress has responded only to desperate plaints in special in- 
stances; and no one has attempted a fresh appraisal. That task 
has been shouldered by tlie Antitrust Division, and out of its score 
of indictments and complaints should come a body of law more in 
tune with industrial reality. To test the validity of restrictive 
clauses in their broad sweep, it has instituted suit in a diversity' 
of situations.^ Out of these cases the courts ought to be able to 
hamilier a rationale that brings light into a confused situation. In 
all such matters due process should become the instrument of legal 
clarity. No necessary antithesis exists between the grant of patent 
and the commitment of public policy to free enterprise. If judicial 
decisions reveal any overlapping domain, the Congress should clear 
it up. 

Well-rooted in the present law is the doctrine that the purchaser 
of an infringing waw is himself an infringer. Yet it is extravagant 
to require the consumer, at the moment of purchase, to probe into 
the realm of patentability and infringement. aaIicu only with vexa- 
tion and delay can the courts themselves get such matters straight. 
The notion of the purchaser as an accessory to the illegal use of a 
patent is hard for common, sen^e to entertain. And the mischief 
which may be done to a manufacturer by capriciously tlireateniiig 
his cuetoiners or circularizing his prospects is not easily set aright; 
his offer to' save them harmless is a sad expedient, and the declara- 
tory judgment a puny remedy. The courts are. quite pfoperly. loath 
to act without a clear-cut mandate,, lest they be accused of legisla- 
tion. Tlieir reluctance calls for statutory correction. The innocent 
buyer should be imnume to suit for infringement; in the tangle of 
conflicting patent claims, he should be a remote third party. In- 
duci)ig paralysis in the market place is not an aid to settling a legal 

It is, of course, impossible to accommodate patent law to industrial 
fact without creating a zorie of discretion. A price according to use 
presents a neat enigma. The competitive ideal has no place foi- such a 

fTlie words are those of Mr. Justice Stone in holding that Hammer v. Dacienhart, 
247 U. S. 251 (1917), no lonj;ei' is legal currency. In £-". 6'. v. Daihij Lumber Co., Gl Su. Ct. 
431 (1941). 

8 Joseph Borkin, Patents and the New Trust Pi'oblem, appparinp in Law and Contempor- 
arv Problems, Duke Tnlversltv Press Winter 1940 Issue, pp. 74-81. Also see Department/ 
of Justice Public Statement, Dec. 11, 1939, the Sherman Act and Its, Enforcement. 


"variation from the rule of single price. The medical profession prides 
itself upon a single standard of service for all and a graduation of 
charges to the ability of the patient to paj-"? A rule of duat or even of 
nniltiple price has wide-spread standing, especially, in industries 
marked by surplus capacity and the dominance of overhead. In an 
instance such as the vacuum tube, a lower price for amateur than for 
professional use seems reasonable; and. in general, a departure from 
the quoted price to allow purchase by members of the lower income 
groups who otherwise would have to da without would not seem to 
run counter to public policy. 

The trouble is that to allow use to become a criterion of price may 
present a loophole to privilege. As yet the matter has been little ex- 
plored. The phenomenon appears in com])etitive industries ; it has long 
been established in bituminous coal. Yet the notable cases, unfor- 
tunately, are "to be found in industries like milk and electric energy 
which savor strongly of monopoly. The economy presents a host of 
unlike instances, often thinly disguised as different grades or even as 
different products. But the custom has been subjected to little critical 
inquiry and the current state of knowledge dema)ids caution in the 
graduation of price to use. The presumption should run strongly 
against departure; but some authority should be permitted to make 
an exception when tlie public interest beyond any reasonable dobut 
demands it. 

An equally intricate question concerns the pooling of patents. In 
many instances "the monopoly" is itself a reflection of bad patent law. 
A number of processes, like and unlike to each other, are employed to 
manufacture a good. The owner is sure that his own is valid and that 
all others are infringements. In the ensuing bout at litigation all 
parties are exhausted and all clamor for a settlement. Straighten out 
the patent law, devise an easy and elcpeditious method of validation, 
and a great many such pools will never come into existence. But if the 
various jjatents are distinct and if they must be used together to secure 
the result — or at least to turn out the best good wliich advanced 
technology can afford — the matter is different. The choice is to sacri- 
fice quality and efficiency or to sanction the monopoly. The only desir- 
able out is to accept the pool, place it under public authority, and see 
to it that private rights are made to s^rve public ends. A variant of 
the patent pool is the usage of "cross-license." If, to turn out a superior 
product, a number of manufacturers, owners of separate patents, grant 
licenses to each other, the same governmental supervision becomes 

The proposM for a system in which licenses are available -to all the 
members of the trade upon the same terms presents no simple issue. 
The current state of the patent law gives to "the open license" a promi- 
nence out of proportion to its real importance. If the evils at which it 
is aimed were stopped at their sources, it might become necessary only 
in the exceptional case. Take from licenses all their covenants of re- ■ 
straint, strip away all agreements in respect to output, territory, and 
price—and the incentive of the patentee toward exclusive agreements 
will be greatly reduced. A strong case for the open license is the 
patent pool. A merging of kindred privileges cannot be left a volun- 
tary matter. At present a concern often produces an invention and 
secures a patent as the ticket of admission into a pooL The usage is 


replete with abuses. Private interests, entrenched behind legal sanc- 
tions, cannot be permitted to decide who shall baof their select number. 
It is evident that a patent not in use does not promote the develop- 
ment of technology. Its idleness may cause no public loss; a dozen 
other techniques may lead to thp same end. Or its suppression may 
arrest the progress of an industrial art. In such a case, there should 
be power to invoke the courts to cancel the instrument — lease, assign- 
ment, license, patent — by which the invention is laid upon the shelf. 
Some cases will call for severe remedies. If the patentee squats upon 
the public domain in the path of industrial progress, some public body 
should liave power to compel a license.'' Such an authority is in strict 
accord with the theory of free enterprise. It Avas in vogue in a number 
of colonies at the time the Constitution was di awn up. By the Fathers, 
the power to compel license was not regarded as an invasion of the 
exclusive right of author or inventor." At that time private claims 
encroached little upon the fund of common knowledge. Now, access 
to an up-to-date technoloj^y is essential to entrance into the majority 
oLindustries. If at that time the common good reserved such a power 
to the Goverliment, its necessity would a])pear far more obA'ious now. 
It is Said, however, that the compulsory license will discourage sci- 
entific progress; that the new method, if not put to use, will become 
available to competitors. Inventions will fall into the hands of manu- 
facturers content to use them for what they are — whereas the up-and- 
coming concern will hold them back until they are perfected. Thus 
the requirement will undermine the val\ie of patents whose industrial 
application has not yet been perfected. It will destroy the bargaining 
power of the small inyentor who is not in a position to exploit his 
discovery; for, if he does not like the terms offered him, the large 
manufacturer can extract a' compulsory license from the little fellow. 
The reasons advanced have cogency in some industries; in others 
they are at sharp variance with the facts. Administrative discretion in 
a case by case approach is .the proper, way to apply a general statute 
to diverse situations. A statute flexible enough to meet the demands 
of unlike industries must wait upon a more detailed inquiry. But the 
demands for, national defense call for an immediate answer to specific 
needs. An item in the catalog of armament must be produced in 
quantity. All available capacity' must be turned to account and 
quality caimot be sacrificed. Firms which produce for the Govern- 
ment must have full access to the latest and most efficient technical 
processes. And, since nations now fight each other with economies as 
well as armies, the necessity extends to commodities not ordinarily 
thought of as military supplies. It may be that power to compel the 
necessary licenses can now be spelled out from provisions already upon 
the statute books. If not, this deficit in national defense needs at once 
to be repaired by legislation. • , 

It has often been suggested that, when there is recourse to law, the 
issues should go to a special court. It goes without saying that a 
single standard of judgment should be applied to all/ suits for in- 
fringement. A national economy, with a common fund of technical 
knowledge, no longer has a place for multiple jurisdiction. The 
cases should be consolidated into the" docket of a court of distinctive 

» The English have such a law. See Patents and Designs Act, 1907, 7 Bdw. 7, c. 29, 
12 Halsbury's Statutes 593. 

"• For examples of such statutes see pp. 18-23 above. 


competence, whose members "wonld sit sinj^ly or en banc as the im- 
portance of the matter at issue migfht demand. The judges should be 
widely A^ersed in the law and industrial usag:e; thej- should be served 
by a staff of skilled economists and technicians. Their procedure 
s-hould allow matters concerned with the technical arts and public 
policy an easy access to the record. An appeal from its jud^ient — 
allowable only on questions of law, that is, of public policy — should 
go direct to the Supreme Court. Although there is some sentimeni 
against special tribunals, the consensus of informed opinion favors a 
single court of patent appeal. Dissent seems to come only from 
members of the patent bai-, and their reasons appear rather obscure. 

But reform in procedure cannot await a new tribunal. Multi})le 
suits need to be discouraged and a semblance of unity brought to a 
wilderness of holdings. To that end a minor refonii might woi-k 
wonders. At present each Federal circuit is in respect to patents a 
law unto itself. The separate legal domains rest upoji the rule of 
review of the United States Supreme Court. Its custom is to accept 
the case only if two circuit courts differ in decision. The oi)eration 
of certiorari is not in strict accord with tl^e intent which underlies the 
patent grant. Not only do the several courts of appeal vaiy widely 
in the criteria they employ but in general their standards of patent- 
ability are far less severe than those of the Sureme Court. The result 
is a great body of patents in effect — how large it is impossible to say — 
which would probably be declared void by the highest court in the 
land. Even more important, wher6 patents are shields for restraints 
of trade, they could hardly withstand the attack of antitrust. The 
attention of the Supreme Court should be respectfully called to its 
iiile of review which, going back only two decades, presents a curious 
patradox. Just as technology became dominant in modern industry, 
and access to it became the condition of free eiiterprise, the highest 
court in the land makes the subject of secondary concern. If privi- 
lege now at large is to be brought back within its ambit; it can no 
longer neglect a matter as vital to the general welfare as capital 
structure or labor relations. No severe or mechanical criteria should 
be employed to select cases for the ultimate judicial scrutiny. 

A growing necessity for which provision should be made is the 
intervention of the Government in private suits. The great corpus of 
patent law has emerged from private litigation ; it is only in the anti- 
trust eases, a minute fraction of the total, that the Government has 
been represented. In the ordinary action the parties are concerned 
only about their own rights ; considerations of public interest, unless 
they happen to serve the cause of one party or the other, pass unargued. 
Yet every case involves a private privilege in the public domain, and 
it is essential that its boundaries be sharply defined. The backward 
state of patent law is not due to conservative judges. Its lag behind 
other branches is proof of that. It stems primarily from its oi-igin in 
private litigation. 

In its very nature the law of patents is public law. The grant is 
the creation of a private equity within the public domain. The in- 
dustrial arts are common property, accessible to all wlio ha^'e occasion 
to put them to work. The letter from the Government can extend 
only to the improvement or the novelty. Since it is accorded for a 
public purpose and limited to a span of years, it can hardly — without 
confusion of thought — be regarded as a "property." If established 


terms must be used, it is rather a lease, terminating at a fixed date and 
not subject to renewal. Since the machine or process may be widely- 
used, yet a single person is authorized to control its employment, the 
term "franchise" is even more texact. The privilege accorded for a 
limited time is exclusive; that is, within the rightful limits of the 
grant, all other persons are exclucled. If the patentee chooses not to 
"make, use, or vend" the product himself, but is willing to permit 
others to do so, it is hard to see. how his control over their conduct can 
be broader than the privilege conferred upon him. In all matters of 
lease, license, assignment, the character of the grant and the purpose 
it Was intended to serve becomes the legal reference. 

An instrument needs to be contrived for holding the patent to its 
orbit. A means toward ending the anomaly would be the establish- 
ment within the Department of Justice of a Public Counsel on Pat- 
ents. It would be his task to exercise a general oversight of patent 
grants, of the assigimaent and leases which give them effect, and of 
all patent litigation in the courts. While an npplication was pending, 
he. would have the right to intervene if its acceptance carried a threat 
to public policy. After its grant, he would have the right to insti- 
tute a suit, to cancel any instrument by which the patent in operation 
was pushed beyond its legitimate boundaries, made the foundation for 
a restraint- of trade, or converted into an immunity to the geneinl 
law. Courts are jealous of their right not to an^iwer questions whicii 
are not raised. It would be the task of the Patent Counsel to make 
the public interest ah issue in every necessary suit. 


A series of such steps, however, "falls short of an answer to the pat- 
ent question. The instrument has been assigned a definite place in 
the national economy; and, if it has failed in its office or has been 
deflected from its orbit,, a more fundamental revision becomes 

Here the norm of reference is clean-cut and derived from unim- 
peachable authority. The question is put by the Constitution of the 
United States itself. The Congress is given no general power to 
issue letters patent or to reward inventors as it will. An experience 
with grants of monopoly in England was fresh in the minds of the 
Fathers ; the lesson had been underlined in recent differences with the 
Crown. Instead the power granted, in the idiom of public policy, 
was "to promote the progress of science and useful arts." The grant 
to the author or inventor for "limited times" of an "exclusive right" 
in his invention was the mere instrument by which the general wel- 
fare was to be served. Alone among the powers delegated by the 
people to the Congress, the Constitution itself provides the reference 
for legislation and administration. If a statute, or a going system of 
usage, serves and continues to serve this particular purpose, it is 
valid. If it forsakes its function, or fails at its task, it has strayed 
beyond the bounds of its constitutional warrant. 

The powers of Congress under the Constitution are stated in broaU 
terms; the instrument is not cluttered up with the detail of applica- 
tion. Congress was free to translate power into a statute — provided 
tlie purpose of its act was to promote the progress of science and 
the useful arts. Its agent for administration was free to apply the 


law in instance after instance — provided its ruling served the same 
good end. The Congress has no power to make a patent serve an- 
other purpose ; the diversion of a grant from furthering the progress 
of technology to a dominantly acquisitive or defensive end has no 
warrant in the supreme law of the land. The public purpose is last- 
ing; its realization has to be altered to changing circumstance. As 
industrial events have stalked down the decade the problem of pat- 
ents and free enterprise- has demanded fresh sta.eiiient. 

It is, of course, quite out of the question, to state with precision 
the part the patent grant has played in promoting the industrial 
arts. There are persons who recite that under the prevailing system 
technology has taken gigantic strides and who therefore insist upon 
making the two cause and effect in a simple -formula.^^ Yet an 
after-this-therefore-because-of-this-argument is too elementary to ex- 
plain beyond any reasonable doubt some 15 volcanic decades of na- 
tional development. Over the years many winds have breathed hot 
and cold upon the imagination of men and countless factors have 
speeded or arrested ideas on their way to the status of practical proc- 
esses or mechanisms. There are in fact more unknowns than there 
are equations from which to derive their specific values. Moreover, 
analysis can hardly go forward in terms as broad as the patent grant 
and the advance of the useful arts. The grant has currency as a 
cluster of numerous and changing usages, and the advance of tech- 
nology presents a broken march, in which the several useful arts, im- 
pelled by distinct influences, move at different rates. The current 
issue of office and instrument demands a detailed attack. 

A fiction which still lias currency goes back to eighteenth-century 
fact, when an applicant for the GoA'ernment's favor is thought of as 
the starry-eyed tinkerer, who draws his specifications on brown paper 
and selects an attorney from the advertisements in Popular Mechan- 
ics. At that time the incentive of expected reward could prod the rare 
individual to invent; the grant of privilege carried little threat to 

Eirsonal opportunity and could hardly abridge free enterprise, 
ong ago the species began to decline and in recent years it has 
been headed toward e?ctinction. The Commissioner of Patents has 
recently testified to the decline of a noble race and has borne witne>ss 
to their many bitter experiences.'- That occasionally an outsider 
crashes through and wins spectacular rewards is not to be denied ; but 
the common experience has been great' expectation and bitter disap- 
pointment. If the patent grant has been an incentive to such persons, 
far more often than not its promises have been unfulfilled. That we 
must take scrupulous care lest the sources of attic invention di^ up is 
at best a minor argument for prevailing reform. 

The same concept of the solo inventor animates the argument that the 
prevailing system is a prop to free enterprise. It has been repeatedly 
urged that to the little fellow the Government's grant is a shield against 
the attack of big business. In the nature of ' 1 ings, the contention is 
incapable of definite proof or disproof. In aidition to its promise, 

"Note, for example, the argument of Senator William I King, in Hearings, Temporary 
National Economic Committee, Part II, pp. 321-322. 

" "I do not say that the day of the individual inventor is one, Mr. C^ 'irnian. but I thinki 
it is rapidly fading." These are the words of no 1' ' ai" hi rity than Conway P. Coe, Com- 
missioner of Patents before the House Committee on 'a ents, 74th Oong. (1936). Set 
Hearings on H. R. 4523, p. 1068. 

294640 — 41— No. 31 11 


the prevailing arrangemeixt creates serious hazards for the individual 
who tinkers and contrives. It is a"* common practice to hurl the in- 
fringement suit against the small firm and a grant is a weak shield 
against the aggressive rival who has the necessary funds and an in- 
clination to litigate to the last ditch. When a small patentee can be 
forced to come into court and to answer in each of 10 circuits, his 
survival rests rather upon sufferance than upon his monopoly. It is 
far safer to accept a tolerance, which permits a modest existence 
within the interstices of the industry than nobly to go forth to battle 
to make good his >xc^isive rights. Those who defend in the name of 
the poor inventor t le .buses o? the prevailing system had better devote 
their enthusiasm to increasing his bargaining power. 

The fact is that the conditions of invention have radically changed. 
The pioneer work is now largely done in laboratories and workshops, 
maintained by the Government, by universities, by foundations. 
Here scientists, who are salaried employees, make an advance of the 
bounds of knowledge their regular occupation. ^^ As they press for- 
ward their work in physics, biochemistry, metallurgy, they respond to 
no immediate stimulus from the patent system or from the urges to- 
ward money-makin'g. If "idle curiosity" prompts the quest, it is car- 
ried on with the fervent hope that eventually it will make a difference. 
A great deal of such work is in the nature of discovei'y, whose practi- 
cal application more secular hands must contrive. But no hard line 
separates idea from process, and often the personnel continues its 
work until the 'invention is far enough along to patent. It is an all 
but universal rule that the rights of the inventor are assigned to the 
organization with which he is affiliated. 

In such a habitat the patent has developed its distinctive usage. 
The code of professional ethics forbids the physician from making hi^ 
discovery a source of personal gain and in days of old patents were not 
sought. But second thought has conspired with circumstance to sug- 
gest that legal protection can be accepted without yielding to the 
pursuit of gain. It is argued that the legal sanction secures control 
by a responsible pa,rty, insures the quality of the article, protects its 
fair name against unscrupulous vendors, and through quantity pro- 
duction makes for a lower price. The University of Toronto main- 
tains its patent upon insulm. At the Univei-sity of Wisconsin an 
Alunmi Research Foundation accepts promising ideas incures the 
expense of development, and grants to individual inventors a share of 
the royalties.^* The Research Corporation of New York is a clearing 
house for the creative contributions of men of science. It accepts in- 
ventions; markets them and collects the revenues; disburses receipts 
between the inventors, the institutions with which they are connected, 
and a fund maintained in its own name for the stimulatioi of re- 
search. The Carnegie Institution, the Rockefeller Institute for Medi- 
cal Research, the National Research Council have all approved of 
patents for scientific work, provided the inventions are dedicated to 
the public use. Among others Banting, Compt on, Einstein, Lang- 
muir, Millikan, Soddy — Nobel prize winners all — have taken out 
patents. A notion is becoming dominant that trail-blazing ought to 
be able to pay its own way; and patents are being increasingly em- 

" National Resources Planning Board, Reports 1, 2, , (1941). 

"A .similar arrangement, varying greatly in its detail, is in operation at Columbia, 
Harvard, Stanford, Illinois, Michigan, Pennsylvania, California, and other universities. 


ployed as a means of finance by universities and foundations. As the 
endowments of private institutions decline and as social needs arise to 
claim State tax funds, the patent is likely to become increasingly 
important as a financial asset. 

From so intermediate a form it is but a short step^ to the research 
laboratory of a large corporation. An industry often supplies a uni- 
versity with funds for a particular venture, a business enterprise 
often is driven back to fundamental inquiry. Ideas, blue-prints, 
personnel move from one to the other^f ar more easily than the words 
science and business would indicate. The corporate estate offers to 
the technician opportunity and a living wage. He does not have to 
beg or starve in order to go ahead, he has access to library, facilities, 
consultation. He is not immune to the ordinary human urges, but 
his self-interest is canalized by the conditions of his servitude. He 
has a job and relative security, a chance to win promotion and to 
enhance his reputation. He gives up claims to profits and tha 
expectation of a pecuniary prize. 

In the corporate estate the promotion of technology becomes a 
group affair. A collective discipline replaces the freedom of the indi- 
vidual to follow whatever trail he will. Questions come from out- 
side the workshop — the elimination of a defect in the ware, an in- 
novation with which to get a jump on a competitor, an engaging 
gadget with which to win a new market, the need of a patent to 
replace one about to expire. The course of business creates its series 
of tasks — a waste is to be overcome, a substitute material devised, a 
new article of commerce contrived, the same-old-thing to be fitted' 
out in new clothes. A necessary change creates the necessity for a 
dozen other changes. An agenda lists more things-to-be-done than 
can be handled. Research, like management, advertising, industrial 
relations, is a department of a business enterprise, in which a spe^ 
cialized personnel addresses itself to questions of a going concern. 
It is no lying-in-hospital, in which imaginative minds are delivered 
of brilliant creations. 

The mark of the corporate armament is on its product. The urge 
from within becomes recessive, the prompting from without domi- 
nant. It is th6 task of the man on salary, not to invent, but under 
direction to pursue technical research; it is his concern, not to produce 
a novelty, but to take a hand in solving a stated problem. The 
question which must be tackled has many ramifications; many per- 
sons, each with his distinctive competence, must lend a hand ; the 
answer is a work of collective authorship. The accent falls upon 
the necessity of the moment, not upon some "exclusive right" to be 
obtained. When the creation comes, then is the time to get busy 
about the patent. The invention emerges, not in its independent 
right,- but as an instrument in the service of business policy. Many 
innovations would emerge even if they could be accorded no legal 
protection, for without them, the concern would lose its strategic 
place in the industry. They are devices by which a firm keeps 
ahead — or at least abreast — in the competitive struggle. 

Corporate, as well as individual, research needs its incentive. Since 
"a one-man invention" is the exception these days, the patent-system 
needs to be accommodated to its corporate source of supply. In times 
past the grant has been in accoid with its office in the economy. A, 
term just long enougli to allow two sets of apprentices to be trained 


was once the established way of bringing a new mystery into the realm. 
An ''ex'^lusive right" for a limited time was then the stimulus which 
awakened the latent talents of gifted individuals. Advances in the 
industrial arts now come largely out of the research divisions of busi- 
ness ventures. They emerge, not by a single creative act, but out of a 
protracted inquisitorial process which roughly falls into the three 
stages of idea, development, and production. In the current state 
of culture a good idea is not hard to find, but the gulf which lies 
between it and production is enormous. It must be bridged by devel- 
opment, an arduous, expensive, unromantic adventure. ^= Here, heavy 
expanse is essential and here the progress of the useful arts is called 
upon to pay its own way. In some instances research is so essential to 
the operation of the enterprise tliat costs may be merged into general 
expense and covered in total intake. In others technical inquiry can- 
not be afforded unless it can be made self-sustaining. A single dis- 
covery may entail a loss, but the department is a kind of pool, and it 
needs to subtract from outgo or to add to intake a little more than 
enough to cover the sums it absorbs. In a word the system needs to be 
revised to put the laboratory of the corporation upon a profit-making 
basis. That done, the grant of patent again becomes functional. 

It is no small task to accommodate the gi-ant to its corporate and 
industrial habitat. If the recent inquiry has fallen short of supplying 
all the knowledge essential to a reform long overdue, it has blazed the 
trails which need to be followed.' The need is now for a general com- 
mission of inquiry, staffed by experts, to probe fully into the issues sug- 
gested here. An insistent task is a definition of "patentability." 
All inventions derive from common knowledge; they differ in 
the quality and magnitude of their contributions to the industrial 
ftrts. As respects origin they fall into three rather distinct classes: 
First, creations which exhibit individual insight; second, deriva- 
tive processes, worked out hj j^rofessional staffs, equipped with 
laboratory facilities; third, variations upon a basic design such as a 
dozen workmen would independently contrive. The mark of the first 
is genius; of the second, professional competence; of tlie third, me- 
chanical ability. It was patience on the part of the man of genius 
which the Constitution wished to reward ; the mere display of capacity 
to contrive has been repeatedly frowned upon by the United States 
trails which need to be followed. The need is now for a Congressional 
Supreme Co\irt. Invention through research financed by a corporation 
was not in the contemplation of the fathers, yet it is today the dominant 
source of technology. Norms of patentability need to be sharply de- 
fined. The ability that finds expression in improvements is wide- 
spread ; its application needs no encouragement from the state. On the 
contrary the grant upon so inferior a level creates sanctions which may 
be put to uses they were never intended to serve. At best the line be- 
tween that which is patentable and that which is not is a vague and 
irregular one, and a severe uniformity is probably never to be attained. 
But standards need to be elevated and there is little likelihood that they 
will be fixed too high. To their upward revision inquiry about the 
state of the industrial arts needs to be driven through industry after 
industry. The limited tolerance which policy accords to property 
rights ill technology demands the support of definitive criteria. 

"*At tho hearings both Kt\iulsen and Kettering, of General Motors, testified to the im- 
portance of the period of development. See Temporary National Economic Committee, 
Hearings, part 2. lip. 328-340. ,140-361. 


The limited period for which a patent is to run likewise needs recon- 
sideration. The term of years has never been accommodated either to 
industrial practice or to the incentive it serves. In the England of 
handicrafts, where patents were given for the development or the im- 
portatian of a new trade, the grant was purposive. It ran for 14 or 
for 21 years — it ran just long enough to serve its statutory purpose. 
Our original period, borrowed from petty industry, was 14 years, with 
a conditional renewal for another seven. Bothers made extensions 
unworkable, the difference was split, and the life of all grants was lim- 
ited to 17 years. The ways of handicraft have fixed the figure for a 
machine technology. The demand is for the minimum period which, 
under prevailing industrial conditions, will allow the proper incentive 
to invention. 

The commission of inquiry might well consider two or three separate 
periods, depending upon the character of the invention. The longest 
span of life should be accorded to the distinctive novelty — the kind of 
thing which the biologist would call a sport. To the results of corpo- 
rate research should — in strict accord with the constitutional purpose 
which animates the grant of patent — be accorded a life of privilege just 
long enough to keep such an investment a profitable venture. A new 
gadget, a result of tinkering, a nlinor variation serves principally as a 
"talking point" in a game of salesmanship. If it receives recognition 
at all, the protection should not run longer than its use decrees, cer- 
tainly not for more than two or three seasons. 

Technology moves now with a speed once undreamed, of — its swift 
march dictates a shortening of the life of a patent. Industries move 
at very different tempos — unlikeness suggests life spans accommodated 
to their distinctive requirements. The patent system itself is not 
designed to give protection at all points where creation touches the 
industrial arts ; if it is to fit neatly, its life span needs to be measured 
to a variable necessity. A news agency requires protection for its 
coverage for 4 hours. The life of a design in a dress is a season ; its 
protection for a few weeks is as much as the designer wants. In 
radio reception technique moves at a brisk pace; in automobiles, in- 
novation now comes far more rarely; in the sewing machine an 
industrial art is almost stagnant. The period of privilege should be 
long enough to keep invention on the march and short enough to 
prevent an interest from becoming vested. Upon the current stage, 
a span of 17 years — fixed when technology moved at a far slower 
tempo — may be quite excessive. It may well put in jeopardy the 
very institution of free enterprise to which it was set down as spur and 
exception. If its prolonged life allows its owner to dig in securely 
and to rest upon his rights, it fails the office it was intended to 

Practical necessity dictates as simple a scheme as may be. Variable 
factors must make their peace with ease of administration. At best 
three classes of invention and three time-spans are as much as the 
traffic will allow. The would-be patentees will strive valiantly to get 
their contrivances into the most privileged group and only rigid 
standards severely applied can stop them. In other domains of 
public control, industry-by-industry is the only approach which has 
proved realistic. If each invention is to serve its purpose of promot- 
ing the useful arts, the authority in charge must get down to cases. 
Such a procedure, however, enlarges discretion, complicates issues, 


swells the volume of work, and increases the demand for judicial 
review. A compromise into classes becomes an administrative ex- 
pediency and the fewer classes there are, the swifter the business will 
move. Reality must not be sacrificed to routine; but only an ex- 
tended inquiry can outline a procedure which strikes the best balance 
that may be between administrative feasibility and technical advance 
over the whole economy. 

All of this is just another way of saying that a patent is a fran- 
chise. It is a privilege, in the public domain, granted for a limited 
time, and intended to realize a public purpose. Like any other 
franchise, the grant of patent carries its mutuality of obligation. 
The patentee receives his right, from which all other persons are 
excluded; in exchange, after a discreet interval, he is to enrich a 
common fund of useful knowledge with his invention. As conditions 
have changed, the grant has gone astray ; it needs to be restored to 
its constitutional office in the national economy. 


An inquiry into "the concentration of economic power" cannot ignore 
the patent system. Our national economy is committed to free enter- 
prise. Tradition, common-sense, and the antitrust laws concur to 
impose a competitive pattern upon American industries. Among the 
oldest and most cherished of our institutions is "freedom of oppor- 
tunity," an aspect of which is the openness of occupations to all who 
care to take their chances.^® The right of a man to his trade is among 
the oldest of the "liberties" recognized by the common law.^^ A per- 
son's liberty in his calling was in time caught up into the Bill of Rights. 
It has, by the Supreme Court, been declared to be guaranteed by the 
Constitution itself." 

But right to a trade is nominal if it is barricaded against; entrance 
by the newcomer. In addition to labor and capital, the business pro- 
moter demands access to technology. In the days of handicraft, an 
apprenticeship enabled the novice to master the art or craft. As the 
tool receded before the machine, skill fell back before precision, the 
mystery came to reside in the mechanical instruments, the knowledge 
which finds expression in the productive process to be multiplied many 
times over. Ours has become a machine economy, and the advance of 
all the sciences has been enlisted in the service of the making of wares. 
It is today hard to think of a trade whose operation does not rest upon 
an intricate and dynamic technology. Wliatever the industry, a legal 
right to enter is of little avail unless the adventurer has access to the 
industrial art. 

With us free enterprise is the rule, the grant of patent for inven- 
tion or discovery the exception. The intent is to leave the body of 
technical knowledge a public domain. But lest the ways of a trade 
freeze into a ritual, novelty is to be encouraged. The incentive is 
suited to the public end it is intended to serve ; and to draw out the 
spark of genius within the inventor, he is, for a limited time to enjoy 
the full rewards of his invention. As his grant of letters expires, his 

^«See Walton H.' Hamilton, Common R(lght, Due Process, and Antitrust, 7 Law and 

Contemporary Problems 24 (1940), and cases there cited. 

" See Cokeys statement, p. 14 above. 

^ AUgeyer v. Louisiana, 165 U. S. 578 (1897) ; ATeio State Ice Co. v. Liebmann. 285 

U. 8. 262 (1932). 


novelty is merged into the ancient and refreshed art. In a society in 
which knowledge accumulates slowly and inventions are technical 
events, patents stand out sharply as exceptions to the general rule and 
leave the fund of accumulated knowledge little disturbed. In a highly 
dynamic society in which productive process is subject to rapid obso- 
lescence and "improvements" are matters of conscious design, such 
private claims may blanket the whole technolo^. 

If a patent possessed some inherent mechanism which held it to its 
own beat, all might be well.- But it operates only through a medley 
of human behavior, and in the affairs of mankind it is the rule, rather 
than the exception, that an institution undergoes repeated changes in 
identity. It is hard to think of a usage whose current employment 
follows the lines marked out at its origin. As an instrument passes 
from any one group to another, its adopt ed habitat imposes upon it a 
new role. It should accordingly occasion not even mild surprise that 
as, by act of assignment, a patent passes from the inventor to the 
corporation, it undergoes a profound change in character. The domi- 
nant concern of the business unit is to make money, not to promote the 
useful arts. It .contributes to theit advance, if the pursuit of gain 
lies that way. But if the purpose of the grant is antithetical — or 
even irrelevant — there is little pla ee for public purpose in the formulas 
through which the corporation carries on. Nor are executives to be 
blamed for making the grant a n insti^iment of solvent finance. They 
stand in a fiduciary relation to their stock-holders, and unless that be- 
comes their primary obligati on, their places are likely presently to be 
filled hj others. 

But, if wrong is not to be imputed to individuals, a situation has 
blundered into being which calls for drastic amendment. A grant of 
privilege is conferred upon the inventor in order that the industrial 
arts shall go forward. As a writ from the Government it is a sanction, 
and in recent decades the sanction has increasingly been employed as a 
legal immunity. The weight of authority seems clearly to indicate 
that "the exclusive r ight" of the inventor is a right — like all rights, sub- 
ject to the genera,! law — from which all other persons are excluded. 
The owners of pateAts attempt instead to make "exclusive" mean abso- 
lute and thus to have the State abdicate its authority in respect to all 
that appertains to the grant. Kejjeatedly it has been argued that "the 
patentee is Czar within his domain" ; that "he is under no obligation 
to deal fairly or obey the law." ^^ The patent has been made the but- 
tress to privilege. The threat to it has become the enforcement of the 
antitrust laws. In their concern with trade practices, the Federal 
Tra de Commission and the Department of Justice have been plagued 
with a legalistic conception of a patent as a sacrosanct area in the 
economic realm. If defense counsel could associate a grant from the 
Government with a method of restriction, they created difficulties ; if 
they could involve the charge of restraint in a tangle of issues steam- 
ing from a host of patents, they made it almost impossible for any court 
to probe to the heart of the matter. As letters-patent have been 
employed as armament against Government attack, patent lawyers 
have invaded the field of antitrust, and antitrust lawyers have become 
concerned with patents. Thus the conversion of limited privileges into 
immunities has become a major legal enterprise. 

"Brief for appellee, Interstate Circuit Co. v. U. S., 306 U. S. SOS (1939). 


Such use of patents as legal armament has become wide-spread. 
The grant leaves the inventor to enter the service of the corporate 
estate; the owner-by-adoption leases a number of concerns to make 
use of it. Into the licensing agreements restrictive clauses of various 
kinds are written. A number of firms manufacture ; yet the sales of 
each are limited to a certain territory and there is no competition 
between them. A process can be employed to turn out various articles, 
or an article can be put to various uses; each of a number of •licensees 
is restricted to a single ware or the sale of a ware for a. single use. It 
is decreed that an amplifier be sold at one price for professional and 
at another for amateur use ; a violation of the license, by allowing a 
motion-picture manufacturer to purchase at the price specified for the 
youth who bums up the short waves, is an "infringement." -° Quotas 
are imposed upon all who produce, and the threat of flooding the mar- 
ket is stopped at the source. Plants of licensees are severally limited 
in their capacities. A system of prices, prescribed by the patentee, 
becomes a covenant running with the lease. The Government's grant 
blocks the entrance ; whoever would enter the trade must come to terms 
with the owner. 

Such a type of restriction marks the national economy in many 
mutations. A patented process frees gasoline of anti-knock ; an essen- 
tial ingredient is tetraethyl lead, "one of the most dangerous poisons 
Imown to mankind" ; the public health demands that it be kept out of 
the hands of the unscrupulous, and surely the character of the retailer 
who cuts prices is not proof against the temptation.-^ A corporation 
breaks down the technique of grinding optical lenses into a series of 
acts ; these are to be performed by the manufacturer, the Avholesaler 
and the retailer and each act is covered by a patent; a rigid system 
of fixed prices moves in lock-step with the technical process. Within 
a technology as mature as ours, distinct processes may be used to 
achieve a like result. A concern buys up competing inventions and 
acquires a monopoly of an industrial art. 

Thus, upon the patent, as the instrument of policy to promote inven- 
tion, an alien purpose has been grafted. As an immunity to antitrust, 
the grant will be cherished by parties who engage in restraint of trade. 
Defense moves inevitably into offense. First, a shield that happens 
to be at hand is used, next a shield is consciously provided for a use at 
hand — here is the easiest of transitions. A patent provides a sanction 
but it is about to expire — by some means or other its life must be 
prolonged. An improvement alone is hardly enough ; its importance 
must be magnified until the line between invention and improvement 
is completely blurred. A multiplication of improvements is far bet- 
ter; it creates at least an appearance that an industrial art is being 
transformed. So it becomes the custom to lay down a barrage of 
parents about the corporate estate. No single grant from the Govern- 
ment, perhaps no combination of grants, may protect restraint 
against the general law. But, at the very worst, they complicate an 
antitrust suit, with a tpchnical problem of such intricate magnitude 
that only the most stubborn court will plow through it. The grant 
of a patent is intended to protect an invention ; in practice it repeatedly 
operates to block off a whole teclinology. 

>« General Talking Pictures Corp. v. Western Electric Co., 305 U. S. 124 (1938). 
^^ Ethyl Gasoline Corp., v. U. 8., 309 U. S. 436 (1940). 


In Hartford Empire, United Shoe Machinery, General Electric, a 
concern becomes sovereign to an industry; its grants from the Govern- 
ment become charters whence emanate systems of private government. 
Far more often the monopoly wears a much looser cloak. But, rigid 
or flexible, circumscribed or far-reaching, it everywhere exhibits the 
same rationale. The rapid march of teclmology is a threat to the 
security of the industry ; beat upon by invention after invention firms 
must carry on ; the conflict in time brings problems, uncertainty, seri- 
ous hazards to solvency. In order that he may go ahead with assur- 
ance, the executive demands to know exactly how he stands in respect 
to the industrial arts ; the court, in return for a large outlay and after 
a painful interval, will accord a belated answer. Invention and liti- 
gation conspire to lead rival claimants to a settlement. Since its terms 
are the result of conflicting pressures — and the public is not a party 
to the accord — it usually takes the form of a division of territory with- 
in the technical domain. Each of the contracting parties takes certain 
processes as his own, acquires the exclusive right to certain wares, or 
obtains sole control of the market within a defined area. A persistenjt 
effort is made to prevent the encroachment of novel discoveries upon 
established methods. As a barrier against technical invasion vaijious 
companies exchange patent rights with each other and thus tl>row a 
wall about their self -vested interests. It is common practice to make 
an invention and to secure a patent to block off a competitor's progress. 
By studying his ware and developing an improvement upon it, a con- 
cern may "fence in" its rival ; by a series of such moves, it may pin the 
trade enemy within a technology which rapidly becomes obsolete. As 
often as not such maneuvers retard, rather than promote, the progress 
of the useful arts. Invariably their effect is to enlarge and to prolong 
personal, privilege withiii the public domain. 

As a result the authority of the dominant firm moves into the place 
of the free market. An overlord may decree the conduct of an indus- 
try or the effect may be secured through a concert of nominally rival 
companies. But, whether the arrangement is corporate or contractual, 
the high command decrees what firms may come into the trade and 
what concerns must stay out. It fixes a business province for each of 
the concerns, appoints its market, specifies its product, oversees its 
prices, restricts its output. Its power of police extends far beyond 
its own domain ; it levies a toll upon every industry which must use its 
product. It gives its commands to the buyer who must make use of 
its products. It imposes its will upon the helpless public, taxes the 
consumer without his consent, lords it irresponsibly over an industrial 
empire. Its decisions are posed upon other considerations than regard 
for the general welfare ; its judgments, uncorrected by any public body, 
are not infallible*. In an earlier day such an overlord, standing upon 
his patent, decreed that Henry Ford was not a person of such character 
that he could be licensed to make cars and that his. product was a dis- 
grace to a rising luxury good. Hartford Empire claims for its arsenal 
of patents an amplitude of power which the Supreme Court has failed 
to discover within the sovereignty of a Commonwealth like Oklahoma. 

All of this leaves its impress upon the pattern of free enterprise. In 
industry after industry access to the common body of knowledge is not 
enough. An improvement reduces cost, improves quality, pi-oduces a 
new ware, adds a smart wrinkle — and puts at a competitive disadvan- 
tage "all who do not have access to it. An industrial art is made the 


cr» ature of conscious development ; before an innovation becomes com- 
mon property, another follows and the art is kept blocked off. It is 
beyond the reach of all who are within, or would enter, the trade, save 
upon terms dictated by a privileged competitor. An exclusive right 
to a step in a process thus becomes a monopoly of a whole technology. 

The patent accords a limited franchise. So long as it runs, the 
owner has the market for his ware very largely to himself. But during 
this period of temporary protection, he has every opportunity to dig in 
and barricade his trade against the newcomer. He builds up good- 
will, induces consumer acceptance, employs advertising, erects a mar- 
keting system, comes into control of the channels of distribution. When 
his patent expires, he remains in command of the strategic heights. 
He is able to put at a disadvantage any adventurous concern which 
would dispute the market with him. He may, by means of improve- 
ment, give to his grant a new lease of life. But often enough such 
protection is at best an added precaution. Nominally "the exclusive 
right" is for a "limited time" ; quite often the patentee has it in his 
own power to repeal "the limited time." Invention has become so 
much a corporate affair that a Federal judge of long service can recall 
but one pateilt case in his court in which it made the slightBst difference 
to the inventor which way the decision went.-^ 

Thus it has come about that a patent is harnessed to causes it was 
never meant to serve. It may be used as a shield against public policy, 
as an immunity to the general law. It may be employed to exempt 
concerns from the rule of tlie market and the severities of the rivalry 
for tra de. Competition is a rigorous ordeal ; it exacts vigilance as the 
price of survival. It puts positions, capital, the pay-roll, goodwill 
in constant jeopardy and is a continuous threat to the security under 
which the mass of men desire to carry on. In a situation played upon 
by forces which forever command new adjustments, businessmen will 
employ their ingenuity to discover and turn to account devices of sta- 
bilization. It was the cry for security in a time of collapse which 
prompted the National Recovery Administration. The trade associa- 
tion represents an attempt to ameliorate the condition of zealous ri- 
valry. The patent has proved to be a help in time of trouble to con- 
cerns which, many in number, would be as one in faith and doctrine, 
one in price policy. 

The net result is a strange anomaly within a democracy. An indus- 
try is removed from the control of the market and no substitute is pro- 
vided lor its protection which has been forfeited. There emerges an 
industrial province completely independent of the authority of the 
Government. The grant is detached from its function of encouraging 
invention and used to create an immunity to the general law. Its 
dominant office comes to be its service as a sanction in the maintenance 
of legal defense. The incentive it releases is not the propensity to 
tinker and contrive, but the urge to make fast the barriers about the 
corporate estate; any genuine technical advance it prompts is a by- 
product of a practice of the acquisitive arts. In such employment a 
wayward patent system has strayed far from the office to which it was 
appointed by the Constitution, 

The grant of patent is an expression of public policy ; so, too, is the 
commitment to tree enterprise. As matters have fallen out, currently 

==■ Judge William Clark, testifying before the House Committee on Patents, 74th Cong.) 
(1936). Sep Hearings on H, R. 4623, p. 1075. 


they present a clash of values. But, when in practice they collide, the 
question of preference is beset with no doubt. Although the patent 
statute is decades older than the antitrust acts, it is set down as an 
exception to the ancient common law that all trades shall be open 
to every man who wills to take ^.heir chances. The recitation of nis- 
tory, the language of Constitution and statutes, the course of legal 
industrial events unite to attest free enterprise the rule, the grant of 
patent the exception. If the economy had remained as the Fathers 
knew it, the accord would not often have been disturbed. But tech- 
nology has become highly dynamic, and trades are now in bondage 
to its latest offerings. If the progress of the industrial arts is to be 
encouraged, without the sacrifice of our system of free enterprise, 
the conflict must be resolved. 

The general lines of reconciliation are clear; the detail, like that of 
the adjustment of the grant to the prevailing conditions of inven- 
tion, awaits specific inquiry. The patent is not an immunity to anti- 
trust ; it confers no privilege to violate the general law. Its intent-at- 
law is to reward the inventor for his ingenuity or to compensate the 

f)romoter for his initiative, trouble, expenSe. If a fresh slate were at 
land whereon to write, the answer would be clear. Let the inventor 
either manufacture the article himself — at the moment a sheer 
hypothesis ; or let him license others to manufacture. In farming the 
work out, let him limit his reward to the collection of royalties and 
play no favorites. In either event his incentive will be preserved and 
the arteries of trade be kept open. There is no evidence that technical 
progress rests upon the grant of power to regiment an industry. 

But there can be no fresh start. The law, after a long recesSj must 
do the best it can with a business system which grew up in negligence 
of it. An attempt all at once to bring the practices of industries into 
harmony, with what the law demands would create more shock than 
the system could absorb without threat of disintegration. And the 
return would be to a competition, not of normalcy but of volcanic 
rivalry. Nor should such a move back in the name of the law be 
unattended by other measures. . It is imperative that the economy be 
kept volatile, forward looking, creative, flexible enough to meet things 
as they come. But it should wear enough of order to allow to the wide- 
awake concern a reasonable chance to remain solvent. Here are mat- - 
ters which demand further study and the formulation of a program. 
But issues, which years ago should have been met, can be no longer 
deferred. If presently the patent is not brought into accord, free 
enterprise can survive only on the fringes of a closed economy. 


The public concern with the economy finds expression in a seriesi 
of policies. Labor, finance, investment, natural resources have each 
provoked from State and Nation a succession of legislative acts. Ag 
time has passed, conditions changed, knowledge accumulated, values' 
become articulate, measure has followed measure to make and to keep 
each of these an instrument of the general good. A number of 
statutes, unlike in character and in specific objective, have defined the 
place oi each in the commonwealth. Land and its wealth has pro- 
voked a law of real property, the usages which relate to possession 
and "cultivation, acts of Congress seeking to promote settlement and 


to insure conservation. A solicitude about investment ranges from the 
ancient ban upon usury to the intricate oversight of the Securities and 
Exchange Act. Finance has "prompted a constitutional reference to 
money, the Federal supervision of banking, the open market operations 
of the Federal Reserve Board. As notions of its place in the community 
have evolved, the status of labor has again and again been revised. 
By clause on parchment, legislative act, judicial gloss, administrative 
ruling, informal response, a national policy has been set down in respect 
to the dominant factors in the equation of the general welfare. 

The lack of a like attention to technology is-hard to understand. In 
the operation of industry its importance does not fall below land, 
labor, finance, investment. If the history of the national economy 
falls into periods, the state of the industrial arts is likely to provide 
their distinguishing marks. It is technplogy which decrees the chang- 
ing molds in which business activity is poured. It is technology which 
decrees the apparatus and equipment into which investments are cast; 
which fixes the forms of useful endeavor under which labor is put to 
work. In a process of growth every factor in the operation of the 
system of wealth is cause and result to all the others ; yet it is tech- 
nology which stands out most dramatically in the process and it is 
technology which stamps with the rich color of distinct identity all 
that it touches. No one would think of a scheme of usage, which 
seemed good enough a century and a half ago, as at present very useful 
for labor or land. No one would regard the obvious arrangements, 
which seemed quite adequate just after the Civil War as at all suited 
to the current complexities of finance and labor. Yet the useful knowl- 
edge of the eighteenth has become the intricate and powerful tech- 
nology of the twentieth century — and the primitive way of its control 
has endured. 

And the patent question is no mere problem in technology. It came 
into being as an instrument of policy. Its task was in essence medi- 
ation ; to draw out what lay dormant in the hiunan mind and to put 
it to work in the economy. At the beginning it seemed enough to 
provoke the invention into being and, after a limited servitude, to 
release it for general use. To stimulate and to release are still ob- 
jectives of policy; yet each raises a host of issues which would have 
been strange to all who voted for. the original act. To make and to 
vend are simple infinitives ; yet, in our world, manufacture and mar- 
keting involve intricate trade practices, and amid their arrangements 
it is no easy task to keep the balance true between the private equity 
in a technical process and the common good. If every statute had its 
appointed orbit, and if in their operation acts of Congress did not 
clang and clash, all-is-well might ring out along the patent front. But 
the thou-shalt-nots of antitrust fall jarringly upon the privileges 
asserted under the Government's grant; and the tariff laws are turned 
into sheer irrelevance by agreements between gentlemen at home and 
in foreign lands who hold exclusive rights from their own countries. 
The corporate estate has learned how to guard itself, its stockholders, 
its workers against the onrush of a dynamic technology. Yet today 
the mass of workers have no adequate security against the reduction in 
the number of jobs which efficiency brijigs and "technological unem- 
ployment" is a dominant source of stress and shock. 

Thus, for ordinary time, a crisis and a program of defense touch 
off another formidable catalog of issues. Easiest stated and soonest , 


mended is the right of the Government — no matter through what or 
how many concerns its orders are executed — to access to all that is latest 
and best in technology. At a time when.-tlie resources of the economy 
must be geared to national defense, it is an invocation 'to weakness to 
"allow the ceremonial of patent procedure to block the practical applica- 
tion of established arts. One cannot say, "Let a good go into pro- 
duction," and immediately it is done. Capacity, with its complement 
of machines, has to be created ; a corps of workers, with their assort- 
ment of skills, has to be gathered and trained ; a network of chan- 
nels has to be cut to sources whence raw materials come. All' of 
these things have to be done in advance of actual need, usually 
when there is no war to generate in government an emergency 
power. Such requisites of national security cannot be left to the 
owner of a grant who allows his invention to be put to work as 
profits point the way. In all that respects defense, the control of 
capacity must be liberated from the patent in bondage to private 

In peace or at war the international cartel poses its problem. A 
corporation barricades its monopoly by securing grants in all the 
dominant nations. If concerns here and abroad lay claim to rival 
technologies, the conflict is usually resolved by a private understand- 
ing. Like countries engaged in power politics, an international ac- 
cord marks out spheres of influence. The arrangement presents in 
glaring outline the "basic principle of American law" that the patentee 
may restrict the geographical scope of the license granted. The limita- 
tion, calmly accepted in respect to the domestic market, wears a 
sterner aspect in relation to foreign commerce. A number of con- 
cerns have discovered in domestic law a sanction for participation in 
combinations which are world wide.;^ An accord divides territories, 
erects a wall between the home and the foreign* markets decrees pro- 
tection without benefit of the tariff law. In conseqr->nce the patent 
issued by the Government of the United States allows a levy of tribute 
here by. a ban upon imports. The 'consumer is denied the protection 
of competition; and an agreement between gentlemen which vaults 
over frontiers becomes the actual regulation of commerce with foreign 

As an instrument of foreign policy the patent has not yet been 
subdued to control. Germany has been foremost to exploit the frail- 
ties of the present system. Its technique has been to break down all 
quotas upon production at home and to accord scrupulous respect to 
all limitations upon output abroad. So its own supplies of beryllium, 
aluminum, magnesium have run in full stream, while the international 

2' General Electric limits its license to make, use, and vend to the domestic market. If 
a licensee produces for sale abroad, he is- to be sued for infringement. In a number of 
instances, the court has rather clearly said that "the rights not accorded by the license 
agreement are reserved to the patentee and it is competent" for him "to protect his 
privileges by pi-eventing others from exercising them." U. S. v. General Electric Co., 272. 
U. S. 476 (1926). In ieality, however, the actual incidents of infringement ai'ise only in 
the alien nation to which the patented article is consigned. Under these circumstances the 
restriction imposed upon the domestic grant acts as a protection for a foreign market which 
the American patent does not control. 

If, however, the foreign member of the cartel should import, it is doubtful \Ahether the 
.American member has a lei;al remedy. In Bosch v. 0-raff. 1.3;? U. S. 607 (ISOih. .on 
almost directly antithetical fact situation withstood legal scrutiny. The ciuestion pre- 
sented was whether a dealer residing in the United States could purcliase in another 
country articles patented from a person there authorized to sell them, and import fhem 
to and sell them in the United States without the licojise or consent of the owners of the 
United States patent. The court lield that the sale of articles in the United States iin(>r a 
United States patent could not be controlled by foreign laws. In the Boesch case neitlier 
the patentee nor any assignee had ever received any royalty or given any license to use 
the patented article in any part of the United States. 


cartels have maintained their schemes in countries which accord to 
the so-called enterpriser the inalienable liberty to create scarcity. 
Evidence presented to the Tem})orary National Economic Committee 
showed how a peace with German industrial power ^vas essential to 
the existence of an infant beryllium industry. On some military 
products — optical instruments are a good example — the United States 
must as royalties pay tribute to patentees of other nations. At the 
same time American citizens who own foreign patents are paid in 
blocked currency or not at all. So anomalous is the situation that a 
bill has been introduced in Congress whose intent is to hold royalties 
due to aliens from American licenses in a fund from which our own 
patentees are to collect the sums due them from abroad. Of greater 
moment, however, are the channels of communication created by the 
prevailing arrangements, along which "military secrets" take their 
natural course. The reports, which invariably attend the operation 
of international understandings, necessarily convey to foreign con- 
cerns — and to their governments — accurate pictures of the detail and 
of the volume of production here. The system of information is no 
less efficient when the reports and royalties are routed by way of a Swiss 
bank than if they go to the foreign corporation direct. 

Our democracy can no longer ignore such a use of patents as coun- 
ters in an international chess game. We have not seen fit to erect 
tariff walls against the importation of beryllium; but private inter- 
ests, responsible to no elected assembly, have by personal agreement 
constructed their own. The Government encourages the export trade, 
but cartels decide that the products of American capital and labor may 
not go abroad but must stay at home. The treaty-making power is en- 
trusted to the Executive, with a veto in the S?nate : commerce with for- 
eign nations is a domain entrusted to Congress by the Constitution. 
Yet, with patent claims as a base and without official sanction, a net- 
work of industrial restraints has been thrown across the seas. In* re- 
spect to materials of war German-owned patents have blockaded Great 
Britain from American shores. Foreign patentees collect their tribute 
before appropriations can be translated into armament. In its sweep 
across political frontiers the patent system puts national defense in 
serious jeopardy. 

It is easy enough to extend such issues, domestic and foreign, into! 
an imposing catechism. Yet even this exhibit of samples is enough to 
indicate that the patent question is not limited to technology ; that in its 
magnitude and dimensions it leaves no part or aspect of the national 
economy untouched. The plain truth is that a complete revision of 
the patent system is long overdue. A strange paradox attends the 
prevailing arrangement. The useful arts go forward in a culture j 
which they have created; yet the means for their encouragement, with I 
amendment only in detail, go back to the beginning of the republic. I 
The current institution takes scant account of the prevailing state of I 
scientific knowledge, of the conditions under which discovery and! 
development occur, of the relation of patents to trade practices, of j 
employment by the corporate- estate, of nullification of acts of Con- 
gress, of the role of technology in national defense or of its dominant! 
place in the national economy. Nor has the experience of the last six! 
decades — during which the counjtry has been industralized — come into.] 
place in the reconstruction of current usage. 

concp:ntration of economic power 267 

To orient the whole question, and to discover its many facets, a com- 
prehensive investigation is essential. The hearings and researches of 
the Temporary National Economic Committee have drawn forth a ten- 
tative agenda of promising leads. The five clinical reports are down 
above -* present in concrete instance the kind of inquiries which need to 
be followed through a score 6r more of industries. In the past a con- 
gressional committee has now and then passed the patent system in 
review." While such work has invariably been valuable, the result^ 
have been sharply limited by the instructions. A far more ambitious 
venture must be undertaken. A concern with the state of the indus- 
trial arts and the conditions of their advance is not sufficient. The 
problem is one of manufacture, employment, marketing, foreign trade, 
national defense, free enterprise ; and wherever the patent throws out 
its tentacles, .there should diagnosis go. Such an inquiry is far too 
broad and exacting to be handled in such leisure as overworked Mem- 
bers of Congress can spare from their official duties. It demands a 
Commission, the competence of' whose personnel is as broad as its field 
of study. A scientist and a technician it must possess, but persons 
whose skills lie in the law, defense, the economy, and administration 
must be among its members. Its single mandate should be to secure 
all in the way of knowledge, analysis, understanding which is essential 
to the formulation of a public policy in respect to technology. 

It is, of course, im.possible to anticipate the results of such an inquiry. 
Its very purpose is to secure perspective, concretion, implication which 
vision now lacks. It should with dispatch, and yet with thoroughness, 
set norms of patentability, work out a process for an expeditious dispo- 
sition of applications, fix the ambit within which protection by patent 
is to operate. It should redesign the patent-system to bring it into 
accord with modern industry, harness it to the promotion of science 
and the useful arts, and eliminate its' conflicts with the system of free 
enterprise. It should distinguish clearly between inventions which 
are creative, technical advances by research organizations, and con- 
trivances which are no more than mechanical variations upon prevail- 
ing usage. It should approach invention as creation, consider inno- 
vation in relation to the entire technical process and demote "improve- 
ment" to a secondary place or relegate it to irrelevancy. - It should 
establish a standard for novelty worthy of the talents of the American 
invention, x It should, in a word, recapture perspective, elevate func- 
tion above mere variation in detail, and restore the grant of patent to 
the larger office to which it was appointed by the Constitution. ' 

It must, almost inevitably, propose that the Patent Office be geared 
to the performance of its office. As an agent of national purpose, 
it occupies a strategic place within the national economy; its task 
is to see to it that patents promote — and do not arrest — the progress of 
technology. It should concern itself with real contributions to the 
industrial arts ; the products of sheer tinkering should be beneath its 
notice. The Congress has been slow to appreciate the heavy responsi- ' 
bilities which the greatest industrial revolution in history — the end 
of which lies far ahead — imposes. The agency should be given an or- 

2* See chs. vi, vii, pp. 87-122, above. 

^ Congressional committees in the past have made substantial contributions to our 
knowledge of patent practices, but have not achieved the legislative reforms presaged by 
their investigations. See Revision and Codification of the Patent Statutes, 62d Cong., 
2d sess. (Oldfleld committee) : United States Patent Office, 66th Cong., 1st sess. (Nolan 
committee) ; General Revision of the Patent Laws, 72d Cong., 1st sess. (Sirovich com- 
mittee) ; Pooling of Patents, 74th Cong., 1st sess. 


ganization adequate to the discharge of its duties.^® The Commis- 
sioner — or a Board which might replace him — should be experienced 
alike in science and in public policy and be adequately staffed with 
lawyers, technicians, and economists of broad training and wide com- 
petence. The detail of investigation will have to be delegated to its 
staff officials-;- the sheer volume of work demands that the bulk of its 
decisions be theirs. But by supervision and review the agency must 
uphold a general policy, maintain fairly unform standards, and make 
judgments serve the lawful objective. All patent grants should meas- 
ure up to its exacting requirements. 

In such matters the direction seems clear, though, the procedure 
remains to be devised. A perplexing question is how to give a greater 
validity to the* writs which issue from the Patent Office and yet guard 
more diligently the public domain. A great reduction in the volume 
of grants should enhance their value. The staff, emancipated from 
myopic attention to differences in detail, would be free to give adequate 
attention to real inventions. All novelties fall into technical domains ; 
eaph of these is, well equipped with trade journals; an application can 
easily and promptly be called to the attention of all who are con- 
cerned. If any party feels his rights infringed or his trade likely to 
be restricted, he may, within a reasonable time, file his protest. In any 
event a thorough investigation by officials whose competence rises above 
a routine level should precede any grant. If an interested party in- 
tervenes, an informal administrative hearing should be held at which 
all who feel themselves in interest, shall have opportunity to be heard. 
The letter which issues from such a procedure shall beconie a franchise 
for the Government for the use of the invention. In its favor a legal 
presumption should be written — subject to rebuttal as the prepon- 
derance of evidence rims to -the contrary. 

In the abstract it seems desirable to endow certificates from the 
■ Patent Office with finality. As things are now the hazard of infringe- 
ment is a barrier to entrance into ari industry. The innocent use of 
Erocess w4iich may later turn out to be another man's property invites 
ankruptcy. A settling of the question in advance is a primary con- 
cern of all the parties. Free enterprise operates best when the un- 
known factors in the business equation are at a minimum. A protec- 
tion is afforded the little fellow whose only trump card may be his 
ownership of a patent. At present, no matter how valid it is, a giant 
"concern may wear him down and take it away. 

A shift from judicial toward administrative control is inevitable; 
but the detail of the process of validation is more important than the 
auspices under which it is accomplished. There can be no quarrel with 
a shift of discretion to a speedier and less expensive arena. And 
party, perplexed about the limits of his technical rights, is entitled to 
accept a; decision as a definitive answer and not as a move in, an end- 
less game. The resort to law must be reduced to a speedy, inexpensive,- 
competent process of judgment. But, under current conditions, there 
is too little as well as too much in the way of an appeal to the courts. 
Since every patent is affected, with a public interest, a validation by 
private settlement should be strictly taboo. The Commission shoula 
explore this whole domain and contrive a method of validation, simple 

^The Commission might well consider the future of the Court of Customs and Patent 
Appeals. It seems obvious that the two orbits of jurisdiction have nothing in common. 
It may develop, upon inquiry that the appeal work now done by the court could be handled 
through some new agency'in the Patent OfQce itself. 


in process, definite in result, fair to all parties who have a stake in 
the outcome. Until this is done and the recommended procedure 
proves its worth, an easy access to the courts must be allowed. For, as 
statistics of decision prove, the higher the bench, the greater the dispo- 
sition to guard the public domain. 

Thus far the questions are at hand, though the provision of answers 
may tax the resources of the Commission. As the inquiry passes from 
matters of procedure and technology to those of policy and the econ-. 
omy, its difficulties increase. Here leads are f; ml, trails unbeaten, and 
the members must discover for themselves the issues which it is their 
task to resolve. In such an undertaking there is no escape from a 
clash of values. The call is to create incentives to the promotion of the 
industrial arts with the least hazard to the system of free enterprise; 
to accord recognition to private right in technical discovery, yet for- 
bid personal trespass upon the useful knowledge which is common 
property. It is to make sure that the urge, strong enough to serve its 
creative purpose, is not allowed to overreach itself, and that innova- 
tions, after their apprenticeship under private auspices, promptly be- 
come a part of the public domain. Above all it is to see to it that there 
is no monopoly of an industrial art and that private claims do not 
obstruct the stream of technical progress. 

All of this, however, does little more than get the agenda under 
way. The issue and validation of the patent is in a sense a preliminary.. 
It must be put to work in an industry which is a domain of a going econ- 
omy. As it finds employment it touches off a host of relationships — 
patentee and licensee', licensee and licensee, licensee and unlicensed com- 
petitor, vendor and ultimate consumer — and in the various stages of 
promotion, manufacture, marketing, such relationship demands a code 
of fair dealing. So far as such matters have been reduced to law and 
order, the active agent has been the courts; and the courts, bereft of 
the authority to legislate, have had to deduce rules of^ conduct from 
the nature of the patent and the statutory terms of its grant. No 
domain of human activity can be properly regulated by standards of 
legality drawn from afar by an argument alike speculative and attenu- 
ated. It demands guiding • principles indigenous, to its own domain. 
There has long been a demand for a code governing the use of patents 
in the economy. A principal task of the Commission is to furnish to 
Congress. the intellectual raw materials for such an enactment. It is 
ahnost a shock to discover the tiny fraction of patent practice which has 
Ibeen brought under statutory authority. Vast areas, almost un- 
charted, need to be domesticated to publicpolicy. It is the function of 
the Commission's report to outline arrangements which will make an 
advancing technology an instrument of the- general welfare. 

An accommodf tion of the control of invention to the current 
economy is long overdue. The channels of opportunity are closing; 
old industries are not expanding; new ones are not getting under 
way. A rigidity of industrial structure made it impossible for us to 
take the crisis of 1929 in our national stride; as yet we have not" 
completely recovered from the shock whicJ- t brought. The current 
crisis calls for a program of national def 31 .se ; it imposes upon the 
industries of the country a gigantic task ; c ily a strong and flexible 
economy can rise to the demand. The p-e ient inquiry iiito concen- 
tration of economic power has gone fa; inough to reveal curf-ent 

294640— 41— No. 31 -12 


patent usage as a- dominant factor in imposing lines of regimentation 
upon the industrial system. It Jndicates a growing inability to 
absorb shock or easily and speedily to effect the reorientation which a 
sizable armament demands. Another investigation is needed to 
streamline the patent system to the cause of progress which the 
Constitution would have it serve. The series of immediate steps 
should be realized at once ; others should follow as quickly as under- 
standing can point the way. The general welfare unites with na- 
tional defense in demanding that free enterprise give to our indus- 
trial system the st-en.-^-th to meet the exacting demands we are 
imposing upon it. 


A final word is necessary to escape myopia, to sharpen perspective, 
to catch the long time vision. In policy the role of knowledge in the 
economy is undervalued. It is common among too many of us to 
hypothecate a world of scarcity in which humanity is the prisoner. 
Man is Alice in a kind of Blunderland who has to run as hard as he 
can to" remain in the same place. He is a creature of innumerable 
and insatiable wants; and nature, which must provide the materials 
that minister to them, is an affair of scanty, even of niggardly, 
resources. The problem — which can invite nothing better than a 
passing solution — is to make the stuff at hand go as far as may be. 
The antithesis 'between human nature and the material universe is 
never to be resolved — for there is not enough to go around. 

A finite world endows such a statement with a measure of truth ; 
but it is far too much an economic version of the loss of Eden to be 
a well-rounded account. In an ultimate sense — though it is a little 
early in the -affairs of mankind to raise the question of the ab- 
solute — the material universe may be fixed beyond our poor powers 
to add or subtract. It is, of course, impossible to develop human 
gifts or to extract worldly goods out of stuff which does not exist. But 
as yet we have made hardly a start at turning to account what is 
there; the world of nature is a reservoir upon which we may draw 
rather than a treasury which we may turn to account. 

Knowledge is the key to the universe. As vision is sharpened, 
knowledge accumulated, taboos broken down, ways of finding out in- 
vented, the world about us makes its response. We know nature 
only as we discover and put to use the things it holds. As scientific 
inquiry it is held in thrall by the impulses which prompt it. The 
physicist tells us that at present we know almost nothing about even 
so elementary a thing as matter. The little we know is in response 
to the questions we happen to have asked ; and these questions come 
out of a discipline with a life history. If other questions had 
prompted study, we would now know different things. It is not 
because the universe has changed over the intervening years that 
Einstein has raised a problem of relativity to which Newton's tele- 
scope and mathematics was mute. What matter is, its ultimate 
how and why, still eludes us. It is quite possible that, in a fresh 
approach, even the word may become archaic. 

Our "natural resoiirces" are not primary, but derivative. They are 
natural resources in view of the knowledge and techniques which 


currently we bring to them. Where we do not know, and have no 
means for turning to account, it is as if such things did not exist. 
As discovery blazes the way and contrivance follows in its trail, our 
natural resources are enlarged. The Iroquois lived almost at the 
level of starvation in what is now one of the richest territories 
in the United States. The American Indians lacked tools of metal 
with which to help themselves from nature's storehouse ; metals were 
under the forests and there was no axe with which to hew down the 
trees.. Before the coming of Columbus no wheel turned in the New 
World, resources were resources only near the spots where they were 
found. In the eighteenth century the spark given off by stroking a 
cai-£ back the wrong way presented only the dimmest image of elec- 
tricity; the composition of coal had been explored -only a little ways to 
reveal "a less agreeable form of fuel than wood." Even a few years 
ago cottonseed was a nuisance, whose extraction raised the cost of tlie 
fiber ; chemical elements, later to enter a thousand products, had not yet 
been discovered. It is the spark of useful knowledge which probes 
the material universe and sets within the category of wealth the 
properties of things of which no notice had before been taken. 

As a culture advances, and inquiry takes to unbeaten trails, the 
world of nature is revised. When Julius Caesar conquered Britain, 
the industrial arts he introduced added materially to the country's 
resources. The wealth set down by William the Norman in his 
Domesday Book was severely limited by the methods of farming and 
husbandry then in vogue. As a varied agriculture, with its rotation 
of crops, came to succeed the three-field system, the soil of the country 
was completely remade. It was economic position and the machine- 
process which gave old England the jump and endowed it with the 
requisites to a world venture into industrialism. A catalog of re- 
sources as drawn up by contemporaries at distinct stages of national 
development would present very different inventories. The dominant 
explosive in a clash between cultures — Rome in Gaul, the Caucasian 
in America, Britain in India, Western Europe in the Orient — ^is the 
difference in technologies. The white man has a key to a treasure 
about which the native knows almost nothing. Whatever natural 
resources may really be, they are to us as the state of the industrial 
arts makes them. 

The conquest of nature goes forward— by short steps, backtracking, 
shifts of base, leaps — and always at man's prodding. The simple 
act of harvest has been elaborated into a science of agriculture; a 
revolution was essential to its start. Man had to shift his focus 
from the fruit or grain to the earth whence it sprang if he was to 
have what he wanted, when he wanted it, and in abundance. He 
had to fix the calendar, understand the seasons, discover the time of 
sun and rain, contrive tools and methods of their -use. The adapta- 
tion of various crops to locale and climate were steps in the domesti- 
cation of the soil. A discovery of breeding enabled the farmer to 
make plants more rugged, hurry them to maturity, stiffen them 
against disease, improve their products, mr dply their yields, create 
new species, and make them bring forth fruits which nature never 
knew. A long-staple cotton creates a new fiber. A faster growth, 
or an immunity to_ rust, extends the area in which wheat can be 
grown. The invention of dry farming turns a desert into productive 
land. Fertility is a general thing whose distinctive properties have 


only been superficially explored; it is a kind of a hat out of which 
^any products remain to be drawn? 

Like the seed,, the germ of animal life teems with possibilities. 
The embryoes, out of w^hich come the hog, the sheep, and the steer, 
present no differences to the eye; it takes the most powerful micro- 
scope to reveal the slightest distinction between their microcosms. 
Yet each nucleus is a peculiar way of taking many elements from 
the material universe and transmuting them all into a single article 
which man may use. It may be that m chromosome each is securely 
locked' beyond tempering; yet, under a bisexual system, unit char- 
acter may be drawn from one parent or the other into a new per- 
mutation, and traits -which m|ix can touch off endless novelty. Our 
beef may be better or worse ; it is certainly not that of old England. 
A process of selection has produced a hog which yields the maximum 
of pork on the minimum of corn. The Jersey represents a cow 
highly specialized to the production of milk of a high butter fat. 
It is the abnormalty, or even the mutation which nature never knew, 
that man finds best adapted to his needs. In a sense, the animals 
which serve him are' synthetic. It is his niediation which builds the 
bridge across which materials come to satisfy his needs. 

The mark of synthesis even more clearly marks man's implernents. 
Nature presents in the raw no tools; the stick has to be pointed, 
the stone flecked to the hand, the bow strung. Iron, copper, baux- 
ite exist as ores, in various states of concentration and diffusion. 
But fire, a major invention, must precede the smelting of iron; 
fusion at a high temperature is necessary to secure^ a workable 
copper; and an intricate metallurgical process is essential to the 
conversion of bauxite into aluminum. In instances the addition of 
a tiny fragment of one metal to another will. turn out a compound 
with qualities possessed by neither; durilium has a strength and 
hardness which aluminum does not possess; magnesium combines 
the stability of steel with the lightness of aluminum. We are dis- 
covering that we can make our metals flexible, yet keep them strong 
and durable. Almost all of them are processed for their roles in 
industry; if an automobile had to be fashioned out of the materials 
taken directly out of the earth, it could not run a hundred miles 
without being shaken to pieces. 

Minerals are wealth as they can be gotten at; concentration or 
diffusion makes them accessible or locks them away against .use. As 
they become more diffused, an improved technology must lengthen 
our reach or they are lost. Once gold nuggets were picked out by 
hand. In the days of the rush, the quartz was ground and the 
heavier grains' of gold fell into the sluice boxes. Then came the 
amalgam process, with mer* ury as the lodestone, to pick up minufe 
particles and to turn huge piles of waste into gold mines. And now 
the cyanide process revises an already refined art and again turns 
dumps into valuable possessions. Scientists allege that a piece of 
average dirt is 5 percent iron ore and that the earth's crust is 7 per- 
cent aluminum. Metallurgy now is concerned with ores of 51 per- 
cent or better, and its experimental processes hardly look beyond the 
40 percent pure. As late as the last World War we were threat- 
ened with a dearth of nitrogen, an essential of fertilizer, yet the 
air contains 79 percent of that element. Now we have developed 
a process for getting at it, and the long haul from Chile and the 


threat of famine are alike gone. As a fact of nature, underlying 
parts of Texas, New Mexico, and Wyoming, billions of tons of po- 
tassium are held fast in geological strata; but it took decades of 
chemical research to contrive a practical process of recovery. As. an 
insoluble becomes a soluble ore, we find ourselves abundantly sup-r 
plied. Minerals serve men inversely to their cost of extraction, and 
the march of technology overcomes the pecuniary barrier that fences 
off the supply.-® 

A single instance tells a series of stories. IVfarco Polo met petro- 
leum somewhere on his travels. It was to him of little consequence — 
though a school of opinion held it to be useful in the treatment of 
mangy camels. When oil was found in Pennsylvania, some shrewd 
New Englanders discovered — probably somewhere within their inner 
consciousness — that it was blessed with wonderful medicinal proper- 
ties, and proceeded to dispense a cure-all at so much per bottle. Tlie 
kerosene lamp increased the orbit of its use and upon it a great in- 
dustry was established. With the coming of the automobile, the 
internal combustion engine converted "coal oil" into a resource basic 
to national life.^ It is an essential alike in peace and war^ and the 
culture we know could hardly carry on without it. It has lain down 
concrete highways, enabled the worker to live in the country, pro- 
vided a flexible and schedule-less instrument of transportation, and 
insinuated itself into the fabric of social life. 

How much oil we have no one knows. The answer is not a quantity, 
it is a complicated formula, most of the terms of which are unknown. 
A motor car can be developed which will deliver 40 miles per gallon 
where we now get 18. The improvement of the refining process 
enables twice as many gallons to be obtained from a barrel of crude 
as a generation ago; that has doubled the amount. The oil that 
counts is not the oil in the ground but the oil that can be captured; 
ag;ain, with improved methods of extraction, the amount has been 
multiplied by two and the end is not as yet. Quantity, then, depends 
upon the state of the industrial arts; and so does the substance 
vaguely defined as petroleum. Oil to Marco Polo, as the medicine 
vendors knew it, for the lamps of China, as the motor-car speeds 
along, that aircraft may move on voyages of swift destruction, are 
rather different products. Like any other good oil may be defined 
by the use to which it is put. Already it can be derived from soy 
beans, sugar cane, bituminous coai ; the problem of science is to tele- 
scope a. process which in geology required millions of years. A 
distinguished technician never mentions petroleum ; he refers always 
to "oil as we now know it." Oil is not oil; oil is as prevailing 
technology and the accumulation of knowledge, makes it. 

Yet oil is but an instance; textiles tell a kindred story. In the 
third quarter of the eighteenth century, Penelope at her loom — a 
craftswoman who had been at her task from the days of Homer — 
begap to fade from the domestic picture. A series of very crude 
inventions^ by which machines were tauglit to spin and weave, was 
obtruded into the process of making cloth. Through their magic 
very fime fibers were converted into very rough textiles. The new 
technique, begmning with cotton, was somewhat later extended to 

**For a description of the potentialities of converting the earth's crust into useful raw 
materials, see C. C. Furness, The Storehouse of Civilization, 1939. 


wool ; but fine cloths were of the hand, and it was decades beiore 
a method of quantity production was employed in their fabrication. 
The historians, who sat on the sidelines, thought so well of the 
changes that after awhile they gave them the name Industrial 
Revolution. There are now coming into play novej processes 
by which even the coarsest of fibres can be turned into the most 
refined of fabrics. Even the fiber may prove, to be a non-essential; 
silk stockings now stem from bituminous coal and an engineer of 
repute comments that the cotton picker— if it has really come — comes 
too late. It might have been a valuable device; but, as technology 
^oes, that was once upon a time. Now it is of little consequence ; for 
m view of inventions which are just around the corner, the difference 
between fibei- and stalk is of no gi*eat significance. Yet no one calls 
a series of discoveries by which all fibers become as one in the sight 
of technology an industrial revolution. 

Such a case may easily become the usual thing. No one- as yet 
knows how many and what useful products may be drawn forth from 
cornstalks, wheat straw, the heap of weeds, or vegetable waste. A 
banquet has been served at which an mgredient of every dish went 
back to cotton ; and an exhibition of all the derivatives from it would 
be a sizable affair. A large number of things that bituminous coal 
is has been discovered, but its multiple reality is far from being fully 
explored. A Negro scientist has won acclaim for his race by the 
tangibles which he has drawrl out of the peanut. Iowa State College 
lists more than a hundred distinct products — ranging from acetic acid 
to charcoal — which derive from whole corn. It may come about that 
synthetic foods — which serve the human economy without waste — will 
become as common as synthetic metals are today. As knowledge 
grows, the material world is enlarged and restocked. 

At this stage in the affairs of mankind, circumstance favors useful 
knowledge. We are not so absorbed by spiritual values 'as .to be 
indifferent to material things ; taboos of magic or of religion no longer 
block paths of inquiry ; the prevailing climate is not hostile to idle 
curiosity. Our culture grants to a sizable fraction of the population 
some opportunity for the free play of intellect. The human mind, 
of course, cannot create something out of nothing and ideas never 
enter the most facile heads out of the ethereal blue. The mind can 
work only with the stuff it has on hand or can pick up ; but, as it is 
stored with tiotions, images, memories, it can bring familiar things 
together into new patterns. Thus, aiiv act of creation may attend a 
process of synthesis. We live, almost all of us, as members of dis- 
tinct groups; we stand along intellectual frontiers where domains of 
knowledge meet and various disciplines collide. Those of us who 
follow intellectual pursuits daily experience a barrage of ideas from 
many directions. With elements so numerous and varied, a host of 
novel permutations are always just within reach. At the art of asso- 
ciation not a few among the people are deft. Millions of us possess 
such an ordinary gift, however rare genius or even talent may be. 
The advance of useful knowledge demands no more than turning 
favorable conditions to account. 

Inquiry knocks persistently at nature's storehouse; it seeks to dis- 
cover and to make useful what lies within. As it fumbles its way 
along it has often been stopped but as yet has encountered no ultimate 
barriers. Nature has, so far as we are now aware, set no limit to 


what the universe holds ; it is our limited understanding, or our fail- 
ure to contrive ways and means, which sets bounds. As the world of 
material i-esources is enlarged, a wider and wider world stands out 
dimly to invite conquest. The wherewithal for a standard in keep- 
ing with the dignity of human life is all about us. The genieral 
welfare, promised by the Constitution and still unrealized, is not 
blocked by nature and must not be blocked by the artificial barriei-s 
which man erects against man. 

A crisis in the history of the Nation is upon us. If the common 
good is to be served, an economics of scarcity must give way to one 
of abundance. The right of a man to his own exists within the com- 
monwealth ; he may do as he pleases with that which is his property. 
But liberty and property stop short at the line marked out by the 
general welfare. Long ago law joined policy to decree that no man 
is to exploit his wealth in such a way as to create a scarcity, make for 
a lower standard of life, or drive a barrier between a people and their 
resources. The great task of Government is to realize these ancient 
values in the conduct of the modern industrial republic ; to this great 
task the productive genius of a people must be encouraged to contrib- 
ute, unrestrained by private claims in the economy. The 'imprison- 
ment of invention and production spells doom ; the nation which dis- 
covers how to release to mankind the great storehouse of creative 
energy shall inherit the earth. 

TABLE Of cases 

Adams v. Burke 54, 55, 56, 57, 63, 73, 81, 85 

Adrian Piatt and Co. v. National Harrow Co 47 

Albany Paper Co. v. Morgan Envelope Co 63, 66, 68, 74) 85 

Allegeyer v. Louisiana . ^ 158 

Altoona Public Theatres v. American Tri-Ergon Corp 132 

American Equipment Co. v. Tuthill Building Materials Co 69 

American Oramaphone Co. v. Pickard^ 65 

Amei-icoM Lechithin Co. v. Warfield Co 69 

Barber Asphalt Co. v. Stulz Sickles Co j._ 83 

Bassick Mfg. Co. v. Adams , 85 

Bassick Mfg. Co. v. EolUngshead—l _-_ 60,85,134 

Bauer et C'iev. O'Donnell 64,73,74 

Bement v. Hwrrow—- . 59, 60, 62, 69, 78, 81, 82, 84 

Bloomer v. Millinger. '. 54, 57, 85 

Bloomer v. McQuewan 54, 55, 56, 63, 71, 72, 73, 81, 85 

Blount Mfg. Co. v. Yale a/nd Toume Mfg. Co 78, 79 

Bobbs-Merrill Co. v. Straus ^ 73 

Boesch V. Ora/ff— ;_ _ 165 

Boston Store v. American Oramaphone Co 64,74 

British Mutoscope and Biograph Co. v. Homer 84 

Broderick Copygraph Co. v. Mayhew —- ' 65 

Broderick Copygraph Co. v. Roper 65 

Carbice Corp. v. American Patent Corp 68, 69, 82, 85 

Chaffee v. Boston Belting Co 54, 57, 73 

OUp Box Mfg. Co. v. Steel Protected Concrete Co 47 

Columbia Motoi' Car Co v. Duar . .— 117 

Comm,erQial Acetylene Co. v. AutoVux Co : : 65 

Consolidated Rubbef Tire Co. v. Republic Rubber Co . _ 65 

Continental Paper Bag Co. v. Eastern Paper Bag Co 59, 60, 141 

Cortelyou v. Carter's Ink Co ^— 65 

Cortelyou v. Johnson 65 

Cortelyou v. Loive 65 

Cotton Tie Co. v. Simmons : ;- 56, 63 

Crovm Cork a/nd Seal Co. v. Brooklyn Bottle Stopper Co .'- 65 

Darcy v. Allen ■. -, 13 

Detrola Corp. v. Haseltine Corp 137 

Dr. Miles Medical Co. v. Ooldthvxdte 72 

Dr. Miles Medical Co. v. Joyner Drug Co 72 

Dr. Miles Medical Co. v. Park—^ _ 73, 81 

Edison Phonograph Co. v. Pike : 72,73 

Edwards v. Picard 84 

Electric Vehicle Co. v. Duerr 117 

Ensten v. Simon, Ascher and Co 138 

Essex Razor Corp. t. Gillette 132 

Ethyl Gasoline Corp. v. U. 8 . ^ 69, 83, 147, 160 

Evans v. Eaton 36, 52 

Evans v. Hettich 36,52 

Evans v. Jordan _ _ 36, 52 

Evart Mfg. Go. v. Baldtoin Cycle Chain Co 58 

Ex parte Wood 52 

Ferguson Inc. v. Lechithin Corp 69 

Fowler v. Parke^^-- 71, 141 

Frey'and Son Inc. v. Cudahy Packing Co _ 75 

F. T. C. V. Beech Nut Packing Co — 76 



F. T. C. V. Goodyear Tire and Rubber Co 100 

F. T. C. V. Racine Paper Goods Compamy 47 

General Electric Co. v. De Forest Radio Co , 137 

General Electric Co. v. Independent Lamp and Wire Co 137 

General Talking Pictures Co. v. Western Electric Co 14, 

52, 55, 60, 73, 74, 84, 97, 160 

Gibbons v. Ogden 37 

Grant v. Raymond 52 

Hammer v. Dagenhart 148 

Harrison v. Glucose Co : 72 

Harrow v. Hench 78 

Hazeltine Corp. v. Abrams 137 

Heaton- Peninsula Button-Fastener Co. v. Eureka Specialty Co 58 

60, 62, 64, 65, 68, 72, 82, 85 

Hench v. Harrow 79 

Henry v. A. B. Dick Co- 58,65,68,82,85 

Heyer v. Duplicator Mfg. Co 68, 85 

Hobble V. Jennison : 74 

Hoe V. Knapp 58, 141 

Indiana Mfg. Co. v. Case Threshing Co 78 

Ingersoll d Bro. v. M'Coll 65 

Interstate Circuit Inc. v. V. S 83,84,147,159 

International Business Machines Corp. v. TJ. S. 67 

Jayne v. Lader , 73 

Keeler v. Standard Folding Bed Co - 64,73,74 

Kendall v. Winsor 53 

Keplinger v. De Young 52 

Leeds and Catlin v. Victor Talking Machine Co 64, 68, 85 

Leitch Mfg. Co. v. Barber Co 68, 69, 82 

Livingston v. Van Ingen 37 

Lord V. Radio Corp. of America 67 

Lovell-McConnell Mfg. Go. v. Waite Auto Supply Co 65 

Lynch v. Magnarox Co . 79 

Mackay Radio v. R. C. A 131 

Mayhew v. Broderick Copygraph Co 65 

McClurg v. Kingsland 56 

McGrath Holding Corp. v. Anzell 85 

Mitchell V. Hawley 54, 55, 57, 60, 64, 73, 85 

Motion Picture Patent Co. v. Universal Film Co 66, 67, 68, 69, "79, 82, 85 

Mowry v. Whitney 130 

National Harroio Co. v. Hench = 78 

New State Ice Co. v. Liebmann 114,158 

Ogden v. Gibbons : 37 

Oxford Varnish Co. v. Alt & Wiborg Corp 67 

John D. Park d Sons v. Hartman 73 

Parsons Nonskid, Ltd., v. McKirmon Chain Co 65 

Pearsall Butter Co. v. F. T. C 67 

Pennook v. Dialogue 52, 56 

Philad Co. V. Lechler Laboratories, Inc . 69 

Pick Mfg. Co. v. General Motors Corp 67 

Pope Mfg. Co. v. Gormally 60 

Registering Co. v. SampsonL : 64 

Remington-Rand, Inc., v. International Business Machines Corp 78 

Rubber Tire d Wheel Co. v. Milwaukee Rubber Co ; 78 

Schriber-Schroth v. Cleveland Trust Co 131 

Shaw V. Cooper 52 

Sinclair Refining Co. v. F. T. C 67 

Standard Fashion Co. v. Magrane Houston Co 67 

Standard Sanitary v. U. S 65, 66, 68, 69, 79, 81, 85 

Straight Side Basket Corp. v. Webster Basket Co , 69 

Straus V. American Publishers' Association 74 

Straus V. Victor Talking Machine Co . 64,74 

Sullivan v. Fulton Steamboat Co - 37 

The Telephone Cases '. 88 

Triplett v. Lowell and Dunmore 138 


Tyler v. Tuel 52 

United Electric Co. v. Creamery Package Co 47 

U. S, Fire Escape Counterbalance Co. v. Joseph Halsted Co 65 

U. 8. V. A. Schroder d Son, Inc 75 

V. S. V. American Bell Telephone Co 90, 130 

V. S. V. Americun Bell Telephone Co. (second) 103,130 

V. S. V. American Bell Telephone Co. (third) 130 

V. 8. V. Colgate Co 75 

U. 8. V. Darby Lumber Co 148 

V. 8. V. Eastman Kodak Co 47 

V. 8. V. General Electric Co ._ 58, 59, 60, 62, 69, 76, 80, 81, 98, 99, 102 

U. 8. V. General Electric Co. (second case) 103 

V. 8. V. Hartford Empire Co 118 

TJ. 8. V. New Departure Mfg. Co 79 

U. 8. V. Patterson 47 

V. B. V. Porcelain Appliance Corp 130 

V. 8. V. Standard Oil of Indiana 69, 79, 130 

17. 8. V. United Shoe Mach. Co 62, 66, 67, 68 

V. 8. V. Wimlow 65 

Victor Talking Machine Co. v. The Fair • 72,73 

Vulcan Mfg. Co. v. Maytag Washer Co— I 67 

Waltham Watch Co. v. Keene 65 

Westinghouse Electric. and Mfg. Co. v. Diamond State Fiber Co 68 

Winchester Repeating Arms Co. v. Buenger 65 

Winchester Repeating Arms Co. v. Olmstead 65 

Wilson V. RousseoAi 53, 55, 56, 71 

Wilson V. Simpson 55, 56, 63, 68 

Yale and Towne Lock Co. v. Blount Mfg. Co 59