dlOO OJnrn^U Ham Bt\}noi ICtbrarg Cornell University Library KF 3100.51878 Arguments before the Committee on patent 3 1924 019 218 159 DATE DUE Ui4 / ^ 7 CAVLORO P«lNTeOtNU.« A Cornell University Library The original of tiiis bool< is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31 92401 921 81 59 45th Congeess, ) SENATE. ( Mis. Doo. 2d Session. ) ( Ko. 50. ARGUMENTS BEFORE THE COMMITTEE ON PATENTS SENATE AND HOUSE OF REPRESENTATIVES, IK SUPPORT OF, AND SUGGESTING AMENDMENTS TO, THE BILLS (S. No. 300 AND H. K. 1612) TO AMEND THE STATUTES IN RELATION TO PATENTS, AND FOE OTHER PURPOSES. , Apkix 3, 1878.— Ordered to be printed. WASHINGTON: GOVEENMENT PRINTING OFFICE. 1878. 63^;ig*f CONTENTS OP AEGUMENTS BEFOEE SENATE COMMITTEE. [See index at end of volume.] Page. Bill 1 Parties present at the hearing 13, 52, 55, 157, 175, 209 Memorandum of the principal changes introduced by the bill 13 Mr. Chauncey Smith 17 Origin of the bill audits preparation 17,25 History, purpose, and importance of the patent system 19 Various illustrations of its value 21 Direct influence of the law 23 Sect, 1 . Limitations 25-28 Sect. 2. Damages and profits 14 The present rule of damages 40 No hardship under it and no change introduced by this section 41 The present rule of profits, its operation and its hardship 41 , 48, 49 It is intended to cover profit defendant did make, not what he might have made 42 Proportion of public gain actually received by patent-owners 44 Damages only and no profits to be allowed in certain cases 40 New rule of profits 47 Power of Congress over the question 47 Discretionary power in the court to increase or diminish 48 Value of the patent, and not cost to inventor, is the true measure 49 Meaning of the damage clause of this section, aLd reasons for it, and opera- tion of it 129 Profits. (Mr. Senator Morgan's suggestion and discussion of ii) 131 Sect. 3. Appeals. Reason for this section 50 Sect. 4. Control of case pending on appeal 51 Sect. 5. Reissues 51 Sect. 6. Effect oj reissues on existing rights 51 Mr. A. H. Walker : Sect. 2. Damages and profits. Damages alone not sufficient in cases of in- fringement by use ; profits; illustrations 28 Effect of this section is to abolish recovery of profits altogether 30-43,87 This section improperly destroys vested rights of action ; this is unconstitu- tional 44 Cotton-worm case 47 The rule of profits and grounds of it 142, 144 Inventions and improvements on them. No one called upon to pay two royalties for one invention 143 Letter OF Mr. J. H. B. Latrobe. All the sections 53 Letter OP Mr. Mavnadier. Limitations; damages and profits ; periodical fee. 53 Mr. Commissioner Spear. General approval. See his communication in Ap- pendix, p. 197 55 Mr. T. L. LiVERMORE : Sect. 2. Damages and profits. Criticism on excluding profits in any case ; amendment suggested 55-57 Sect. 5. Reissues. Objects to amending by anything outside of original pat- ent ; reasons for this 57-59 Approves the bill generally 60 Mr. C. S. Whitman : Sect. 15. Assistant Commissioner to give bonds 60 Sect. 1 6. Price for copies 61 Sect. 17. Copies from Patent Office 68 Sect. 19. Patents for intentions previously patented abroad on behalf of the same inventor - - 63 Sect. 2) . Applications hy assignees for patents and reissues 65 (Mr. Knight. Change in this report in^the codification of 1870 Was acci- dental) 66 Sect. b. Reissues. Models should not be used 67 IV CONTENTS. Page. Mr. W. C. Dodge : The patent law. lUuslrations of what it has accomplished for the com- munity 69 Extracts from reports to English Government 71 English parliamentary investigation and determination to adopt the United States system 73 Labor and cost of perfecting and introducing inventions 74 Testimony on this point before the parliamentary commission 74 Switzerland copies our law as the only way to promote invention 77 Sect. 5. Reissues. Models should not be used to reissue by 77 Sect.}}. Periodical fee. Eeasonsforit 79 The fees, however, are too large - 80 Sect. ]6. Price for copies 80 Sect. 18. Final fee and issue 81 Sect. 19. Patents for inventions previously patented ahroad on behalf of the same inventor 82 Sect. 20. Abandoned applications 83, ]88 Sect. 21. Oath to applications 95 . Sect. 24. Interferences, after a patent has been allowed and upon applications for reissue 84 Mr. Dodge's, additional brief in appendix on sect. I, and other matters, with resolutions of U. S. Patent Association 203 Mr. 6. H. Christy : Sect. 1. Limitations. The period should be five or six years 86 Sect. 2. Damages and profits. In first clause the election of the patentee should be looked at as much as the nature of the invention 86 This section ought not to apply to existing rights of action 87 Nature of profits and nature of damages (general discussion by committee and others) 88 Cotton-worm case 89 Infringer should pay profits he might have made 89 Sect. 5 and sect. 21. Reissues. The inventor ought to swear to the reissue ap- plication. Models might be abolished and working drawings substituted. 90-91 Sect. 8. Perpetua'ing testimony. Useless and oppressive to the patentee 91 Amendment suggested 92 Sect. J9. If the discrimination against foreign patentees is to be maintained it should be limited to aliens and not operate against Americans who first take out patents abroad 93 Mr. H. D. Hyde : Sect. 1 . Limitations. The period should be one year 94 Sect. 11. Periodical fees. This is very valuable 95 I represent users of invpntious who pay royalties. The patent system en- courages inventions, without which our business could not exist. We want to preserve it, and approve the bill with these exceptions 94 Mr. M. D. Leggett (Ex-Commissioner of paten's): Sect. 21 . Oath to application. Approves of section, and gives reasons for it and illustrations 97 Sect. 5. Models are very useful to enable persons to understand the patent 99 Sect.}. Limitations, Approves 101 Sect 2. Damages and profits. A difficult matter. The section is good. The amount of the license fee is not enough to compensate the plaintifi'; illus- trations of this ; court ought to be able at least to allow expenses 101 Sect. 6. Reissues. Not to retroact ; very just 102,104 Senator Morgan's remarks about it 1 04 Sect. 5. Reissues. The necessity for them 102, 1 04 (Senator Morgan suggests that the amendment of the patent should be based on all the original papers and model) 102 Reissues should be based on the drawing or model, which are certain, and not on the language of the application, which may be ambiguous 105 Sect. M. Periodical fees. Very good. It is not a tax 105 Mr J. H. Eaymond : Importance of a patent system 106 Approval of the bill, and general considerations 106 Necessity for the bill ; hardships under the present law ] 07 Sect. 2. Limitations. Should be three years 107, 109, 124 Sect. 5. Reissues. Vested rights ; evils of reissues 108 Sect. 8. Perpetuating testimony. Necessity for it, §§ 9 and 10 108,121 Progress of invention , 101 CONTENTS. V Page. Mr. J. H. Raymond— Continued. Difficulty of ascertaiuing what is covered by patents 110 Iiistauces of improper issues of patents Ill Instances of the effect of the law, and some practices under it 112 Effect of the patent law in stimulating inventions 112 Sect. 2. Damages and profits. The measure of damages which the law gives fixes the commercial value of property. The value of the invention should not be resorted to to fix the measure of recovery 1)3 Basis of the patent law, and nature of the patentee's riffht and title 114 Public will infringe unless the damages are uncomfortably high 115 Meaning of "same " in line 13 116, 144 Keasons why some railroads do not use certain inventions • 116 This section may properly affect existing claims for damages and profits ; they are not vested rights 1 17 Congress may give to the inventor less than an exclusive right 117 Retroactive effect of statutes 118 Sect. 1. Limitations. Mr. Senator Morgan's views 119 Sect. 2. Damages and profits. Rules must be prescribed to guide the discre- tion of the courts 120 Mr. Livermore's suggestion about interest is not right 124 "Innocent" infringements (Senators Morgan and Wadleigh) 120,121 "Innocence" has no legal significance 121 Sect. 1 1. Periodical fee. Very important 123 Sect. 21. Applications and oath to them 124 Sect. 2. Damages and profits. If they were smaller, patentees would settle for less, and there would not be. so many suits 126 The general rule, in human affairs, is not the iiitrinsic value of what a man has to sell, but its market price 126 Army worm and Paris green case and profits 1 27 Amendment to section 2 129 Mr. J.J. Storrow: Hardships will exist, not because of the rights, but because of unconscien- tious abuses of them 139 Discussion of the alleged distinctions between " innocent " and " willful " in- fringers 136 There are very few "innocent " infringers, and the distinction attempted is not capable of legal application 137 Statutes of limitations should be statutes of repose,' and not require courts to dive into defendant's heart to learn whether th^y apply 137 Extra allowances for expenses in cases of vexatious or frivolous claims or infringements would meet part of the difficulty 138, 202 Champerty and maintenance condemned ' 148 Sect. 1 . Limitatioris. Differences between this statute and ordinary State stat- utes. This runs against unknown infringements by persons in other States. The period should therefore be liberal 139 Sect. 2. Damages and profits. There are no remedies peculiar to patent cases. 139 (Senator Morgan suggests abolishing actions at law) 140 General discussion of the practice of bringing suits in equity instead of at law 141 The remedies of the patentee 141 The right to recover profits is the great check against willful infringements. The present rule 142 There are cases where it is impracticable to take an account of profits. Il- lustrations 142 Amendment to line 8 143 The word "same" in line 13 refers to damages. This is the grammatical construction, and it is also the meaning which the sentence must have in application, whatever word be used 143 Importance of rules of profits and of some change in them at present ; mere mscretion in the court is not enough 143 Value of the invention is the basis of recovery, but it is not the exact meas- ure of it. If the invention cheapens the cost of manufacture it lessens the price at which the article is sold. The public gains greatly in cheapness, and the patentee is generally satisfied with a small portion of the gain.. . 144 This section recognizes this fact and makes market value rather than intrin- sic value the meas.ure of recovery in many cases 145 The section is retroactive. In this it follows the precedents of former patent laws, and is within the line of decisions whicn distinguish between the right (the patent) and the remedy (the money recovery). Authorities... 146 VI CONTENTS. Page. Mr. J. J. Storeow— Continued. But it may be wise to confine the effect of the section to suits hereafter to be brought 147 Sect. 3. Appeals n.3, 17.5 Sect.b. Reissues. Reasons for them ; necessity for them ; illustrations 148 Inventions and improvements on them ; right to each 149, 154 A reissue is an amendment of the patent in order to correctly describe, in the technical form required by the statute, that which the patentee, before he got his patent, substantially showed to the office as his invention. This satisfies the requirements of justice ; to permit evidence aliunde, by ex parte affidavits made long afterward, to show his invention would open the door to fraud. Eeissue should be for what specification showed, and showed as his invention ;-- 152 The office of the model is not to describe, but only to illustrate the invention ; it can be easily changed by accident or design ; it should not be resorted to as a basis for reissue 152 The propriety of the reissue should be fully re-examined, in the courts, and this section provides for such re-examinatioQ ■ ■ 153 Sect. 11. Periodical fees. The feeling against reissues is not justly due to the fact of reissue, but to the practically worthless character of the inventions covered by them. The periodical fee will extinguish such patents before any one wants to reissue them 155 The preparation of the present bill, and the labor bestowed upon it 156 Trial by jury, and power of a court of equity to assess damages in patent causes under the 7th amendment to tlie Constitution 140, 158, 176-180, 191 Distinction between the right and the relief for the invasion of it 193 Distinction between the character of the relief and the form by which, or the forum in which, it is to be obtained 193 Nature of the right - 193 Power of a court of equity to give unliquidated damages 395 Convenience of the practice, and contemporaneous aud long-acquiesced-in construction of the Constitution with regard to damages in patent causes. 195 If the right is doubtful, the action at law should not be taken away 196 Sect. 9. Repeal of patents. Introduces no new feature, but affords a better meth- od of using a recognized and necessary right 199 Sect. 20. Abandoned applications. Should not the invention also be aban- doned to the public? 199 Security for costs belongs to the judiciary act, and not to the patent law 200 The profit of the patentee in practice consists in the receipt of a small por- tion of the gain realized by the public from what, in a practical sense, he has created. True basis of damages and profits 301 Sect, 8, Perpetuating testimony. Amendment suggested 201 Mr. J. G. Abbott approves the bill 157 Mr. J. E. Hatch: Sect. 2. Damages and profits. Amendment and reasons for it. Extra allow- ances for expenses 157,204 (Mr. Senator Morgan suggests abolishing actions at law) 140, 148, 156 Sects. 1-12. Brief on each 204-208 Mr. W. W. HUBBELL : I represent inventors, and am opposed to the tenor of the bill 154 Sect. 1 . Limitations. The right of action should, under the Constitution, last at least during the whole life of the patent, as under stat. 1870 J 58, 1 85 Amendment proposed 160 Discussion of it, and reasons for it 161 No security for costs should be required of plaintiff in patent suits 1 63 Constitutional right and duty of Congress with regard to patents 164 The grant must be exclusive and the remedy coextensive with it 166 Secti. Damages and profits. Objectionable J67 Discussion of the damages clause and its operation^ 168 Discussion of the profits clause and its operation 169 Amendments suggested 170 Sect, 3. Appeals. Objectionable. It may make two appeals. The Supreme Court should have power to take an account 172-175 Discussion : Can the same question be reopened when a case comes up a sec- ond time 173 fe;(. 2. Amendment to pre&eTve trial by jury 180 Amendment about damages and profits 181 True principles of patent law 181 CONTESTS. VII Page. Mr. "W. W. HuBBELL— Continued. The grant must be exclusive and unconditional, and Congress has no power to modify the grant or substantially to change the remedy 182 Sect. 5. Eeissues. Model should be used 185 Sect. £. Seissues not to retroact. Amendment 186 Sects. 7 and 8. Approved 186 Sects. 9, 10, 11, 13. Objected to. They will harass patentees 186 Sects. 14, 15, 16, 17, 18, 19. Approved. 187 Sect, 20. Abandoned applications. Objected to; discussion 187 Sect. 21. Oath to applications. Approved 188 Sect. 11. Periodical fee. Objected to -. 190 Mr. HuBBELL's navy fuse 190 Mr. A. J. Todd : General approval of bill 174 Discussion by Senator Morgajt and others as to right of trial by jury, and convenience of proceeding in equity 176-160i Sect. 4. Appeals. Amendment suggested 179' Hon. Assistant Secretary op the Interior : Transmitting communication from Hon. W. H. Doolittle, Assistant Com- missioner of Patents 20^ General approval of bill 209- Sect. 24. Reissues and interferences. The law and practice of the office on these subjects, and history of the law and changes introduced by legislation and judicial decision 209 Hon. Secretary of the Interior : Transmitting communication from Hon. Ellis Spear, Commissioner of Patents 210- Amendments proposed to sections 5, 16, 20, 22, 24 of the bill, and to Kev. Stats., J§ 484, 4891. Hearty approval of the bill. Statement and expla- nation of various sections of the bill, reasons for them, and advantages re- sulting from their adoption. Consideration of the amendments proposed by him, and his reasons for the same 216-232-: OONTENrS OP ARGDMENrS BEPJRE HOUSE COMMITTEE. . [See index, page xv, infra. ] Page. Mr. J. H. Kaymund. Represents 81 railroad corporations associated to defend patent suits 225 The patent law is only to promote the useful arts 226 Utility of the patent system 297 Existing defects 229 Recovery in law and equity 232 Nature of the grant 232 Sections relating to litigation, viz, 1,2,3,8,9,11 233 Section 1. — Limitations 235 Section "5. — Reissues 239 Section 2. — Damages and profits, the present rule and the true rule 237-244 The section is constitutional ; it changes the remedy but does not impair the right 245 Reply to Mr. Walker 248 Mr. Geo. H. Christy. Section 2. — Profits and damages. Users ex delicto should pay over gains and profits 249 If they put down the prices, and make no profits, that is a reason why they should pay more, for they inflict a greater injury on the plaintiff 250 Application of the rule of profits to the cotton-worm poison case would not lead to bad results 250 Cotton-tie cases. The vendee must always look out that he buys a title which entitles him to retain and to use the thing bought; so as to all prop-, erty 251 If the user buys of responsible dealers or makers, they will always protect him ; they must, in order to keep their business 252 Reapers. The figures which Mr. Raymond gave for royalties on reapers are known to me to be utterly incorrect. I am counsel for the concern he re- ferred to. The nature of the reaper business described 552 The value of a patent does not come from infringing use, but from use by the owner, or under license 253 Section}]. Periodical fees ; heartily approved of; its effects 253 Sections 8, 9, 10. These give three remedies for the tort feasor against the patentee ; this wrong ; sections 9 and 10 are ample ; section 8 is very dan- gerous, and is calculated to invite oppression ; section 8 discussed, its practical operation considered, and the objections to it stated 253 Section 5. — Reissues. This section, as drawn, enlarges the right, and is ob- jectionable 361 Reissues should not be limited to three years ; "there should not be any limi- tation of time to the right 2&;5 The complaints against patents arise largely from the fact that the things invented are so convenient that everybody finds that they do not want to do without them ; but that is the last reason for abolishing the patent or not paying the inventor 264 Mr. J. J. Storrow. Origin of the present bill 264 Knowledge of the subject-matter, in its practical effect on the community, should precede legislation upon it 265 The patent law originated in the statute of James I (1625), called the statute of monopolies, because it abolished patents for monopolies, and only allowed patents for new inventions. It held out in advance a prospect of reward, in order to induce invention 265 Before our Constitution, the States granted patents ; our Constitution author- ized Congress to grant them, and the first Congress passed a patent law in 1790 266 Sketch of history of patent legislation in the United States 2'i6 CONTENTS. Page. Mr. Storrow (continued). Steps taken by the inventor. The application ; the specification ; the claims ; preliminary examination in the office i appeals; interferences 266 Infringement; litigation; the patent has no physical existence ; it cannot ba defended by physical force ; hence the legal remedies should be ample 267 Process of invention ; conception of the idea ; reduction to a practical form (illustrations of different kinds of inventions); the caveat; the patent; improvements - 267 Embodiment not merely in some, but in the best practical form ; this step involves great skill, much time, perseverance, and generally much money; public does not gain much till this is accomplished, neither does the in- ventor ; so he is incited to that completion which public interest demands. 268 Introduction into general use, generally against the opposition of manufac- turers, who do not wish to throw away existing machinery. All this re- quires labor and money, and the legal power of the inventor to assign a part or the whole, in order to attract capital, is important. The assignee is as important to the public gain as the inventor. The life of the patent under tho Constitution is limited, and the system tends not only to create and introduce the improvement, but to do so at the earliest possible day.. 269 Remedies for infringement should be efficie-nt, but should not be unjust nor harsh ; inventors interested in this, because most patent suits are also de- fended by patentees ; reasons for this and illustrations of it 269 Growth of the patent system. From act of J790 to act of J8.36, 46 years, 10,030 granted; fi-om J836 to now, 43 years, nearly 200,000; in 1876 nearly 15,000 for new inventions, besides tr^de-marks and designs ; about 20,000 applications ; fees paid into the Patent Office exceeded its expenses by $105,445.05 in 1877 270 Probably 20,000 to 25,000 patents assigned last year 270 Territorial growth. Originally, most patents taken out in New England. In 1870, the six great Western States took out more than the six New Eng- land States; in 1877, they took out 50 per cent, more, and Ohio, Indiana, and Illinois took out more than all New England. Growth inthe South.. 270 The manufactures of the West have grown as their patents have, and now the manufactures of those six Western States exceed those of New England 271 Manufactures are our greatest interest, and have grown in the whole coun- try, and in different sections of the country about in proportion to the growth of patents 310 [Statements and arguments of Mr. Coffin and of Mr. Hyde follow here, v. p. ix, infra. ] Connection between the growth of patent system and the growth of indus- tries affecced by it ; granting of patents has, as matter of fact, encouraged the progress of the arts ; the history of the growth of the two shows this. 305 Shoe manufacture. With the exception of iron, this is the largest industry of the country. Within twenty-five years, this has changed from hand- work to machine-work ; almost ev^ry machine used is covered by exist- ing patents ; but the result is that raw materials have increased in price, the hours of labor have shortened, the day's wages have doubled, and the shoe is sold to the consumer very much cheaper than before. The total .royalties paid on all the machines in a well-equipped shoe factory do not average more than 2J to 3^^ cents per pair — that is, not over 2 per cent, of the actual saving on a large class of work. This is too small to affect the retail price to the consumer, and the associated manufacturers who pay it have sent Mr. Hyde to ask for some modifications in the law, but also to say that its-coutinued efficiency is essential to the existence of this great industry 306 Cotton manufacture; increase of production; cheapening of product; in- creased wages and shorter hours of labor 307 This and other machinery is not the result of one happy thought, but of a long course of invention, labor, and expensive experiment ; illustrations ; number of patents that mark the progress in any industry.... 308 Correyiondence between patent growth and industrial eroicth. Our manufact- uredprodnct is double our agricultural product ; figures from the census showing th is and showing the period and rate of increase ; the West now manufactures more than New England, and this is the result of the last 25 years ; the manufactured product of the six grain-growing States of the West is greater than their agricultural piodnct ; figures from the census 310 This growth in the whole country coincides in time and extent with the growth of patents ; the change of relation between the East and the West in industries has followed the change of relation in the number of patents taken out by the different sections ; figures 312 CONTENTS. XI Mr. Stokrow (continued.) '**'' Increase in manufactured product, in amount of wages, in number of opera- tives, in money-Talue of a day's labor, in the day's wages of the opera- tives— 1850-1870; table 313 This has led to cheapness of product. We are by it enabled to compete with and beat other nations, not only in onr domestic but in neutral markets, of which they had long held possession. We have done this because we have made more improvements in the industrial arts than they have. This superiority has been exhibited just when and as the growth of our patent system has surpassed theirs. Tables of exports and imports of United States, England, and France , 314 Breadstuffis are almost an industrial product, because without the recent agricultural machinery subject to existing patents we could not compete in the price of grain with that raised by cheaper European labor 314 Belgium is very prosperous by its industries, and grants a very large num- ber of patents 315 Cheese factories ; exports of cheese have grown as the patents on cheese- making have grown 315 So of American-made saws 316 So of American car-wheels and chilled rolls 31(5 So of emery-paper, &c 316 Exports from Philadelphia, alone, of patented articles and artiules madn by patented machinery, were $1 1,500,000 in 1877 16 Exports of lanterns, carriage-wheels, trimmings, hardware 316 Utilization of cotton-seed ; its value and importance; exports of it; this is directly created by the patent law, and is not yet completed; the greatest progress is yet to be made 317 Keceut practical recognition abroad of the advantageous operation of patent laws; England; Sir William Thomson; Germany; Swiizerland; MM. Fevre-Perrett, Bally, and Dubied '. 318 The only demand for inventions which will lead to a supply, is a demand which is accompanied by a payment or reward to who<'Ver lurnishes the supply ; the patent system does not ignore, but is directly based upon, this law of poliiical economy 320 Improved labor-saving machinery does not diminish but increases the wages of labor and the number of laborers employed ; reasons for this ; illustrations of it, and proof that this is actually the fact ; figures from the census , 321 The great growth of agricultural population in the grain-raising and reaper- using States arises, not from the lack of demand, but from the greatly- increased demand for such labor since and consequent upon the introduc- tion of agricultural machinery ; so of the growth in those States of the labor employed in manufacturing .324 All over the world the busiest communities are those where improved ma- chinery has given the greatest result and therefore the highest value to a day's work ; illustrations of this 326 Patented inventions cheapen products at once and during the life of the patent 327 The patent system is not so much a reward as a necessary prerequisite to th& creation and introduction of machinery to any considerable extent; effect of the law on the inventor and on those who buy inventions and manufacture and introduce the article ; Goodyear ; McCormick ; Bes- semer — history of Bessemer's invention 328 Improvements in hosiery. The inventors of these improvements received not over five per cent, of the actual saving to the public during the limited term of their patents 331 E. B. Bigelow's carpet-loom and other inventions 332 Introduction of gingham manufacture into United States was made possible only by labor-saving and power-driven machinery 332 The rewards of inventors are less than those of men in other walks of life, where the pay depends ripoB the risk of success and is measured by the degree of success -- 333 Difference between invention in the useful arts and in the fine arts in their processes and in their results ; Tennyson, Homer, Arkwiight, &o 333 Patent system is in theory and in fact and historically the growth of the spirit of freedom-; historical proof of this ; it offers a career to the laboring classes which nothing else can afford them ; it is a mark of the highest and purest civilization 334 Les's stocking-frame and effect of patents upon it 335 XII CONTENTS. Pago. Mr. Storrow (continued.) Inventions are not so matters of course that they come at once when wanted ; perfected machines require long labor and great expense ; this will not be bestowed unless the inventor or improver is to have the results of his la- bor ; illustrations of this ; in many cases the invention does not supply a demand, but creates it, by furnishing a supply of a new article 335 Sheep-shearing machine ■ 335 Inventions are not simultaneous to any great extent ; proof of this from "interferences" at Patent Office and otherwise — 336 Patented inventions always lead to further improvements ; inventions se- cretly practiced do not 337 Inventions cannot be successfully used in secret — 337 Instances where the immediate result of patented inventions has been to cheapen the product during the life of the patent ; alizarine and other prod- ucts • 338 Royalties on harvester patents are not over two per cent, of the saving to the public by the use of the invention ; so of many other inventions 339 The royalties would be much more than repaid to the public if the patent law merely hastened the introduction of the improvement by eighteen months - - 340 Objections to the patent law largely come from those who do not know what it is nor how it affects the public. The remedy is to remove the ignorance, and not to remove the law 341 Consideration of the special features of the hill. Section 1. — lAmitations 341 Section 2. — Damages and profits. Necessity for a vigorous civil remedy be- cause there is no criminal remedy. The existing law, and the rules fol- lowed by the courts ; necessity for a ohaiige ; the character of the changes proposed ; practical operation of the clauses of the sections 343 False assumption Sf fact on which the present rule of profits is founded 344 Impossibility of taking an account of profits in some cases of infringement by use, and therefore the courts should not attempt it in those cases, but should allow a gross sum as damages — 347 Discretionary clause of the section 349 Power to allow counsel fees and expenses in certain cases 349 Section 3. — Appeals from decisions affecting validity of patent and question of infringement 350 Section 4. — Control over cases in equity pending appeals 350 Section 5. — Rtissues. What they are and necessity for them 350 The present law about them ; the changes introduced provide better safe- guards against the abuse of the rights; further improvements introduced. 351 There should be no limitation in time to the exercise of this right 352 Section 6. — Beissues not to retroact. The present law and reasons for the change 352 Section 7. — Correction of certain errors 352 Section 8. — Depositions in perpttuam 353 Section 9. — Suits to repeal void patents 353 Section )0. — Bill against false clamor 353 Section I], — Periodical fees. Reasons for this, and advantages of it to in- ventors and to the public 353 Section 12. — Recording 354 Section 13. — Joint owners 354 Section 14. — Fraudulent sales 354 Section 15. — Assistant commissioner to give bonds 354 Section 10. — trice of copies at Patent Office 354 Section 17. — Certified copies 354 Sections 18 and 22. — Payment of final fee 354 Section 19. — Inventions patented abroad 354 Section 20. — Abandonment of applications 354 Section 21. — Applications for reissue 1 354 Section 23. — Number as well as date of patent to be marked on patented arti- cles ., 354 Section 24. — Interferences . 355 Section 25. — Repealing clause The retroactive portions of this bill are such as affect the remedy merely, do not take property or destroy vested rights, and leave perfectly eflBcient remedies to protect for the future aud^;o give redress for infringements in the past. Legal discussion of this question, with authorities 355 The changes proposed improve the law. They are in the interest of invent- ors, as well as of all other persons, who gain by the law, as I believe the whole community do; large-minded inventors and patentees see tliis 359 CONTENTS. Xin Paffe, Mr. C. C. Coffin. The progress of industry in the United States and the effect of patents and patented inventions npon it 272 The plow; its improvements, gains to the public, and insiguificant royalties 273 Steam-plows and the cost of inventing them ; the demand for them still uu- supplied 276 Corn-planter and check-rower 277 Cultivator 278 Corn-sheller 279 Seeders; history of their invention and its cost » 280 Reapers, mowers, harvesters; their history , 281 Royalties and license fees on them 282: The self-binding harvester ; the time and cost put into their invention and construction 282 Sales of agricultural machinery on long credits 284 Horseshoe machinery ; the saving; they have cheapened the product 285 Horseshoe-nail machine. History of the invention, the struggles of the orig- inators, the cost, and the cheapening which has resulted 286 [See, also, Mr. Storrow, p. 329.] Stockings 287 Wood screws 288 Carriage-shafts 288 The rock-drill 289 Tin manufactures ; baby-rattles exported to England, and parts for toys ex- ported to Nuremberg , 290 Woolen industry 291 Spinning, and the improvements in it 292 The Crompton fancy loom 292 Bigelow carpet-loom 292 Cotton-gin ; its recent improvements 293 Cotton-looms ; also the Bigelow, the Knowles, the Crompton looms 294 Market for cotton goods 294 Conditions for export trade 295 Mr. H. D. HVDE. Represents the Shoe and Leather Association. History of the introduction of shoe-machinery into this industry; effects of it in raising wages, cheapen- ing product, and increasing supply and consumption ; description of vari- ous machines 296 The peggers and the Sturtevant peg-wood - 298 Export trade ; beneficial effect of patents on this industry is recognized by the manufacturers who use the patented machines and pay the royalties.. 299 The small amount of the total royalties as compared with the gain 300 The inventors are not manufacturers seeking to improve their business, but outsiders, who are affected by the hope of profit from their patent ; and it is only the protection the patent gives them which enables them to perfect their inventions ; illustration ' 300 Section 1. — Limitations. We want it 303 Section 1). — Periodical fees. AVe want it 304 Mr. Geo. Payson, Section 1. — Limitations 360 Sections. — Perpetuating testimony 361 Section 5. — Reissues 362 Section 6. — Reissues not to retroact 363 Section 2. — Damages and profits Injustice of the present rule and necessity for the change proposed by this section 367 Illustration of the whip 371 Reply to Mr. Walker - 248 Mr. C. S. Whitman. Growth of patents in the South.- 373 Sectionh. — Reissues. Reasons for them; necessity and justice of allowing them, and reasons for the safeguards imposed by this sectiou ; models 374 Section 7. Correction of certain errors about joint inventions 381 Section 13.— Joint owners 381 Section 19.— Inventions patented abroad 38.i XIV CON! ENTS. Pag9. Mr. A. H. Walker. Reasons for a hearing ou this bill 3^7 Section i. — Limitations. Present state of the law ; no overwhelming necessity for any statute. No objection to some statute, bat the four years proposed by this section is altogether to short ; illustration 388 Etfetot ou existing rights of action ; objeetiqnable in this respect 391 Section 2. — Damages and profits. Statement of Moiory v. Whiiney, and the existing rule of profits ; it permits no hardship ; illustration 393 The change effected by this section creates a far greater hardship on the patentee, and the defendant only suffers from unlawful use of others' property 395 Objections to the clause abolishing account of profits in certain cases ; illus- trations of the operation of that clause 396 The section is retroactive; it diminishes the recovery upon existing rights of action ; this is unjust and clearly unconstitutional, for it destroys vested rights ; the courts would hold it invalid, but Congress itsSlf should respect the Constitution, and not compel us so resort to litigation. Legal argu- ment upon this question, citing Branson v. Kenzie, Green v. Riddle, Dash v. VanKUek 397 Comments on Mr. Raymond's argument 401 Damages and profits under act of 1870 and R. S. 4321, are not cumulative, but supplementary 402 Patents are not monopolies 403 Origin of this bill. I was not asked to take part in its preparation, as under the circumstances I ought to have been 403 Vested rights ; what they are 404 Distinction between the right and the remedy discussed 406 Retroactive effect of statutes of limitation 4 06 Mr. Raymond. Reply to Mr. Walker 407 Mr. Walker. Rejoinder '. 408 Hon. Elisha Foote. Most of the bill is good ; but the second section should be struck out, be- cause it is very oppressive on the patentee and will impair his rights 409 The present rule of damages and profits, and reasons why the change is in- jurious 410 Seymour v. McCormick, 16 How., 489 410 Discussion of language of section 2 about damages 411 The essential right of the patentee and the basis of the patent system is the right to the exclusive use ; no law should disturb this ; the matter should be left untrammelled, to be affected only by the operation of business- interests 412 The spike case, and other illustrations 413 Objections to the new rule of accounting sought to be introduced 414 The discretionary clause 415 The importance of the patent law to foster inventions and promote the pro- gress of the useful arts 416 Inventions increase wages, and increase the demand for labor, because they make it more productive and valuable 417 Section 9. — Suits to repeal patents ; harsh and oppressive 418 Models are the best evidence of the invention, and ought to be retained and used ." 418 All fees on patents, especially the preliminary fee, should be reduced 419 Mr. Chauncey Smith. The effect and operation of the patent system — a knowledge of this must precede all attempts to legislate about it 419 Few hardships which the law can cause would be as great as the evil from impairing the protection given to inventors 420 Value of inventions, and results which they have achieved '. 42 1 Power and capacity added to the community by the steam-engine; figure. 421 Inventions increase the demand for labor ; illustrations of this and reasons for it 421 Power of locomotives of the whole country 423 Inventions produce new products, or utilize waste materials, and thus add to the wealth of the community 424 Patents stimulate them; almost all the inventions of the world have come from countries which have applied this stimulus ; illustrations and proof of this 425 Improvements in printing, 425 The law en ibles the poor man to reap the fruits of his mental acquirements as securely as the capitalist can the profits of his capital 426 CONTE^TIS. XV Mr. Chauncey Smith— (Continued.) *^*' The love of gain is an important spring of human action, and the patent law appeals to it 427 We should have some without it, but not so many nor such useful ones ; illustrations 427 Character of inventors 427 What the successful invention and introduction of a now machine involves in addition to purely intellectual labor 427 Watt's steam-engine directly due to patents 428 Educational effect on the workman of the thought to which the attempt to invent gives rise 429 It has trained for us an army of inventors and skilled workmen, just as the Prussian system has trained a nation of soldiers 430 The future open for inventions ; progress of improvement in the steam-en- gine since Watt's time 431 Mr. Smith's opinion about the bill ; reply to Mr. Walker. Section 2 is con- stitutional 432 Rule of Mowry v. Whitney, and objections to it when applied to cases to which it does not belong ; purpose of part of section is to confine it to cases to which it properly belongs 435 Profits should not be given as a penalty 435 Inventors seldom realize more than 5 per cent, of the savings when left free to act 435 Piano-legs case, and application of the rule to it 436 Section 5. — Amended so that reissues shall not be based on models 434 Objections to reissues come largely from those who would interpose tech- nical defenses 434 Section 11. — Periodical fees. Operation of this section and benefits from it. It is a benefit to inventors because it destroys patents which are useless and may become obstructive 433 Mowry v. Whitney discussed. Its results disapproved by the court 437 Hon. S. A. HURLBUT : Character of the bill 438 Value of the patent system 438 Character of patent litigation 440 Section. 1. — Limitations 440 Duty of Congress to establish a patent system 441 Great benefits from it 442 APPENDIX. Testimony that our progress as manufacturers in foreign markets is due to the ex- tent to which we have surpassed other nations in the cheapness and quality of our machine-made products. Appreciation of our progress 443 Extracts from correspondence of consuls with the State Department 443 Mr. Charles Bartlett, Martinique 443 Mr. Alfred E. Lee, Fraukfort-on-the-Main 443 Mr. H. J. WiNSER, Sonneberg (with extract from Dr. Herman Grothe). 444 Mr. James M. Wilson, Nuremberg 445 Mr. A. Badeau, London 446 Mr. DoCKERY, Leeds 446 Mr. Shaw, Ontario 446 Mr. Chance', Nassau 446 Extracts from reports to Parliament on the Philadelphia Exhibition 446 Extracts from addresses before British Association September, 1876 446 Sir W. Thomson 447 Mr. St. John V.Day 447 Extract from pamphlet of Mr. Bally, Swiss commissioner and manufacturer.... 448 [See index at end of volume.] S. 3 0. November 14, 1877. — Mr. Wadleigh asked and, by unauimous con- sent, obtained leave to bring in the following bill; which was read twice and referred to the Committee on Patents. March 5, 1878.— Reported by Mr. Wadleigh with amendments, viz : Omit the parts in [brackets] and insert the parts printed in italics. A BILL to ameud the statutes in relation to patents, and for other purposes. Be it enacted by the Senate and Rouse of Representatives of the United States of America in Congress assembled. That from and after the pas- sage of this act no profits or damages in any suit at law or in equity hereafter commenced for the infringement of a patent shall be recovered which shall have accrued more than four years next preceding the com- mencement of such suit : Provided, That where a party, in order to pje- serve his right of recovery, finds it necessary to institute a number of suits involving the same issues, and he is proceeding with good faith and with reasonable diligence to bring one of thein to final judgment, any court in which any of them are pending may, in its discretion, grant a stay of proceedings from time to time in any such other cases pending before it : Provided also, That the limitation herein provided for shall not apply to rights of action existing at the i)assage of this act [may be en- forced by] on ichich suits shall be brought within [four] two years there- after, if not previously barred by laws already existing; but nothing in this section contained shall revive any right of action already barred, nor prolong the right to sue on any cause of action already existing. Sec. 2. In all cases where the patentee has elected to license other persons generally to use his invention, in like manner to that in which it was used by the defendant, or where it appears to the court or jury that, from the nature of the invention, it is for the interest of the pat- entee that other persons generally should use the same in like manner and pay bim a license fee therefor, the measure of the plaintiff's dam- ages shall be the same, both at law and in equity, and no account of profits or savings from use shall be allowed, except in case of a use by therewith partially or completely maJcing a product for sale. If a license- fee has already been established by a reasonable number of transactions of a character applicable to the case at bar, that shall be adopted as the measure of said damages; but if not, then the court or jury shall determine the [same] damages from all the evidence in the case. In taking an account of profits in any case, the defendant shall not be charged with any saving he may have made, [unless it has] if he shall shbw that it has not enabled him to realize an actual profit in that part of his business connected with the use of the invention. And the court shall determine what ])ropoition of such profit is due to the use of said invention, and what proportion to the other elements from which such profit was derived, capital and personal services excepted ; and the proportion of actual profit so found to be derived from the use of the invention shall be the measure of the profits to be recovered. But, if in any case, it shall appear to the court that the damages or irofits, S. Mis. 50 1 Z BILL TO AMEND STATUTES IN RELATION TO PATENTS. ascertained as above, shall be inadequate to give the plaintiff a just compensation for the injury done by the infringement, or shall be in ex- cess of such injury, the court shall have power to increase or diminish the amount to such an extent as may be just and reasonable. And whenever the court shall be of the opinion that the suit of the plaintiff, or the defense of the defendant, teas vexatious, or the infringement was willful, the court may award against the defeated party such sum, by way of counsel fees and expenses, as it shall deem just and reasonable : Provided, That the provisions of this section shall not apply in any case in which a de- cree for an account or assessment of damages has, at the date of the passage of this act, already been pronounced. Nothing contained in this section shall affect the right of the plaintiff to an injunction, nor to recover in a suit in equity, in addition to. the profits to be accounted for, the damages the complainant has sustained by the infringements com- plained of. Sec. 3. In all patent causes, after a decree has been made upon the merits of thecase, in favor of the complainant, establishing the validity of a patent, finding an infringement thereof by the defendant, and order- ing an account or an assessment of damages, the court in which the cause is pending may, if it shall see fit, authorize the defendant to ap- peal forthwith from such decree; and thereupon, if such an appeal shall be taken and perfected within such time as the court shall prescribe, it shall be competent for the said court to stay proceedings in whole or in part during the pendency of such appeal, and to require from the de- fendant a bond, with sureties, to answer the final decree in the cause, or to dispense with such bond, as it shall see fit. Sec. 4. The several courts vested with jurisdiction of cases arising under the patent laws may, at any time during the pendency of any patent cause, grant or suspend the issuing or operation of an injunction upon such terms as the court may impose, and subject to such rules and regulations as the Supreme Court may establish, shall have like power after an appeal of said cause, and while the same is pending in the Su- preme Court. Sec. 5. Section forty-nine hundred and sixteen of the Eevised Stat- utes is hereby amended so as to read as follows : Whenever any patent is inoperative or invalid, by reason of a defective or insufftcient speci- fication, or by reason of the patentee claiming as his own invention or discovery more or less than he had a right to claim as new, if the error has arisen by inadvertence, accident, or mistake, and without any fraudulent or deceptive intention, the Commissioner shall, on the sur- render of such patent and the payment of the duty required by law, cause a new patent for the same invention [shown in the model or draw- ings, or described in the original specification or its amendments, and to which he would have been entitled,] and in accordance with the cor- rected specification, to be issued to the patentee, or in the case of his death, or of an assignment of the whole or any undivided part of the original patent, then to his executors, administrators, or assigus, for the unexpired part of the term of the or ginal patent. Such sur- render shall take effect upon the issue of the amended patent. T'he Commissioner may, in his discretion, cause several patents to be issued for distinct and separate parts of the things so shown or described, upon demand of the applicant,' and upon payment of the required fee for a reissue for each of such reissued letters patent. The specifications and claim in every such case shall be subject to revision, [and] restric- tion, and r^ection, in the same manner as original applications are. Every patent so reissued, together with the corrected specification, shall BILL TO AMEND STATUTES IN RELATION TO PATENTS. 3 have the same effect and operation in law, on the trial of all actions for causes thereafter arising, as if the same had been originally filed in such corrected form, except as otherwise provided in this act; 6w.it no new matter shall be introduced into the specification not shown, contained, or sub- stantially indicated in the specification or drawings of the original applica- tion or its amendments. In any suit at law or in equity upon a patent hereafter reissued, the defendant, having given notice or pleaded the same in the manner set forth in the forty-nine hundred and twentieth section of the Eevised Statutes, may prove in defense to the whole pat- ent, or any of the claims thereof, that the new patent, or any claim thereof, is not for the same invention shown [in the model or drawings, or described in the original specification or] contained or substantially indicated in the specification or drawings of the original application and its amendments, and to which he would have been entitled. Sec. 6. No machine or other article made prior to the surrender of a patent, and the issue thereupon of a new patent, which, or the use of which, did not infringe such surrendered patent, shall be held to be an infringement of any of the claims of the new patent not existing when such machine or other article was made. All rights of action accru- ing to a patentee, his executors, administrators, or assigns, for profits and damages on account of any infringement of a patent, prior to its surrender for a reissue, shall remain unaffected by such surrender, and no suit shall be barred or abated by such surrender, and all suits at law or in equity may be maintained for the recovery of such damages or profits in the same manner as if said surrendered patent had expired by its own limitation: Provided, That nothing contained in this section shall apply to letters patent reissued prior to the date of the passage of this act. Sec. 7. Whenever a patent has been issued to one person for an in- vention actually made by him jointly with another or others, or a pat- ent has been issued to several persons for an invention made by only one or more of them, and such error has arisen through inadvertence, I accident, or mistake, the Commissioner, upon the application and oath of the true inventor or inventors, and, with the written consent of all the owners of said patent, entered of record, may correct the mistake as a clerical error. No new patent shall be issued in such case, but the correction shall be entered upon the old patent, or the record thereof, or both, and said patent shall thereafter, for all purposes, be regarded as having been properly issued, in its corrected form, at the date of its original issue. Dpou such correction, a fee of twenty dollars shall be paid, under such regulations as the Commissioner of Patents may from time to time prescribe. Sec. 8. Any person who may wish to perpetuate testimony to be used in any patent suit then pending, or which may thereafter be brought, may do so, subject to the following rules and conditions : He may file a bill or petition in the circuit court of any district in which the parties having a right to sue for infringement of said patent, or against whom he shall desire to use testimony to be taken hereunder, or any of them, reside or may be found, setting forth the date, number, and subject of the patent, and the name of the patentee, the names and residences of the several parties interested in said patent, so far as known to him, the names of witnesses proposed to be examined, the facts proposed to be proved by each, and his desire to perpetuate testimony, as aforesaid. On the said parties being brought into court in the usual way, the court, if it deems it just and reasonable so to do, may enter an order or orders in the case, directing before whom and when and where, either within or without the district, the evidence shall be taken. Both par- 4 BILL TO AMEND STATUTES IN RELATION TO PATENTS ties may attend at the same time and place or times and places so des- ignated by the court, or at such times and places as the.v may agree, and [then and there introduce such legal testimony of said witnesses as they may sci' fit, which] the petitioners may then and there introduce such legal testimony of such witnesses as they may see Jit relating to the facts set forth in the petition ; and thereupon, in relation to or in rebuttal or avoidance of the matters put in evidence by the petitioners, the respondents may introduce the legal testimony ositious which I submitted. I believe in part, if not in fall, they favorably reported them to the Senate. No final action, however, was taken, and with the understanding that the committee had obtained leave to sit during the recess I early planned with some of those with whom I was associated to lay before the profession and those interested in patents, as far as we conveniently could, the action which had been taken in Congress and some proposi- tions for further amendments to the bill. I think Senator Wadleigh was aware of my intention to do this, and thought it might be well to secure in this way, as far as we could, the opinions of the members of the bar, especially of those who had had experience in the practice and administratisn of the patent law. Some time in the summer, therefore, there was a pamphlet prepared in Boston and sent out under my name — although a very large part of it was not peculiarly my work — inviting those to whom it was sent to consider its provisions, and, if they saw fit, to communicate with myself, or otiiers wlio were known to be interested in this matter, and state their views upon tiie proposed am».ndments of the patent law. There was no suggestion as to what our own views were, no argu- ments intended to secure a favorable expression of opinion, but merely the expression oi a desire to know what the wishes, judgment, and ex- 2p 18 MR. CHAUNCEY SMITH. perience of the members of the bar familiar with the workings of the patent law might be upou the various amendments. There was a brief preface stating the subject-matter of the pamphlet. After stating the object of the contents of the pamphlet, it reads as fol- lows: "The third paper herewith printed, containing several provisions in addition to those embraced in either of the preceding papers, is submitted for the purpose of obtaining opinions in relation to the subject from those interested in patents or in the administration or improvement of the patent law, and especially the opinions of lawyers whose practice has given them an opportunity to observe the i)ractical working of the law as it now is. " The chairman of the committee of the Senate has expressed a desire to have these opinions obtained, so far as can be done, and at the re- quest of many gentlemen I have taken this method of obtaining them. I shall be glad to receive any communications on the subject. Atten- tion is especially invited — " 1. To the proposed limitation of the time within which damages or profits may be recovered, contained in the first section. "2. To the provision contained in the second section (two forms of which are given) in relation to the measure of damages and the rule for estimating profits in certain cases. "3. To the provisions of the fourth section in relation to rights of action under claims in reissued patents which were not in the original patent, and to the loss of existing rights of action by a reissue. " 4. To the provisions of the eighth section requiring the payment, at certain intervals, of fees in order to preserve such patents as are found to be worth preserving." Soon after issuing that pamphlet I received communications from some gentleman upon the suiyect, and finally an invitation was extended to me to visit, gentlemen in Chicago for the purpose of conferring on the subject of amending the patent law. I went there in the latter part of September. I met Mr. Eaymond, and the counsel for the Western Eailroad Association, Mr. Payson, and several other gentlemen from different parts of the country, many of them counsel for the railroad companies who had been supposed to have an especial interest in the passage of the act brought here last year, but among them many counsel familiar with the practice of the patent law. We sat down together and discussed the subject for seven days, as earnestly and as candidly, I think, as any gentlemen ever could discuss a question of the importance of this. We met, differing widely in our views; we parted, having come to a very substantial agreement in our views. We had done this, not by concessions on our side of what we deemed to be valuable, for the purpose of securing a like concession from other parties, in order that we might present a bill which might be re- garded as a compromise bill, but we came to the conclusions which we did from an honest conviction that in our discussions we oi^ht to weigh the objections most carefully which had been presented on owe side or the other ; and I believe that the result of our discussions there was an agreement based upon a conviction, shared by all alike, that we had been compelled to concede nothing to each other as the price of other conces- sions, but that we had discussed the subject in the utmost fairness and arrived at valuable results. As soon as we had done that we prepared a revision of the proposed amendments, embracing more than had been contained in the first pamphlet, and this revision, in turn^ was printed. THE PATENT LAW. 19 and sent to all gentlemen who Lad received the original pamphlet, and to a large number besides. I think several hundred copies were distributed in this way, without any other suggestion than to say that what the pamphlet contained was the result of our deliberations, and that if anything could be elicited by way of objection or approval, or by way of addition thereto, we should be glad to receive it. The result which we hoped to reach by this method of addressing the public was in some degree realized. We received written and verbal communications from many, and expressions of satisfaction to a con- siderable extent with the work which h.id been done. Some criticism has been made. Some have doubted the wisdom of all its provisions which we have thought proper to present here. Generally, however, I may say that the result of our labor has been received by the profession much more favorably than we had any reason to expect from gentle- men who were not in possession of the views which we entertained per- sonally and of the reasons upon which we had presented the proposed amendments. I come, therefore, with some degree of confidence before this com- mittee to say that I feel justified in the conclusion that the work which we have presented to the public, and which we now come before the com- mittee and Congress for the purpose of securing favorable action upon, has received a very general approval from those who have the largest interest in the working of the patent law, either for it or adversely to it, and from those who have had the largest experience and the best means of judging as to the value of its provisions. Such, Mr. Chair- man, is the history of this bill. Before considering its provisions in detail, I should be glad if the committee would indulge me in a few observations upon the general expediency of the proposed amendments, especially with reference to their bearing upon the general working of the patent law. The Constitution of the United States provides that "Congress shall have power to promote the progress of the usefnl arts by giving to in- ventors, for a limited period, the exclusive right to their respective in- ventions "; and, in pursuance of this power, in 1790 a patent law was passed, and the country has been in the possession of a patent law ever since. That law was rei)ealed" three years subsequent to its passage and a new one substituted, which remained in force with some amendments until 18.30. The law then underwent a complete revision. The whole theory of our system was changed in several important particulars. iPreviously to that, patents had been granted to any one who applied for them, no supervision being exercised over the issue of a patent ex- cept as to its form. No power existed on the part of the Secretary of State, as I understand it, or the Attorney-General or officers who had it on charge, to reject an invention if the applicant saw fit to take his patent. In 1836, as I said, the law underwent a complete revision. The most important new feature of it was the institution of the Patent Office under the charge of an officer whose duty it was, before issuing a patent, to ex- amine the alleged invention and to form ajudgmeut as to its value and as to the fact whetLer or not it was an original invention with the party laying claim to it. This feature of our system has remained in force ever since. It has been adopted by other countries, and is now about being adopted in England. It has been adopted, as I understand, in Germany, though I^have not personally examined the matter. It has secured the assent of other countries, as I am informed. 20 ME. CHAUNCEY SMITH. This law has remained in force without much substantial change until the present time. It is true, the law underwent revision in 1870, but its features were not essentially changed, and some changes were effected upon the revision of the statutes in 1874 ; but they were not material. Substantially, then, we are subject now to the law which has been in operation since 1836. Has this law vindicated the wisdom of the original provision of the Constitution and the provisions of the law itself in promoting the prog- ress of the useful arts? I cannot entertain a doubi that those who have witnessed its operations must come to the conclusion that, what- ever its faults may have been, its advantages to the public have been immense and were never greater than at the present day. It has, as I believe, stimulated invention to a high degree. It has produced the most extraordinary and wonderful inventions in our own country which the world has ever seen. It has interwoven new inventions with every branch of our national Industries. During the first ten years of the existence of the patent law, only about two hundred and fifty patents were granted; at the present time something like 15,000 are granted in a year. They embrace every branch of human industry. They cover the whole field of our manufactures, and not of our manufactures alone, but of agriculture. It would not be possible today to raise a bushel of wheat in this country without tak- ing advantage of modern inventions. If the plow itself was not a patented plow, it yet would be a plow which embraced in the iron or steel used in its construction patented productions or the result of patented machinery. If, for the sake of the experiment, we discarded the plow for the more primitive spade, we should still find ourselves in the use of patented inventions. Turn whichever way we will, our daily life is beset, so to speak, with modern inventions. I remember when my mother was a spinner, and spun and wove .the cloth with which she clad her children. She walked backwards and forwards at her wheel, drawing out a thread of some two or three yards in length, and doing for a day's work an amount of travel which, I think, amounted to between three and four miles. Some little time since I was in a manufactory watching the operations of a boy tending a ma- chine which drew out 600 threads at a time, each of them longer than the threads which my mother drew, twisting them and winding them up on the spindle in less time than she could do it; and on inquiry I found that that was a machine of limited capacity ; that other machines existed which drew out 1,500 threads at once. Upon inquiry I became satisfied that it would not be extravagant to say that the value of human labor today in spinning was a thousand-fold what it was in my early days. Weaving has shared in the general progress, not, perhaps, quite to that extent, but still to such an extent that, as a domestic art, it has ceased to exist. Have we ever reflected upon the wonders involved in the production, at the present day, of a yard of cotton cloth ? The cot- ton must be raised. How much machinery is involved, except as it may be involved in the preparation of the soil, in planting the cotton. I do not know, but it is no sooner gathered than it is brought within the reach of some invention. Among the earliest of tliose of which the patent-law of this country keeps a record is Whitney's cotton-gin. At the very next stage of its progress it comes under the action of pat- ented machines for baling it. These bales, in their turn, are fastened by patent fasteners now in use, and which are deemed of such impor- tance that large manufiictory intereits .are involved in them. Jt is EFFECT OF PATENTS. 21 brought to our mills in the East for manufacture by railroads, the fruit of inventions of later years, and by steamships which did not exist at the commencement of this century. It finds its way to our mills to be taken from the cars into the mills by patent derricks, or elevators. It is cleansed by patented machinery ; it is spun by a whole long list of pat- ented inventions to reach its final form ; it is woven into cloth which numbers, it is a modest calculation to say, one hundred threads to the inch. I think the number is more than double that ; but even at that number we would find that the length of thread in a yard of cloth was more than seven thousand yards, and yet, when this length of thread has been twisted and woven, it is sold, it may be, for not over four cents a yard. At the several stages of its progress, it has passed under the influence of recent patented inventions. I stood, not long since, in a print shop where this cloth comes tO' receive its final finish by receiving upon its surface figures devised by artists of the highest character, giving to it a beauty which Solomon in all his glory could not command in his day, and I wondered at the amount of invention which was concentrated at the point where the roll which imprinted the figure, the cloth, and the chemical dye which imparted it were brought together. Along one line I traced this series of inventions which I have been describing, having reference to the pro- duction of cotton and weaving it into cloth. I went into an adjoining room and found artists engraving the rolls. I knew that these rolls were produced by improved processes, the result of chemical investigation and of mechanical invention such as the world was entirely ignorant of a few years previous. I found the artists engraving designs which were themselves the result of high artistic progress in their depart- ments. I watched the applications of the dyes, and I knew there was a long line of invention which had placed them within the reach of man, and a whole series of processes by which these designs of skilled artists could be imprinted on the cloth, which went out of the mills to be sold at seven or eight cents a yard. I could cite numerous examples of the same kind. Invention has given us the telegraph, a thing unknown a few years since. It has given us all the varied products of rubber, unheard of till within the life of all aged men now living. It has given us the reaper and the mowing- machine and the thrasher. Why, the very words that were used in agriculture in my boyhood now no longer have their original meaning. Heaping is not what it used to be. A reaper formerly was a man using a sickle ; it is now a machine. A thrasher is not a man using a flail ; it is a machine driven by a steam engine, devouring the grain on the Western fields faster than two teams can bring it from the field within their reach. I took occasion to say while I was in consultation with the gentlemen in Chicago that the papers the past season had been filled with the im- portance to this country of securing the European markets for the grain which was raised on the Western prairies. It was deemed a matter of national importance. The struggle was to be, whether this country or the fields of Kussia were to supply the demand for the manufacturing centers of Europe. There are three classes of men, I said to those gen- tlemen, who are especially interested in the progress of this national in- dustry. They are the farmers who raise the grain, the millers who grind it, and the railf'oads which transport it; and upon the progress of inven- tion which shall enable them to lay down a bushel of wheat or a barrel of flour at. our Eastern wharves at a few cents more or less, may depend our hold upon those vast markets. If there are any classes of men 22 ME. CHAUNCEY SMITH. to-day who are hostile to patents, it is just these three classes of men whom I have named as being most especially interested in this great branch of national industry. Let me turn wherever I will, I find simi- lar illustrations. Let me allude to one, because it is of historic interest. Adam Smith, in his "Wealth of Nations," refers to the manufacture of pins, as prac- ticed in his day, to illustrate the great advantages of the division of labor, and tells us that there were eighteen operations to be performed in the manufacture of pins. Generally they were each performed by a single individual, but sometimes, where the number of workmen was not sufficiently large, one individual at different times performed different operations. He had seen, he said, an establishment where ten men were engaged in manufacturing pins. They were able, by the great skill whicl) they had acquired, to make twelve pounds of pins in a day, and as each pound, he said, contains on an average four thousand pins, the product of a day's labor was forty-eight thousand pins, where, without this advantage derived from the division of labor, ten men would not, perhaps, have been able to produce over twenty pins each a day. All that is changed now. In a room not much larger than this, a short time since, I saw forty machines at work, not much larger than sewing-machines. They were in the charge of four men, who kept them in repair, supplied them with material, and took away their product. That was all they had to do, and when the material was once fed to the machines the ma- chine went on doing its duty with more precision than it would if it had been a living person. Each machine was turning out pins at the rate of 160 a minute, and thus the establishment was producing pins at the rate of about four millions a da.y. Nothing remained to be done with the pins after tliey left the machine except to treat them chemically for the purpose of coloring them and to stick them on papers. Strange as it may seem, it cost more to put them on papers than to make fchem. Invention, I believe, has changed that, so that now pins are stuck on the papers without the aid of human fingers. And, most wonderful of all, these pins, cut from wire, pointed, headed, colored, and put on papers, with all the expense attending their sale, were sold fof between 3 and 4 cents per pound more than the wire cost out of which they were made. Pins themselves are of comparatively modern invention. I be- lieve Queen Elizabeth did not have them. Who would dispense with them now? They enter into our daily habits, so that it would be re- garded a deprivation to be without them ; and yet a little addition to their cost would place them beyond the reach of many persons. Now they are so cheap that nobody can afford to be economical of them. Within a few years there has been a form of pin invented for the benefit of the infant portion of the community, a toilet pin which pro- tects the point. It is a wire pointed at one end and cunningly twisted, so that one end serves as a shield for the pqjnt of the pin. It was pointed out to an English lady at our Patent OfiQce as one of the most interesting inventions that we had to present. Why was it not invented long before ? It waited three hundred years before getting itself in- vented after pins were introduced. No one would imagine it involved invention, and yet, though the need always existed, it was not until some happy thought brought it to the mind of some lucky inventor that it was brought to the world ; and no person now would think of dis- pensing with it. Shall I pass over the various modifications — the various inventions of comparatively a trifling character — and come to one which I think will be deemed the wonder of the world, which even now is exciting the EFFECT OF PATENTS. 23 wouder, not merely of those who do not understand it, bat even more, the wonder of those who believe they understand it. You have all heard of the telephone, recently introduced, by which, Mr. Chairman, I believe that if you had the communication established you could talk with your friends in San Francisco as readily and, as easily as I now talk with you. If I was called upon to produce evidence that this invention was due directly to the influence of the patent laws, I have a witness here whom I could put upon the stand to testify to you that, knowing its history, he knew well that Mr. Bell at least would never have invented that device, that wonderful contrivance, unless it had been for the hope that through the patent law he would reap a rich reward for his devotion to this invention. Some years ago I appeared before a committee of the House upon a matter connected with the telegraph. The president of the Western Union Telegraph Company was there opposing the measure which I had either the honor or misfortune to advocate. I was endeavoring to im- press upon the committee the conviction that our telegraph communi- cations might be greatly improved ; that there were inventions lying in the land, unused by the Western [Jnion Company, which would enable them to perform that service for the country for less than half what it was done for then. I was asked what these inventions were. I enu- merated several. My friend Mr. Hubbard, here present, will remember that I mentioned among others the duplex telegraph, a device by which messages are sent at the same time over the same wire in opposite directions, or, if need be, two sets of messages in the same direction. Tou should have seen the look of incredulity which passed over the faces of the members when I stated that this could be done; you should have seen the smile of contempt on the face of Mr. Orton as he referred to inventors. I said, " Mr. Orton, you ought, I think, to know, but apparently you do not know, that this invention has been in daily use between Boston and New York for six months ; it is only because a man, who has made an improvement in the invention in the hope of the reward which will come from it, is himself the president of a weak tele- graph company, and he is able to maintain the field as a competitor with you only by means of this invention." Mr. Orton left the room, as I have been assured, with the determina- tion that he would not rest until he had possessed himself of that inven- tion ; and he did obtain it, and now, today, spread all over the land, are machines in operation which not only send double messages, but which send quadruple messages over the wires; and this great controversy in ISew York a few weeks since between the two rivals was based upon the desire of each to possess the advantages of that invention. Shall any one say to me that inventions would be made if there were no patent laws? Why are the inventors so ready to come forward and take the advantages of the patent law unless they make their inventions in view of the protection they afford ? Any gentleman who has practiced long with inventors knows that no contracts are more common than those which have reference to future inventions where parties stipulate, on the one hand the inventor and the other hand the man possessed with means, that the inventor shall set himself to work to evolve an inven- tion which is to be the joint property of the two. Would such contracts «ver be made if the patent law was not in force ? If this day there should be a change in the Constitution which should give to Congress the power, not to promote the useful arts, but to retard and hinder them, and Congress was called upon to carry out that provision of the Con- stitution, what would be its first step except to repeal the patent law 1 24 MK. CHAUNCEY SMITH, "What else would it be necessary to do? Would not every one instinct- ively feel that except for the stimulus of patent law there would be no need to^uvoke any legislation to retard and destroy inventions? You need not impose a penalty on a man for making au invention. Take away from him the hope of reward, and the trouble and labor and expense of making inventions will be quite suflfieient to prevent anybody from making them. I afflrm, therefore, that if it is a desirable thing to promote the progress of the useful arts, it is a necessary and indis- pensable thing to provide a patent law which shall, afford protection to inventors ; and not to them alone — hardly to them primarily — but to those who are called upon when inventions are made to invest the ne- cessary capital to bring them out and demonstrate their value. This is one of the most important functions of the patent law; for, except for this, inventions might lie around you as thick as hoar-frost in an autumn morning, and people would not invest the money required and take the risks which they have to incur if they knew the fruits would be seized by their neighbors the next day, and they should have to go into competition loaded with the weight of the expenditure which had been necessary in order to bring the inventions before the public. Not alone for the inventor does the patent law exist; not alone for the manufacturer or the capitalist, but primarily for the country ; but for the country only through and by the influence and the protection which the patent law has upon and gives to the men of genius and the men of capital. Look at the history of Canada. She started into the race with us and other countries under the belief that she could take inven- tions of other countries, and especially of her inventive neighbor at the south, without paying for them. - She made provisions for protecting her own inventors, but no foreigner could take the benefit of the patent law in Canada, if I understand it right. The inventions would not go- there. The inventions which were made here and proved to be profit- able could not be transported to Canada, because nobody would take the risk and be subject to the free competition of a man who spent no money upon them ; consequently their system was changed, and our inventors have the Canadian field, and now are this day going there with their inventions simply because the introduction of them is attended with the hope of reward. How many of our industries have grown up to a magnitude which makes them important far beyond what I have said. We are seizing the watch manufacture of the world. Switzerland went home from here last year in dismay at the prospect that this industry of hers would be swept from her hands. Her commissioners went home to recommend the establishment of a patent law. I know of no more striking illustration of what can be reached in the progress of time by the continued eftbrts of inventors than this very matter of the watch and clock manufacture. Go down through the streets of this city — or any other city, I suppose, in this country — and yon will find in their shop-windows, at any time, bushels — I use the term not extravagantly — bushels of a little cheap clock, which will keep good time, which is tasteful in its appearance, and serves all the purposes of the domestic clock; and you can buy it for $1.25. One other illustration, Mr. Chairman, and I will leave this subject. We all know that engineering has received an accession to its powers ■within a few years which seems to enable it to defy all obstacles which nature may interpose in its path. Its additional power has been gained through two important inventions ; one is the steam-drill, the other is nitro-glycerine. One of them struggled into existence. It received its EFFECT OF PATENTS. 25 full development in the work attending the Hoosac Tunnel. A steam- drill, it is true, had been introduced in the Mont Oenis Tunnel. It was an exceedingly expensive instrument to use, and has been entirely sup- planted by what is now known as the "Burleigh drill." When 1 was called upon some years since to investigate the invention involved in that drill, I found that there were almost a hundred, certainly scores, of men who had attempted to occupy that field, but the attempt had not been successfully attained until the time I indicate — during the prog- ress of the work on the Hoosac Tunnel. When it was accomplished, the invention was so simple that you could hardly lay your hand upon the feature which distinguished Burleigh's drill from all the fruitless efforts which had been made before. But now it enables us to pierce mountains which human power would never have dreamed of. It opens to us at far less cost the boundless resources of the Western mountains. ]S"ot by that alone, however, for alongside of it is the invention of nitro- glycerine, which, when it was discovered a few years ago, was looked upon as so dangerous to human life that it would be impossible to train it to the service of man. It seemed to be created by nature for no other purpose than to fill the world with alarm. It has now become as harmless as a little child at play until it is called upon to perform its work ;' and it does it then with a power which human imagination had no conception of until this agent was introduced. 4 I had placed upon the sheet of paper before me a variety of other illustrations, and I think those that I have named are by no means the most marked. They are, however, I believe, those in which you can trace most directly and emphatically the influence of the patent law. I am perfectly well assured that Mr. Burleigh would never have invented the Burleigh drill unless he had hoped for a reward through the work- ing of the patent law; for he had not got the invention onto paper, even, before he started for Washington to secure his patent. I will now ask the attention of the committee to the special provisions of the bill. I am reminded that I omitted to state, in giving the history of this bill, that some of its provisions were planned and presented by the mem- bers of the Patent Bar Association, relating particularly and especially to the practice of the Patent Office; and others who were associated with us and myself limited our labor principally to provisions relating to the administration of the law after patents are issued. As I proceed I will call attention to some of those provisions. It may seem strange, Mr. Chairman, yet the fact is so, that there is no statute of limitation which bars the right of action on suits for the infringement of a patent. This omission probably has arisen from the fact that the law of the United States does not provide statutes of lim- itation except under the general provision which places actions in the Federal courts under the law of the State courts in that particular. There has been some conflict of decisions in the courts as to whether the statutes of the several States in relation to limitations of actions gen- erally would apply to the actions for the infringement of a patent; most of the decisions, I think, however, have been adverse to the application of these laws. I think it must be taken, therefore, that there is no sta - ute of limitations applicable to it. The bill which was presented here last year provided that no recov- ery should be had in actions for an infringement of a patent for more than one year prior to the giving of a notice of infringement. I sug- g^ted in the hearing before the committee at the last session that that, in the first place, was inadequate to cut off the right of action, because 26 KK. CHAinrcEY smith. it'could be preserved by giving notice; and if notice had been given, no length of time was interposed as a bar to the action. I suggested, too, that, in my judgment, an evil would arise from that of very serious mag- nitude, and that was, that parties having a right of action, or thinking they might have a right of action, would feel it necessary to give notice universally. That, of itself, is a matter which is attended with consid- erable injury sometimes, because a claim that a right of action exists for infringement is necessarily an uncertain one, and people often find themselves embarrassed in their business who are innocent infringers, if infringers at all, by the influence which such notices have upon the will- ingness of people to trade with them. I suggested then that the true remedy was a statute of limitations, and the first section of this bill, that 1 have tjie honor to call the atten- tion of the committee to, is a statute of limitations. It provides that no damages shall be recovered for a period of more than four years prior to the bringing of the suit. There has been a general expression of opinion so far as I know, or have been able to learn, that there should be some statute of limitations provided. There has been a considerable difference of opinion as to what the true limit should be. Some have thought that it should be six years from the expiration of the patent, "which would carry it over a period of twenty-three years. Others have thought that" the right of action should expire with the patent. Some gentlemen have suggested that it should either be shorter than four years or as long as six. Some find the principle by which they thought it should be governed in the analogy of actions upon contract, which usually run for six years. Others think it should be treated more in the nature of a tort; and in this case the statute is generally shorten Legally, an infringement of a patent is a tort, and it would naturally, if mere names were to be observed, fall under the shorter limitatidn. We have thought that there are good reasons why there should not be a very short period of limitation, because the length of time which is requisite to bring a suit on a patent.to a hearing for the purpose of test- ing the validity of the patent is necessarily long, occupying two or three years before the circuit court, sometimes longer; and if it goes to the Supreme Court, generally from three to five years. It seemed wise then, it seemed judicious, to give such a length of time as would ena- ble the patentee to bring his suit to test the validity of his invention without the necessity of bringing a multitude of suits in order to pre- serve his right of action ; and thinking that generally it might be as- sumed that that question might be determined in four years, we have suggested that as the proper time. In order, however, to give a party the right without unnecessary ex- pense to preserve his rights of action by bringing a suit, we have intro- duced a proviso giving the courts power, whenever the bringing of a suit becomes necessary, to suspend the progress of all others while one «uit is going forward in good faith to test the questions at issue, thus giving a party the power to protect his rights without subjecting either plaintiffs or defendants to the expense which attends the prosecution of •a suit to final judgment. The last proviso is one which relates to causes of action now in ex- istence, upon which I suppose I need not spend time. Senator Morgan. It has occurred to me that there should be an ex- ception incorporated in the first section ; and that is, to limit the opera- tions of the bar in the statute to those persons using such patent for their personal account, and not for the sale of the invention or the manufac- ture of patented machines or parts of machines for sale. Probably a SEC. l: LIMITATIONS. 27 person ought not to be held liable to account for damages who had been using the patent in good faith upon dis own account and in his own Ijusiness ; bat if he had been engaged in speculation he ought not to be entitled to the benefit of that statute. I think there ought to be an ex- ception as to that class of persons who have willfully and for profit invaded the rights of the patentee. Mr. Smith. I can only say, iu respect to that, that I think, if the issue of good faith were presented, it would be a difficult issue to try, and one which would be claimed to exist in all cases ; and that no person ever infringes a patent or does any other thing in the ordinary course of business except for profit. Senator Morgan. My question is not one of good faith, but for per- sonal use and personal advantage, without sale or attempt to derive profit by sale of the manufactured patented machines or parts of a machine. Mr. Smith. I suppose your objection relates to the use of the ma- chines, like the mowing-machine or the reaper, and alludes to such a case as the purchase by a farmer without any knowledge. Senator Morgan. Where a man in California or Oregon has invented a machine, patents and introduces it there, has capital to carry it on there, and another party in Georgia or some other distant point, Maine, for instance, becomes furnished with the information which enables him to manufacture such machines, and he does so, and disposes of them along the Atlantic coast, that man ought to be punished, of course, for his invasion of the rights of the patentee; whereas, if such a person were to use a patent unwittingly, I may say, while he violates the patent rights of the inventor, he uses it for his own purposes. Senator Wadleigh. Your idea is that this first section should apply to cases where a man makes a personal use of the thing, but not to a case where he manufactures for profit — that there should be a longer limitation, if anything? Senator Morgan. It ought to be an exception. Mr. Smith. That there should be no right of action agaiust the party for personal use ? Senator Morgan. 'No; limit it to four years against tiiat person, but increase the length of the bar against the person who uses it for profit. Mr. Smith. I think that is a suggestion which is deserving of con- sideration ; though it does not strike me as practical to apply it in such a way as will not subject the users of machines, if there is a short bar, to the necessity of being sued in order to preserve the rights of action ; and it has been one part of our effort to place the rule so that litigation may be rendered unnecessary to as large an extent as possible. I am, however, very glad of the suggestion. Senator Wadlbigh. Your view is that if the owner of the patent allows it to go into use by parties who have purchased of those who have manufactured for profit, thereby the plaintiff is foreclosed from bringing a suit against them 1 ,Mr. Smith. I do not understand that that is the suggestion. The suggestion is that if parties who purchase machines or use inventions themselves are liable to be sued, and must be sued, say within one year, the necessity for bringing suits against them will be greatly in- creased, because parties will not allow their rights to expire or become barred when they know of them ; whereas, under the longer statute of limitations, the question at issue may be decided in one suit, and will serve as a guide in the settlement and disposal of other causes after- ward. 28 MR. A. H. WALKER. Senator Wadleigh. Senator Morgan is not disposed to shorten the time at all. Senator Morgan. I am satisfied with the four years. I have never seen a statute that was not liable to some exceptions. In the course of judicial investigations exceptions are grafted upon them. Mr. Smith. There are some cases where there would be some neces- sity for a longer provision. There are classes of cases where some in- justice would be done if limited to four years. I had not thought of that method of meeting with the objection ; and if it should be deemed advisable, I certainly do not at present see any reason for objecting to it. If the committee will pardon me, I will now yield to other gentle- men, resuming my remarks hereafter. AEGUMENT OF A, H. WALKEK, Esq. Gentlemen oe the Committee : I was much pleased with the elo- quent eulogy Mr. Smith pronounced upon the patent law as it now stands. He delivered the encomium ; I will apply it. I will do so by urging the committee to change the law with great caution, lest, ac- cording to the old fable, it kill the goose that laid the golden eggs. My remarks will be confined wholly to the second section of the pro- posed act. In order to its proper understanding, I will review the law as it now exists. There are at present two methods, in either of which a patentee may proceed to enforce a money recovery for the infringe- ment of his patent. He may proceed at law and recover " damages," i. e., what he has lost by reason of the infringement, or he may proceed in equity and recover the infringer's ^'■profits," i. e., what the infringer has gained by his wrongful acts. These remedies are based on wholly different theories ; the first being an action of trespass on the case, and the other a bill in equity based on the idea that the infringer is a constructive trustee de son tort for the benefit of the patentee as to whatever gain the former has derived from the infringement. They are also adapted, each, to a different class of patents. The value of a patent on a bed, for example, consists wholly in making and selling it. These things can be done by one man about as well as by another, and therefore, in such cases, the recovery of '■^dam- ages" is an adequate remedy. The hot air blast is an example of a patent the value of which, on the other hand, consists wholly in its use. Formerly blast-furnaces were fed only with cold air. Afterward it was discovered that by simply intro- ducing hot air into the furnace a superior quality of iron could be pro- duced. That invention was patented. There was no particular ma- chinery by which hot air could be produced, but the hot-air process was patented. Now, in that kind of invention the monopoly consisted wholly in the use, and could not at all consist in the making and selling, because nothing could be made which could be patented, but it was simply the use that constituted the value of the patent. I fancy the time will come when the locomotives will be run by water instead of coal. Water is the most combustible thing in the world ; hydrogen being very inflammable, and oxygen being the great sustainer of combustion. The problem is merely to separate the two gases. When our coal-fields are exhausted, I fancy our engines will be propelled by the combustion of water; and I presume when that invention is perfected^ SEC. 2: PROFITS. 29 it will bft analogous to the hot-air blast. It will consist in some simple application of a previously well-known means, and not in the invention of machinery. If my conjecture proves to be correct, the value of that invention will consist only in its use ; not in making and selling of machinery. Now, su{)pose I should happen to be the inventor of that wonderful thing, and all the world, seeing that water is cheaper than coal, use it, and the railroad running from Baltimore to Philadelphia says, " We will not get a license, but we will go on and use it, and see whether Walker will make us pay." That thing is constantly done by railroads in using inventions. Suppose I sue the railroad company running from Balti- more to Philadelphia at law for damages, they put in a plea that they have not injured me at all by the use of the invention. Why ? Because if they had not used water to run their locomotives they would have used coal, and if they had not used water or coal, I could not have run the locomotives over the road. They have not deprived me of anything I would otherwise have had, and therefore, when I sue at law, I recover nothing. But it is not for the benefit of the user of the patent that the Government of the United States has conferred the exclusive privilege of it; and here that privi- lege is taken away from me and conferred upon the railroad company. The benefit inures to the railroad, and I am not to be rewarded in any manner for that invention, merely because I could not use the inven- tion if they had not used it. In such a case my only remedy consists in the fact that a trust exists in behalf of the inventor, and the Supreme Court has held the doctrine that the user of the patent is a trustee for the benefit of the owner of the patent, and whatever money the former de- rives from the use of that invention, be it more or less, he holds as such trustee, and is bound to pay that money over to the owner of the patent. That is the doctrine of equity. In 1870 a statute was enacted by Con- gress in which this distinction between the recovery of damages and the recovery of profits was recognized. Congress enacted that, in addition to the profits heretofore recoverable in equity, the court, sitting on the chancery side, shall have power to give the recovery of the damages that the patentee has sutt'ered. That looks like a great injustice, in that it would give the patentee a double recovery; but the Supreme Ojurt of the United States in the case of Birdsali v. Goolidge, 3 ODto, 68, has construed that enactment to mean that the patentee might have in equity whichever one is largest, whether the profits or dunniges, and if it turns out on the hearing tliat the profits wljiich he would derive in equitj' are smaller in amount than the damages on the other side, the profits shall be increased by having added to them such proportion of the damages as is necessary to swell the aggregate amount of the damages he would bave recovered at law. Therefore, the construction which tlie Supreme C )urt has put on the act of 1870 removes every element of injustice, and that act provides noth- ing new except that the party may get damages in equiti/, and he is not forced to go on the other side of the court and file a declaration, but he gets the same kind of relief in equity that he formerly could get only by beginning a second suit. Senator Morgan. Is it the result in practice that these cases under that act go to courts of equity instead of law courts? Mr. Walker. Very largely. As the act is construed, it only produces a difference of tribunal, although upon a reading of the statute it seems to be grossly unjust. However, this bill does not propose any change in that law. Wtiat this bill proposes to do in the second section is to 30 ME. A. H. WALKER. abolish tlie recovery of profits altogether, and limit the recovery to the damages which the patentee has suffered. I am sure it will be seen that I am right in that when I call attention to the last clause of the second section before the proviso. There ar6 several complicated methods, not easy to be understood by anybody not an adei)t in such matters, by which the profits and damages are to be assessed in accordance with the provisions of this section, and then it says : "But if, in any case, it shall appear to the court that the damages or profits, ascertained as above, shall be inadequate to give the plaintiff a just compensation for the injury done by the infringement, or shall be in excess of such injury, the court shall have power to increase or diminish the amount to such an extent as may be just and reasonable." That means this: When, in accordance with the plan laid down in the first two paragraphs of that section, profits do haplpen to be assessed as profits, on the idea of trusteeship, now enforced by the Supreme Court of the United States and the circuit courts of the Uuited States, if it turns out that those profits amount to more than the damages that would be recoverable at law, they have to be reduced to the damages recover- able in law. Therefore the effect of the section is that the recovery of profits under the doctrine of trusteeship is abolished, and the only recov- ery is the exact amount of damages. ' ^ Now, suppose I should go on and invent my method of running steam- engines by water, and should sue the Baltimore and Ohio Road for in- fringing it. Under this bill I could not get anything more than a nom- inal recovery, because the bill abolishes the recovery of profits under the theory of trusteeship, and, whether I should proceed in equity or in law, all I could get would be damages. I cannot prove that I have been injured other than in a nominal way by reason of such infringement, and they will say, "We have not hurt you at all; we have not deprived you of anything because we have used this invention on our locomo- tives. The locomotives belong to us and you have no control over them, and you could not have used the invention on our road." The only remedy on any theory of " damages" is a license-fee in such cases. I could, indeed, refuse to allow these people to use my invention unless they gave me a license-fee, but, unfortunately for that measure of damages, license-fees can only be established by agreement between the infringers who use the patent and the patentee. The railroad com- panies have nothing to do except to refuse to establish the license-fee,. and they cut me off entirely from that only possible method of recovery under this bill. It seems to me to be very unjust, and contrary to the spirit of patent laws, to reward infringers, and deprive inventors of that reward which the Constitution of the United States supposes they are to have. This bill is a bill for the reward of torts, not of genius; for the encour- agement of wrong-doing, not the encouiagemeut of invention ; inasmuch as it takes away the lion's share of the benefit derivable from the vast proportion of the inventions made in this country, and confers that lion's, shaie upon the wrong-doer. It gives the patentee only a very small proportion of the benefit that is derived froui the use of his improvement during the life of the patent. It does that thing in all cases where the invention is of such a character that it can be used by the infringer more profitably than by the inventor. There is a large proportion of the patents granted by the United States which come under that category. The infringer may make twice as much money out of the use of an improvement as the inventor can, and in all such casts, under the doctrine of trusteeship, the recovery of SEC. 2: PEOFITS. 31 profits is twice as much as the recovery of damages ; and as this bill proposes to abolish the recovery of profits and confiQes the recovery solely to damages, in all such cases it confers upon the infringer the largest proportion of benefit arising from the patent. Senator Morgan. I suppose the gentlemen who prepared this bill had your argument in view when they inserted this clause : " The court shall have power to increase or diminish the amoanc to such an extent as may be just and reasonable." Mr. Walker. I do not know exactly what they meant by that lan- guage, but I understand they meant '-just and reasonable" in view of the damages to which the patentee was entitled, and not "just and rea- sonable" in view of the trusteeship relating to •profits. Senator Morgan. Does it not give to the chancellor power, in assess- ing the damages or profits, to regulate the assessment by his opinion of -what is "just and reasonable," either in the nature of profits or in the nature of damages? Is not that jurisdiction actually conferred by this clause in the bill? Mr. Walker. I have thought a good deal about that, and 1 believe no chancellor would take the responsibility of giving me profits on the theory of trusteeship. The bill is not expressed clearly. My idea is that chancellors are reluctant to exercise any discretion, and they do not do it unless it is clearly conferred; and therefore the practical construc- tion would be given to the act, by every court to the attention of which, it might be called, that they are to increase or diminish the assessment with reference to damages, and not at all with reference to this principle of trusteeship for profits. Senator Wadleigh. But the bill provides : " But if, in any case, it shall appear to the court that the damages or profits, ascertained as above, shall be inadequate to give the plaintifit' a just compensation for the injury done by the infringement, or shall be in excess of such injury, the court shall have power to increase or dimin- ish the amount to such an extent as may be just and reasonable." Mr. Walker. "Just and reasonable" with reference, as I apprehend, to the idea of damages. If it turn out on trial that the damages shall amount to $1,000 and the profits to $10,000, and I have proved up my profits at $10,000, the defendant will say, "Your honor will please exer- cise the discretion conferred by this act and reduce the $10,000 down to $1,000, inasmuch as the $1,000 represents the damage which the pat- entee has suffered," and he will insist that that is the true construction of the law. I hope the committee, whatever it does, will express itself clearly, because there is nothing more vexatious and troublesome than the construction of an act the meaning of which cannot be known for many J ears. It is my deliberate opinion that the courts would hold that the discretion conferred is to reduce the assessment down to dam- ages, and that the just and reasonable thing contemplated by the bill is the just and reasonable damages, and that it has no reference at all to profits. Senator Morgan. As the words "damages "and "profits" are only divided by the difsjuuctive conjunction "or," which is copulative in this connection, the meaning in that case is plain. " But if, in any case, it shall appear to tlie court that the damages or profits, ascertained as above," &e. And in either case, whether damages or profits, "the court shall have power to increase or diminish the amount to such an extent as may be just and reasonable. Mr. Walker. Just and reasonable, to make it conform to the idea of the injury. 32 ME. A. H. WALKEE. Senator WADLEian. Just and reasonable under all the apparent cir- cumstances. Senator Mokgan. Just and reasonable as to the damages or profits. I do not see any obscurity. Mr. Walkee. My idea of the law is this : Whenever you figure it on the theory sdf profits or damages and it turns out that the latter amount is more than enough to compensate the patentee for the injury he has suffered, the court has the discretion to reduce it down to the amount of injury he has suffered. Senator Chaffee. The clause says, "damages or profits." Mr. Walkee. Certainly, "damages or profits," but the fore part of the section provides for assessing damages and assessing profits. Now, the bill goes on to provide that, when the whole thing is figured up, the equity account shall be reduced to reasonable compensation, and com- pensation means damages and not profits, on the theory of trusteeship." However, the committee undoubtedly will be able to draught the bill so as to express it clearly. Very likely I am wrong about it, but it is clear to my mind that no bill ought to be enacted which abolishes the recovery of profits, because when the recovery of profits is abolished, in every case applying to inventions of such a character that they can be more profitably used by the infringer than by the inventor, the result of the abolition of the recovery of profits is that the infringer will have three-quarters or nine-tenths of all the advantages of the invention, in exact contravention of the theory of the patent law, which proposes to confer the advantages upon the inventor' aud his assignees. Senator Wadlbigh. Take the railroad-brake. Mr. Walkee. That is an illustration. Senator Wadleigh. In that case it was estimated that the invention, which was a very simple one indeed, under the law in reference ta tak- ing the amount of profits as the basis of compensation, was worth sixty millions of dollars. Mr. Walkee. That was a grossly exaggerated estimate. Senator Wadleigh. Suppose it was true 1 Mr. Walkee, I will argue that. Suppose it was true. Suppose the damages that would be recoverable on the theory of a license, or any other theory of damages, would amount to $100,000 instead of $60,000,000 (and, in point of fact, for many years the railroad companies did reap $60,000,000 from the invention), this bill says the patentee shall recover the $100,000, and that the infringers shall keep all the balance. Senator Wadleigh. The bill says that the patentee shall recover stich amount as the court shall deem just and reasonable, taking into view not only the injury, but the profits derived from the invention. Mr. Wai.kee. I wish the bill said that. I cannot find it. Senator Chaffee. In the fore part it says: "The measure of the plaintiff's damages shall be the same, both at law and in equity, and no account of profits or savings shall be allowed." Senator Moegan. That is in regard to the license-fee. Mr. Walkee. The license fee is applied by the bill to all cases, like the use of water as a fuel and the use of the brake. This bill provides that where the invention is of such a nature that the inventor desires to license other parties to use it, owing to the fact that he is not in a sit- uation to use it all himself, under such circumstances, both in law and in equity, no profits shall be allowed at all. Senator Chaffee made the correct remark in that regard, that in all such circumstances no recov- ery of the profits could be allowed at all according to the bill. With regard to the invention of the future, thw burning of water in- SEC. 2 : PROFITS 33 stead of coal, no jiroflts could under any circumstances be allowed to the patentee at all, but be would be remitted to his license-fee, if he could persuade enough railroad companies to establish a license-fee; and if not, the jury would have to assess, according to this bill, compensa- tion for the injury that the patentee had received ; and in making that assessment they would be precluded by the very language of the bill from taking Into consideration at all the benefit the infringers had de- rived from the use of the patented improvement. The Chaieman. Your position, as I understand it, is that the law should now stand as it is, as construed by the Supreme Court ? Mr. Walker. Yes, sir. The Chairman. And that it needs no alteration ? Mr. Walker. And that it needs no alteration. Senator Morgan. Is it altered by this bill ? Mr. Walker. O, most materially. Senator Morgan. In what particular 1 Senator Wadleigh. It is altered in this respect. As the law now is, it gives the inventor either profits or damages, whichever may be largest. Senator Morgan. I understand that it gives the inventor the elec- tion. Senator Wadleigh. But in this case, whichever may be the largest, he cannot have that as the measure of his compensation unless the court determine that under the circumstances it is just and reasonable. Senator Morgan. The court always has that substantially under its charge by its power to grant a new trial. They cannot impose enor- mous damages on the conscience of the court merely by the fact that the jury found it so. and the court may make a new decree. The power of granting a new trial being brought to the attention of the court, the proper relief may be obtained without difficulty. Iklr. Walker. But these profits are never recoverable by jury, and therefore the power of granting a new trial would not exist at all. Senator Wadleigh. In reference to the first clause of the second section, so far as that relates to license, I suppose you understand it to apply only to cases where the licence granted has been granted where the transaction is one where the inventor understands he is getting about wtiat is right for the use of his invention. Then you could not take a case and bring it in to show the transaction as the establishment of a license-fee where the license had been granted mainly or partially for the purpose of giving the inventor the use. Mr. Walker. I think if there were enough cases of the latter kind they would establish a license-fee under the rule of the courts. Senator Wadleigh. You do not understand the granting of license for the purpose of getting the invention into use, but it would furnish evidence as to what license-fee should be in this case. Mr. Walker. I think they might, because this section says if the license-fee has been established, that shall be the measure of compen- sation. Senator Wadleigh. But if the license-fee has already been estab- lished by a reasonable number of transactions of a character applicable to the case at bar, that would be sufficient. Now, would not that clause " of a character applicable to the case at bar," prevent a transaction where a license was granted simply or mainly to get the invention into use ? Mr. Walker. Yes ; it would prevent that. That hardship would not result, but it is true, gentlemen of the committee, that inventors in the early years of their monopoly are often ignorant of the real value of their inventions. It is frequently far more valuable than they suppose, and S. Mis. 50 3 34 MK. WALKEB. very often they grant licenses for a very small fraction indeed of the real value of the invention. This bill provides that if they have granted a moderate number of licenses, according to the law as it now stands in reference to the establishment of a license-fee, that thereafter that shall be the sole measure of recovery, and if it turns out that the infringers make ten times as much as they supposed they would make or as the inventor supposed they would make, he shall be confined to what in the early days of the patent he, with their concurrence, agreed as the amount he was willing to receive, and that they shall pocket the bal- ance. Mr. Smith. What do yon understand the law to be now ? Mr. Walkek. I understand that under some circumstances the license- fee can be changed from time to time, but that the power to change the license-fee from time to time does not enable the patentee to fix a license- fee adequate to the value of the invention in cases where the invention can be used far more profitably by the infringer than it can be used by him. The courts have understood for twenty-five or thirty years, and under- stood very well, that damages cannot be made to conform in amount to the profits recoverable on the theory of trusteeship. In the case of Liv- ingston V. Woodward the question was illustrated. That was the first case in which any recovery of money for the infringement of a patent was had in equity, and there the elective principles were hinted at. In 2 Otto, 716, and 3 Otto, 68, Justice Miller and Justice Clifford have fully explained the philosophy of elective recoveries. I think no lawyer will dispute this proposition, that if it is deemed desirable that the infringer should pay to the inventor whatever benefit he has derived, it cannot be brought about with any degree of uniformity except by the doctrine of trusteeship, owing to the fact that, unlike other kinds of personal property, the patent is frequently of more value to one man than to another. A horse may be worth a hun- dred dollars to me, and it may be worth a hundred dollars to my brother Smith. My patent may be worth a hundred dollars to me, and a thoa- sand dollars to him. Shall he take away and pocket the $900, in exact contravention of the philosophy of the patent law which conferred upon me the exclusive heneflit of my invention for a limited time? That gross injustice can only be prevented by allowing the courts of equity to proceed as they have done and to say to Brother Smith, "You have made a thousand dollars by the use of Mr. Walker's property, and if he chooses to treat you as a trustee and ask you to pay over that thousand dollars, without inteirest, you cannot com plain." There is a. particular injustice in reference to this matter when rights of action have already accrued. It is well settled that rights of action that are vested are as much property as tangible property is. If anybody disputes that proposition, Cooley on Constitutional Limitations will disabuse his mind. Several of my clients have a number of valu- able improvements in locomotives and various improvements in rail- roads. Those improvements have been infringed fifteen or twenty years by the railroad companies. The rights of action for infringers' profits have accrued. We file bills, and ask them to pay over the amount of profit derived. Our rights of action have vested ; they are as much property as any other kind of property, the only difference being it is in the tortuous possession of another party. It is held in trust by the parties who derived the profit by means of their own wrong- doing, and I have now only to sue in equity to force them to pay it over to my clients. This bill puts a stop to that, and says that the remedy SEC. 2: PROFITS. 35 of a bill in equity shall be no longer at our disposal for the recovery of that property. The fifth amendment of the Constitution provides that " no person shall be deprived of property without due process of law." I say my clients' property cannot be divested, whether it be a chose in action or a thing in possession, by an act of Congress ; and if it cannot be divested by act of Congress, then, inasmuch as this bill refers to our actions which have already accrued as well as those hereafter to accrue, it is obnoxious to the fifth amendment to the Constitution of the United States, which provides that they shall not be deprived of property with- out due process of law. Senator Morgan. I suppose you would want to aitiend the last pro- viso by inserting that " the provisions of this act shall not apply in nny case to any right of action under existing laws." Mr. Walker. That is it exactly, and that is all the amendtnent I have to suggest, " that the provisions of this section shall not apply in any case in which the right of action has already accrued." Senator Morgan. What do you consider the meaning of the words in the twenty-third line of the second section, " capital and personal services excepted ?" Mr. Walker. I understand that was intended by Brother Smith to meet what he deems to be an unjust decision of the Supreme Court in the case of 3Iev8 v. Conover, in 4 Otto. That was a patent for sawing wood. It turned out that the man who infringed the patent and sawed wood lost money, but the Supreme Court held that he would have lo8t> 50 cents per cord more if he had not infringed the patent, and therefore he had to pay over the difference. I understand that the whole clause was intended to meet the doctrine laid down by the Supreme Court in that case. Mr. Smith. That particular clause was intended to place the rule exactly where the law now is, that the infringer of a patent is not to be allowed for the use of his capital and personal services. Mr. Walker. Mr. Smith would be far more competent to explain what he meant by this language than I, but evidently it has no connec- tion with the argument I am making, viz, that where rights of actions for profits on the theory of trusteeship have accrued, this bill, as far as it acts on those rights of action, is in contravention of the fifth amend- ment of the Constitution of the United States. It is an act of confisca- tion. It says, " Because you have not your money in your pocket, but it is in the hands of parties who ought to pay it over to you, and you can only get it by certain proceedings in equity, we will confiscate it by depriving you of the only remedy you have to obtain it." It is frequently said that Congress could do anything so long as it did not interfere with rights by name, and that only when they take away property by name do they violate the fifth amendment ; but the Supreme Court has twice, and perhaps oftener, stated that whenever the law-making power passes a law which in any manner abridges the remedy existing prior to the passage of that law for the recovery of prop- erty or rights, it is as much in contravention of the fifth amendment of the Constitution as though it took away the right by name. I will furnish the committee with the reference to the cases in which that is decided. This, then, is my argument in reference to rights of actions hereto- fore accrued. If anybody has infringed my patent, all the benefit he has derived from the use of that patent iamy property in his possession, and I have only to file a bill in equity to make him pay over to me that 36 ME. WALKEE. exact sum, and that without any regard whatever to the amount of in- jury I have received. That is the explicit declaration of the Supreme Court, and it has been the law for a great many years. I say, under the circumstances, my clients have a right at this moment (a good many suits are already begun) to recover these profits that belong to them according to law. But now this bill comes in and says, " You shall not have your remedy for recovering those profits at all ; you can sue them at law and get damages, which is an entirely different thing, but you will have no remedy in equity to recover those profits.^^ I say, inasmuch as it takes away the remedy, it takes away the right as much as though it took away the right by name, and I can furnish the members of the committee , with ample authorities to substantiate that doctrine. Therefore I say the bill ought to be amended, if it is desirable to pass a constitutional law, and one that will undergo the scrutiny of the courts, in precisely the form that Senator Morgan suggests. Senator Wadleigh. Your idea is that a man's right to his invention is iirecisely the saiiie as his right to his horse, or any other property belonging to him % Mr. Walker. I would so hold if I had time to argue the question. Senator Wadleigh. Is there not this distinction : While a man has a right to put his horse into his own barn, and not use it himself, he has no right to lock up his invention and let nobody use it. It is his duty to let his invention go out to the world. Mr. Walkbe. He has no such duty with reference to the period of his monopoly at all. The only duty he has is to spijead the description of the invention on the records of the Patent Office, so that after the monopoly has expired, whether it be in fourteen, or seventeen, or twenty-one years, it will be free to the world. He has no duty to pub- lish that invention, or introduce it during the life of the monopoly ; and if he chooses to let it lie as useless, there is no law or reason why he shall not be permitted to do so. Senator Wadleigh. Suppose, for instance, a foreign inventor comes here from a foreign country, and he procures a patent for an invention which materiallj affects the cost of important manufactures. He pro- cures that patent in this country for the benefit of his manufactories abroad, and, for reasons which he sees fit to act upon, he does not allow any one in this country to use his invention at all, but lets it be used for the benefit of Ibreign countries entirely. Mr. Walkee. I understand such a hardship as that ought to be guarded against l)y refusing such a man a patent. Senator Wadleigh. The Patent Office cannot divine what his inten- tion is and know what he is going to do with it. Mr. Walker. That is purely a theoretical case. Ko inventor or patentee ever does that thing. The theory of the law is that during the life of the monopoly, which is limited, the patentee may do whatever he chooses with his property, and after that period it is free to the world. There is no decision of the courts, and no language that can be quoted from any statute, \jvhich confers upon the inventor anything like a quali- fied property in hi!^ patent during the life of the monopoly. As I under- istand the theory of the law, it is his absolute property during the life of tlie monopoly and is not qualified. Indeed, that is the language of the Ounstitution itself, viz, that the right is exclusive. If he is bound to sell that property at reasonable prices, it would not be exclusive; and whether Congress could include the less in the greater and make a modified monopoly, and base it upon the exclusive direction of the Con- SEC. 2: SHOULD NOT RETRO ACT. 37 stitutioD, certainly Congress has not done so. The Constitution pro- vides that the patentee shall have the exclusive right to his invention for a limited time, and, in conformity, Congress has enacted a series of laws conferring the exchisive right upon the patentee. No law can be pointed out which makes it not exclusive. This bill may be said by some persons to be doing a wise thing in making it a modified and qualified right. Perhaps it may be said that it would be a wise thing if the Con- stitution were changed ; but, at the present, the Constitution says Con- gress may protect patentees by conferring an exclusive privilege upon them ; and, in conformity with the Constitution, exclusive privileges have been conferred. I say when , under those exclusive privileges, rights of action have accrued, and are therefore perfectly vested property as much as anythinq is property, the members of this committee will see, if they read page 362 of Cooley on Constitutional Limitations, that they have no right to interfere with it. But this bill comes in and deprives us of those rights of action, and, therefore, deprives us of our property, and is therefore in contravention of the fifth amendment of the Con- stitution. Senator Morgan. What part of the fifth amendment? Mr. Walker. That no person " shall be deprived of * * property * * without due process of law." Senator Morgan. That relates to the methods of procedure; but is there any prohibition on the power of Congress to take from any man the benefits of what you call a vested right under law ? Mr. Walker. In the case of Barron v. The City of Baltimore, 7 Peters, that precise point came within the decision of the Supreme Court, and Chief-Justice Marshall held that that amendment was enacted as a restraint on the law-making power of Congress. Senator Morgan. With reference to rights under contract ? Mr. Walker. With reference to any matters referred to in the fifth amendment. Senator Morgan. As to taking a man's property without due process of law ? Mr. Walker. Without due process of law. Senator Morgan. I understand that. Suppose we should know of a case in which there was a very great amount of damages recoverable by a patentee whose patent was believed to be wholly and equitably unjust and a great burden to the couatry. Do you deny the right (notwith- standing you brought an action) to take away the benefits of existing laws so far as they give the power to recover such damages ? Mr. Walker. I certainly do. Senator Morgan. I have a series of cases in my mind which would have a tremendous influence upon certain sections of this country, A man took out a patent for a process of killing cotton-worms with a mix- ture of Paris green, flour, &c. As soon as the discovery was known, of course everybody resorted to it. Every cotton-grower in my State who had the money to use it went to work and got Paris green and flour and mixed them up, and they killed the cotton-worms, and in many instances saved vast amounts of cotton. Suits are pending now in regard to that. UpoH certain assumptions or premises which are furnished in the differ- ent cases, those men would have the right to recover the profits and damages out of the cotton-planters for the use of this discovery. Un- der the circumstances, if we have the power to prevent it, I think it is our duty to prevent the recovery of the great damages or great profits which may have accrued to the planters in these cases and to confine the parties to the recovery of a proper license-fee. 38 MR. WALKEE. Senator Wadlbigh. The second section of this bill provides for that. Senator Morgan. I know the second section of the bill would provide for that, but I was referring to our constitutional power to enact such a section as to pending cases. Mr. Walker. This monopoly that was granted for this discovery was only a limited one in point of duration, and after the expiration of the monopoly, if it is a great blessing to the cotton-fields of the South, it will be used by them. Is it, after all, such a gross injustice that this great benefit, although enormous for a short time, should be conferred upon the man who discovered it, in order that invention may be en- couraged and the public have the free use and benefit of the discovery for centuries afterward 1 Senator Wadleigh. Somebody else would have discovered it. Mr. Walker. Mr. Smith said that for three centuries this simple thing of the toilet-pin was not thought of. It is easy to see that the simplest invention may be unknown for a long time. Senator Wadleigh. 1 believe it was in evidence that this brake was invented by several workmen in railroad-shops, who did not apply for a patent, and it went into use on those roads. Mr. Walkek. In point of fact that brake was invented by but one or two persons, independently of the true and first inventors and after they invented it. Mr. Smith. In the case put relating to Paris green, would you claim that the owner of the patent for the Paris screen had a vested right to the whole of the cotton-crop, without allowing anything for the use of the capital ? Mr. Walker. Of course not. I do not understand that the law as it now stands would have given it. Mr. Smith. Could you take the profit into account in any other way ? Mr. Walker. He would have a vested right in all the profits that came from the use of the Paris green. Senator Morgan. In some cases the remedy was applied when three- fifths of the cotton-crop was destroyed, and a great deal was rescued, and sometimes it was almost entirely rescued by the use of this prepara- tion. That would be profits in the way which has been mentioned, because it was that much saved to the planter. There are various actions pending in some parts of the country for the recovery of these very profits. Is it to be admitted here that Congress has not the power, in the readjustment of the patent law, to deprive those persons of the profits which they claim were realized by the planter in the use of this invention and in the saving of his crops ? Mr. Walker. I take the ground that there are only three or four links to that question, and that the conclusion is inevitable that Con- gress has no power whatever to deprive the inventor of those profits. Senator Morgan. I should be very much obliged to you for a brief on that point ; for my strongest disposition is, if it could be prevented, not to allow this man to obtain profits on these vast cotton-crops, saved by the application of so simple a thing as that. Mr. Walker. I will repeat (as perhaps my brief will not be brought to the attention of all members of the committee) my proposition, that where rights to recover profits in equity have vested, Congress has no I»ower whatever to divest them, and that depends on these circum- f tances: First, that those rights are as much property as anything tangi- ble is property ; and you will find the law on that point in Cooley on Con- stitutional Limitations. Secondly, that, being property, the fifth amend- ment provides that property shall not be taken away without due pro- SEC. 2: SHOULD NOT EETEOACT. 39 eess of law; and, thirdly, due process of law has frequently and con- stantly been held to mean judgments, proceedings, and decrees of courts, and never acts of Congress or of any other legislative body. Fourth, the Supreme Court decided, in Barron v. The City of Baltimore, that that amendment was designed expressly to prevent Congress from doing that thing ; and, further, that the conclusion is positive and cer- tain that where rights of action for profit have aocrued, Congress has no power whatever to take away that right, or in any manner limit or abridge the remedies by which those profits may be recovered. I take it, the gentlemen of the committee were not sent by their con- stituents to Washington for the purpose of passing laws which will be held to be unconstitutional by the Supreme Court. It is the duty of Congress to pass wise laws, but those laws should be always constitu- tional. No object would be gained by passing the bill as it now is, ex- cept to promote litigation and raise a large crop of questions that would be finally settled only by the Supreme Court, and on the principles I have enunciated they would confirm our rights. Ifthe bill presented to this committee is clearly unconstitutional, the committee will see such uncon- stitutional features and they will sift them out and adopt those that are constitutional. Members of the committee may think if they were making a constitu- tion they would make it differently, but still I fancy they will conform to the Constitution as it is and pass no laws not in conformity with it. Therefore, I say in behalf of my clients that I take no interest in the question except that I do not want to see my clients put to the expense of having such a provision held to be unconstitutional by the Supreme Court. Litigation is tedious ; litigation is expensive ; litigation is long, and life is short. If that bill were passed tomorrow, I could file a bill iu equity contravening it in some circuit court in the West or in the East, and in the course of five years I would get a decision of the Supreme Court that in as far as the second section applied to the rights already accrued it would be null and void, and in contravention of the. fifth amendment of the Constitution. The parties infringing patents would have the trouble of fighting the question, which would be finally settled ad- versely to them. No good would come of it, and nothing would be accomplished except delay and increased litigation and perplexity by raising the question. We would merely be forced to put it through all the stages of litigation in order that the provision might be held to be unconstitutional by the Supreme Court. The committee adjourned until to-morrow at 10 o'clock a. m. Friday, November 16, 1877. The cammittee met at 10 o'clock a. m., pursuant to adjournment. ARGUMENT OF CHAUNCEY SMITH EESUMED. Mr. Smith. I approach now, Mr. Chairman, the consideration of con- fessedly the most diificult branch of the patent law ; that is, the sub- ject of the damages in suits at law and the rule in regard to the recov- ery of profits in suits in equity. The patent law, the statute I mean, prescribes no rule of damages, and no rule in regard to the recovery of profits. There is, indeed, a provision that, under certain circumstanceSj the courts may increase to the extent of threefold the amount of actual 40 MR. CHAUNCEY SMITH. damages found by a jury ; and tbere is a provision that a court of equity in taking an account of profits way also proceed to ascertain the dam- ages in addition to the profits. Neither of these provisions, however, prescribes a rule under which or by which the profit shall be ascertained in the one case or the damages in the other. The diflSculty of prescribing any rule is inherent in the nature of the subject. Inventions are of such various characters that the modes la which they are to be used must be widely varied. The rights which an inventor has to determine for himself in what mode he shall use his in- vention, will materially affect the damages which he might suffer from an infringement. He may have an invention which it is impossible for him to use personally, or even to manufacture. It is one upon which he must rely for reaping any reward upon inducing other people to adopt it. Another invention may be of such a character that he may engage in the manufacture of the article covered by the invention, and reap his profit from the sale of the article, endeavoring to hold the monopoly in his own hands, and to supply the community with all of the article which they desire to use. Such might have been the case with Howe's sewing-machine. He may on the other hand elect, in view of the large amount of capital which is requisite to carry on the manufacture and supply the community, to license other parties upon a royalty for the manufacture, they paying him for the right under the invention. Such in fact was the mode in which Howe reaped mainly his profits upon the sewing-machine. In one case he might reap by the aid of his cap- ital and his skill in business a very large profit on each machine. In the other case he might reap only a small .profit on each machine, but it would be the profit due directly to the invention, and not increased by his personal skill and ability in the management of a business or by the capital which he Invested in its employment. Another case which may arise — and you will readily see it presents a difficult case for estimating damages — is where an inventor may have some invention upon, for instance, a sewing-machine, or a reaping-machine, or a steam-engine, or a printing-press, which gives the machine an additional value to the public. He may be a manufacturer, and through the aid of that invention he may seek by giving it to the public, by selling his machine at no enhanced price, to reap his reward through the sale of a larger number of machines which the public are open to manufacture. Mr. Corliss made some valuable improvements upon the steam-engine. New England and the whole country is deeply in- debted to him for the improvements which he not only made, but which he stimulated other people to make, by the competition he forced them to encounter. His mode of dealing with the patent was, not to allow other persons to manufacture under a royalty ; not to allow them to put his invention on machines which they might build. He did not even sell his machines, in many cases, for a price enhanced by virtue of his invention. Sometimes he sold them for a fixed price in money. An ordinary and a very beneficial way to the community was to go to a person using a steam-engine and ascertain how much it costs him for fuel. Taking the records of his books for a series of years, and as- certaining that for the power he used it cost him so much money per year, he would offer to take out his steam-engine, put in a new one with his improvement, taking for his pay a certain fraction of the price which in one, two, or three years the man should save by the introduc- tion of it. So that the party got a better engine for nothing. Not only that, he got a premium for putting it in, because he received a larger share of the saving than Mr. Corliss himself did. Mr. Corliss made his SEC. 2: PROFITS. 41 profit in the sale of the whole engine. Suppose an infringer came in and interfered with the possibility of his making those arrangements, you can see that the damages which he would suffer, I do not mean legal damages as estimated by the courts, but the loss, the injury, might be very serious. A question akin to this arose in the case of Seymour v. McCormielc, where the manufacturer had the control of a patent which increased the value of the reaping-machine, which he sold, however, at the same price, perhaps, with other manufacturers. He made, perhaps, really little or no profit upon the particular feature which was the subject of the patent; but he made, as usual, a considerable profit on the machine at large; and he claimed in a suit for the infringement of that patent that he was entitled to recover what he had lost, not merely by the sale of so much of the machine as was covered by the patent, but the profit which he would have made if he had held the whole machine under his patent, upon the theory that if the defendant had not used his invention, he himself, J;he plaintiff, would have had the opportunity to sell the machine, and not the defendant. It appeared in fact in that case that the plaintiff had been in the habit, however, of granting licenses to other manufacturers to use his invention at a specified price. The court held in that case that the damages could not be estimated by reference to the loss of the profits on the whole machine; that that was too remote, and that in some way they must arrive at that proportion of damage which was due to the use of that particular feature of the machine, and there having been an established royalty, the Supreme Court held that that must be taken as the damages in that class of cases. Beyond this, I believe there is no fixed rule in law. Even that. is a flexible rule; for upon an examination of the cases it will be found that the courts will consider in each particular case whether the royalty which has been established is one which is " applicable under all the circumstances to the case at bar." I pass from the consideration of the damages at law, because I do not understand that the section which we have under consideration makes any change in the rule of recovery at law, and I do not understand that, in the administration of the patent-law in suits at law, any cause of complaint has arisen which calls for a statute. I suppose that no de- fendant ever yet had a verdict found against him with which he was satisfied; but there has been no just cause of public complaint under the rule as Applied to suits at law. I think I have before stated that the difficulty of administering this branch of the law had been so great that the courts and the legal pro- fession had abandoned the law side of the court and sought the benefit of the equity side primarily, because it was easier to investigate the questions arising under the patents before a judge than before a jury, and especially because a court of equity could grant relief by injunction, which a court of law cannot grant. But when the law side of the court was abandoned for the equity side, it was soon found that there were cases were the plaintiffs were not content to rest with the remedy of an injunction, but sought to go fnrtheT, as justly they might in many cases, and obtain a recovery in money, and the court of equity lent its assistance to plaintiffs in such cases by sending the cause to a master to ascertain the profits which had been made by the defendant, upon the theory, repeatedly stated by the courts, that the defendant was to be held as a trustee for the money in his hands. In the case of Dean v. Mason, in 20 Howard, I think, the plaintiff 42 ME. CHAUNCEY SMITH. undertook to charge the defendant not simply with the profits he had actually made by infringing the Woodworth patent on the planing-ma- chine, but to Charge him with such profits as he ought to have made in the exercise of reasonable skill in the use of the invention. The same principle was implied in an earlier case. They sought to charge him as a trustee for the use of the invention, as a trustee under a con- tract is often charged for the profitable employment or for reasonable skill in the employment of property which he holds of his cestui que trust. The court repudiated that doctrine. They held that he was to be charged, not as a trustee for the use of the invention, not as holding the inven- tion in his hands as a trustee under a contract, but only for the money which had actually come into his hands as the fruit of the invention ; and against that rule it seems to me there could be little cause of com- plaint, although cases might arise where the recovery would be large. A case did arise afterward in Providence, where, under the application of that rule, the defendants were charged with some two or three hun- dred thousand dollars profits, made in the use of an invention. I have never, however, heard that there was any cause of complaint against the rule there laid down, which embraces this peculiarity and has reference to a clause in the section where they held that the defendant in that case could not be allowed to set oflF against the profit which he had made interest on the capital which he had invested, neither could he be allowed to set oflf a claim for personal services and for the skill which he had brought to the management of the business, following in that case the analogy of the rules of equity in regard to trustees, that they are not to be allowed to make a profit out of the funds of their cestui que trusts by charging for their services or for capital which may be employed alongside of that of the cestui que trust in the unlawful use of it. Some time after this the case which was referred to yesterday of Mowry v. Whitney arose, and I beg the attention of the committee especially to this case because I think it gave rise to all the complaints which have arisen in regard to recovery in suits in equity since that time. It gave rise to a necessity, if there is a necessity, for the very amendment which we have brought before you in the second section of this bill. The defendant there had manufactured oar-wheels and an- nealed them by a process which was covered by the plaintiff's patent. He had made a profit of about $95,000, if I remember correctly ; over $90,000 certainly. The plaintiff undertook to charge him for the whole amount of that profit, on the ground that the car-wheel, substantially, when it was sub- jected to the process of annealing, was not of so much value as it had cost up to that time, and that if sold for any purpose to which it could be applied at that time, it would have sold for less than it had cost ; that profits began to arise from that point, and were therefore due to his invention because the annealing was all, substantially, that remained to be done. Under that rule he claimed $95,000, which he said had been made by the use of his invention. It appeared, however, that the defendant, and the plaintiff himself, I believe, sold car-wheels made by this process at no higher price than those which were annealed by other processes which were open to the world to use ; and the court held, apparently, and I think with good reason, for the purpose of preventing an injustice or a hardship under the rule as it was previously laid down, that that portion of the profits which had been made should be determined by ascertaining how much advantage the defendant had gained in reaping those profits from the SEC. 2: PROFITS. 43 especial mode of annealing wheels as compared with anj' of the other modes of annealing wheels. The invention did not rest broadly on the annealing of wheels. It rested only on the special process of annealing wheels. The plaintiff could not therefore put into his pocket as the fruit of his invention that which was due to annealing generally, but could only take that part of the profits arising from the annealing of wheels which was due to his particular process of annealing. Unfortunately, as I think, in laying down this rule, however, the court stated it in terms which were capable of the greatest hardship, if not of injustice. They said that the defendant was to be chargeable with the advantages which he had reaped from the use of the invention, which in that case was well enough; but it would often appear, and I think has subsequently appeared in different cases, that in attempting to reach those advantages by comparing the cost of the process under the patent with the cost of other known processes, they laid down a rule which would sweep into the plaintiff's profits moneys which the defendant never dreamed of possessing, and could by no possibility have possessed. I will repeat again an illustration which I have repeated so many times that I am almost ashamed of it, and yet it so strongly illustrates the fallacy of the rule, whether we can state that fallacy in the words or not, that I cannot forbear its introduction here. It was given to me by Mr. Hillard of Boston, when I was engaged in taking an account of profits before him, and where the defendant in that particular case, which arose before the case of Mowry v. Whitney, claimed that just such a rule as was laid down in Mowry v. Whitney should be applied ; because in that particular case be held that he should be charged with a less amount than under the rule which we sought to charge him with. There was, said Mr. Hillard, a time when the art of printing was new, and it might have been covered by a patent. If the first man who printed the Bible had been an infringer of the patent, and had been brought up to an account under the rule which has been subsequently laid down in the case of Mowry v. Whitney, he as master, if he had been sitting in that case, would have found himself confronted with this state of facts : That the only mode of making books before that was by the pen ; that the Bible, a large book, eagerly sought by a large class of people, was so expensive that there were few people in Europe who could command a copy, and that in point of fact the person who might have been the defendant in that case had sold the whole edition at a price so cheap that the ecclesiastics of that day charged him with be- ing in conference with the devil. Now, the whole edition which he sold probably brought him a less sum of money than it would have cost to have made a single copy of the Bible by hand ; and if he had been charged for each copy of the Bible which he sold, made by the art of printing, the cost of each one of them written out by hand, there was not a kingdom in Europe which could have responded in damages. I need not say that we all see that the application of such a rule would be unjust, because you would be charging under the guise of profits, under the rule which allowed you only to charge that which the defend- ant had received, with a sum of money infinitely larger than he had ever dreamed of receiving. The application of the doctrine of Mowry v, Whitney to cases arising in the West illustrate that rule. There are two patents now or recently in force under which several defendants at the West, railway companies, have been charged, or are liable to be charged, with infringement. One of them is known as the swedgeblock patent. Somebody had invented a kind of an anvil, I will call it, upon which the ends of injured rails 44 ME CHAUNCEY SMITH. could be restored to their original form and integrity much more con- veniently than by any other device (as it was claimed) then known — much more conveniently than with a common anvil. . The defendants in those cases had infringed by using machines vary- ing somewhat from that described in the patent, but which the owners «f the patent still claimed came within the scope of the patent ; and when driven to take an account, the rule of Mowry v. Whitney was ap- plied. The master ascertained what it would have cost to mend those rails by any known process of mending them open to the parties to use, and he found a large amount — a million and a half of dollars, I think — against some of the companies. The case came to the Supreme Court, and was decided last year. There was an attempt made to show that the railroad companies never had made any such amount of profit a» that ; there was an attempt made to show that that mode of mending rails even was not a profitable mode, and could not be made a profitable mode ; that the companies had better have abandoned their rails and had them re-rolled, and laid down new rails. Bat the court refused to listen to that suggestion. Still another case is known as the Tanner brake case, where it is claimed — I do not know with how much justice — that if the plaintiff is allowed to recover under the rule laid down in Motory v. Whitney, the sum would amount from the several roads to fifty or sixty million dol- lars. And yet the service is one which the plaintiff sought in vain to- induce the railroad companies to adopt to any great extent at five dol- lars a mile. What he may eventually get out of it I do not know. He has not yet received the fifty or sixty million dollars. In fact, I believe he has not been able to receive enough yet to pay his counsel. My own judgment was that, though the rule of Mowry v. Whitney was wrong in principle, the Supreme Court would at least limit it to those cases where profits had actually been made, and would consider it as a rule only for ascertaining the proportion of actual profits which the defendants had made ; and I was unwilling to believe, until forced to believe it by the decision in the case of Mevs v. Conover, decided last winter, and reported in the Official Gazette, where they held that the defendant should be charged with that difference, under the rule of Mowry v. Whitney, between what it cost him to split wood by the machine and what it would have cost him to split it by hand, although he had lost money in selling his wood. They charged him for money constructively in his hands, although in the case of Bean v. Mason they had refused to charge him with what he ought to have made by a reasonable use of the invention. How these two decisions can be reconciled I am unable to understand. But it leads me here to observe, that if any such rule is in existence, any rule which entitles the plaintiff to the whole amount of the advan- tage derived from his invention, it is, I think, unsound for another rea- son ; and that is, that in the introduction of inventions to the public use the case rarely, if ever, occurs where an inventor is able to place in his own pocket any considerable amount of the value which the community derives from his invention, and any rule which undertakes to place in the plaintiff's pocket a very much larger sum of money than he could possibly have made if he had been allowed to practice his invention in his own way, must, I think, involve in som eway some lurking fallacy. Take this case of Mevs v. Conover: I do not know the special circum- stances which surround it, but I can easily imagine that the defendant was compelled to sell his wood at a lower price than it cost, and not wholly because he managed his business unskillfuUy, but because the SEC. 2: PEOFITS. 45 price of wood in tlie market, split perhaps by tlie aid of this very inven- tion, and by licenses lawfully using, had been reduced so much in con- sequence of the invention, that he had to follow the market and sell it at the same price. - Now, who got the benefit of it, if that was the state of the fact anl it is a state of facts that might easily arise? Not the man who split the wood and sold it at the price which had been determined by the intro- duction of the invention to the public. The defendant in that case did not put into his pocket the advantage of the invention. The public got it ; and there are few cases where a plaintiff, as I said before, can reap the whole value of an invention, I know of one case, in which I think the facts are substantially these : A machine has been for many years in successful operation in Massa- chusetts for the manufacture of a particular class of shoes. I believe it cost ten years of the labor of some of our most skillful inventors — more than one — and more than one hundred thousand dollars in money to bring that machine up to a useful point. It is safe to say that no man would have ventured upon that expenditure unless he had hoped at the end to reap not only a reward for daily services, but a rich reward under the operation of the patent law. It has proved to be a very prof- itable invention. I believe that under it something like 25,000,000 pairs of shoes have been made in a year of a class which previously sold at $4 a pair, but which could be manufactured so much cheaper by this process that they have sold at $3 a pair; the public getting the benefit of an article which they desired to use, and which they could use more largely than before, of $1 on each pair of shoes. The owners of that patent have charged as a royalty and received less than two cents a pair on all the shoes made. That is a striking, and no more than a fair, illustration of the ordinary operation of the patent law, which goes to show that the inventor is in no case enabled to reap anything like the amount of benefit which the community de- rive out of an invention. Take, again, the Howe sewing-machine, a monopoly which was — and I think not without justice — toward the latter portion of its term com- plained of. Machines of the best class, suited to general use, were for many years sold for about $60. It was complained of as a hardship that the American people were compelled to buy them at that price when they could be built for $15 or $20 ; and yet if you had undertaken to estimate as to each particular machine how much its owner made by the use of that machine even at $60, estimating it by the rule in Mow- ry V. Whitney, and to ascertain the difterence between the cost of doing upon the machine all that the machine was capable of doing and the cost of doing the same amount of sewing by hand, it would be found that the machine paid for itself perhaps a hundred fold even at that price. I think Mr. Howe, when he applied for the extension of his patent, was compelled to admit that he had received in net profits nearly $500,000 for his invention ; and yet he was also enabled to show that, at that date even, the advantage to the country could not be estimated at less than many millions of dollars. It was upon the proof of this state of facts that he was entitled to receive his extension. It has seemed to me, Mr. Chairman, in view of the case of Mevs v. Conover especially, that the Supreme Court had tied itself down to a rule, which the circuit courts feel bound to follow, which cannot be ad- ministered without great hardship and great injustice; and I have, there- fore, felt no hesitation in asking this committt-e to consider a rule wliich 46 ME. CHAUSfCEY SMITH. should release the courts from a bond uuder which they have bound themselves, so that they might reach some rule which would not work such cases of extreme hardship. I have felt the danger of undertaking to prescribe in terms any rule to meet a case of such difficulty as this. I have felt that unless the exigency were pressing it would be better to — bear those ills we have, Than fly to others that we know not of. And while I think I can see my way clear to the application, without injustice, of the rule which we have endeavored to state, in all cases which I can bring to my mind, I am yet by no means confident that cases may not arise now unanticipated upon which the rule may operate with as much hardship as any rule that has ever been suggested. Yet I think there is good reason why this committee and those who are inter- ested in improving the patent laws should make the attempt. The first clause of this second section does not, I think, change the rule of recovery in cases at law. It only provides that in a certain class of cases the courts of equity shall administer the rule of the courts of law, and shall not take an account of profits in form ; but that they shall, in such way as they have the power of doing, ascertain what the damages would be under the rule in law in like cases. So far, I think, there is no danger to be apprehended from the sugges- tion made yesterday, that we might be interfering with vested rights. I understand we are leaving the rule at law just as it now is, and that we are only saying to a court of equity that it shall adopt the same rule, and shall not seek to administer justice through the machinery of an account. There are suggestions in several of the cases which have been brought before the courts that the taking of an account of profits was merely a mode of reaching the damages, and to be limited eventually by the amount which the party was entitled to recover as damages. If my suggestion is correct, the objection to this part of the section will not be found to have force. Whether we have been successful in happily choosing the language under which the courts will be called upon to act, I cannot with cer- tainty say. The only part of the first branch of the section as to which I have entertained any doubt — and I shall not attempt to discuss it — is that part commencing in the fourth line, which reads as follows : Or where it appears to the court or jury that, from the nature of the inventionj it is for the interest of the patentee that other persons generally should use the same in like manner and pay him a license-fee therefor, the measure of the plaintitt's damages shall be the same, both at law and in equity. We have endeavored to guard this language cautiously, so that it shall not bring within its scope cases which would operate with hard- ship upon plaintiffs. There are gentlemen present who will present ob- jections to this feature of the bill, and I do not care now to discuss it. I will leave it to those gentlemen to state their objections; and when they are clearly brought out, if we see that the bill can be improved by a change, no persons will be more happy to adopt the suggestion than we shall. If necessary, another gentleman, following me, will attempt to show that this language is as well chosen as any which could be adopted. The second branch of the section commences on page 2 of the Senate bill, line 14, and is an attempt to relieve the courts from the operation of the rule in Mowry v. Whitney by stating that in taking an account they shall only charge the defendant with profits on account of a saving when such saving has enabled him to make an actual profit; that one SEC. 2: PROFITS. 47 of the facts which must be ascertained is the actual profits which the defendant has made by the sale of the invention or in the branch of business in which the invention has been used ; that having ascertained that fact, the court shall then, by appropriate modes of investigation, ascertain what proportion of the actual profits made is justly charge- able to the use of the invention, and that the defendant shall be charged with that amount, and no more. We have, in addition to this provision, which does seek to control the mode of taking an account in equity, a provision which is intended to place the whole subject of damages within the discretion of the court, so that they shall feel that in no case they shall be compelled, under a par- ticular rale, to give a judgment for an amount which is greater than the injury done to the plaintiff, or which is really less than the injury which has been inflicted upon him. We have introduced also a proviso that the provisions of this bill shall not apply to cases which have actually been sent to an account. I think the suggestion which was made by Mr. Walker yesterday, that the damages which a party is entitled to recover for an infringement are to be treated as vested property, is entitled to much weight. I con- fess that I have great difficulty in coming to the conclusion that his right to recover those damages is not a right of property which the court must respect. But I have been able to persuade myself that the rule which we have laid down will not come within that olijection. I have already suggested one of the answers to one branch of it. The answer in respect to the second branch which we have introduced, the one relating to profits, or my answer to it, is that we are endeavoring, not to change the rule of profits, but to compel the courts to administer the true rule, because, as I have intimated already, I have never be- lieved that that rule was a sound one. It may perhaps be regarded as a provision for declaring what is already the law. To my mind, at all events, it is not a change which affects any rights that the plaintiff can now say are vested in him. Mr. Walker. You are now speaking, J suppose, only of the second paragraph of the section ? Mr. Smith. That is all, sir. I have one further suggestion which may be entitled to some consideration, and that is that the subject of dam- ages generally is unquestionably within the discretion of Cojigress. It may lay down a rule of recovery, I think, without doubt, if it seems wise to do so. If it should appear that this rule, if adopted, would in- terfere with rights already vested in some plaintiff, the court I think would not hold that provision unconstitutional, but would simply hold that the case did not come within the scope of the provision, although it was not specially excepted by the terms of the act ; and for myself I should not feel quite at liberty to exclude a defendant from the possibil- ity of reaching the benefit of this rule under the suggestion that under some possibility the court might hold that he was not entitled to the benefit of it. I perhaps ought to make this suggestion, that I believe the defend- ants in most of the cases which have arisen, or which are likely to arise, would find, in the circumstances of the case qualifications which would prevent the rule of Mowry v. Whitney from operating with too great hardship. No more striking illustration of that arises than in the very swedge-block cases. Three or more defendants were sued for using ma- ebines which were each unlike the others, but each of them the plaintiff charged was an infringement. The court finally held that one or two of those machines were not infringements of the patent ; that they were 48 ME. CHAUNCEY SMITH. things which were open to the world to use, and the defendants in those cases escaped liability on the ground that there was no infringement. If the defendants in the other cases, instead of attempting to defeat the patent, had allowed its validity and had claimed before the master that there were two other machines which were open to them to use, and that they were only to be charged with the difference between the cost of mending the rails by their own machine and by these other two machines, they would have escaped scot-free. So in many cases it will be found that the special circumstances are such that the defendant will escape from the operation of the rule. Take, Mr. Senator Morgan, the suggestion which you made yesterday in regard to the use of Paris green for killing the army-worm. I am unable to believe that any man can hold a valid patent for the use of Paris green in that way. If he can have any patent at all, it must be for the use of some combination of Paris green with some other sub- stance, either inert, for the purpose of more readily applying it, or hav- ing some specific action of its own. Senator MORGAN. That was the nature of the patent I spoke of— a patent for a combination. Mr. Smith. If there was any other known mode of applying Paris green for killing insects, especially in combination with anything else, those plaintiffs must come under that qualification of the rale and re- cover only for what they can show their particular combination is better than any other known combination. But the case that you suggest is a striking illustration of what might arise where the plaintiff, claiming that he was entitled to all the advantages which arise from the use of an invention, might put a whole cotton-crop into his pocket against the defendant, although he would undoubtedly himself be perfectly content to sell his new powder for a price which might not give him $5 an acre. Mr. Eatmond. Excuse the interruption. Do you draw distinction between a combination which is patented and any other compound which the public are entitled to use ? Mr. Smith. Any other compound which the defendants are entitled to use, at least where Paris green forms the poisonous element. Mr. Eaymond. It does not cover all other combinations of that char- acter, but simply that compound. Mr. Smith. The Supreme Court has not yet decided whether a party is to be held chargeable for the whole use of an invention when he might legitimately buy another patented article and use it in its place, although the rule as stated, perhaps, would exclude that. I pass. on, Mr. Chairman, and I will now pass hastily over the remain- ing sections to section third. Senator MoR&AN. Before you do that, I should like to suggest a diffi- eulty, not with a view of having it answered now, but one that occurs to my mind in reference to the second section. In the concluding clause of that section you give the court power to increase or diminish the damages in any case at law or in equity, as I understand, according to its discretion, making that the final decision and the judgment of the court. It is a discretionary decision, as I understand. It is, of course, a judicial decision, but somewhat discretionary. We have power lodged in the court ; and where is the necessity of having any rules for regu- lating the processes or methods by which the court shall arrive at the amount of the damages to be ascertained in a given case ? Mr. Smith. Perhaps that might be so. The last clause might be all that is required, and 1 am not sure that 1 should not have preferred to SEC. 3: PROFITS, 49 leave the section in that way if 1 could have felt sure that the courts would feel as much at liberty to apply a rule of that kind as they would if it was incorporated into the law itself. I desire, Mr. Senator, in this connection, to read a passage from a re- ported case, which will show why we thought it necessary to introduce some provision of this kind and indicate the spirit of the amendment which we propose to make. It is the case of the Packet Company v. Sickles, a case at law, where the court used this language: The rule in suits in equity of ascertaining, by a reference to a master, the profits which the defendant has made by the use of the plaintiff's invention, stands on a dif- ferent principle. It is that of converting the infringer into a trustee for the patentee as regards the profits thus made, aud the adjustment of these profits is subject to all the equitable considerations which are necessary to do complete justice between the parties, many of which would be inappropriate in a trial by jury. With these cor- rective powers in the hands of the chancellor, the rule of assuming profits as the groundwork for estimating the compensation due from the infringer to the patentee has produced results calculated to suggest distrust of its universal application even in courts of equity. (19 Jfaiiace, pp. 617, 618.) It has seemed to us — I speak now for those with whom 1 have been in conference — that notwithstanding the powers which the court had, they still felt their hands tied to some extent by the rules which they themselves had laid down, and that it would be of service to them, per- haps, to prescribe by statute a rule which should clearly place in their hands in all cases the power of administering justice under the particu- lar case ; and yet I am not quite certain that except for these considera- tions I should not have preferred to introduce simply the last clause of the section and leave the matter there. Mr. HuBBELL. Allow me to make a suggestion. To enable the gen- tleman to turn his mind to that point — I see that it struck the Senator as it has struck me — I suggest that instead of this special legislation to the court, which is always objectionable — In the estimation of damages or profits under a patent the owner shall have a right only to recover a jiist compensatiou for his invention, and his time, ingenuity, and expense bestowed upon the same, with a right to a penalty not exceeding three times the amount in all, in the discretion of the court, and due allowance shall be made for the capital, labor, and oircumstauces under which the invention has been used in the estimation of damages and compensation — it would be better to leave all the details to the court and not legislate specially for the court. That is a judicial question. I wish to turn your attention to that. I shall urge this instead of that whole section. Mr. Smith. Thank you. The rule which was presented last year for estimating damages provided that a reasonable license-fee should be ascertained having reference to time, ingenuity, and expense expended upon the invention. I then suggested, and I think the suggestion is a pertinent one, that such a rule would operate with extreme hardship upon defendants in many cases, because there are many inventors who spend more time upon an invention than it proves to be worth, and to transfer to a defendant the cost of an invention, instead of allowing it to rest upon the plaintiflf, would be an act of hardship. I will pursue this thought a little further. When in consultation with Mr. Paison, the counsel for the railroad association, we were discussing the propriety of attempting to place in the hands of the court power to ascertain what a reasonable compensation was. I asked what elements he would take into account, whether it should be simply what it cost to the inventor, and, if so, what proportion of this cost should be charged upon the defendant before the court ; whether he was to take the whole of it, or whether it was in some way to be apportioned between that de- S. Mis. 50 4 50 MR. CHAUNCEY SMITH. fendant and all other defendants known or unknown to the court, in ■which case it would be, of course, utterly impossible to apply the rule, and the defendant might be charged with very much more than he ought to be charged with, on the assumption that there might not be half as many infringers as might actually arise. I suggested, further, that one element would be to take into account the value of the invention to the public — to those who used it, but that there would be danger under that rule that the defendant would be charged with ten times as large a proportion of the actual benefit to the public as the plaintiff, as an inventor, ever now receives under the oper- ation of the ordinary laws of trade ; so that it seemed to me not ouly unwise, but might, in many cases, be unjust to attempt to charge a defendant his proportion of the value of an invention to the whole pub- lic at layge; because he would, in that case, be charged with an amount which no inventor now expects to reap if he is left in the undisturbed enjoyment of his invention. Section 3 was suggested by Mr. Giflford, of New ¥ork. It provides for a hardship pressing mostly upon a defendant, but oftentimes felt by a plaintiff, arising in this way : Upon the final hearing of a suit iu equity, if it is held that the defendant does not infringe the patent, although, it may be valid, the plaintiff may appeal at once to test the question of infringement before the Supreme Court, because no account intervenes. If, however, the defendant is charged as an infringer under the decision of the court, an account is to be taken, because no appeal can be taken until a final decree is reached, and the decree upon the original hearing is merely an interlocutory decree. The parties there- fore, must go through, in the case of a finding in favor of the plaintiff, with a long and very extensive accounting iu many cases before there is any possibility of reaching the Supreme Court to determine the only question which may be of any importance, and that is the question of infringement, or the validity of the patent. We have, therefore, pro- vided in this section that the court, in its discretion, may allow the de- fendant to appeal at once, and not await the finding of the court below upon the question of damages. We hesitated much before introducing it, not that from any reason related to the administration of the patent law it would not be a very beneficent provision, but from an apprehension that it might send more business to the already overcrowded Supreme Court ; but upon a dis- cussion with the gentlemen in Chicago, who had in various States seen the operation of a rule similar to that in their State jurisprudence, we came to the conclusion that it would be more likely to diminish the work of the Supreme Court than to increase it. Senator Morgan. Is it intended to apply that to equity cases alone 1 Mr. Stobkow. One gentleman has suggested that after "causes," in the first line, the words "iu equity" should be inserted. Senator Moegan. Is not that the rule now in all equity causes, that when there is a final decree settling the equities between the parties an appeal lies to the Supreme Court, and then you do not have to await the stating of an account ? Mr. Smith. No, sir; that decree is held to be only an interlocutory decree in patent causes, and the Supreme Court would not allow an appeal. That ruleis well settled, and it seems to me that both for plaint- iffs and defendants it is well to place in the hands of the circuit court the power of sending a case up for a decision on the important questions without waiting to incur the expense of taking an account, which may after all prove entirely fruitless. SECS. 3, 4, 6. '51 Section 4 provides for placing in the hands of the circuit' courts power to alter or amend the injunction after an appeal has been taken to the Supreme Court, for in many cases great hardship arises from imposing on a, defendant an injunction which he must obey during all the lapse of time while the case is pending in the Supreme Court, and where he may snfifer a hardship against which he can have no relief. It is not necessary that I should discuss these sections, because I think their scope is suflSciently indicated' by them. I pass over the fifth section, not because it does not deserve some comment, but because it was introduced by the Patent Bar Association, who will address the com- mittee upon that subject, only lemarking that I think it states the rule of law as it now stands with a single exception, that it places in the hands of the court an enlarged authority to inquire, in the case of reissued patents, as to the character of the reissue. As I have already taken more time than I ought to take, I must pass hastily over this, trusting that other gentlemen will bring the attention of the committee tot-hem. Section 6 contains two provisions, one clearly for the benefit of de- fendants in patent causes, and calculated to relieve them from a serious hardship. As the law now stands, a patentee may take his patent and neglect to claim some feature of the invention which he had a perfect right to claim. So long as his patent stands in that way, the world is entitled to use it, because he is held to disclaim all which is not specially claimed. Under that state of things a party may resort to the patent, and having ascertained that a certain thing is not claimed, may incor- porate it into a machine. On a reissue of the patent, although no dam- ages can be recovered for infringement prior to that time, he may be enjoined from the use of the machine after that time, although he law- fully built it, and it became his property. This section is intended to relieve him from that liability to injury by providing that he may con- tinue to use the machine as though he had constructed it under a special license. It also provides a remedy in another class of cases which operated with hardship on the plaintiff, because by the surrender of his patent he lost his right to prosecute for infringements which had occurred previously to the act of surrender. We see no reason why he should not be allowed to recover, if he has a valid claim under his original pa- tent, in the same way that he would be entitled to if his patent expired by its own limitation instead of by act of surrender. I intended to trace hastily the other provisions of the bill; but, hav- ing consumed so much time, I will close my remarks with a single ob- servation. I received last night, from a gentleman in Boston, Mr, May- nadier, a patent lawyer, a communication addressed to me upon the subject of these amendments. As it is in print, I will hand to each of the members of the committee a copy of it. The Chairman. The committee propose to take all the time that is Necessary for the full discussion of this bill, and do not propose to limit you. We can have other meetings if necessary. Mr. Smith. lam greatly obliged to you, Mr. Chairman, for the sug- gestion-, and yet I think there is nothing which makes it of much im- portance lor me to continue ray address. I wish to say that I also re- ceived from Mr. Latrobe, of Baltimore, a letter, not in print, but which 1 think is deserving consideration, which I will also place in your hands. The Chairman. Do you wish this incorporated in your argument by the reporter? Mr. Smith. No, sir ; I only hand it to you as the opinion of a gentle- man whose opinions are entitled to consideration. I should be g'ad if the committee saw fit to print it. bi ME. J. H. B. LATEOBE. The CHAmmAN. We can have it printed. (The letters of Mr. Latrobe and of Mr. JMaynadier refer to a previous draught of the bill; the changes since made meet some of their sugges- tions.) Mr. Sm:[TH. Mr. Chairman, I am greatly obliged for the kindness of the committee in listening to me with such attention. I cannot close without expressing the hope that the work which we have been enabled to bring before you will receive the approval of the committee, and, after it, of Congress, and that through it the country — not inventors only, but the whole country — will find that the true objects of the Con- stitution are secured by promoting, more effectually than heretofore, *' the progress of the useful arts." APPENDIX TO MR. SMITH'S ARGUMENT. Letter of Mr, Latrobe. Baltimore, October 31, 1877. My Dear Me. Smith : I have taken my first leisure to go over the amendments to the patent laws proposed by the committee of which you are chairman ; and that I take an interest in the subject is best proved by my troubling you with this letter. Section 1. I am not quite sure about four years as the statutory limit for recovery in a suit on a patent. I know more than one case where more than six years have elapsed between the commencement of a suit and the final decree of the Supreme Court. Ought not an inventor to be permitted to test his patent's worth before you oblige him to sue? I would make the limitation six years at least. True, your section authorizing an appeal before an account helps matters, but I think I would prefer the six years to the four of your section 1. Sec. 2. Are you quite right in leaving it to either court or jury to fix what ought to be the price of a license? True, you leave it to the party to fix a license- fee " by a reasonable number of transactions." But, if not, then " the court or jury shall determine the same from all the evi- dence." Is not my invention as much my property as my house, and am I not the sole judge of the value of the latter? I am not sure that the law, as decisions have made it, is not all that is wanted just now. I have a case where I would like just such a sectiop as your number 2. But— Sec. 3. Very good indeed. Sec. 4. All right. Sec. 5. Supplies a defect. Sec. 6. The last clause of this section is very proper. I wish it were law now, to meet a want I have. Are you satisfied that the first part of the section is quite as clearly expressed as it might be? I found myself studying before I quite made it out. I think that I would have used some such form of words as this, "A license by one of two or more patentees shall have the same effect as a license executed by all, unless their power in this respect is controlled by some instrument recorded in the Patent Office." Sec. 7. It may be hypercritical, but is there any necessity for the words at the top of page 7 beginning at " before" and ending " thereof" I Sec. 8. All right. Sec, 9. I doubt this. It may be old-fashioned, but I hesitate before MR. J. E. MAYNADIER. 53 I am willing to interfere with a patentee's right to deal with his property at his discretion. Suppose a patentee jpermjis his patent to be infringed — suppose, as is often the case, he is not able to bear expenses of litiga- tion — what right have J to call upon court or jury to determine whether a delay to sue is reasonable or not? Other objections suggest themselves. Is not the present remedy sufficient in case of a patent assailable on any legal ground ? Seo. 10. This is assimilating our patent law to the English and French systems. I am not sure whether this is desirable or not. You know as well as I do the struggles which some of the most meritorious patentees have had in introducing their inventions to the notice of the public. I have now a suit on a valuable patent, the owners of which were, you may say, paupers at the expiration of four years from the date of their patent, which now has but five years to run. I am not sure about section 10. Seo. 11. All right. Seo. 12. All the alterations proposed here are good, especially that to 4916. Most truly, JNO. H. B. LATROBE. Chaunoet Smith, Esq. LETTER OF MR. MAYNADIER. Boston, November 12, 1877. Dear Sir : I have examined the pamphlets received from you, the last, entitled " Eevision of the Proposed Amendments to the Patent Law," with such care that I can make the following statement of my opinion in regard to the matter : Sbotion 1. Some limitation is, in my opinion, needful, and four years is reasonable. Seo. 2. It is too late now, perhaps, to object to taking the established license-fee as the measure of damages; but I have no doubt that it is always unjust to put an unsuccessful defendant on the same footing with those persons who are honest enough to admit a just claim before they are compelled to do it. It seems to me that full justice will be done if the equity doctrine as to profits be done away with, and the matter be left under the rules of law, now pretty well settled, as to damages. Under the present decisions it is safe to say the license-fee will be held the measure of damages in all cases where such ruling is not flagrant. I am so fully persuaded that much wrong arises to both parties from the present system of holding the infringer liable not only as a tort- feasor, but also as tnistee, that I beg attention to this matter. I suggest that section 2 be changed as follows : Strike out lines 16 to 27 (p. 3), both inclusive, and also the words "or profits" in line 29,and insert after line 15, " The infringer shall not be charged as trustee, but in all suits in equity the complainant shall have the usual discovery and account, so far as relates to the extent of infringement, to aid in show- ing the actual damages." It seems to me also that both rules for estimating profits (the one now established and the one suggested) are open to grave objections. For example: Suppose the infringer has used the patented machine so improvidently that he has lost money, i. e., that he has sold the pro- duct of the patented machine below cost (it may be, and often is, in 54 ME. J. E. MAYNADIEE. competiiiob Wkh the owner of the patent); in that case the proposed rule would be less just than the present rule {Mowrey y.Whitney), under which the master finds the actual saving by using the patented machine over any other means or method open to the infringer, whether the infringer sold the product at a profit' or at a loss. It seems to me that the profits the infringer may hii\e actiiallymade can have no relation whatever to the amount he may have saved by using the patented ma- chine instead of some other machine which he had a right to use. If the product cost five dollars when the patented machine is used, and would have cost six made in any other way, it is obvious {if the rule established be just) that the infringer has saved one dollar; and this whether the product be sold at a profit or at a loss. The rule now established has no relatioti to the profits actually made^ but determines the profits for which the infringer is charged by ascer- taining the saving. Why change it, not at all in the case of an infringer who so keeps up the price of the product that he actually realizes as much as or more than the amount saved by the use of the patented ma- chine, but radically in the case of an infringer who so undersells that he actually realizes no profits at all ? Why not abolish it altogether ? for it necessitates an issue which is absurd, viz: What would have happened if the defendant had done something else than he did? it being, in at least ninety-nine cases in a hundred, absurd to suppose that the defendant would have done this " something else." The third and fourth sections (pp. 4 and 5) are of great importance, and should have been enacted in the first patent act. This is also true, in a measure, of section 7. Should not the words " in equity " be inserted after "jurisdiction " in line 2, section 4? Section 5 (p. 5) seems to me eminently just, and to make a much- needed change. Lines 1 to 8 of section 6 (pp. 5, 6) seem unnecessary. The rest of this section may be of value as declaratory. Sections 8 and 9 seem to me very desirable additions to the present law. Lines 41-43 of section 9 (p. 10) seem to need revision, as they do not cover the case of two or more equal owners not in the same district ; nor the case of three or more owners, no two of whom owning " the greater part of the patent " {i. e., more than one-half) reside in the same district. fhave not fully considered the tenth section (p. 11), but I have long been of opinion that some method should be devised for ridding the com- munity of several classes of patents before the expiration of the full term. One of these classes embraces patents not valid, but which, it is- hoped by their owners, cannot he proved invalid after the lapse of a few years. Another, and a very large class, embraces patents for inventions of a very low grade. Another class embraces what may be termed speculative patents, i. e., those obtained by skillful but oversanguine inventors, not for present use, but with the hope that some day they may be important; these are mostly mere notions imperfectly thought out, and never embodied except in a crude model. The provisions of the tenth section would probably work a remedy, but it would certainly work great hardship in some few cases, viz, that of the really great iuventors, too far ahead of their times to be appre- ciated, and too poor to pay the taxes ; but most of these men are de- frauded as the law now stands. Section 11 (p. 12) will be of great value in the few cases where it is applicable. Yery respectfully, J. E. MAYNADIEE. Chauncey Smith, Esq. MR. T. L. LIVEEMOEE. 55 SUGGESTIONS OF COMMISSIONER SPEAR. Mr. Smith. I understand that the Gommissioner of Patents approves the bill. I should like to have the committee hear him. Mr. Spear. I would i)refer to put my suggestions in writing on some other day than to-day. On the whole, the bill meets with my hearty approval. There are some features relating more particularly to mat- ters concerning the Patent Office and the conduct of business in the office, which I should like to make some comment upon, and 1 will do so to-morrow or some later day in writing. The Chairman. You prefer a submission in writing? Mr. Speae. Yes, sir. ARGUMENT OF T. L. LIVEEMORE. Mr. Chairman and Gentlemen : I disarrange the order because I fear that I must leave earlier than I anticipated. I deem it a great for- tune of mine that I was called on by the learned counsel, who opened this subject to the committee, to participate in the deliberations of him- self and his associates on this amendment, an honor which perhaps my ex])erience does not fully warrant. At the same time, having been called upon to do so, and conceiving that no counselor careful, of his own standing could feel at liberty to advocate class or special legisla- tion, knowing that my associates in this matter have not such a feeling, and having full permission from them to express my individual views dissenting in some degree from the provisions of the bill, I take the liberty of now suggesting two or three amendments, which, I think, ought to be made to the bill as presented. I am glad to do so before the gentlemen who represent the Bar Asso- ciation of the Districtof Columbia speak, because in what I have to say on one section I shall criticise something that they have offered in the bill. I shall be glad to have them have an opportunity to reply to it. The first remarks that I desire to present are with regard to the sec- ond section. The first paragraph of that section I will read : " In all cases where the pat«ntee has elected to license other persons generally to use his invention, in like manner to that in which it was used by the defendant, or where it appears to the court or jury that, from the nature of the invention, it is for the interest of the patentee that other persons generally should use the same in like manner and pay him a license-fee therefor, the measure of the plaintiflPs damages shall be the same, both at law and in equity, and no account of profits or savings shall be allowed. If a license-fee has already been estab- lished by a reasonable number of transactions of a character applicable to the case at bar, that shall be adopted as the measure of said dam- ages ; but if not, then the court or jury shall determine the same from all the evidence in the case." The first three lines in the bill as presented by the gentlemen here, substantially the first three lines of the Senate bill, propose to enact, as Mr. Smith has said, what has already been decided to be the law by the courts, and I agree that that provision is just; that "in all cases where the patentee has elected to license other persons generally to use his in- vention," that license-fee should be the measure of damages ; provided that, in addition to that, interest is added from the time when the in- fringement began, because if the patentee licensed them early he would 56 MR. T. L. LIVERMOKE. obtain his lideiise-fee aud have the use of that money during the whole period since the time when the machines began to be used. But suppose an infringer for four years or ten years has availed him- self of the invention without paying a license-fee, then it evidently would not be iright that he should get off at the end of ten years by simply paying the license-fee, when the patentee, if the mau had paid the license-fee in the beginning, would have had the benefit of the capi- tal in the mean time. I am inclined to think that the courts would now, as the law stands, add interest; and I think that the provision in the last part of the clause giving the court power to increase the damages would probably result in that adding of interest. So that those first three or four lines I agree to. Then we come to this provision in the second section : " Or where it appears to the court or jury that, from the nature of the invention, it is for the interest of the patentee that other persons gen- erally should use the same in like manner and pay him a license-fee therefor, the measure of the plaintiff's damages shall be the same, both at law and in equity, and no account of profits or savings shall be allowed." I understand that that is framed with the purpose of meeting a class of cases where, for instance, a man has invented a switch for a railroad and evidently cannot use it himself because he cannot run a railroad for his own profit individually ; or in a case like that suggested by Senator Morgan, where an improvement like a combination of Paris green with something else for the purpose of having it safely handled and used is the subject of the patent; and that improvement is one which evidently must be used by the public generally in order to bring profit to the patentee. Of the nature of the invention itself, it is one which must be licensed to other people to be used in order to give the patentee any profit. I agree that in such cases, where it is an improvement like that, like the Paris-gieen combination, it might result in enormous injustice to have an account of the profits which the defendants made taken under the rules which perhaps the courts are bound by now ; and that in those cases where, from the nature of things, it must be held to be the inten- tion of the patentee that his improvement shall be used by the public because it is an improvement out of which he cannot make profit unless it is used by the public, a reasonable license-fee should be the measure of damages. So far I agree to it. But suppose that there is an improvement like that of Mr. Corliss, which was suggested here, which, from the nature of things, he can use more profitably himself; and suppose that he con- ceives that it is for his interest to use it more profitably ; suppose that he has not at the time that case comes to trial been able to begin the introduction of this improvement, as he contemplates, and a case comes to a court, and he sets up in his declaration that he intends to practice the invention himself, and not license others to apply his invention to machines; suppose that some jury takes a different view or some judge takes a different view, and because it cannot be demonstrated by evi- dence of practical experience that it would be for his profit to have others use it or introduce it or sell it, instead of himself, they limit him to some imaginary proper license-fee. In those cases the rule would be unjust, and to my mind that would come very near to infringing upon that provision of the Constitution ■which provides that Congress may legislate to secure to inventors the exclusive use of their inventions, because the exclusive use in that case which they can secure to him is the use which he can make of it. In SEC. 2: DAMAGES AND PROFITS. 57 the other cases the exclusive use is that use which is the only one that can be profitable, to wit, the use by the public under license from him. To my mind, this part of this section operates with a level rule. It touches Mr. Corliss's case as well as the case of the farmers in Alabama; and 1 think there should be a discrimination, and to that end I would suggest that all that part of the Senate bill beginning at the word "or," line 3, and ending with the word "allowed," line 10, second page, should be stricken out ; or that this amendment should be made, that the word "for," in line 5 of the Senate bill, and line 5 of the bill presented, should be stricken out; the word "interest" in the same line stricken out, and the word "intention" inserted in place of the word "interest;" and after the word "damages," in the eighth line of the Senate bill, and the eighth line of the proposed bill, the words " for using, but not for sell- ing," inserted ; so that the paragraph would either be entirely stricken out, and leave the law as it is today in cases where no license-fee has been established, or else that it should read in this fashion : "Or where it appears to the court or jury that from the nature of the invention it is the intention of the patentee that other persons generally should use the same in like manner and pay him a license fee therefor, the measure of the plaintiff's damages for using, but not for selling, shall be the same both at law and in equity." That, to my mind, would effect that discrimination which is the only one that would be just, to wit, in those cases where the thing might be used by the public to make a profit for the patentee, like the use of Paris green, or the railroad-switch, the court should be at liberty to infer that it was his intention to have the public use it, for there could be no other inference ; and in those cases where it was possible that he himself only could apply the improvements to his machines, and sell them, as his own powder, or the machines for the production of given articles, in those cases the law should be left as it is to-day. In stating the case upon my proposition, I think I have stated all the argument upon it that is necessary, and I will pass from that section. Section 5, which is one that Mr. Smith has said was framed by the Patent Bar Association, is another one which I think is open to criti- cism, and very serious criticism ; and before I read that, in order that the committee may have before their minds clearly the situation to which that section is intended to apply, let me state briefly what the law as to reissues is to-day, as interpreted by the courts, and as we suppose it would be interpreted by them. If a man in describing his invention has omitted to make a complete description of it, or has omitted to state fully and completely all that he might claim as novel in his invention, he may surrender his patent and apply to the Commissioner of Patents for a new patent, called a reissue, and that new patent may be issued with a new description of his machine, and with new claims and new features that he did not claim before ; and, to make that new description under the law and the practice of the courts as it stands to-day, the Commissioner of Patents is authorized to, and must, as 1 conceive, allow the patentee to go to the model which is on file in the Patent Office and make a new drawing from that model, putting in new features which did not appear in the drawing of the original patent, no matter if it is half the machine, and upon that new drawing make a new specification and a new description, and upon that new description make new claims. Now it is not quite settled, as I understand, by the courts, whether in making an amended specification the applicant may resort to the original specification which he filed in the Patent Offlce when he applied 58 ME. T. L. LIVERMOEE. for his original patentj for an amended description or not. It often happens that the Commissioner, in passing upon his application, re- quires certain parts of his description to be stricken out, for one cause or another, so that the specification or description of the inventor, as annexed to the original patent, may omit many features which were de- scribed in the original description filed. It is not clearly settled, I think, by the courts today that an applicant for a reissue may resort to that original description to enlarge the description of the reissued patent which he proposes to take. This section is one designed to au- thorize and require the Commissioner to permit the applicant to resort to that original specification, and confirming the law, in addition, as it now stands. Section 5 of this bill provides : "Section forty-nine hundred and sixteen of the Eevised Statutes is hereby amended so as to read as follows: Whenever any patent is in- operative or invalid^ by reason of a defective or insufficient specifica- tion, or by reason of the patentee claiming as his own invention or dis- covery more or less than he had a right to claim as newj if the error has arisen by inadvertence, accident, or mistake, and without; any fraudulent OP deceptive intention, the Commissioner shall, on the surrender of such patent and the payment of the duty required by law, cause a new pat- ent for the same invention " — And now comes the clause to which I object — *' shown in the model or drawings, or described in the original specifica- tion or its amendments" — To wit, the specification originally filed in the office and not that an- nexed to the original patent necessarily — "and to which he would have been entitled, and in accordance with the corrected specification, to be issued to the patentee, or in the case of his death or of an assignment of the whole or any undivided part of the original patent" — And it goes on to provide then substantially what the law provides now. The last paragraph of this section provides that — "In any suit at law or in equity upon a patent hereafter reissued) the defendant, having given notice or pleaded the same in the manner set forth in the forty-nine hundred and twentieth section of the Revised Statutes, may prove in defense to the whole patent, or any of the claims thereof, that the new patent, or any claim thereof, is not for the same invention shown in the model or drawings, or described in the original specification or its amendments, and to which he would have been enti- tled." I understand that that part of the section is framed to meet this state of affairs: The law, as it now stands, requires the Commissioner to amend the new specification by the model on file ; and it is a serious art of the patent. It may be filed away in secret places in the Patent Oflice, or it may be in tile public model-room of the oflice. That is a matter of option with the Oommis- sioner. He may keep it there in the cases, if he chooses, or he may put it away. As a matter of practice he does, I believe, keep the models in the model-cases. Now, the public know nothing at all about this model, but they have a right to know, and do know, everything that issues under the seal of the Patent Office and is published broadcast over the land. They know all there is in the specification, forming a part of the patent, or they can know it very easily. Now, we give the inventor the right to reissue and cover anything that is described in his original specifica- tion and described in his original drawing, not because that specification and drawing are the best evidence of the invention, but because it is what the inventor has published to the world. The difficulty which Mr. Livermore speaks of is not imaginary. I know of just such a case. The trouble would seem to be this: The party files with his application his model, his drawing, and his specification, at the Patent Office. He takes out his patent, and it may be said, first, that his model does not agree with his drawing or specification when filed at the office. The Commissioner may dispense with the model or not, as he sees fit. He therefore may take out a patent for what is not really shown in the model. The model may differ from the drawing, under the present law. He goes on for six or eight years. He finds that certain devices which are shown in his model that has been deposited in the Patent Office are largely used all over the country. Perhaps he finds that all the har- vesters of the western country use a certain device shown in his model THE PATENT SYSTEM. 69 which is filed away in the Patent Office. Perhaps he finds that some large manufacturing interest has been established upon what has been deposited in the model-room of the Patent Office, but what did not con- stitute a part of the patent according to the specification and drawing. He goes back to the Patent Office, or goes to his attorney, or solicitor, and takes out a reissue covering what was shown in that model — cov- ering not what was shown in his original specification or in his original drawing and what the world is supposed to know all about, but cover- ing something that was placed in the custody of the Commissioner of Patents and something that the Commissioner of Patents might do with as he chose. He then takes out his reissued patent and flirte it in the face of the manufacturers of the country, or the farmers on the western jwairies and says, "Here, gentlemen, you are all using my harvester and you must pay me for it." That seems to have been the difficulty in the patent law that Mr. Livermore speaks of as needing correction, and he also mentioned the fact that perhaps gentlemen connected with the Bar Association might oppose it. I assure him most earnestly^that I have no wish to oppose his views as I understand them. I believe I have nothing more to say upon the question, gentlemen. Mr. Dodge, a member of the association, and Mr. Christy, a patent law- yer of prominence in Pittsburgh, desire to make some remarks to the committee, I understand. AEGUMENT OP W. C. DODGE. Mr. Chairman and Gentlemen of the Committee: Before pro- ceeding to discuss the proposed bill, I desire to make a few remarks on the policy and effect of a patent law. Among a certain class, of late, there has been considerable opposition to our patent system, and that feeling has found expression in both the Senate and House. I have observed, however, that this opposition generally assumes the form of self-interest, and is a demand for class legislation of the worst kind. On the part of the Grangers it was first a demand that articles which they wanted to use should not be patented, and subsequently, that patents should be granted only for such a time as would snfllce to demonstrate the utility of the invention, and that then they should be free to the public, the inventor to be rewarded by a grant of money from the public treasury. On the part of the railroads it is a demand that they shall be allowed to appropriate any invention they please, and then to have the law so changed as practically to prevent their being compelled to pay for them. Th&n there is another class, very small, thank God, who denounce all inventions as a curse ; and it is but a few weeks since a paper here ^t the capital asserted that the invention of the steam-engine and the sewing-machine were two of the greatest evils that ever befell mankind. Another writer recently gave it as his opinion that while "no doubt a good deal of good grows out of the industry and ingenuity set to work (by patents), it is at least an even chance that the evil is greater," and that the " inventors stimulated by patents are men of second or third rate ability as inventors, whose skill consists rather in formulating an ingenious application which may give them a patent that will enable them to levy tribute on same form of industry," and then clinches his argument, as he supposes, by the statement that such men as Franklin, Watt, Fulton, and Stephenson did not take patents on their .70 ME. W. C. DODGE. •inventions because, tbey were "not actuated by a love of gain, but worked solely for the public weal." A little examination will sbow how utterly unfounded are these and lall similar statements. Franklin made his invention, which was an improvement on the Ger- man open stove, in 1745, and he subsequently int^ented the lightning- rod ; but as he died in 1790, and as our tirst patent law was not passed until after he died, it is not easy to see how he could have patented them if he would. Watt not only patented his steam-engine, but he also patented all his subsequent improvements. Not only this, but his patent was ex- tended by act of Parliament for twenty-Jive years. As to Stephenson, he patented every invention he made, the list of which can be seen in the record of English patents from 1815 to 1841. So, too, with Fulton. The State of New York granted his partner, Liv- ingston, and himself the exclusive right to navigate the waters of that State by steam, which act was extended from time to time, until finally it was declared illegal by the Supreme Court, in the case of Gibbons vs. Ogden, because it was a violation of the right conferred by the Consti- tution upon Congress ; but that was after his death. In 1809 Fulton took out his first patent, and in 1811 he took out another. In addition to all this, in 1846 Congress passed an act giving to his heirs the sum of $76,300, a fact so little known that when a bill was pending before the Senate a few years since to remunerate the heirs of Jethro Wood for his invention of a modern plow, a Senator said, "If the government desires to do anything of the kind, why does it not do something for the heirs of Fulton, who never received a cent ? '' If any one doubts that our patent-system has been a great benefit to the nation, he need only to look at our condition at the commence- ment of the Revolution, when the laws of the mother country prohibited the establishment within the colonies of any iron-rolling mill, lumber- slitting mill, and the manufacture of hats or woolen goods of any kind, unless shipped in British vessels and sold to British merchants or in the British colonies, and then look at the condition of the country today. It is no longer a question that patents do stimulate inventions, and that inventors are of immense benefit to the nation ; and hence it is that nearlj' allcivilized nations have patent laws, and that all the greatest and best inventions originate in those countries which offer protection to the inventor. As an illustration of a country without a patent sys- tem, take Switzerland. For lo ! these many years, generation after gene- ration, the Swiss have been almost a nation of watch-makers. One would naturally suppose, therefore, that all the valuable improvements in time- keepers would have originated with them. But not so ; on the contrary, nearly every valuable improvement in time-keepers has originated in England, France, and the United States. Why ? Simply because they have patent laws, and Switzerland has none. What object is it for a man to spend his time and money inventing an improvement, if the moment it is done his neighbor can appropriate it ? What farmer would sow or plant if the moment his crop was grown his neighbors could step in and "reap where they had not sown ?" Or, which of these pub- lic-spirited railroad companies, now asking you to change the patent laws for their special benefit, would invest their capital in building their roads if when built, the dividends were to go into other pockets than their own ? As an illustration of what an inducement will accomplish, take the chronometer. That little article, of such inestimable value to the com- merce of the world, was the result of a prize offered by the British Gov- BENEFITS FEOM PATENTS. 71 ernment of $100,000 for any means by which the longitude of a vessel could be determined within ten miles. Harrison worked at it for forty- years, and in 1767 he won the prize of $100,000. It is recorded that he made one so perfect that it varied but one second and a quarter in ten years. To-day we make more and better watches and clocks than any other nation, and why? Simply because our intelligent mechanics, stimulated by our patent system, have not only invented valuable improvements in them, but have also invented machinery whereby they can be made far better and cheaper than they possibly can be by hand. The result is not only that the price of these articles has been greatly reduced, but they are so much better that the Swiss have not only copied them, but have also copied the trade-marks used on them. So great has been the revolution wrought in this business that the Swiss commissioner to our Centennial, himself a large manufacturer of watches, on his return home, told his people that they must either adopt our system or give up the business. And what is true of this is equally true of nearly every other branch of manufactures. Our improvements in machinery for the manufacture of boots and shoes have so cheapened and expedited their production that to-day we are selling them in Europe, especially in Holland and Germany, notwithstanding their cheaper labor; and only a few days since I read the statement that no less than twenty-eight factories, stocked with American machinery, had been established there since our Centennial. To-day American made tin-ware is being sold in Birmingham, not- withstanding the tin comes from Cornwall, and pays freight here and back, besides the duties on it. Why? Because we make it by machines produced by our inventors, enabling us to make it cheaper, if not better, and because the superior skill of our artisans enables them to produce the articles in styles and forms which render them much neater and more convenient for use. To-day British dealers and manufacturers everywhere are excited over the fact that American hardware is fast displacing theirs, not only in Europe, but in Central and South America, where heretofore they have held undisputed sway. Almost from the first we have supplied Europe and the Central and South American countries with sewing-machines, nearly two-thirds of the entire product of our country being exported; and today you will find American knitting-machines in many a German household; while for years past American locomotives have coursed over the plains of Enssia, and to-day the American sleeping-car is crowding its way on to all the principal railroads of Europe. Sir Eobert Peel once said it was " the destiny of the United States to feed Great Britain, and the destiny of Great Britain to clothe the United States." Even if that was' true then, it is not so now, for not only do we clothe ourselves, but we are beginning to send our clothes to England, and that, too, while feeding her to a greater extent than ever before. How English opinion has been changed in this respect is shown in the following extract from a recent report of Harris Gastrell, secretary of the British legation, made to his government upon the state of our textile industries. After giving at great length the statistics, showing our production, the number of hands employed, wages paid, and the capital invested, he closes with this statement: I cannot close tbis report without recording the fact that, in every important branch ' of industry referred to in the course of the previous pages, the American, manufaeturera seemed to be ever gaining on their oompetitors of the Old World by availing themselves to 72 ME. W. C. DODGE. the ntmost of every advantage of improved process or labor-saving machinery which American or other inventors may ojfifer. There can be little doubt but the celerity with tohioh all such advantages are thought out and then introduced into general use, is owing to the constant pressure of high rates of wages, and the comparative certain protection of capital invested in inventions. Neither can I close without observing how favorably the great industries of the United States would probably compare with the best organized of the competing in- dustries of Europe. The past history and present development of the textile indus- tries is an earnest of a, prolific future. Whether or not a reduced cost of living shall ever be attained, I cannot doubt that, under sound conditions of production, American industry ijoill notonly supply Us home market, but will also become a formidable competitor in foreign markets in many articles. How soon that competition abroad may take place in this or that industry is not for me to conjecture. But I think that the data in this report are sufficiently full and correct to enable others to predict that time in respect to the cotton and woolen in- dustries. I have italicised a portion of the above to call special attention to what I consider the more important of the statements made. The "celerity with which inventions are made and introdued" and the "com- parative certain protection of capital invested in inventions " is the key to the whole subject, and /or all that we are indebted to our patent laws. Need I say more as to the beneficence of our patent system, or the im- portance of preserving it in its integrity ? i The result of all' this is to keep at home a large amount of gold formerly sent abroad to pay for foreign manufactures, while giving employment to large numbers of our people, who in turn add to the demand for the products of our farmers, and give employment to our railroads. Who believes, who can believe for a moment, that this state of affairs ever could have existed but for our splendid patent system ? — a system, I hesitate not to say, which is the best the world has ever seen, and as evidence of that fact I may state that other countries are adopting it, some already having done so, and others about to do so. It is not at all a new idea to find now aud then some thoughtless persons who rail at the patent system, as being the source of " odious monopolies," and who believe that its repeal would be a benefit to the public, but it is a most singular fact that now, just when, through our Centennial, our inventions are being introduced all over the world, there should arise this hue and cry against the patent laws. And what is more singular still, is the fact that the Granger element, which was organized to fight the railroads, should now be co-operating with the latter in the effort to limit the rights and remedies of inventors. It may not be amiss to see what has been the result of similar efforts elsewhere. In 1862, and again in 1871, there was adopted by the Brit- ish Parliament a resolution, as follows : Ordered, That a select committee be appointed to inquire into the law and practice' aud the effect of grants of letters patent for inventions. That resolution was introduced by a member whose firm had been made to pay quite an amount in damages for the use of a patented invention which they had appropriated without leave or license of the owner ; and it is a striking coincidence that this movement to change our laws was inaugurated by the railroad combination, who, as they tell you, have in like manner been mulcted in heavy damages for a sifnilaV appropriation of patented inventions, and which the owners would gladly have sold or licensed them to use for far less than the sum awarded by the courts. As proof of this it is stated that the owner of the swage-block patent, for the use of which these companies complain they have been made to pay an exorbitant price — over $100,000— oft'eredi BENEFITS FROM PATENTS. 73^ to let that same company have the use of his patent for its whole term for $1,000, which they agreed to pay, but when the papers were to be executed, the company insisted on the party taking pay in the bonds of the company, worth only ninety cents on the dollar, and because the owner of the patent refused to be thus swindled out of one-tenth of the price agreed upon, they refused to complete the arrangement, and told him they would use it in spite of him, and he might help himself if he could. I submit that it does not become parties who have acted thus- to now come here crying like a whipped school- boy, and ask Congress to change the law simply to relieve them from the consequences of their own willful violation of the law. But to return to the result of the parliamentary investigation. The committee consisted of twenty-one members, headed by the attorney- general, and it was authorized to send for persons and papers. The investigation was continued through two sessions, the committee call- ing before it a large number of the most prominent manufacturers, inventors, and others, from not only their own country, but also from other countries of Europe, and one or two from the United States. Their report contains the testimony in full, and makes two quarto vol- umes of nearly 500 pages. The result of that investigation was, that instead of recommending the abolition of patents, the committee recog- nized and reasserted the right of inventors in their inventions, and that a just patent law was of great beiiefit to the nation, and finally recommend, in effect, the adoption of the American system. I cannot leave this subject without calling the attention of this com- mittee especially to the following propositions laid down by that com- mittee in their final report, viz : 1. That the privilege conferred by the grant of letters patent promotes the progress- of manufactures by causing many important inventions to be Introduced and devel- oped more rapidly than would otherwise be the case. 2. That the same privilege leads to the introduction and publication of numerous- improvements, each of a minor character, but the sum of which contributes greatly to- the progress of industry. 4. That it does not appear that the granting of pecuniary rewards (as proposed by the Grangers) could be substituted, with advantage to the public interest, for the tem- porary privilege conferred by letters patent. 6. That protection should only be granted for what is shown by an investigation to- be new ; that is, by adopting the American system of examination as a novelty. 10. That the duties payabfe on patents should be so adjusted as to encourage invent- ors to the utmost to make known their inventions, &c. 12. That inasmuch as the property created by the patent law, and the qnestions^ arising under it, are peculiar, there should he special courts for their determination. For a more detailed statement, I beg to refer this committee to the report itself, a copy of which 1 had the pleasure of presenting to it* then chairman a year ago. It contains many other valuable facts and suggestions, but which want of time will not now permit me to mention. I may add, however, that it closed with a recommendation of an inter- national patent system, and a request that Her Majesty's Government take steps looking to that end, and that a resolution to the same effect was adopted by the representatives of the different countries at the patent congress held at the World's Fair at Vienna. Since that time- Canada has adopted our system, and Germany has done substantially the same during the past season ; and even Brazil and other countries- are about moving in the matter, being stimulated thereto by the wonder- ful evidences presented at the Centennial of the benefits of our system. Before leaving this branch of the subject I desire to add a few words^ in reference to the ideas of those who oppose patents, and to whom I have already referred. 74 ME. W. C. DODGE. T ' As to that class who insist that all inventions are a curse, it is hardly worth while to spend time to argue. They belong to the communistie class, the same class who destroyed Cartwright's loom, Aritwright's spinning-jenny, and who, under the direction of the trade-union of Ly- ons, destroyed the Jacquard loom, an invention so wonderful that when its author was presented to the great war minister Oarnot, himself a splendid engineer and mechanician, he exclaimed, "Are you the man who can do what the Almighty cannot, tie a knot in a stretched string?" They belong to the same unreasoning class who during the past season created the riots and worked such widespread destruction throughout our own land. With such to attempt to reason is to cast pearls before swine, and therefore I pass them by. In reply to the writer who says that those who are stimulated to make patentable inventions by a hope of gain are second or third rate invent- ors, I instance the whole list of inventors who have taken patents, at home and abroad. Take such men as Dr. Nott, Evans, Blanchard, Whitney, Goodyear, Colt, Howe, Singer, Wilson, Morse, MoOormick, Perkins, Fairbanks, Bigelow, and Ericsson, (Siemens, Bessemer, Fowler, Whitworthi Jacquard, Nasmyth, Arkwright, Fulton, Watt, Stephenson, Earl of Stanhope, Hargreaves, Grompton, Bell, and Jetiiro Wood, of whom a Senator on the floor once said, " I am fully satisfled that no ■citizen of the United States has conferred greater economical benefit on his country than he; none of her benefactors have been more inade- quately rewarded." If, as asserted, men like these are but second or, third class inventors, then where, in Heaven's name, do you find the first-class inventors 1 People generally have but a faint idea of the amount of labor and money that is expended in producing and perfecting inventions. They seem to think that they come as a matter of course, or that they are the result of a mere lucky thought, reijuiring neither study nor expense for their completion. Nothing can be further from the truth. As an illus- tration, take a few of the oases testified to in the parliamentary report before mentioned. It is there shown that Mr. Holden spent sixteen years and $250,000, and his partner, Mr. Lester, as much more, on their wool-combing' machine, and that altogether there was expended on the invention before final success not less than ten millions of dollars ! Mr. Howard testified that he and his partner, Mr. Fowler, M. P., ex- pended on their invention of the steam-plow $300,000, and that it was not done as "a work of philanthropy, but from the hope of gain." And he added, " 1 think that it is good public policy on the part of the state •to stimulate the faculty of invention in those who possess it, inasmuch as by invention the public is greatly benefited, and I think the patent law has the effect of stimulating inventors." And when asked if he, as a manufacturer, had not been placed at a disadvantage in those coun- tries which had no patent laws, he replied, "No; and I attribute it mainly to one great fact, namely, that the two great manufacturing nations of the world, England and America, maintain a •patent law." He further stated that, as a result of their patent system, he found that their manufacturers were always ahead of those countries which did not protect inventors ; that in his own branch of business he had found by his travels in Prussia they were at least seven years behind the English, and that in Holland, where there was nopateni law, there was no progress. Siemens testified that he left his own country and went to England «imply because he could secure protection for his inventions there, but could not in Germany. Bessemer, the inventor of Bessemer steel, testified as follows : " My BENEFITS PROM PATENTS. 75 experience during the whole of this time (the years that he was experi- Boenting) has shown me clearly that if I had no patent law to fall back upon, I, as an engineer, conld never have first spent two and a half years of my time and $20,000 over mere experiments, which, if they had failed, would have been an entire loss to me. Altogether I made an outlay of $100,000 (gold); but of course I had a large stake to play for. I knew that steel was selling at $250 to $300 per ton, and I knew' that if it could be made by my plan it conld with profit be sold at $100 per ton. But had it not been for the law, securing my right in my inven- tion by a patent, I could never have hoped, as a simple manufacturer, to recoup myself; and I should never have dared to embark in the iron trade, that I knew nothing of, and compete with every manufacturer, who could use my invention without the cost and risk that I myself hart had, because he would have known everything at once, while I had to dig it out at great cost. Instead of having an advantage over the trade, I should have had the manifest disadvantage of having spent more capital to produce a given result than any man who followed me; but with the protection of a patent law, I felt no hesitation, and so strong was my belief in the ultimate success of my invention, in spite of the unfavorable opinion of the trade, that I persisted." The result of that invention was that the production of steel in Great Britain was raised from 51,000 tons in 1851 to 300,000 tons in 1871. At the same time the price was reduced to $125 per ton, thus making a saving to the public of $22,227,500 in that twenty years, to say nothing of the benefits to all the world for all time to come. I think it is safe to say that fully ten millions of capital is invested in the Bessemer-steel business in this country to-day, and it may double that amount. As a consequence, steel rails are furnished at about the former price of iron rails, and their importation has almost ceased, thus retaining at home the vast sums formerly sent abroad for their purchase, besides giving much better and safer roads. Mr. Mundella testified that he " was quite clear that inventions never would be proceeded with without patent laws." Mr. Wright, a large manufacturer, testified as follows : " I think I may, without exaggera- tion, say that a very great part of our prosperity is owing to the inventions protected by patents." Of the same tenor was the testimony of Messrs. Hasseltine, Johnson, Carpmael, Sir William Grove, Lord Eomilly, Webster, Ashton, Newton, Nasmyth, and others, all of whom testified to the benefit of the patent law, and that thereby their manufacturers were enabled to keep twenty years ahead of competing nations who did not thus protect inventors. Mr. Woodcroft testified that his experience showed that without a patent law inventions would not be produced, and as proof he instanced the colonies of New South Wales, Victoria, Ceylon, Cape of Good Hope, New Zealand, and Trinidad, all of which had recently adopted a patent law, simply " because they could not get inventions without patent laws.'" J. Stuart Mill advocated the patent system ; and Jeremy Bentham, in his Manual of Political Economy, says that, "protection of inventions is as necessary as protection against thieves ;" and he adds : " He who has no hope that he shall reap, will not take the trouble to sow ; for that which one man has invented all the world can imitate," thus show- ing the greater necessity for the protection of this species of property. As a prominent law-writer has well said, property in patents is the most difficult of all kinds of property to defend. It cannot be defended like lands or ordinary personal property by possession or force, because of its intangibility; and a thousand different persons may infringe it in SI, thousand different places at the same instant. Said Commissioner 76 MR. W. C. DODGE. Mason in his report for 1855 : " The present insecurity of the property of Inventors, even after patents are obtained, is a source of great dis- couragement and often of peculiar hardship." Commissioner Holt, in his report for 1867, after speaking of the law- lessness of infringers, says : " The eyes of Argus would not suflice to dis- cover, nor the arms of Briareus snfBce to resist, the assaults of so omni- present a foe as it is the lot of the patentee to encounter. The insolence and unscrnpulousness of capital, subsidizing and leading on its merce- nary minions in the work of pirating some valuable invention held by powerless hands, can scarcely be conceived of by those not familiar with the records of such cases as I have referred to." And he advocated a limitation of time, after which the validity of the patent should not be called in question. Said Commissioner Bishop, in his report for 1859 : " There is no species of property in this country subject to the same hazards and uncer- tainty as. property in patents." Said Commissioner Fisher : " No class of our citizens has done more for the glory and substantial prosperity of the nation than the mechan- ics and inventors of the United States, and th«y have never been favored children." Said Judge Holt, in his report for 1858 : "A class of men who have given to their native land and to the world the cotton-gin, the steam- engine, the electric telegraph, the reaper, the planing and the sewing machines — inventions whose beneficent influences tell with measureless power upon every pulsation of our domestic, social, and commercial life— may well be pardoned for believing their wants should not be treated with entire indifference by that body which represents alike the intellect and heart, as it does the material interests of the great country of which they are citizens — the Congress of the United States." With such evidence as this before it, I trust this committee will hesi- tate long before it recommends any change of the law which shall either abbreviate the rights of inventors or render their invasion by infringers more easy. As to the idea that patents are the " odious monopolies " that some represent them, it is simply absurd, and shows that those who apply to them this term do not know what they are talking about. How can that be a monopoly which is open to every citizen, and even to every foreigner ? All alike can have the benefits of the patent law by com- plying with its conditions. It is far less of a monopoly than is the patent which the government gives freely to every citizen who will settle upon and improve a quarter-section of the public lands. In the latter case the occupant gives nothing to the public, and gets a title in fee-simple, which he and his heirs can have the benefit of forever; while the inventor, who does give something to the public, gets a title for sev- enteen years only, a mere lease for that wMeh he created ! The odious monopolies, or those properly so called, such as were given ill the time of Queen Elizabeth, confepdng on some favorite the exclu- sive right to sell steel, salt, starch, paper, &c., by which the cost to the people was increased in some instances a thousand per cent., took from the public rights which it possessed, and gave notMng in return ; while, on the other hand, an inventor gives to the public something it never before had, and talces nothing from it. " Invention," says Mr. Ray, " is the only power on earth that can be said to create. It enters as an essential element into the process of the increase of national wealth, because that process is a ci-eation, and not an acquisition. Hence the most frequent cause of the increase of BENEFITS FROM PATENTS. 77 national wealth is the increase of the skill, dexterity, and judgment, and of the meebauical contrivances, with which national labor is applied." " How," says Oommissiouer Holloway in his report of 1863, "can the exclusive privilege to sell salt in Elizabeth's time, which added not one bushel to the production, but which enriched the monopolist and robbed the community, as was the fact, by raising the price from sixteen pence to fifteen shillings, and the exclusive right of Whitney to the cotton-gin, which has added hundreds of millions to the products and exports of the country, be both branded with equal justice with the odious name of monopoly ? " The fact is, the patent law was established to prevent just such odi- ous monopolies, by providing that no one shall be protected in the right to his own invention even, except on condition that he shall fully explain it to the public so it can use it, and then, after a brief period, give it freely to the public forever. With even more truth might it be said that it is an odious monopoly for the farmer to gather the crop he has raised, or the mechanic to occupy the house he has made. Since the commencement of this hearing the cable brings us the fol- lowing in reference to patents in Switzerland : Public sentinent in Switzerland is beginning to look with favor upon patent laws ; and the loss of a good deal of their watch-making trade, mainly because inventors could not be protected, has caused considerable feeling on the subject. Fedecal Coun- cilor Droz has prepared a bill for a pateat law, which has been published in the Swiss journals, and thus is presented to the people. Patents of importation will be granted to inventors living abroad only on the principle of reciprocity. The maximum dura- tion of a patent is to be fifteen years. And thus it will be seen that Switzerland too has awakened to the importance and necessity of protecting inventors in order to keep abreast of her competitors in the onward march of the age. Having thus traveled rapidly over a very wide field, I now ask the attention of the committee to the few provisions of this bill which it is made my duty to explain. I propose to occupy your time but very briefly, and only upon some sections which Mr. Whitman has not referred to, which I had more of a hand in preparing than he, and which, therefore, he wished me to present to you. I will just call your attention to section 5. I will say upon this subject, on which he was just speaking, and which was referred to by my friend Mr. Livermore, that when we had that subject before the associ- ation originally we struck out. the words " or model " entireljr, for reasons very similar to those given by Mr. Livermore ; but there is now another or additional reason for striking out these words, and that is the late fire in the Patent OflSce, which has destroyed about one-half of all the models there, about 87,000, 1 think. So that with reference to those patents it is impossible of course that they shall be reissued by the models. The question is, as a matter of policy, whether we shall let the law stand in Its present shape, and have one rule for those patents where the models were destroyed, and another rule for those patents where the models are not destroyed. My own view is, that it would be better to strike out entirely all reference to models. Yet the inventors and the majority of our association say this (and there is a great deal of force in what they say), that the model was the object which the inventor best knew, and the thing upon which he was most entitled to his patent; and if he did not get a particular thing in his drawing or specification originally, it is no reason why he should be cut off from it on reissue. The same might be said of other features as well as those in the model, perhaps not in the drawing and not claimed in the patent ; and if he reissues by 78 MR. W. C. DODGE. the drawing, he would cut him off just as much, and there would be no difference in that respect. After all, it seems to me it is more a question as to what it is politic to make the law than anything else. However, there is this consideration, that one-half of the models were burned, and, therefore, if you insert the words "or models" you will have one rule applied to one-half the patents and another rule to the other half. But, as a matter of justice and right, I can see no reason at all why the inventor should not be allowed to cover whatever was his original in- vention, and whatever might have been patented originally. 1 can see very grave reasons why he should not be allowed to do it under the law as it was, because when he takes out the reissue he would hold the infringer liable for machines and articles which were made before he ever notified the world that he claimed them as his invention. That certainly was very unjust, and that we propose to prohibit by another section. Senator Mobgan. Will you refer us to the section of the old statute which is proposed to be here amended? Mr. Dodge. The section relating to reissues, section 4916. I will state for the information of the committee that, as this law stands now, we can reissue and claim anything shown in the model or in the drawing. The way Mr. Livermore proposes to change it, or as it would be changed if you leave out the word "model," is that you may reissue and amend the patent by anything shown in the drawing or specification. In other words, this change in the law would substitute the specifica- tion for the model. Formerly, prior to 1861, it was the practice of the pfQce to allow reissues for anything shown in the drawing, model, or specification, and in addition to that to allow parties to furnish proof. aliunde of features which were not shown in either of the three. That was the practice of the Patent Oiiice until the decision of the Supreme Court in the Carhart Melodeon case, in which they decided that the re- issue in which had been put a feature not shown in the model, drawing, or specification, but which the man originally had as a part of his in- vention, was void ; and since that time the oflice has not permitted any- thing of that kind. In the act of 1870 the law was changed so that the inventor could only claim by a reissue what was shown in the draw- ing or model. If you strike out the word " model," it will simply leave a drawing or specification. Mr. LiVERMOEE. The published drawing or specification. Mr. Dodge. That was not the intention. The intention was to allow him to go as far as the papers which he originally filed showed that he was entitled to, on reissue. Mr. Livermore. That is what I object to, among other things. Mr. Dodge. Then there would not be much of an object in the reissue. Mr. Livermore. That is the foundation of the claim. Mr. Dodge. The very object of the reissue very frequently is to get a more complete and full description of the invention as the foundation for a claim. If he cannot change the specification, I cannot see what he gains by the reissue. Mr. Livermore. I would allow him to amend by describing anything shown in the drawing, because that is published to the world, but I would not allow him to go back to the specification filed in the Patent Office, and which is never published. Mr. Dodge. I get your idea perfectly. Now, I want to call attention to section 11 , which, although it did not originate with us, is one that probably will create as much excitement among the inventors of the country as any section in the bill, and that is the one providing for the payment of two duties upon a patent in order to keep it alive; a pro- SEC. n : PEEIODICAL FEES, 179 vision which we advocated (that is, myself and some of the older resi- dents here) when the act of 1870 was passed, and which we are decid- edly in favor of; that is, I am personally in favor of it, and I think quite a number of the solicitors are, for the reasons which have been stated, to get out of the way these old dead patents. It happens in the course of our experience that we find a man takes out a patent for what he supposes will be a good invention. He has never made a machine or tested it. Probably 9 out of 10 of the things patented never have been embodied in full-sized working-machines prior to being patented. A man gets an idea of an invention, goes to work and makes a model, and goes to the Patent OflQce to secure his patent. After he gets that done he solicits capitalists to manufacture the arti- cle. A manufacturer very frequently goes to work and spends $10,000, it may be, in the first machine, and experiments with it, and he finds that it proves a failure. If so, of course, that is the end of that patent. The inventor abandons all thought of it, and goes off and turns his at- tention to something else. By and by there comes along another man who, taking up the same idea, goes to work and makes a machine which proves to be perfectly successful and gets a patent on it. He organ- izes a company, getting $100,000 or $30Q,000 or $500,000 of capital in- vested in the manufacture of that machine. It is put before the public, and it operates successfully. Then comes along what I call one of these patent sharks or patent spec- ulators. He goes down to the office and rakes that class over with a fine-tooth comb to see if he cannot find an old patent which can be re- issued to cover this successful machine. He comes across the old defunct patent and goes and buys it. The owner, of course, is glad to get what he spent on it, and he may take a hundred dollars tor it. Very fre- quently the man is dead, and he will go to the widow or heirs, and they will take anything he offers them for it. He reissues that patent. Being an ex parte proceeding, of course nobody knows anything about it. He reissues it just as Judge Grier stated of that hat-body case, that it was put through the enlarging process, not for the purpose of protecting what that patentee invented, but for the purpose of covering other in- ventions. He has the specifications and claims prepared with special reference to covering this successful machine, and when he gets his pat- ent he goes to the manufacturer and says, "Tou are infringing my patent." The manufacturer examines the matter, and it seems to be a clear case. Or he refers to his attorney or counsel, and they examine it, and they tell him that they think he is infringing the patent; and then he has either got to pay that man what he chooses for the privilege of going on with his business, or else he has to shut up shop. If the man who gets out this reissue cannot, make the manufacturer come to terms, he will go around to his different customers all over the country and threaten them with suits of infringement, and thus destroy or break up his business. The proposed law cuts off that sort of thing. This provision will do more to prevent fraudulent reissues than any other provision in the whole bill, because that original inventor, of course, will not keep his patent alive after this failure of it. That will be the end of it. If he does not pay this fee at the end of four years it is out of the way. Hence, I think, this provision will do more to prevent fraudulent reis- sues, which have done more to give rise to the predjudice against patents than any other provision in the law. But you will find a great deal of objection to it from the inventors on account of the amount of the fee. The object is not revenue. That is not what is wanted, because they have a million and a hundred odd thousand dollars lying in the Treas- 80 MR. W. C. DODGE. ury now, paid by the inventors of the country, over and above the ex- penses of the Patent Office, and it would be unjust to tax them further Therefore, it seems to me that the fee might be very materially reduced. It does not matter what the amount is, whether it be five or ten dollars, but only some amount which the man must pay or have his patent die. I should say that five and ten dollars would be amply suffi- cient for all purposes, instead of fifty and a hundred dollars. It strikes me, if there is to be any difference in the terms, as they have four years for the first term and five for the second, that the first term is the one that ought to be the longer. When a man has made an invention he has only got the work laid out. Then the difficulty is to introduce it to the public, and there are a hundred reasons why he cannot do it. In the first place, there may be a patent that has a few years to run, and he cannot use his invention until that patent has expired. One of the most successful inventions our manufacturers are using today, and on which they have netted probably not less than a ntiilion dollars of profit, is an invention of my own, which I sold to a manu- facturing company, and for four years I could not stir with it. I en- deavored to sell it for anything I could get for it, simply because ttiere was a patent which had four years to run, and which we believed would be extended for seven more. The manufacturers said to me, " We can- not use it ; what is the use of buying it ? " I could not do a thing with it myself because it required large capital. That is the way with almost all these inventions. The inventor hardly ever works the thing himself, and the diffloulty is to get capital interested in it and to have it intro- duoed, because all these manufacturers have their capital invested in the manufacture of some article with all the machinery, tools, and ap- pliances adapted to that article, and they say : " What is the use of throwing away all that we have invested to introduce something else ? So long as nobody else does that, what is the use of it ? We can sell these articles just as well without your patent as with it." Hence I would make the first term the longer term, so as to give a man a good chance to get his patent introduced and to realize from it, if he can. If then he fails, and does not care to pay the duty, let the thing go. In England they pay fifty pounds at the end of three years, and a hundred pounds at the end of seven years, and a failure to pay either of course forfeits the patent. In other countries it is an annual tax; an annuity in most of them. We find at the end of the first period of three years in England a large proportion of the patents die out. They do not choose to pay the fifty pounds to keep the patent alive, and at the end of seven years probably not ten in a hundred are preserved. Mr. Stansburt. Ninety per cent, die out. Mr. Dodge. At any rate, the larger portion of them die out. They do not prove to be valuable, and hence the inventors do nothing with them. I will say, in reference to section 16, of which my colleague spoke, that there is one point where I am afraid you did not get a clear idea. The law prescribing the price to be paid for copies was fixed before we commenced printing the patents. It was fixed in the act of 1861, mak- ing the price ten cents per hundred words. We commenced printing patents November 27, 1866. Tbey did not change tae law in that respect from that time on. The act of 1870 did not change the fee at all; so that we pay now the same price for certified copies of printed specifications as was paid for written specifications. I will give a case to illustrate that. For instance, I buy a printed copy of a patent for 25 cents. I want to have it certified for use in a suit. It happens SECS. 11, 18. 81 to be a voluminous one. After they have put on the certiflcate which is a blauk form, and the seal, the price amounts to over $30; and the Commissioner says, " Under the law, I cannot help it; I must charge yoa ten cents per folio." That provision of the law is a mere oversight, and the suggestion of amendment comes from the Commissioner. He, however, I believe, has a little amendment which he wants made to that section ; but that he will point out himself, and I will not take your time. The next is section 18. Senator Morgan. Before going any further, can you state what are the present charges under section 11? Mr. Dodge. There never have been any under our law. It is an en- tirely new idea introduced into the system. Senator Morgan. The eutire section is new, then ? Mr. Dodge. Yes, sir ; it is entirely new. That did not origiaate with us ; but I wanted to call attention to these facts, because we are all interested in making the bill perfect. As the law stands to-day, you will find a man who fails to prosecute his application in the offltfe for two years after any action had on it, forfeits his application ; but he may come in and file a new one at any time. The party who has had his patent allowed, and has let six months go by without paying the final fee, forfeits his application, and if he neglects for two years to renew his application, he is cut off entirely from ever having a patent for it. So that the man who has an invention which the office says is patentable is placed on a worse footing than the man to whom the office says, " Ton have no invention." There are two sections in the original law on this subject, one refer- ring to neglect to act on a case rejected, and one to a case where for- feiture is incurred by neglect to pay the final fee. We finally came to the conclusion to cut off at the end of six months the party who failed to pay the fee. One object is to make the parties more attentive and not to let these cases lie along, so that the public may know what patents are liable to come out. But the opinion of the Commissioner is, and I think it is the opibion of the majority of our association, that this pro- vision should be changed so as to put the two classes upon precisely the same footing and allow them to renew it at the end of two j'ears by paying a new fee and filing a new application. That the Commissioner will speak himself to you about. There are in section 18 some very important provisions. I may say that the practice in the office has grown up by accretion, not really by any statutory provisions, and they are changed with every new Com- missioner. As Commissioner Leggett said, it is, and probably will con- tinue to be, a political office. We have averaged ten Commissioners since Mr. Lincoln's election, some of whom were lawyers, others were not, not even members of the bar, and the result of it is that we have all sorts of decisions and all sorts of practice. It is like a clock-pendu- lum, here she comes and there she goes, all the time swinging from one extreme to the other, until we do not know, as was said, when we go to bed at night where we will be when we get up in the morning, so far as the decisions and the practice of the Patent Office are concerned. When Commissioner Leggett was in, he established the rule that when a party paid his final fee, which, under the statute of 1861, was not to be done until the patent was issued, he then having complied with all the requirements of the statute, his patent should issue ; that it should not be stopped by the interference of somebody who came in after that time. There are about two weeks between the time of the payment of the S. Mia. 50 fi 82 MB. DODGE. final fee and the time the patent is delivered. That time is occupied in preparing the drawing and specification, and everything, in the office. That time elapses after the party has paid his final fee, before the pat- ent is made up, signed, and sealed. Commissioner Leggett established the rule that it ceases to be an application and becomes a patent after the final fee is paid. At present the patent is dated two weelss before delivery, and it commences to run, and is actually in operation under the law, two weeks before the document is in existence, and before the party can get possession of it. Now the office has swung away to the other extreme, and they have stopped patents even after they were signed and all made up and ready for delivery, after they had commenced to run. We want, if possible, by statute to fix definitely the time when the case ceases to be an appli- cation and becomes a patent — a time definite, within which the patent shall issue after the party has complied with all the requirements of law. Hence we say here, which is new matter, in line 7 : "Every patent shall issue, bear date, and take effect as of a day cer- tain, to be fixed by the Commissioner of Patents, not later than the sec- ond calendar week after the payment of the final fee." What we mean by a day certain to be fixed is this: They have in the office what they call an issue day for each week. All patents are dated on a certain day. That, of course, must be in the discretion of the Com- missioner, according to the facilities and necessities of the office. Now Tuesdays are issue days and Fridays are make-up days. He will proba- bly designate Tuesday as the day when the patents will take effect, and they are to be. delivered on that day ; not delivered two weeks hence and liable to be stopped in the mean time. But we go further. Suppose that although the man has complied with all the requirements and the patent is made up, the Commissioner ought not to issue patents which he knows the courts will hold to be void. Hence we leave it entirely under his jurisdiction by the next succeeding words : "And until the day of issue the application shall be within the jurisdiction of the Com- missioner." That is done for two reasons : First, they may find a reference which they had not found before and which is a perfect answer to it; and if they do, they will give that as an answer, and the man will then aban- don the case. The Commissioner should not issue a patent which could be of use to no one. There may be a case of fraud brought to the atten- tion of the Commissioner of which he is bound to take notice, and in that case he ought not to be compelled to issue a patent. But we go on with this proviso restoring the rule as practiced by Mr. Leggett: "Provided, That no application on which the final fee has been paid, after notice of allowance, shall be withheld from issue because of inter- ference with any application filed subsequent to the payment of the final fee, as aforesaid." It leaves it in his jurisdiction for all other purposes. That party may have his interference after the patent has issued, if he wants. The idea is to make these parties hurry up ; not to let them lay back four, five, and six months, or a year or two years, and then come in and stop a more energetic party who has been industrious in trying to get his patent. I want also to add one word in reference to what my friend said about section 19, and that is as to having our patents terminate by the expi- ration of foreign patents. Tiiere is one fact not generally understood, and that is, that we cannot have a valid patent abroad after the patent has been taken out here. I have within the last month received word •rom England that the English patent office has held that the introdaa- SECS. 18, 20, 24. 83 tion of one of our printed specifications there is a bar to the inventor himself from taking a patent there subsequently, because the invention is thus published within the kingdom. In the second place, we cannot have a valid patent at all in Prance if the thing is made public in any way or anywhere previous to the filing of the application there. Therefore, generally, when a party comes to us and says, "I have an invention which I want patented here, and also in England, Prance, and Belgium " (those being the three principal coun- tries in which inventors take out foreign patents, because those are the great manufacturing countries of Europe), our practice is to file an appli- cation here and let it lie until we send over there and file an application, and as soon as we know that the application is filed there we have the patent issued here. Then the American patent will take date before the foreign patent and will not lose that three years; but here is the trouble: Under these foreign systems they have no examination, but the grant of patents is a matter of course, and the patent will issue in so many days or weeks from the time the papers are filed, whether the inventor wants it to issue or not. Consequently the inventor has no control over the patent after it is filed in the ofiBce, Here it is not so. We are liable to all sorts of delays, and are kept waiting for one or two years by references and appeals or by an inter- ference, but in the mean time the foreign patents have gone out in advance, when we did not mean to have them go out in advance, and thus against the party's desire and intention he is deprived of three years of his American patent. That is one reason why we propose to change that section. Section 20 is substantially the same as the law is now, making all rejected applications which lie for more than two years without any action forfeit. I think there are only one or two changes in the section, and they are not of any consequence. The last section, section 24, is one of the most important, relating to reissues. Senator Morgan. Is not two years a very long time to allow the appli- cation to be completed ? Mr. Dodge. Two years was adopted simply because that had been adopted under the act of 1861, and applied in various conditions all the way through. CTnder the law now the party is required to complete his application within two years. That was done for this reason : Before the act of 1861, parties would file their specification and drawing in the office and not pay their fee. It served as a perpetual caveat without paying anything for it, and the ofiice became cumbered with applica- tions of that kind. Hence they said, "Tou shall complete your applica- tion in two years or we will cut you off"; and so when the act was before Congress in 1870, and discussed at great length, they concluded to apply it all the way through. Senator Wadlbigh. Has there been any difilculty or inconvenience under the act of 1870 on account of the two years' rule ? Mr. Dodge. No, sir. Senator Wadlbigh. It has worked well ? Mr. Dodge. It has worked well, and we found no difficulty, except in the revision of the statutes ; they changed the language of the statute in such a way as to put the man whose patent was allowed in a worse condition than the man whose patent was rejected. In one case it made him abandon his application, and in the other it made him forfeit his invention. We want to put them both on the same footing. Section 24, amending section 4904 of the Revised Statutes, relates to 84 MR. DODGE. reissues, and that is a very iinportaDt section ; because, as I said before, the great difficulties and the prejudices that exist to-day among our granger friendsand those opposed to patents generally, have arisen under abuses of the provisions of the statute relating to reissues, which abuses grow rather out of the maladministration of the law or the failure to properly administer it in the Patent Office. But there are certain things that can be cured by statute. We have followed as near as possible the original phraseology of the statute which has been in exist- ence since 1836, with the exception of the proviso which comes in in line 15 : ^'Provided, That after the final decision between the parties to an interference, the application of the successful party shall not be put into interference with any application filed subsequent to the closing of the testimony taken on behalf of the successful party in the interference so decided ; but the patent shall issue to the successful contestant, and then, if desired by the subsequent applicant or applicants, an inter- ference may be had with said patent." That relates to original applications. Then there is another proviso, which is new, commencing in line 23. The first proviso relates to oidi- nary interference upon new applications. This proviso relates to an interference where a man comes back to reissue his patent : ^'And provided further, That in the case of reissues no interference shall be declared with any patent of later date than that sought to be reissued, except when the original application for such subsequent pat- ent is shown by the office-records to have been of prior date to the appli- cation of the patent sought to be reissued, nor with any application for a patent filed subsequent to the date of the patent sought to be reissued ; but, if desired by such subsequent applicant or patentee, on an applica- tion for reissue, an interference may be had with the reissued patent after the same shall have been issued." What we have sought to do there is to correct two most outrageous practices that have grown up in the office. It originated in this way: A party comes in and makes an application for a patent. After his case is allowed (and perhaps he may have been there a year or a year and a half) another party comes along and makes application for the same invention. They are put into interference, and it will take from six to twelve months to get through that interference, and it is very expensive. After it is all done and the case has been decided by the examiner of interferences, the unsuccessful party appeals to the board of examiners. They set a time for the hearing, and after they have decided, there is a limit of appeal given of thirty days, and just before that time the unsuc- cessful party will appeal again to the Commissioner, and in that way he may keep this party tied up a long time after the original interference is decided. Then, just as the patent is about to issue, this unsuccessful party, perhaps, if a manufacturer, gets one of his workmen to come in and make another application for the same thing, which will again put the inventor in an interference, and then he has got to fight all over the ground again and his patent is tied up just as before. After waiting until the last day, and when he has gone through all the stages, in comes a third applicant, and he will be put into interfer- ence. In that way cases have been tied up there until the unsuccessful party, who knew he could not get a patent and did not expect to get a patent but wanted to keep the inventor out of his patent until he could supply the market, has done thatj and when the market has been SEC. 34. , H5 wholly supplied for the next ten years the patent will issue ; so that, if the party gets a patent ultimately, it is of little or no use to him. The Commissioner says that is a most gross outrage, but that under the present law he has no power to prevent it. He cannot compel par- ties to give security for costs nor prevent this outrage against appli- cants. Senator Wadleigh. He would have an action on the case at common law against him, I suppose. Mr. Dodge. I am stating now just an actual fact. Take these street- cars here ; this sliding car-door. Stephenson, the manufacturer, of New York, is the one who manufactured it. He supplied it to nearly all the street-railroads in the United States, keeping tlie inventor out of his patent three years, tiling unsuccessful applications, one after another. By these means a wealthy man can ruin a poor inventor, who cannot afford to employ a man to travel around the country to take testimony at an expense of twenty-five dollars a day, while the wealthy man has plenty of means at command and can do it. Now we want to stop that abuse. The reason for making a distinction between applications for original patents and for reissues is this : that where a man has his patent and he is tied up in the office by an interference on ai)plication for a reissue, it takes so much out of the life of the patent, nor can he bring suit or hold them responsible as infringers or collect damages from thoseinfring- ing in the mean time. A case in point will illustrate that. There was a patent taken out a few years ago on a certain stove-board. Is consisted simply of a sheet of zinc spun over the edge of a wooden frame or body in sfich a way as to hold the wooden parts in and allow them to expand and shrink freely without wrinkling the metal at all, there being no screws or nails in the wood. It was held entirely by the zinc being spun over the edge of it. That patent was taken out by Mr. Westlake, of Chicago. We secured the patent for him. He first had a party to manufacture under it for two years. They went into the manufacture very largely, fitting up a shop for it; one of those brass- manufacturing companies in Chicago. They put out, prior to the Chicago fire, about sixty thousand of those, which they retailed at two dollars or two dollars and a half apiece. After the fire, in about six months, they got started again. They brought suit against a party who commenced to make the same thing in Chicago, and Judge Drummond held, or intimated rather, that, while they had a good invention, the patent did not cover it. They then dropped that suit and came to the office for a reissue of the patent ; and after it was allowed, and just as it was ready to issue, in came an- other applicant from the same place claiming the same thing. Our case was stopped and tied up with an interference for eighteen months, and the attorney on the other side boasted that they were then filling one order for ten thousand of the articles, for which we never could get any damages, of course. All of this came up in testimony, and it turned out ultimatelv that this party did not expect to get a patent, that that was not his object, but that the object was to flood the market and put the money in his pocket ; and he admitted afterward on the stand, in that very case, that he had knowledge of the existence of our patent for more than two years before he filed his application, which, under the statute itself, was a bar to the grant of a patent to him. That is the reason for that provision there. I believe, gentlemen, I have said all I desire to say. 86 MR. CHRISTY. ARGUMENT OP G. H. CHEISTY. Mr. Christy. Mr. Chairman and gentlemen of the committee, I desire to call attention to a few verbal alterations which I think should be made in the bill, and also comment on one or two points connected with the general policy of the law. And, first, I will refer to section 1 of the Senate bill, which relates to the matter of limitation. I think the limitation is wise. The only question is as to the time. My own im- pression is that four years is a little too short. I think that it should be five or six years. That, however, is purely a matter of discretion or judgment. Some limitation is wise. In the act of July 8, 1870, it was made six years from the expiration of the patent, and that provision continued in force until the Eevised Statutes went into operation, and for some reason or other that provision was left out. This provision makes it four years prior to the date of bringing the suit. As this is rather an experiment in the way of legislation, I think it should be made as broad as possible, and five or six years should be allowed. Passing to the second section, my friend, brother Livermore, referred to some alterations which he desired to have made in the first four or five lines. I have an amendment to suggest in the same lines and for substantially the same purpose, and I will call the attention of the com- mittee to the language in order to get at my meaning : " In all cases where the patentee has elected to license other persons generally to use his invention in like manner to that in which it was used by the defendant." There is one case in which a license-fee is to be the measure of dam- ages. Now, then, it provides another case : " Or where it appears to the court or jury that, from the nature of the invention, it is for the interest of the patentee that other persons gen- erally," &c. Thus there are two provisos. One is, when the patentee has fl^ed a license-fee himself; the second is, when it shall appear for the interest of the patentee, based on the nature of the invention. I will take, for illustration, the Pullman car. Suppose Pullman to be the first inventor of that ; it is obvious that it was optional with him to resort to one of two ways to use the invention : either to sell licenses to the roads to build their own cars, involving his improvements, in which case he would have fixed a license-fee, or to do, secondly, as he has done — build the cars himself, and run them on the roads. The bill here, in reference to such a matter, makes the nature of the invention the sole test, whereas it should be the nature of tlie invention and the manner in which the patentee has chosen to work the invention. Following down, in line 33 in the same page, the word "same" occurs. I should like to ask the committee to strike that out and insert the word "damages." The word "same" may refer to one of three things — the license which is specified in line 9 : " If a license-fee has" already been established by a reasonable number of transactions of a character applicable to the case at bar, that shall be adopted as the measure of said damages ; but if not, then the court or jury shall deter- mine the same." The word " same " may relate to " license,'" which is the subject of the preceding sentence; it may refer to " measure," in the line preceding ; or it may refer to " damages." Now, when, in shaping the law, am- biguity can j)ossib]y be avoided, I submit it had better be done. I sup- pose the intention was to mean damages. SEC. 2: DAMAGES AND PROFITS. 87 Mr. Eatmond. It means license. Mr. Christy. I had two Boston lawyers last night to help me in get- ting at the meaning of that section, and they said that this word meant " damages"; here is a Chicago lawyer who says it means "license." If you go into court on that language, how are you going to construe it ? If it means "license" — and that is what I understood it to mean when I first read it — I am opposed to the whole section. If it means " dam- ages," I have no particular objection to it ; but there is an ambiguity which arises right on the face of the paper. Senator WADLBienj. It has to be read with a view to what you in- tended to effect. The court and jury are to determine what ? The case is brought to recover damages ;. they are to determine, then, the dam- ages that the case is brought to recover. Mr. Christy. That is the construction I want to have given to it. Senator Wadlbigh. I do not think the courts will find any difficulty about it. Mr. Christy. Very well, if the committee are satisfied. On page 3, in lines 30, 31, 32, and 33, there is this proviso : " Provided, That the provisions of this section shall not apply in any case in which a decree tor ati account or assessment of damages has, at the date of the passage of this act, already been pronounced." I heartily approve of the correction suggested, I think, by Senator Morgan, and advocated by brother Walker, of the Chicago bar, to make it read: "Prowded, That the provisions of this section shall not apply in any case in which a right of action has already accrued." I never examined the question, but I think brother Walker's position there is the correct one, that legislation cannot affect the right of par- ties to damages which have already accrued. I think that alteration there would be a wise one. Senator Wadlbigh. Let me ask you, on that point, is not the legis- lature to prescribe the mode in which the damages shall be arrived at? Mr. Christy. I will say to the committee that I have not specially examined that subject, and am not prepared to give a legal opinion upon that point. I only say my impression is that Mr. Walker's posi- tion is correct. I would not undertake to go into a discussion without first making a careful examination of the subject. Mr. Walker. I have given a great deal of study to that question, and it is not a question of the mode of arriving at the damages at all. There are now two separate recoveries, one of profits on the theory of trusteeship, the other of damages by the parties in an action on the case, they having no philosophical or legislative connection with each other whatever; and when you have abolished profits you have not chan.ed the mode of arriving at damages, because profits are not dam- ages any more than a horse is a mule. They are not connected in such a way as that, and when you have abolished the recovery of profits you have simply abolished the recovery of something that the law now gives us. Senator Wadleigh. My idea would be this: that when any procedure, either at law or in equity, is brought by a patentee to recover for an infringement of his right, what he gets is the damages for that infringe- ment, not in the common-law sense of the word, but really damages arrived at in the one case by process of law, and in the other case by proceedings in equity. Mr. Walker. Are you using "damages" in the sense of "compen- sation" now? Senator Wadlbigh. Not at all. 88 MR. CHRISTY. Mr. Smith. The Supreme Court once used language almost to that effect. Senator Wadleigh. T speak generally, of course, without any refer- ence to a particular case. Mr. Walker. In two cases in the Supreme Court, one in which the opinion was delivered by Justice Clifford in 1876, and the other in which the opinion was delivered by Justice Miller in 1876, they expressly stated the philosophy of the two recoveries, and clearly indicated that the two recoveries have no connection whatever, and that the recovery of profits in equity is not a recovery of damages in any sense. Senator Wadleigh. I understand perfectly well it is not in one sense. Senator Morgan. Is not the real distinction this: whether damages that arise under the common law for any injury done to the person or for compensation, whether compensatory or punitive, are damages that belong rightfully to the party as property? Mr. Walker. Exactly. Senator Morgan. Damages given by statute, as I understand, are always under the control of the legislature, and by a repeal or modifi- cation of the statute you can always strike out damages without doing harm to the party at all. Mr. Walker. But this recovery arises wholly on common-law prin- ciples and never belongs to the legislature at all. Senator Wadleigh. They take the ground that inasmuch as the de- fendant has used or held the property of the plaintiff, therefore he must account to the plaintiff for whatever profits he may have received from the property. Mr. Walker. Under the doctrine that he is a trustee. Senator Wadleigh. Tes; under the common-law or equity doctrine. Mr. Walker. Of trusteeship. Senator Wadleigh. He is trustee of the plaintiff. Mr. Walker. And without any regard to the damages. Senator Wadleigh. I understand that perfectly well, but that is sim- ply one way of giving the plaintiff compensation against a wrong doer. Mr, Walker. If you will take pains to read the latest decision of the Supreme Court, they say that is not compensation. Senator Wadleigh. Well, what is it? Mr. Walker. It is not compensation for the injury he has received at all. It proceeds on the theory that the infringer has taken the prop- erty of another man and made money out of it, and that the money according to natural principles belongs to the man that owns the prop- erty, and they subject it to a trust and make him a constructive trustee, and he has to pay it over without any regard to any question of com- pensation, and without any regard to any question of damages. Senator Wadleigh. I understand that perfectly well. Mr. Christy. I wish to refer to one or two points which have arisen in the discussion already, but I do not propose to review very much of what has been said. As I understand this cotton-worm case (although I have not examined the patent), as stated by Senator Morgan, sorae- b( dy has a patent on a mixture of Parts green and flour. I apprehend, so far as this second section has any bearing on a case of that kind, it simply amounts to this, that that man has a patent on the mixture, and when he makes and sells the mixture his right under his patent has expired, and that property then, when sold, goes into the commoti mass of property, and he has no claim in reference to any utility which may arise out of the application of it from the products of the soil, any more SEC. 2: PROFITS. 89 than a physician selling a patent medicine has a right to the profit which may result from the benefit of the medicine to the human system, or any more than in the case of a patent (if such a thing should be in the future) for regulating the weather by arranging the orderly succession of storm and sunshine, any more than the patentee of a method of se- curing that result could claim that he is entitled to all the benefits flow- ing from the operation of nature's laws the action of which is so pre- arranged. In this case of the cotton worm 1 say that the infringer of the patent is liable to the extent of making that mixture; that up to that point he is liable. He is liable purely for the profits on the mixture, the profits which the patentee would have reaped if he himself had made the mixture and sold it; but as to giving him the profits on the entire crop, it is certainly going further than auj courts .vet have gone with the doctrine of consequential damages, to say that if by virtue of a good season, a favorable sun, or a favorable climate, the cotton crop has turned out well after you have killed the worms, therefore the man who patented the mixture which killed the worms should himself have all the benefit flowing from such favorable season. There is, I appre- hend, no danger of the courts going to that extent. Now, in reference to the point upon which my brother Smith has spoken at considerable length, as to holding an infringer as a trustee, even though the money which the courts charge him with has never actually come into his possession, it looks like a hard doctrine in the way the Supreme Court laid it down, at first sight, but the question arises in this class of cases: An inlringer will adopt a patented device; he will put it on a machine (and I am speaking from experience, for I have had to deal with such cases); he will sell that machine at so low a price that no profits can by any possibility come into his possession. Now, then, because he has not only infringed, but also, by his own vol- untary act, has i)ut himself in a position where he cannot pay money because it is not actually in his possession, therefore he must go scot- free ; I say that is an extremely absurd law, and I take it that that is substantially the doctrine condemned in the case he referred to. Mr. Smith. I did not suppose the party ought not to be liable in damages. My objection was to the absurdity of an application on the theory of profits when a man had no profits. Mr. Christy. TVhen a man conducts a tortious business (for an in- fringement is a tort) in such a u)anner that he not only sinks his own property, but sinks the property which he ought to have acquired as the result of the tort, I say it is no injustice to hold him accountable for the money which he ought to have made had lie conducted his business properly, and that he should be held accountable to the patentee for that money. Passing now to section 5, that is this reissue section. With the per- mission of the committee I desire to consider that section along with section 21, which my brother Whitman commented on, in reference to applications for reissue being sworn to by the assignee. I will state generally, because it is the foundation of the conclusions I want to reach, it was found as a matter of history that along about 1864 and down to 1869, when the law was such that any party desiring to do so could go and buy up an old patent, educe from it in some manner or other, by some mental operation of his own, some invention which would cover som.ebo(ly else's manufacture, that sucii an assignee could resort to this privilege of reissue, making oath that he verily believed that John Smith was the inventor ot what he himself imagined the in- vention to have been. He goes into the Patent Oflace and gets a patent 90 MR. CHRISTY. accordingly. The Patent Office at that time had drifted very far in that direction, allowing assignees to come in and make claims, fraudu- lent on their face, unjust to the public, which did not constitute a part of the invention as originally patented. I can give an illustration of that. In a suit brought by the The Pullman Company v. The Woodruff Company, which I had the honor in part to defend, the suit was based on a reissued patent to T. T. Woodruff. The reissue was taken out by an assignee. In that suit I got an affidavit from T. T. Woodruff, the inventor and original patentee, that, in his own opinion, he was not the inventor of claims 1, 2, and 3, I think, of the reissued patent. There is just the evil which arose at that time. That patent was reissued in 1869, 1 believe. Now, then, the law of 1870 was passed which corrected that defect, or that evil, rather, by closing up the doors in part, or the facility with which reissued patents could be obtained, and, amongother , things, it required that the corrected specification, the specification on which the reissue was to be based, must be sworn to by the inventor if he wasalive. We have lived since that time under that law. lam not aware in my own practice of any serious difficulties arising under it, but this section now Is drawn for the purpose of reopening that door and letting in again the very evils which the act of July 8, 1870, was designed to correct. I am most strenuously opposed to doing that. My brother Whitman, I think, says he does not know how that provision of the law got in there. The fact is, that law was drawn under the supervision, I think, of the late Hon. S. S. Fisher, known to you all ; the late Hon. Mr. Jenckes, of Ehode Island, then chairman of the House committee; Mr. Bakewell, of Pittsburgh, and I do not know how many others. It was revised by them time and again and carefully prepared, and prepared, among other things, for the express purpose of stopping this fraudulent reissue business which was almost, in one sense, sapping the foundation of our patent system ; and to-day the outrageous character of some of the reissues is one of the most serious causes of complaint against our patent system in this country. In my opinion the true policy of the law now is, instead of reopening those doors and making these fraudu- lent reissue cases possible again, to shut them a little tighter, and, per- haps, as brother Livermore suggested, strike off the model part of it. Now, then, giving as I think the true history of the way in which these amendments came into the law of 1870, that they were made to correct a then existing evil, I think that it is not the best thing to be done at the present stage of litigation to strike out the alterations then made and restore the law as it was and let those evils come in again. I am not satisfied with lines 10, 11, and 12 of this section 5 which relates to this reissue question ; but at the same time I do not know how to make it any better, unless you abolish the whole model system, which I am Inclined to think would be a good plan, and require the drawings to be made to a scale, or require reduced working-drawings, and then there could be no mistake in what you mean. One of the diflculties is this, and the necessity of models arises from this fact, that drawings are frequently made by unskillful draughtsmen; hence they are often crude in their character, and it is difficult sometimes to make out in complicated devices just exactly what the drawing was intended to show. Members of the committee will understand that when a paper is drawn by a lawyer you can know what it means ; but if it is drawn by a man unfamiliar with legal terms you sometimes find it difficult to understand what it means. In the same way a drawing made by a pro- fessional draughtsman can generally be understood by those skilled in the art, while with a drawing made by a man unskilled in making draw- SEC. 3: REISSUES. 91 ings it is sometimes difficult to tell what the drawing means. When we have that class of drawings to deal with it is exceedingly important to refer to the model in order to correct some defect in the drawing on account of the unskillfulness of the man who made it. I think the best way to remedy the evil is to abolish the model system altogether, and require drawings to be made to a scale accurate in all their parts, or reduced working-drawings, which amounts to the same thing; and then there will be no difficulty in telling what the invention means, because it can only mean one thing, and it is more accurate in that respect than the English language itself. Section 5 provides that "the Commissioner shall, on the surrender of such patent, and the payment of the diity required by law, cause a new patent for the same invention," &c. The law as it is drawn now, as I understand it, provides for determining whether the invention in the reissue is the same as that in the original, by a comparison of the two documents, and that the reissue must be based on the original patent. This section, however, provides that you can base the reissue on the model or the drawings, or the original specification or its amend- ments. It is opening the door very wide to say you may correct by reference to the original model or original drawing or original amend- ments ; and I say in that respect as this section is drawn it is open to greater objection than the law of 1839, which was amended by the act of July 8, 1870. While I am opposed to this section, I am free to say I do not know how to make it any better, unless it is by striking out. the model system altogether. Passing on, if the committee please, to section 8: In the patent law there is one remedy by which the patentee may sue the infringer, either at law or in equity. This bill provides for three other and distinct reme- dies. First, the infringer may file a bill against the patentee for the repeal of the patent, and it is a wise provision; I have no objection to it. Secondly, he may, if he so desires, take a rule on the patentee in case he is threatening, &c., to compel the patentee to bring a suit and test the infringement. Now, there is a third remedy (just as if two remedies for an infringer were not enough), that the infringer may file a bill for the purpose of perpetuating testimony. I submit that it is unreasonable to provide three remedies as against one form of wrong, and particularly I object to the remedy of perpetuating testimony. I have, I think, a perfectly good objection to it, and that is, it is a legal proceeding unnecessary, because there are two other remedies to be used instead of it, and it is highly objectionable, from the fact that it is not followed by any adjudication. Testimony is to be taken and filed in court; a copy, I suppose, is to be sent to the Patent Office, and there it stands on the record. The parties are subjected to a long job of taking testimony, or a short one, as the case may be, and to the expense of it, and so far as determining their rights is concerned they are not one inch farther forward then when they started. As to going through litigation without an adjudication and without deciding something, it strikes me that it is contrary to the policy of our laws. Hence, section 8, I think, had a great deal better be stricken out. Senator Wadleigh. Would not the same objection that you make apply to taking testimony in perpetuam in any case at common law or in equity? Mr. Christy. It would, provided you had these other remedies. I understand that in common-law cases, &c., the party accused, who stands in the position of a defendant, is unable to compel the plaintiff to bring suit. Now, this act provides that the defendant may compel 92 ME. CHEISTY the plaintiff to bring suit on his patent, or he may file a bill to repeal the patent. Mr. Smith. Only in certain cases. Mr. Christy. I say under certain circumstances. My point is this: that those two provisions give the infringer enough remedy for any wrong that he may be supposed to suffer under it, and it is wholly un- necessary and contrary to the policy of the law, after giving him remedy enough, to superadd another which is not going to do anybody any good. Mr. LiTBEMORE. Would you deprive the patentee of the right of per- petuating testimony ? Mr. Christy. I think he can do that now. Mr. Smith. He may want to preserve the evidence of his own inven- tion, or he may want to preserve the evidence of something he may sup- pose will be of use to him. Mr. Christy. I think he can do that now under an ordinary bill to perpetuate testimony, and as to making an additional provision to give Che infringer another remedy when one is enough and the bill gives him two others, I think it wholly unnecessary. I think, under the Eevised Statutes as they stand now, the ordinary remedy by bill to perpetuate testimony will give the patentee all the remedy he wants. However, that is only a matter of judgment, and I will pass along. I have been requested by brother Hatch, of Cincinnati, to suggest an amendment on page 8 of the Senate bill, in line 47. The committee will notice the proviso : " Provided, That no depositions taken under this section shall be used except as against persons who were parties to such proceeding, or those claiming under them," &c. It is to insert after the word " proceeding " the words " and were served personally with notice." They might be made parties by virtue of an advertisement under a rule of court, or something of that kind. Testimony should not be used against any parties except such as were served with personal notice. If the section is adopted at all, that amendment, it strikes me, should be inserted. At this point I will reply to some suggestions made by brother Whit- man in reference to the relationship of American and foreign patents. I want to give a little bit of history here, and I think it will throw some light on the matter. Along in 1869 and in 1870, perhaps, when Mr. Fisher was Commissioner of Patents, the patents under which the Bessemer process of making steel has been conducted in this country, some of them at least, expired. The Mushet patent, and perhaps some of the first Bessemer patents, and one or two others, expired. The Bessemer- steel business was largely conducted in this country, and with great profit to the English patentees. They came here, under our law as it stood then, and made applications for extensions for the additional term of seven years. Mr. Commissioner Fisher, in examining the case, found, as a matter of fact, that the English patents for the same inventions had expired, and decided that it was contrary to the policy of our law to grant to a foreigner an extension for an invention in this country when the nation from which he came enjoyed the right to do the thing whieh it was sought to be protected here. In other words, the English could make Bessemer steel with impunity and without a tax; and he held that it was wrong to tax the Bessemer-steel interest in this country with a tribute to the English patentees, under the circumstances. That illus- trates exactly the diflSculty met with in this class of cases. The law, I suppose, as originally drawn, was only intended to apply to a foreign SECS. 8, 9, 10. 93 patentee; bat, through an inaccuracy in drawing it, it was made to apply also to American inventors. I should like the committee to con- sider the propriety of adding an amendment to section 19,. so as to limit it to foreign inventors, those not citizens of the United States. I under- stand our law discriminates now as against all patentees holding patents in foreign countries, be they foreigners or Americans. I propose now to amend the bill in such a way as that it shall discriminate as against all foreign patentees taking patents in this country only. Mr. Dodge. Provided the foreign patents are taken first. Mr. Chkisty. Yes. Of course I cannot state all the conditions. I propose to add this, and I have noted it in my copy : " But if such per- son " (that is, the patentee under such circumstances) " is not a citizen of the United States, his patent shall be so limited as to expire at the same time with the foreign patent ; or if there be more than one, at the same time with the one having the shortest term; but in no case for more than seventeen years." I think the committee will find the decision of Mr. Commissioner Fisher in the Mushet case based on good grounds. These cases are pub- lished in the Decisions of the Commissioner, and I think the Mushet case is the one most fully discussed. I think the committee will agree with Mr. Commissioner Fisher that it is contrary to the policy of our law to grant protection in this country for inventions after the patents for the same inventions have expired over there. Take this Bessemer steel in- terest. After the foreign patents had expired, if they were still in force here our American manufacturers would be working at a disadvantage; they would have to pay royalty to the English patentee when the Eng- lish manufacturing public could manufacture Bessemer steel royalty free, because the English -patent had expired. Mr. Whitman. Suppose the foreigner took out a patent here and did not take out a patent there ? Mr. Chkisty. I should say, as is commonly said, that that is not a supposable case. My knowledge of foreigners leads me to believe — and I have considerable knowledge of them — that they consider that their eountry is a little better than any other country on earth — and perhaps we do not differ with them in that respect — and that no case was ever known where a foreign patentee took out a patent in this country before he took it out in his own. With thanks to the committee for their attention, I have nothing further to offer. AEGUMENT OF H. D. HYDE. Mr. Hyde. Mr. Chairman and gentlemen of the committee, I have but a few words to say. I am here representing the Shoe and Leather As- sociation of Boston. As you have already seen, most of the gentlemen who have appeared before you and advocated this bill, or amendments to it, have spoken from the stand-point of the inventor. While the bill is drawn with ref- erence to the rights of all parties, the interests of the inventors have naturally drawn together here the lawyers who liave appeared and pre- sented their views. I have been requested to appear here in behalf of a very large body in the State of Massachusetts who are users and not the owners of inventions, and to ask that you may give to them, in the 94 ME. HYDE. consideration of this question, the relief which they feel they are entitled to have. One of the difBcnlties which the users of inventions find is where, having occasion to use machinery, purchasing it of reliable parties, they find, after it has gone into use, that demands are made for patents, cov- ering some portion of the machine, and thej' are thus often subjected to litigation. It is often impossible for them to know what their rights are except through very expensive litigation, in which they have little or no interest, and -which they certainly never would have incurred or been led into had they known the result that would have followed. There are two sections of this bill which are sought to furnish a remedy to that class of people. I suppose the bill that passed the House, and to which the attention of this committee was originally called, arose from a class of people situated similarly to those whom I represent here. The two sections of the bill to which I shall speak, and only those, are the first and the eleventh; that is, to the statute of limi- tations and the provision that patents shall expire unless renewal fees are paid from time to time. The first section is the statute of limitations. That I find incorporated in the bill, and I have every reason to believe that the committee will report some statute of limitations. I desire to particularly emphasize that matter before the committee, and, if you should differ upon other portions of the bill, or if at any stage of it it should be found that the Senate or the other branch should differ, I would impress upon you that this is a section which should be preserved, and that, if possible, the passage of it should be secured. I do not come here as representing a section of people who cry out against the patent laws. We believe in them. The industry that 1 represent is the largest to-day that we have in Boston. That industry never could have existed without the patent law. We live and prosper under its beneficence. On the other hand, we ask to be protected from certain evils which we do not believe impair the eflaciency of the law, but which subject it to certain opposition, and which cause complaints to be raised against it which we believe are just. All concede, I believe, now, that some statute of limitations as in other forms of action should be passed. There has been placed in this bill a period of four years. What is the wisest period of any statute of limitations it is somewhat difftcult to say. It is not upon any abstract principle that you caii determine any question of limitation. It is that period which upon the whole shall best preserve the rights of all par- ties. Of course if the period be too short you only invite litigation, lest men should multiply suits for the mere purpose of preserving their rights. If it is too long, the benefit of a statute of limitations is lost. Now, what is tlie wisest limit, what is the best statute of limitations under these circumstances for this law, is for the committee to deter- mine. Four years have been inserted here. The gentlemen whom I represent have discussed this matter a good deal, and they have felt that a shorter period should be established, and both favor and urge the period of one year. They say that a short period amply protects the owners of patents, and that while they innocently infringe and have no knowlege of the existence of patents those who own the patents are always on -the alert to discover infringers, and may always avail them- selves of their rights. I call the attention of the committee to it that, out of all the discus- sions on this section, they may fix that statute of limitations which shall be wisest. SECS, 1, J] • 95 Now, passing on to the eleventh section, that also is a section very important. It is incorporated in the patent laws of other countries, but 1 believe in this country it has never heretofore been a portion of the patent law. I entirely dissent from what has been said by Mr. Dodge, that the fee should be a nominal fee; the benefit of it is to weed out inventions which are of no value, which only live to vex people en- gaged in legitimate business. One of the serious difficulties to-day is that of a patent which has lain dormant five, ten, or fifteen years, and has even expired, being used for the purpose of provoking, litigation, or for the purpose of collecting damages, or for the purpose of injuring in some way a party that may have unwittingly used it. If an inven- tion has value, if it really comprises anything of worth, the parties are perfectly willing to pay the renewal fee. If it has no value, and if in four years it has not been put into any use, or found to have no value, it ought to expire ; or at least, if the man desires to keep it alive, he ought to be willing to pay a sum as large as is mentioned in this bill. In England the fee for a first renewal is £50 — five times > hat it is here; and for a second renewal it is £100 — five times again what it is here. Here it is put at $50 and $100. If the invention is valuable, any man will be willing to pay that sum. If it is worthless, then, if he wants to keep alive a worthless patent merely to vex the community, he ought to be required to pay as much as that sum. I have looked over other portions of the bill presented here, and I . sincerely hope that the committee will recommend the bill as it has been presented substantially; but these two sections, as representing the users of inventions, not the owners of inventions, I desire espe- cially to emphasize before this committee, because I believe when those two remedies are furnished the great outcry against the patent law will have been silenced, and those situated as the persons I represent, as users who enjoy the benefit and beneficence of law, will still be allowed to continue to enjoy those privileges, and will not be subjected to the hardships to which they sometimes have been in the past. The committee adjourned until to-morrow at 11 o'clock a. m. Satukday, November 17, 1877. The committee met at 11 o'clock a. m., pursuant to adjournment. ADDITIONAL ARGUMENT OF W. C. DODGE. Mr. Dodge. With the permission of Mr. Smith, I wish to occupy the attention of the committee about ten minutes, explanatory of a feature stated yesterday about which I said nothing, because I did not think there would be any opposition to it, which is, to allow the assignee to make oath in the case of a reissue. Our friend Mr. Christy, the commit- tee will recollect, stated that that provision was put into the law of 1870, as he understood, to prevent some fraud or to meet cases of that kind. In the first place, I happen to have had a good deal to do with that act in 1870, arid I have here in my hand the original draught of that bill, as draughted by the late Commissioner Fisher. The Chairman. What is the section of the proposed act to which you refer 1 96 ME. DODGE. Mr. Dodge. It is the last clause of section 21 of the bill, which pro- vides : And In all cases of an application by an assignee for the issue of a patent, the speci- fication shall be signed and sworn to by the inventor or discoverer ; and in all cases of an application for a reissue of any patent, the application may be made and the cor- rected specification sworn to and signed by the owner or owners of the entire interest in the patent. That was always the law until the act of 1870. It was then changed by some means which no person has discovered. It was not in the original draught, prepared by the late Commissioner Fisher, which I have here. [Exhibiting.] There is the section and there the amendments which he proposed. That provision is not among them, as you will see. It was not put in there by the House committee or by the Senate com- mittee, and as to its being ultimately passed by the conference commit- tee, I inquired of every member of the conference committee and not one of them could tell how it originated or why it was put in. Commis- sioner Fisher denounced it from the beginning. He said it would simply be the means of enabling the party selling a patent to black- mail the assignee ; and that we find to be the actual fact. During the past year and a half we were applied to by the president of one of our large manufacturing concerns to reissue a patent which he had bought. We prepared a reissue application, and, under this act, he was obliged to go to the original inventor and ask him to make the oath. He refused to do so unless he was paid $5,000, and we were obliged to pay him $5,000 cash in hand before he would sign the paper. There was no process by which he could compel him to do it in the courts. I am hapi)y to say that Commissioner Leggett is here to-day, and he will con- firm all that I have said upon this subject, for every Commissioner, from the time the law was passed to the present, including the present Com- missioner, has considered that that provision was a great hardship in the law, and that it ought to be remedied. It was found to work such a hardship that at the next session of Congress there was passed an explanatory provision, as you will see by the Revised Statutes, defining that it does not apply to any patent which was assigned prior to the passage of the act. Therefore we have two rules now, a rule applying to patents assigned prior to the passage of the act of July, 1870, where the assignee who makes the application may make the oath, and in the other case, relating to those patents which have been assigned since that time, the owner of the interest must go to the original inventor to make the oath and sign the specification. Yesterday the question was asked whatthatoath was. I have brought here some copies of the rules for the benefit of the Senate committee. The oath is simply this : State op , County of , ss : A. B. and C. D., the above-named petitioners, being duly sworn (or affirmed), depose and say that they verily believe that, by reason of an insufficient specification, the aforesaid letters patent granted to E. F. are inoperative; that the said error has arisen from inadvertence, accident, or mistake, and without any fraudulent or deceptive inten- tion, to the best of their knowledge and belief; that the entire title to said letters patent is vested in them, and that they verily believe the said E. F. to be the first and original inventor of the invention set forth and claimed in the foregoing amended specification ; and that the said E. F. is now deceased. A. B. C. D. You see they are required to swear that he is dead. It works a hardship in another way also. It often happens, and we have a case in point (which Mr. Bond could testify to if he were here), in which a SEC. 21. 97 manufacturing concern in Chicago own a patent which they bought of the inventor. They found they could not protect their manufacture under the patent as it stood, and that it was necessary to reissue the patent. In looking for the inventor, all they have been able to ascertain is that he has gone to Europe. They cannot make oath that he is dead, for in fact they know he is not, in all reasonable probability, and at the same time they are tied up, and cannot move one step, simply because they cannot find the inventor. It has been a constant source of annoy- ance and of hardship from the time the act went into operation, and I was surprised to hear my friend Christy say yesterday that it was not objected to and did not work hardship. So far as I know, the objection has been universal, in the ofi&ce and out of the office, and its change has been urged or recommended by every Commissioner from Mr. Fisher down to the present occupant. ARGUMENT OP M. D. LEGGETT. [Ex-Commissioner of Patents.] Mr. Leggetx. Mr. Chairman and gentlemen, it was ray desire to be present at all the meetings of the committee this week, but duties in courts that I could not control have prevented my attendance, and con- sequently I do not feel that I ought to occupy your time. I do not desire to go over points that have been discussed, and I do not know what has been discussed and what has not. I do not believe that it would be in my power to enlighten the committee on the various mat- ters so ably presented by the several gentlemen who have already spoken. If any member of the committee or any gentleman present desires to ask my opinion on any particular point, of course I am very willing to give the results of my own observation and experience. On the point that has been presented this morning, I will simply say that I fully indorse all that Mr. Dodge has said. I see no good what- ever in that provision of the law, and it is often made a very onerous tax upon the owners of patents; it is made a source of black-mailing to an enormous extent. Since I have gone out of the Patent Oiflce some three years ago or a little over, I have been engaged exclusively in the practice of patent law before the courts. We have found it necessary very often to reissue our patents before we can commence suits on them. This is sometimes done for the purpose of disclaiming certain parts of an invention. We find that the original patent was too broad; that the claims called for an invention of greater scope than the inventor had a right to cover, the consequence being that, if we should bring suit and go into court oi our patent, as originally granted, our patent would be defeated; and therefore it is necessary in such cases to limit the patent and bring it down to just what the inventor had a right to have pat- ented, with the exception of sustaining his patent. Before we can reissue a patent, for the purpose of getting it in such perfected condi- tion, the original inventor must be found, although he may have no earthly interest in the patent at all. The inventor has sold his patent, received a full consideration for it, and therefore has no further interest in it. Yet, as the law now stands, the inventor must be found and his signature obtained to the application for a reissue. In several cases that have come up in my practice the assignees of a patent have been obliged to pay a bonus, and a considerable bonus, to the inventor. In one instance I was informed that the bonus was as a high as $5,000, and S. Mis. 50 7 98 ME. LEGGETT. iQ no instance was it less than $50 for this simple matter of the inventor giving his signature to a reissue application. The law gives him the power of bleeding the owner of a patent just to that extent. The pat- ent may be utterly worthless unless he will sign his name to the appli- cation for a reissue. He has no interest in the patent, directly or indi- rectly. He rarely examines the papers. He is not obliged to give the matter any attention, and his signature is all that he is askpd to give ; yet he can bleed the assignee to the full extent of the value of the pat- ent, if he so desires. I see, as I said, no earthly good that can grow out of the present law, but there is constant evil ; and the evil is such that now I often advise my clients, when they take an assignment of a patent, to draught a reissue in blank and make the party sign it, and that stands sometimes for years before it is filed. Senator Chaffee. Why could not the patentee give a power of at- torney to the assignee? Mr. Leggett. There is no provision in the law that will allow him to sign an application for a reissue by power of attorney. Senator Wadleigh. A power of attorney would be revocable at any time, of course. Mr. Leggett. If the patentee should give a power of attorney, he could revoke it. The inventor is obliged to subscribe the oath and swear to the facts set forth in the application, and that cannot be done by power of attorney. There is no provision i n the law by which an at- torney can sign for the applicant. All such signatures have always been refused by the office. We have had c ases also where the inventor has gone, nobody knows where he is, and it has been utterly impossible to find him with all the means that have been used. Yet we have every reason to suppose that he is living, and the matter becomes a hardship to the assignee, and a very great hardship, as without the signature of the inventor the reissue could not be secured. Tour honors have given attention enough to this matter to under- stand that invalid patents are often granted. The examiners and the Commissioner examine the applications for patents as thoroughly as they can with the lights before them, but all they have is the record of the Patent Office, the machinery there, and what is represented there in regard to the invention. If evidence sufficient to overthrow the prima facie case of the applicant is not found within the records of this office and is not within the personal knowledge of any of the officers, the Commissioner must grant the patent. Under the law, he cannot do otherwise. The law compels the granting of the patent, provided the application complies with the conditions prescribed. Now, when we come to enforce our patent, we may discover that a portion of the thing patented has been constructed by others prior to the date of the patent. That part which has been constructed at such earlier date is not original invention of the patentee. We have a clean invention outside of this machine. It therefore becomes necessary to reissue a limited patent, so as to exclude all claims covering the machine which had been manufac- tured and used at such prior date; otherwise, should we go into cjurt, our patent must be defeated. Senator Morgan. Do you mean that where the patent covers a claim that is not lawful, all the other claims which it covers are vitiated by tb at fact? Mr. Leggett. No, sir; not necessarily that; but there may be a single claim in the patent so broad as to cover clearly a machine that had been constructed and used prior to the date of the invention of the patentee, and our patent may be defeated on that very ground. In MODELS. 99 that case we give up oar broad patent and obtain a narrower one, be- cause we are not entitled to a broad one. Everything is not found at the Patent Office. There has been an effort on the part of the govern- ment to get everything there they can, but a great many valuable im- provements have never been patented, and, consequently, there is no trace of them in the office. Our mechanics and manufacturers have knowledge. of such matters, and patentees must restrict their patents so as to avoid any conflict with such prior machines. Senator Chaffee. I should like to ask you a question at this point in regard to the best manner of issuing a patent, whether upon a model, or whether it would not be better to have perfect and complete draw- ings made, so as to explain every point that the inventor claims a patent for; that is, to use drawings instead of models. Which would be the better way, to use the models or to use the drawings 1 Mr. Leggett. I will say that my experience in the four years I was in the Patent Office (and I have had some experience before the courts prior to that time and since) is, that while originally I thought that models were mere traps, curiosities, interesting to the public to look at, the more I have given my attention to the matter, the more firmly I am of the opinion that they are absolutely necessary for the protection both of the community and of patentees. The Patent Office could get along better without them than the courts. The examiners in the Patent Office are experts in reading drawings. The matter of reading a drawing is an art, just as much as the reading of German or French. If you take a man not accustomed to the reading of drawings, they are blank pages to him. He cannot make the lines of a drawing stand out and portray the invention, because he has not been educated to it. We find actually in experience that there is not to exceed one in five, at most, and prob- ably not so large a proportion, of our best judges on the bench who get any just conception of a machine by the drawing. Senator Chaffee. In a case before a court, an expert could take the drawing and make a model for the court. Mr. Leggett. That is where the greatest trouble comes in pre- cisely. If you would go before the courts and try three or four patent suits and have experts and mechanics construct machines to represent the drawings, you would find that they would come in with different and distinct machines to represent the same drawings. They will come in with two or three distinct machines, and each expert will swear that the model he presents correctly represents the drawing, and the judge is in a greater quandary than he would have been if he had never seen the machine at all. Senator Chaffee. Would not that be the case with the model itself in court? Would not forty experts come in and give the testimony dif- ferently in regard to the same model ? Mr. Lbggett. I have found no practical difficulty on that point. With the help of the drawings and the machine itself I have not yet found a case where experts would mislead the judge. We have no judge on the bench that I know of who would be troubled in that way. I will state the case of one of the clearest legal minds that we have on the bench. He is sharp and penetrating, and transacts a vast amount of business quickly, readily, and accurately. He is one of our very best lawyers. His decisions are a charm to lawyers everywhere, because they are succinct and sharp. I had the privilege of trying a patent case be- fore him. My opponent was one of the best mechanical lawyers in the country, one of our leading patent lawyers. He argued the case for two days, and argued it so clearly that, although I went into court tliinking 100 ME. LEGGETT. I had a perfect case, that could not be wrenched from me, when he got through he had made his view of the matter, it seemed to me, so very clear to the court that I felt a little down about it. He did not use a model, although there was one setting on his desk. The drawings were so plain and clear, that they seemed to show everything. He had a large drawing before him; there was a small drawing before the court, and another small drawing before himself, while I had one in my hands, these drawings representing the machine in question. The court listened. At the end of the second day, just before the closing Lour, he rested, and the court adjourned for me to commence the next morning. I was stop- ping at the same hotel where the judge stopped. As I stepped in to sup- per he invited me to his table. He said he wanted to see me at his room after supper. I went to his room, and then he said to me, " I have a confession to make that I am ashamed of. I have listened two days to this case with all the ability that I have. Last night I sat up almost all night on it, for I was ashamed that I did not get the thing in my head. I must coufess that I do not know anything about it, not a bit more than I did before one word was said. Tou will argue for two days, and I will not know anything more about it then." That was his con- fession ; and the reason of his confession was, because the model had not been used. I told him that the opposing counsel had made it so vivid and clear that I had been frightened in the presentation of it and felt hurt. Said I, " There is no earthly difficulty." Said he, " I will tell you what the difficulty is : I cannot understand the drawing ; they are just straight lines ortpaper. I cannot see any machine on it at all." I told him if he would send for the model I would go and look up the attorney on the other side. He consented to it. I did so. 1 sent to the court-room and got the model and papers. I looked the attorney up and he came in. We spent about half an hour in explaining it to the judge, and he said it was just as clear to him as a thing could be. I presented my side of the case and submitted my argument in a couple of hours the next day, and then went home the next morning and was never troubled with any further argument. Some judges do not And any difficulty. Judge Chipman will take and read a drawing with great vividness ; it stands up and is a machine to him. It was so with Judge Woodruff. 'He would pick cp a drawing and read it as he would read a printed page; it was all luminous to him; but those are excep- tions ; and the only way to avoid confusion and difficulty is to have the model itself from the Patent Office, or a certitied copy of it that shall be an exact copy. The inventors and the mechanics will attempt to in- troduce some slight modification, the party on the other side will make a departure the other way, and the drawing may sustain one side or it may sustain the other side. Experts M'ill swear one way and experts will swear the other way, and the judge is confounded, worse confused, and knows no more when he has done with the case than when he com- menced. Senator Chaffee. ' Then a good mechanic can make a model from a good drawing and make it as perfect as the drawing itself? Mr. Leggbtt. He can do it if it is a working-drawing ; bijt working- drawings it would be very expensive to the government to reproduce. Senator Chaffee. I was thinking whether it would not be better to have these patents issued from such drawings, because the drawings could be preserved more securely than the modelsi Mr. Leggrtt. The government is in the habit of rei)roduciug the drawings, and it seems to be necessary for the public that tliey should be reproduced. The great mass of patents require but a single sheet of MODELS. I / ■ cL 101 drawings ; but if you require working-drawingA sk^ cny^%lit/sMets would be necessary. Sometimes a single drawing^wIKaMS^ iy you have a model that represents it. Therefore, it wou'^nsbi^Rllrfmie gov- ernment for every patent that is issued six or eight or t&tr-btraes what it costs now to the government to issue those patents, and it would amount to from $75,000 to $100,000 a year probably. That would be a pretty expensive luxury, even if it was a luxury, while in fact it would be a great hardship to inventors. It is often that the principle in an inven- tion is clearly shown in a model, and it is clearly shown in the drawing. Were they to get a working-drawing, it must be absolutely reduced to practice first, and to reduce it to practice would require an amount of expenditure that three-fourths of the inventors could not afford, and the consequence would be that the poor inventor would be always shut off. He cannot reduce the inventioa to practice, and must have help to do it, and the capitalist will not give him help until he has obtained his patent. Capitalists will not invest in experimenting until the patent has been granted. They are willing to experiment when they can be secure in case the experiment is successful. Reducing the machine to absolute practice before applying for the patent would become a neces- i^ity, provided you required working-drawings. Senator Ohafpee. I should like to ask what your idea is about this limitation. What would be a proper time, in your judgment 1 Mr. Leggbtx. So far as the time is concerned, I approve of the bill which has been offered here. I think it is about as nearly correct as we can get it. I am not entirely satisfied with this presentation so far as the mode of getting at damages is concerned. The second section I think, perhaps, will need a little careful consideration. I presume it has been discussed already to an extent. I think that there should be a pretty broad discretion left to the courts, and that the discretion should be broader than it is now. Upon the finding of the master the court should have power, I think, to decrease or diminish as the justice of the special case would seem to demand. They may now in- crease, but when they come in with exorbitant amouuts, they have no authority to diminish, and I think they should have authority both ways in reference to that matter. The measure of damages is very hard to fix. It is hard to say that, it shall be just this or just that. A man may go to work and he may manufacture without a license. I may have a patent, and I may license parties here and in different parts of the country. Another man refuses to take a license from me, and goes to work and makes the machine without paying the royalty, and defies my patent. He thinks I am too poor to sue, for my license- fee is small ; but finally my other licensees refuse to pay royalty; for they say if this man can manufacture without paying a license, we will not pay either. Therefore, I find myself driven to the absolute neces- sity of commencing suit against this infringer in order to collect my licenses from the other licensees; for they will not pay a license if he who defies my patent goes into the market and puts the article into trade without paying the tax. He can compete with the licensees and undersell them in the market. If all I can be permitted to re- cover from him is simply the ordinary license-fee which I am getting from willing licensees, I have wasted all the money in enforcing a sin- gle right that years have given me in the licenses of the others. It may be a small matter, but the court ought to have discretion in a case of that kind to compensate me for the expense I have been put to in order to enforce a right that the infringer determined not to respect until the court should enforce it. We have it in all other interests, and 102 ME. LEGGETT. the courts can compensate us to some extent further than just to meas- ure the damage. This section seems to measure the damage by the license-fee. I do not think you should make that the determination of the whole thing, with no power to increase or decrease the measure of damages. Mr. Smith. The last section remedies that. Mr. Leggett. That applies to cases where there is no license-fee, I understand. Mr. Smith. No, sir ; to all cases provided for by statute. Mr. Leggett. I have not given the subject much attention; but if that is already in the bill, no other modification will be needed. In reference to reissues, I want to just emphatically indorse the pro- vision here, especially that portion of it in regard to manufacturers. To make it clear, I will cite an illiistration. Suppose that I am a man- ufacturer, and I want to manufacture a certain article, say a steam - pump. I know a certain man who has a patent on a steam-pump. I look over his patent to see what I have a right to make. I do this honestly. The patent is published for that purpose. I do not want to infringe the rights of the patentee, and therefore I carefully consider his claims and find out what he has secured to him. It is presumed that everything shown and described in his patent that is not covered by the claim is either the property of a prior patentee or else it belongs to the public. The Supreme Court has held that to be the presump- tion, that where a patentee fails to claim only a portion of a machine, he thereby acknowledges that the remaining portion is not his inven- tion. Senator Chaffee. Is it the habit of the Commissioner to make a re- issue for the purpose of enlarging on inventions ? Mr. Leggett. l^ot to enlarge on inventions, but to enlarge the claims; that is, a man has come in originally and has obtained a narrow patent on a specific construction. It was the blunder of his attorney, because he could have obtained a wider patent. An attorney may pre- sent a claim for an invention and restrict it to all its peculiarities and be sure of getting a patent, when, if he would lay a broad claim to it, that would cover the principle of the construction, he would not get a patent so easily. Very often they take out a narrow patent, and after- ward, by a reissue, get a broader claim, to which they were entitled at first. Senator Chaffee. The Commissioner requires proof of that. Mr. Leggett. No, sir ; no proof is required, because the proof must exist in the original documents. Unless the Commissioner finds that the invention was clearly shown in the original application, no proof will help him to grant the patent. He must find it in the original ap- plication, or he cannot grant it at all. Senator Morgan. I am very little acquainted with the patent law", and particularly with the practice of the patent law ; but it has occurred to me since the argument has been going on that this matter of the reissue of a patent is more analogous to proceedings to amend a judg- ment or a record nuno pro tunc than anything else, and that it ought to go on the same principles. A court is asked to correct a mistake made in a cause where the cause has gone into a final judgment. The court refers back to the record, to everything that appears of record, and from that, and that alone, it finds its authority to make such a correc- tion as would do the sort of justice that ought to have been done by its judgment in the first instance. Now, the Commissioner of Patents, in looking back to see whether a patent ought to be reissued, it seems to MODELS. 103 me, ought to be permitted to go to the model, to the claim, and to every part of the claim, to every paper in the case, in order to determine from all of these, and from nothing less than all of these, exactly what was the nature of the patent that ought to have been issued in the first instance ; and, it seems to me, any interference in striking out or removing from the consideration of the court any part of this record which the party has made in the model, or the claim, or any other proceeding, would be an invasion of his rights. Senator Chaffee. That is exactly my idea about it. Mr. Lbggett. That ia the practice. Senator Morgan. If there is anything in this bill to change that ap- plication of these principles of law, I should like to have it pointed out and discussed. Mr. Leggett. I do not understand that there is anything in the bill of that character. I understand that the intention has been to make the reissue harmonize precisely with that idea.l Mr. OOLAHAN. If, in his original application, he had disclaimed en- tirely the main feature he wishes to obtain a reissue upon, should that record have any effect? Senator MOKGAN. That would be a waiver, an abandonment of the claim. Mr. Leggett. On that point I have held that it was an abandon- ment of the claim. I took occasion once, when Commissioner of Patents, to make a thorough examination of that point, and I held that, by the common-law principle or practice of estoppels, when a man had, in his original application, disclaimed that a certain thing was his invention, he should never be permitted to come back again into the offtce and claim that it was his invention, because actions had been based upon it subsequently, and the well-known law of estoppels comes in and applies. Senator Mokgan. You have never become dissatisfied with that de- cision ? Mr. Leggett. I have never become dissatisfied with it; but the su- preme court of the District of Columbia overruled me, an appeal being taken to it, 'and the consequence is that from that day to this the prac- tice of the ofBce has been otherwise. Mr, HiTBBELL. Might he not have made a mistake in the disclaimer? Mr. Lbggett. He may have made a mistake in the disclaimer, but he should abide by it in a case so solemn as that. Mr. Smith. I think in one decision — I do not know where it is — it was held that where a party had made a mistake in a disclaimer as to the facts on which he disclaimed, he might recall it. That was not exactly the case here. Mr, Leggett. That is not precisely the case here. The courts have held that a mistake in the disclaimer, like all other mistakes, might be corrected in the record ; but the case I had in mind was a very bald one. There was an interference declared between two parties, and the question was which was the first inventor. One party had bought up both patents, but he thought one of them better than the other. He went to one of these parties and solemnly-asserted that he was not the first inventor; that the other man was; and he disclaimed the original authorship of the invention. He did this to go into court with the other patent, and when he went into court and was defeated oh the pat- ent he came back to the Patent Office to revive this patent which he had already disclaimed. I refused to grant it, and the court overruled my decision. 104 ME. LEGGETT. Senator Ghaffeb. This matter of reissue rests wholly with the Com- missioner? Mr. Leggett. Yes, sir; he is limited only by the statute. Senator Chaffee. He can grant a reissue or not, in his discretion ? Mr. Leggett. Yes, sir ; but an appeal, of course, lies from him to the >supreme court of the District. Senator Chaffee. Suppose he refuses to grant a reissue? Mr. Leggett. They can go to the supreme court of the District. The law provides that an appeal may be taken to that court from any decision made by the Commissioner except in a matter of interference. From a decision on an application for a patent or for a reissue, an appeal lies to the supreme court of the District of Columbia sitting in banc. The point that I am speaking of particularly will be retained as a feat- ure in that section. Suppose that I am a manufacturer, as I was going to say ; I look into a patent to see what is there. I find that a certain machine that I want to make is not claimed. The inventor has talked about it; he describes it; but he goes and claims something else. Now the courts have held that, for the time being, the patentee is not pro- tected in anything not claimed, as the failure to claim a thing operates as an actual disclaimer of it. The law provides that he may go back, if he has made a mistake, and claim it. That is right enough; but I have gone to work in the mean time, as a manufacturer, and built the machine; I have put it into my factory ; I have invested my money in the use of it; and it was legal when I built it — perfectly so. The law sustained me fully in the building of it and in the investment of my money. Every step was legal, honest, upright, and straightforward ; but yet, when he gets a reissue of the patent under the law, he may come in and enjoin me from any further use of the machine, and thereafter it must stand idle. Senator Morgan. That is in violation of the fixed and settled rule of law, that where a party has to go to a court of any sort, shape, size, or description, and ask the relief of that court to correct his own errors, or to correct errors that have crept into the record by any oversight, the rights which have vested in the interim must remain rights, and are beyond the power of the court to break down or control. Mr. Leggett. That is law everywhere else except in the law of pat- ents, which has provided otherwise ; consequently the statute needs cor- recting, I think, in that respect; that is, where a machine has been made under such circumstances the party should have the right to use the machine if he has constructed it when it was perfectly legal on his part to construct it. Patentees cannot collect damages for what was done before the reissue, but after the reissue has been obtained they may prevent any further use being made of the machine by an injunc- tion. That I think is wrong. I think it is wrong in principle; it is a hardship to the manufacturing interest ; it is a hardship to everybody, and there is no honesty in it. I am not particularly pleased with another feature in the same bill, which provides that if any mistake was made in the original patent, the patentees may go back and reissue, and may claim what was shown in the drawing or model as described in the specification. The law here- tofore has been that it must be shown either in the drawing or in the model, but a description of the matter to be claimed was not sufficient to allow a claim to be allowed in a reissue. It seems to me there is jus- tice in the provision of the law as it now stands. In these reissues more deviltry, if I may be permitted to use the phrase, creeps into the REISSUES. 105 practice of the patent law tban everything else pat together. Eeissues ought to be guarded carefully, and yet the right to reissue should be maintained, 1 think, carefully ; but at the same time it should be re- stricted so as to shut every bar that can be shut against knavery in the practice in this respect. A drawing is a definite, certain thing. That is not ambiguous. A model is a definite, certain thing. That has the same meaning always and no other meaning. Language is ambiguous. It may mean one thing to-day and it may mean another thing to-morrow. There maybe an in- definite phrase used by which the man meant nothing particular at the time, but afterward he finds that somebody has come in and made some- thing that that language might cover. He goes back and reissues his old patent because he has got a new idea and that language can be con- strued to cover that idea. If his model shows it, the idea was in his head at the time the model was constructed. If the drawing shows it, the idea was in his head when the drawings were prepared. But he may, or his attorney for him may, carelessly use language when the thought of a different construction never entered in his head at all. For that reason it seems to me the principle should be shown either in the model or in the drawing before he should be allowed to take out any reissue. Upon that point, however, I am not so strenuous. I suppose it would change the law in this respect, that if the principle is found in either one of the three, either the specification, the drawing, or the model, it could be embraced in a reissue. Mr. Smith. I should like to have Mr. Leggett express to the commit- tee his judgment upon that section which provides that there shall be the payment of a fee to prevent a patent from dying, and I should like to have his opinion as to what the ettect of that provision would be. Mr. Leggett. That provision lam very strenuously in favor of also. In one of my annual reports to Congress during the time that I was Com- missioner, I urged very strongly that there should be a tax levied. Among the greater evils that grow out of the patent practice is, that they nose about among old rusty patents that never have been of any account at all, and certain parties make it their business to buy up old patents because they cover something that has gone into general use, after the patent has been sleeping eight, ten, twelve, or fourteen years perhaps, lyiug perfectly dormant. The thing has been discovered by almost everybody and it has gone into use, but it is not used by the inventor, because he obtained his patent and let it go. It is a fault of inventors often that they take no interest in a thing except in invent- ing itJ When they have invented a thing they drop it in chasing a new thought, and thus they go from one thing to another and never think of their former inventions. Somebody finds such an invention that has been patented and neglected and buys it at a song, and then he will go through the country and bleed the people. I have in mind one case where a man looked up an old patent which covered a gate. Almost every farmer in Indiana and Illinois who had a gate was infring- ing that patent. This man went around and made them pay from $5 to $20 each, or they must go to court. He bought this old patent and probably did not pay more than So for it, and he made $10,000 or more out of it. If a patent is gopd for anything, it can afford to pay a tax at the end of five years. If you require a tax at the end of five years, a large num- ber of patents in existence would die on that day. In my opinion, but a small proportion of the patents issued are patents that would live through such a tax. You can understand how the proposed law would 106 ME. RAYMOND. clear up the fog bauks and leave a very open sea ; and people would know where they stood if we had some method to get rid of the patents which are regarded by the owners of them as worthless ; and taxation would accomplish that object. Mr. HuBBELL. Can this government do that, when the grant of a patent is not a prerogative right of the government? It is a right parted with by the States, and vested specifically in the United States for a certain purpose. Can the government defeat that purpose by levy- ing a tax ? Mr. Leggett. The Constitution provides, I believe, that patents shall be granted for a limited time to inventors. The government may grant patents for one year, or two years, or five years, or fourteen years, or twenty years, or fifty years. It is within the province of Congress to do that ; and if they grant a patent for fourteen years, and provide that on certain conditions it may expire in five years, I see no infringement of the constitutional power. Senator Morgan. Is there any question of taxation in it? Is the tax- ing power invoked at all ? Is it not a question of restriction upon the license you give ? Mr. Leggett. That is all. The taxing power is not invoked at all. It is a restriction in the conditions imposed upon the license. 1 do not know why Congress may not fix it just as they would fix the original fee. They might charge $35 when a man takes out a patent, and $50 more at the end of five years. Senator Morgan. It is not a tax ? Mr. Leggett. It is not a tax. I am much obliged to the committee for the attention they have given to my remarks. ARGUMENT OF J. H. EAYMOND. Mr, Eaymond. Mr. Chairman and Senators of the committee, I shall be gratified by any interruption whatever from any member of the com- mittee, and by any such interruption from gentlemen present, as shall correct any misstatement of law or of fact which I may through inad- vertence or ignorance make in the course of my remapks. I shall de- vote myself in the general and special considerations mainly to the pro- visions of the first two sections. I desire to emphasize the extreme care, as well as the marked ability, with which this bill was drawn. It is not an exaggeration to say that the very highest taleniiu this depart- ment of law has been employed in considering it for two years, putting upon it recently consultations of about sixteen or eighteen days of con- tinuous, constant hard work. Every word in the bill means something, and so far as was practicable it has been desired that every circumstance which ought to be should be provided for and met by the law proposed. I desire at the outset to correct the idea, which has probably grown out of the fact that I have been active during the past two years in advocating radical amendments to the patent law, that I or the interests which I represent are inimical to the patent system. I cannot afford time, in the little it is proper for me to occupy, to say the much that I desire upon the important questions before the committee to exhibit the details of my motives and purposes in order to correct this mistaken idea. I desire the committee to take my most solemn and earnest assur- ance that there is nothing in my personal ambition and convictions, in my professional and business connections, or in the purposes of my THE PATENT SVSTEM. 107 principals, which would knowingly militate against the efflcieut and honest administration of a wise and equitable patent system. I make this explanation thus earnestly, though thus briefly, specially because I deem it my duty on this occasion to make some criticisms upon the present patent laws and their administration. My friend and senior, Mr. Smith, at the commencement of this dis- cussion, asked the question, and answered it in a manner that did honor to his great experience and marked ability, "Has history vindi- cated the wisdom of the patent provisions of the Constitution and of the statutes?" I answer as to the Constitution, without reservation, "Yes." As to the statutes as in force for the last seventeen years, I answer, without hesitation or reservation, " No;" and it is my hope to show the committee that the present statutes, as now construed, with the rules of practice and recovery adhered to by the courts, are to the public in many respects great evils. That the law is in many respects a failure, is sufficiently evidenced by the petitions that come up from the people for its amendment, and by the widcrspread, extreme, and dangerous dissatisfaction among the people, which threatens at no distant day, in the absence of radical amendments, to repeal and destroy the whole system. I shall cite some of the features which are complained of, some of which this bill proposes to remedy. I state as a proposition of my own conviction that 90 per cent, of all the infringements of patents are inno- cent infringements. That will be disputed by some; but no one intel- ligent in these matters will dispute that a very large majority of the infringements are innocent, unknowing infringements. First, then, as to these provisions which have become burdensome to the people. The only limitation which the Federal law has known upon actions or recoveries in patent suits was that enacted in 1870, it being a statute of limitation of six years. The patents to which that applied are largely those granted prior to March, 1861 — fourteen-year patents, that were extended as a mere matter of form in a large namber of in- stances. Therefore those patents run twenty-one years. Patents which are now alive by virtue of those extensions, adding that statute of limit- ations, have a life-time of twenty-seven years within which their owners could bring suits. Postulating, then, that these infringements, in a large majority of cases, are innocent infringements — not only innocent in their start, but continuously so for from twenty to twenty-seven years— for that whole use the people of this country are now called upon to answer in profits and savings on the equity side of our courts. The nature of thcrtitle which is now given to a patentee is that of a close monopoly. If the owner of the patent is a manufacturer and de- sires to keep the control of his patented invention in his manufactory by the use and operation of the law of injunctions, the result only can be extravagant prices for the product of that machine, if it is a machine patent. There is no law which requires that the patent should go into use. A man may take his patent and lock it up in his closet and keep it there seventeen years. There is no power to get it out. The result is such instances as that of necessary use on the Southern plantations of the Paris-green compound already referred to, and the case of the millers of the Northwest in this middlings-purifier controversy, where, in order to use that patented process, one mill in Indianapolis is put* under $250,000 bond by a justice of the Supreme Court of the United States in lieu of an operation of tlie injunction, the court thinking that he would be a little tender with that infringer in that respect; in both 108 MR. RAYMOND. of which cases the users have been innocent infringers, yet are now liable as tort-feasors in immense damages. It is generally conceded that these matters of reissues are great evils. Eeissues are gotten out largely to cover inventions of other people which were made subsequent to the date of the original patent, which the original patentee knew nothing about in the world ; or, in the second place, to cover some part of the model or drawings which is put in origi: nally as a mere matter of mechanical skill to make the machine complete, an element to which the inventor did not attach at all the merit of in- vention, but which afterward he finds going into use in other machines and other combinations. He reissues his patent to obtain a patent on what was put in originally as a matter of mechanical skill, a matter of accident, in order to complete the model and to show the operation of other things which he did invent and claim as his invention. Devices innocently in use at the time of the reissue, not infringing the original patent, are made infringements of the reissued patent. This the bill partially provides for. Senator Morgan suggests that where a pat- ent is reissued any vested right in the public should be maintained, which certainly is sound, if it was possible to do it ; but it cannot be done. While by the provisions of this bill, if at the date of the reissue I am using a single machine or a single process in my business which did not infringe the original patent, 1 am entitled to use that specific machine until it is worn out, and I may repair it but may not replace it, still if the reissued patent covers that machine or process, it certainly interferes with my business, and the vested rights I had under the orig- inal patent I am not entitled to except for a limited period, and that limitation hanging over me of course to" a large extent destroys my business. Instances have been named to the committee where reissues were gotten oat on no other basis (and it is not a fictitious case) than that of a fraudulent alteration of a model in the Patent Office. After a good deal of study, and I think honest, unprejudiced study, in this regard, I have come to this conclusion (although I admit there are two sides to it, and I am not altogether satisfied about it), that the only practical way of properly protecting the people against the reissue of patents is to abolish them altogether, and I would do so, if it were left to my discretion, to-day. Every gentleman in this room will admit that the reissue of ijatents has resulted in more evil than any other thing known to the Congressional acts. There is no possible doubt about that. There is no doubt, either, but that almost any restriction which the committee and Congress may put upon the reissue of patents would be a wise restriction. The legislative power of the government cannot err in that direction, ia my judgment, and it would not err if Congress went to the extent of abolishing reissued patents entirely. Taking up some of the features of the patent law which have come to be burdensome among the people, I will state that I have in my ofQce claims which are made against the railroad companies which I repre- sent that I know to be perfectly fraudulent, for one reason or another. The patents have years to run, and the testimony upon which I am de- pendent to show that these claims are not valid depends upon witnesses fifty, fifty-five, sixty, and sixty-five years old. There is no way of per- petuating that testimony now, and the assignees (and the strictures which are put upon those who hold patents, and not upon the patentees and inventors, but upon the assignees), in a number of instances, are waiting for our inventors to die, in which case wo would be remediless. THE PATE^fT SYSTEM. 109 We desire to perpetuate testimony, and for additional reasons we desire to have the other provision as to invalidating patents. In the next place, there is a large community of men who are travel- ing about the country notifying A, B, and Othat "your business is con- ducted upon a plan that infringes my patent, and you must desist." They advertise the fact in the country, so that if I know that these men have a choice of action against either the user or the manufacturer, I am prevented from buying of the manufacturer, because ordinarily the claimant would choose to sue me, the user, rather than the manufac- turer. Such notices are served all over the cduntry, and they interfere with onr commercial relations to a great extent. Again, the claimant, not daring to publicly advertise that he has a claim upon this manufacture or business, will send out agents all over the country among the farmers, the millers, or the carpenters, or other artisans, and they will say, " Here is the patent which you are infring- ing." Described in the specifications, or possibly in the claims, is the device which the farmer or the artisan uses. There is the broad seal of the United States upon it, and the agent says, "I must receive compen- sation for the infringement." The farmer says, "I hare been using that article for twenty-five years." The agent says, "I cannot help it; this man invented this patented article and got it up before your inventor, • and we can prove it." The farmer says, " I cannot suffer a lawsuit," although he may know it to be a fraudulent claim. The agent says, "Give me $50 and I will give you a license." The amount of money is paid. This kind of blackmailing under the law amounts to millions of dollars annually. There are some of these provisions that we cannot remedy in toto, but the people are feeling these burdensome features of the patent law ; and the object of my citation of some of these burdensome features is to show that radical amendments are necessary, and that the patent law is not a sacred thing to be touched with delicate fingers. In the inter- est of the conservative element of the country I appeal to the commit- tee that radical amendments should be made now, or else the unintelli- gent abuse of the patent law by the public will be carried to a greater extent, and the outcry will get so great in a short time that it cannot be controlled even by the legislative power of the government. Senator Chaffee. Suppose the limitation were made for a year, would not that cut off these abuses ? Mr. Raymond. I will presently try to show why it should not be made one year, but I think four years too long. It should be three years. Id the next place, inventions are stolen from Canada as they come over to Detroit, Buffalo, and elsewhere. I know an instance, which is an example of many other cases. An invention is made in Canada, but not patented or described in any printed publication there, but is seen by some one who makes it the subject of an application for an Ameri- can patent as his own invention. There is no way of destroying a pat- ent in this country for an invention so stolen. Of course tbe same cir- cumstances apply to England, Prance, and Germany. Again, he who doubts that the policy of the government and the policy of the patent law is to give notice of these monopolies to the public, certainly has not read the statutes with intelligence. The government goes as far as it is practicable to go, in my opinion, in this direction in publishing the printed copies of patents, and in requiring the stamping of patented articles. And yet the people are supposed to know (they are bound to know the law) thefuU force and effect of the 15,000 patents granted annually, whereas in fact they do not know anything about it. 110 ME. RAYMOND. That, in my opinion, is about fifteen times as many patents as ought to issue. Corporations and large business interests can aflford and are obliged to pay patent attorneys about $10,000 per annum to advise them as to the force and effect of the patents bearing upon their particular interests. If an individual desires the same service in au isolated case, the necessary report on the state of the art and an opinion thereon by a competent attorney costs him from $500 to $1,000. I do not know why it is, but the hardest thing I have to explain to railroad-men in my business is how one patent can be perfectly valid and yet infringe another patent. Probably the failure is with me in not making my explanation clear enough. AW inventions run in lines. There is a cer- tain progress and a steady improvement in all the arts, and, as I shall show in the course of my remarks, not by virtue of the patent law exclusively. These lines of invention are what is called "the art." Mr. A. starts on one of these lines of invention "to remedy an existing evil. He studies over the matter and gets one element. It makes no differ- ence whether it is a machine or a process that is to be patented. His patent is inapplicable; it is not used at all; but- he started in the right direction, and the claim of his patent covers one element of the final solution of the difflculty. Mr. B. builds upon that, perhaps independently of A. so far as per- sonal knowledge is concerned, and adds a second element. He has to- use the first element, and consequently he gets a combination claim in his patent. He does not solve the difficulty. Mr. C. adds still a third element to the other two, traveling in the same line, not necessarily knowing what the others have done. He builds upon their work, but traveling in the same line his machine or process necessarily involves the two elements invented by these other men, and Mr. C. gets a com- bination claim for his three elements. Now, you cannot use Mr. C.'s patent without paying Mr. C. for it, but neither can you use Mr. C* patent without paying also Mr. A. and Mr. B. C.'s patent is perfectly valid. He has a good claim for those three elements, but his patent is subject to the other two patents, the first of which covers one element and the second covering two elements. Senator Chaffee. How can he get a patent if the same thing has been patented previously ? Mr. Raymond. They give him a combination claim, subject to the other two patents. No man can use this article without being subject to C.'s patent; neither can they use it without being subject to th& other two patents. The question of infringement or of mechanical equiv- alents is the nicest question that exists in the patent law. It is a question which no layman can safely pass upon himself, even in the simplest case. He must have legal assistance. Yet those questions arise in every one of those 15,000 patents granted annually. The asso- ciation of which I have the honor to be an executive officer has got to- day $50,000,000 in litigation in patent cases, and there is not one dollar of that litigation that is based upon the use of a device that we have not once bought and paid for, and paid the patentee. Mr. Walker. Mr. Raymond Mr, Raymond. I will not suffer an interruption. Mr. Walker. You stated that you would suffer an interruption when you made a misstatement of facts. Mr. Raymond. I will withdraw that statement, then. The Tanner brake, which Mr. Walker represents, is a brake that in a few instances was used on cars, but I am witliiu bounds in saying that the thing never went into use. It is used to day on some cars, but, comparatively,. BAD PATENTS. Ill it is fair to say it never went into use. We are using the Stevens, the Hodge, the Eames, the Westinghouse, the Laughridge, and the Smith brakes, and have paid for them all; yet Mr. Walker, as the attorney for his father-in-law, Mr. Sales, sues the Northwestern Railway Company for the first element, the idea of connecting the two trucks of the car, and gets a judgment for $46,000, and the case is now pending in the Supreme Court. If extended to all railroads in the country on the basis of their liability under that patent, which is estimated, liot on a basis of their mileage or gross runnings, but on the basis of their actual use. of double-acting brakes, this decree would amount to over $62,000,000. I did not intend to enlarge upon that idea, but these relations of in- fringement are so difficult and embarrassing, and they are so constantly and uniformly arising, that the public have some rights and embarrass- ments in these matters which the patentee is bound to respect, and the patentee has no such sacred rights in these matters as that we are pre- cluded from handling them very roughly in suggesting a statute to meet such difiiculties. I should like to notice, because I think the time has come when it should be noticed, and noticed very severely, the issue of patents out of the Patent Office for the most insignificant things in the world; and not only for the most insignificant things in the world, but the most insignificant things in the world are sometimes patented two or three times in the Patent Office. Within the last six months I applied for a patent in the Patent Office for a peculiar device, and reference was given to a patent for the same device in an attachment of thills to a wagon, constructed in exactly the same manner, without any qualification, pro- ducing exactly the same results — this being one in a railroad-switch. I said to my friend, "You ought not to have any patent, but 1 think I can get you one ; I will try." I prepared a brief and sent it to the examiner. The examiner then sent me another reference of the use of the same thing, producing the same results, in exactly the same manner, in a sulky for a race course. Senator Chaffee. Still they issued another patent ? Mr. Eatmond. They issued another patent in another class. The examiner in one class probably did not happen to see this prior patent for a sulky for a race-course in another class. I cannot explain how it happens, but I am stating a fact that happened within the last three months. The second time being referred to this identical thing produc- ing identically the same results in another connection, I wrote another brief and sent it to the examiner. I will not give the argument, that I used before him. There was no sense or reason in it in the world. Senator Chaffee. Then you were not very scrupulous'? Mr,KAYMOND. No, I am bound not to be, in securing and protecting all the rights the law may give my client. But I will pay my respects to that idea in a moment. Senator Chaffee. Is that the case with all the rest of the patent lawyers 1 Mr, Raymond. Yes, sir; with every one of them, without a single exception, in my opinion. But I sent my brief on and got a patent on the railroad-switch. Now as to the suggestion of Senator Chaffee: I came, two years ago, to the conclusion that there was no logical sequence following through the patent law from the commencement, nor yet was there a great deal of conscience in it. Of course there is conscience in the practice of patent law. A man came into my office the other day who had no claim in the world in law. He had in fact and morally a 112 ME. EAYMOND. claim. He had been swindled out of a monopoly of a very valuable invention which we wanted to use. I gave him a hundred dollars, sim- ply because he did not have money enough to get out of town. In another case, a man comes in with a case against us which he ought to maintain, but which some technicality of the Patent Office gives us a right to use. I know of no other basis, and there is no other basis, than that the law said thus and so. My conscience in patent matters is the patent statute enacted by Congress, and I cannot substitute anything else. If a man has a legal claim against us (as in one instance that comes to my mind, where there was not the first shadow of a moral right), if the law gives it to him, I say, " You have a claim ; " and in the case to which I refer I paid $34,000 where, morally, the man had no claim at all. Another man comes in to whom I ought to pay $40,000 on conscientious grounds, but I say, " The law does not give it to you, and I cannot give it to you." If the committee please, I have noted eight or nine other respects in which the patent law is very burdensome to the people ; but I will pass them over. I think it sufficiently appears that the influence of the pub- lic sentiment upon members of Congress and the honorable members of thiscommittee must convince you that there is a very, very radical wrong being perpetrated under the patent law, and it is radical amendments that are desired. It is hardly germane to the particular questions before the committee that I should discuss the measure and the merit of the patent law in attaining the civilization which we now enjoy ; yet, as these questions have been discussed, and as they materially affect important provisions of the bill under discussion and the stand-point from which they should be judged, I will submit brief considerations in this connection. Although we are told eloquently of the offices performed by the pat- ent laws in attaining our present civilization, yet their exact measure in this respect is never given us except in the glowing terms of glitter- ing generalities. That they perform important offices in this respect, none should deny ; that they perform principal and primary otSces, none should believe. In considering the causes of our happiness, peace, and prosperity, and as well the assurances of the permanence thereof, my habit of mind is to place as the corner-stone the Christianity that gives us an eternal and immutable foundation by which to measure and on which to base our civil and social laws ; to then add as the founda- tion the general principles of our government, involving the sovereignty of the individual, a government for the people and by the people, rota- tion in office, opposition to centralization of power, and the perfect en- joyment of the inalienable rights; then to build on as the frame- work the institutions of our civil liberty, involving the right of trial by a jury of peers, the right of public assemblage and free discussion, and the public education of the masses ; then to place as the pillars the ex- pressed constitutional guarantees of this religion, these principles, and these institutions; and I finish my building with the statutory provis- ions directed to the executive and judicial servants of the government, among which I find regulations which govern the right of property which our Constitution gives in one kind of the products of the genius and intellects of the people. We have gone far, and indeed have well- nigh exhausted the list of causes of our rapid progress and present civilization, before we come to the patent system. Yet it should have its place. There is an Infinite Power behind our progress. There are those who, viewing only some threatening political cloud or temporary commercial embarrassment, feel and insist that the world is moving MEASURE OP THE INVENTOR'S REWARD. 113 backward ; who, harping upon thfe good days gone by, would bid Liberty to turn her back upon the future— i To dark Ler chains and Swear 't \va8 music. But a candid review of the wonderful progress, and patriotism, and peace that have characterized the last twelve years of American history must satisfy all that there is an indefatigable energy and an indomitable progress in the people, which is due primarily to their physical and mental characteristics as developed by the political principles and insti- tntions of the government, and secondarily to the statutory provisions which encourage development in character, in knowledge, and, indeed, in invention. This leads me to ray second question in this connection : Is the proper measure of the reward to be given to the inventor the full amount of the benefit conferred by him upon the public, as has been the basis of the remarks that have preceded me, or is it to be established by some other, and by what other, rule ? The laws and the decisions that have obtained up to the i)resent time have gone upon the basis that the in- ventor should have, as a measure of his recovery, the benefit that he had conferred upon the public; and it is the logical consequence of that spirit, that opinion, that our laws and decisions have made the measure of recovery as burdensome as it now is. I wish to direct the attention of the committee, also, to this fact, that the measure of damages which you shall enact in this bill will establish the commercial values of all patented articles. If I have a patent upon an article and want to sell it, whether I am a manufacturer or simply selling licenses, the price that I will take depends primarily and almost exclusively upon what I can recover from those who are obliged to use the invention. In establishing this measure of damages you are estab- lishing an extensive list of commercial values. One of the gentlemen who has participated in the arguments before the committee cited the reward that was paid to Mr. Howe, and of the difQculties that lie encountered. A more striking illustration of that is the difficulties, the trials, the annoyances, the anxieties — almost the starvation — of Goodyear. I appreciate all those things, and agree that such men should be rewarded handsomely. They cannot be compen- sated, but they should be rewarded. But there are instances of the other kind. Why should Mr. Singer, a man knowing nothing in the world about sewing-machines, except to see his wife operate one, engaged entirely in other pursuits, sitting by his fireside reading a paper, when iu five minutes, as quick as thought, by a mere accident, comes to him the idea that he subsequently patented. Why should he, under such circumstances and within a lew years, be paid thirteen millions of dol- lars as his reward ? If you will excuse the assumption, consider that I occupy the position of the government for a moment. In our common law of this country, as in the institutions of the government, there is not the first suggestion of a patent system. More, a patent system is directly contrary to the spirit of our common law (not that of England), and it is directly con- trary to the institutions of our government. But for a purpose, for a particular purpose, i. e., the good of the public, the government says to the inventor, "Invent; go ahead ; we will give you a right of property for a limited period in the product of your brain. We will give you a re- ward as an incentive simply that the benefits of your work may be reaped by the public." It is a mistaken idea that pervades almost every S. Mis. 50 8 114 MR. EAYMOND. provision of tlie patent law, that the inventor sboald be compensated for his invention in the measure of. its value to the public. Take, for instance, my watch, an American movement, which cost eighty-flve dol- lars, which, during six months loses only fifty-eight seconds — a watch of a sort that within my recollection would have cost six hundred dol- lars. Is the difference to be paid to the patentee'? Are watches still to be six hundred dollars, and the patentee to get the difference"? Take a locomotive on a railroad : the utilization of steam for transportation has been patented in all its parts ; even the cone of the smoke-stack has been patented. If you are to pay upon any basis whatever that shall come anywhere near the benefit of the patents to the public, it would cost any one of us a thousand dollars to go home, and the people would have to pay it. What, then, is the proper stand-point from which to look at this sec- ond section relating to the measure of the reward which a patentee should get? I admit it is a matter of the utmost difficulty to fix ; but the stand-point from which we must start in considering the subject is, that it is not the benefit conferred by the patentee upon the public, but what the public, in view of the encouragement it gives to the patentee, can afford to pay, taking into consideration all the commercial laws of supply and demand, of easy times, of good wages, &c., and it is not from the other standpoint of the benefit that has been conferred upon the public. 1 said in an argument last year before this committee that there were decrees in the Supreme Court representing values of patents of forty millions of dollars, fifty millions of dollars, and, in one case, of sixty-two millions of dollars. Is there any patent in the country worth sixty- two millions of dollars? Was a patent ever issued that was worth sixty millions of dollars, or forty millions of dollars, or thirty mil- lions of dollars? There is no possible doubt that patents have conferred that amount of benefit upon the world in a great many instances, but can the world afford to pay it under the circumstances of its grant, and the conditions and reasons for its grant? I pass, then, these general considerations of the measure of recovery, to note the nature of the title which a patentee holds, and to complain, if I had the time and the ability, bitterly and forcibly against that title. As I have said, the inventor can lock up his invention in his closet, and keep it there for seventeen years, and depri\e the public of it. In the case of almost every important invention, the same invention is gotten up contemporaneously by other persons. In almost every important case litigation has resulted, for the reason that other men — in one instance sixteen other men — at so near the same time made the same invention that they had to go into the courts to determine which was the first inventor. In view of that fact, and in view, as I have shown, of the benefits of the patent law (and the wonderful progress of invention is not yet found out); in view of the indomitable energy and characteristic of our ijeo- ple, is it right that we should give anybody a close monopoly on any in- vention ? I certainly say no, although the provisions of this bill do not go to that extreme. Upon that point, and upon the question of reissues, I occupy extreme ground, for which, perhaps, I am entitled to the repu- tation tbat I am inimical to the patent law ; but I occupy those positions after very long and earnest consideration. Take, for instance, the pat- ents of the Pullman Palace Oar Company, which have been referred to here; they are in litigation, which, I hope, will continue, and deter- mine the merits and demerits of that controversy. It is an infliction upon the public, that 1 will not attempt to measure, that Mr. Pullman or his company should have, by virtue of anything, although beholds it SEC. 2 : DAMAGES AND PROFITS. 1 15 by a slender thread, if he holds it at all, a monopoly upon using sleep- ing-cars in this country, and that we are forced to make such contracts with him as please him, or else respond to him in damages for the in- fringement of his patent. I do not characterize it as a credit mobilier in the disgraceful sense of the word, but it is a crSdit mohilier in every good sense of the word. It is a fifth wheel. It is a ring within a ring. I have been trying to demonstrate the fact that it is the right duty of the railroad companies to do their own business, and it does not belong to the Pullman Palace-Car Company, or any fast freight-line, or any other extraneous company. Why should Mr. Pullman, by reason of having a patent on the triangular space in the roof for the upper berth, which is his most important patent, the validity of which is least questioned, prevent the railroad companies from using any kind of sleeping-cars that the public will accept ? Take the Westinghouse brake: why should we be obliged to buy any power-brake of Westinghouse or Lockridge or Eames or Smith, and, in order to be able to protect the lives and property of the people, pay them $150 for what it costs them $10 or $12 to make in the first instance, and then be obliged to buy every part that wears out, whether the piston or the rubber tube, from the manufactory of the patentee, and pay him a like profit ? To be sure, we are doing our best to get the money out of the people that we have to pay; but I say it is an outrage, and that so far from receiving such profits upon the manufacturing, they ought to receive a reasonable patent royalty, and be subject to the competition in manufacturing that characterizes all other branches of trade. These remarks are pertinent to this bill, because I will frankly admit that there is couched in the second section a provision that in some in- stances goes to that extent. The delicacy and ethics of being a tort- feasor in patent matters is something that does not secure many. The public will infringe a man's patent and become tortfeasor, if they can get out of it by reasonable damages, especially if they are forced to in- fringe the patent by the inexorable laws of trade. This first clause is put on to meet that case in certain instances. That is the thing we in- sist upon. These other gentlemen with whom I have been in consulta- tion have tried to narrow it down so as only to meet certain cases, viz, " where it is for the interest of the patentee that persons generally should use his device '' — which cuts out VVestinghouse aud Pullman and others who have established the manufacture, because this is not for their interest. But where a man has a patent on a railroad article which he wants to sell, it is only of value to him in that the railroads use it and not he. In all such cases if a license-fee is established, that shall be the measure of damages, and if one is not established the court and jury shall ascertain the measure of damages. I will stop to note the ambiguity of the word " same" in the fifteenth line. There is no ambiguity. You cannot read it and construe it gram- matically without making it refer to the license-fee. Brother Christy said if it did refer to the license-fee, he was opposed to the bill. I would oppose that section in every possible way if it did not refer to the license- fee, as he thinks it does not. Senator Chaffee. Then there must be some ambiguity about it. Mr. Christy. My opinion is it refers to damages, and I understood some members of tiie committee also to say that it did. Senator Wadleigh. That is my view. Mr. Raymond. The bill provides— If a license-fee has already been eatablished by a reasonable number of transactions of a character applicable to the case at bar, that shall be adopted as the measure of said damnges ; but if not, then the court or jury shall determine the same. 116 MR. RAYMOND. You elimiuate the parenthetical clause and that is what it means. Now, what is the meivning? Mr. Christy. Leave it to the committee. Senator Wadlbigh. I think it had better not be left in doubt, at any rate. Mr. Raymond. I do insist, as the most important part of my argu- ment, as the thing which the people of this country and of the eighty- one railroad companies that I represent do insist upon, that by some means we shall be admitted to the use of these devices without having to account for them by this wicked and absurd rule of profits and sav- ings. Senator Morgan. My idea of the grammatical construction of the clause is unquestionably that the word "same" refers to damages, but it would be impossible to give it that construction for the reason that the jury cannot ascertain or determine the measure of damages. It is a question of law for the court. Senator Wadlbigh. But my brother Eaymond has insisted that it referred grammatically to license- fee. Mr. Raymond. That semicolon there is a very awkward thing to get over. I did not see that before ; but I will submit to the committee an amendment which will make it mean license-fee ; for I will state that that part of this section is put in there at our earnest solicitation, and I would make it stronger if it was proper. That to us is the gist of this bill. We must have some relief in this matter. It is a Tiecessity that the public should have relief not only through us (we are simply public servants), but in their own private affairs. I want to cite another instance covering the Westinghouse brake and the Miller platform, which are of the most valuable inventions now in use by railroad companies, being absolutely essential, we think, to the preservation of life and property. There are about thirty railroad com- panies in this country that use neither. They are new roads, just built ; built on bonds, and they cannot afford it, they say. Why ? The West- inghouse brake costs them, say, $150, and the Miller platform, say, $100 a car. The president of the road says, *' I cannot afford to make such a contract as that with Mr. Westinghouse and pay this enormous sum to put a brake on all the cars of this road, and 1 will make an insurance company myself. When I kill a man it costs $5,000 ; if I cut off' his leg it costs ten or twelve thousand dollars. The interest upon that is so much. I can better afford to insure myself against these catastrophes than to buy this invention." It is an actual fact that upon that ground about thirty railroads in this country to-day do not use these inventions. It is the public that are suffering in that respect. The reasoning is good. To be sure it is said you could indict any one of them for manslaughter if you could prove it, but the president of the road has been driven into that position by the close-monopoly character of the title which you give to the patentee and which you should not maintain, in my opinion, in any instance, for it is unquestionably, on the ground of every construc- tion which I have named since the commencement of my argument, con- trary to the public policy that the patentee should have a close monop- oly upon his patent in any instance. To give some color for maintaining that he should have such a mo- nopoly, the case of the pin-machine is frequently used. We will suppose that there are fifty manufacturers throughout the country manufactur- ing pins by hand, and that I have a machine about as big as this table by which I can supply the full demand myself and control the market. The machinery makes the pins and polishes them and puts them into VESTED EIGHTS 117 paj^ers, and runs them off into a basket, and you have simply to have one man tere, they being supplied automatically, to push the paper as they are rolled up. The interest of the patentee, the selfish interest, is that he should have a close monopoly upon that machine, and that he should make all the pins that are made in this country ; that he should establish the price which we must pay for pins, sustaining his right by the operation of an injunction, and keeping others from using the machine. I respectfully submit if there is any ground upon which he should maintain that title and that close monopoly; it is diametrically opposed to all principles of public policy. The bill which we introduced in the commencement of the Forty-fourth pongress provided that anybody could use any patented inventions by depositing bonds in the circuit court where he resided, in such sum as the court might dictate, to respond to the owner of the patent. That provision is not in this bill, but these remarks are applicable to this bill, because the second section of the first paragraph of the bill is intended to go to that extent in cases where it is for the interest of the patentee that the invention should go into use. I should like to make it broader. At the same time I submit, although the radical conclusion of my argu- ment goes further than the bill, that! think it is judicious and wise to be at this time conservative in this very radical amendment of the patent laws, and that this is as far as we should go at present. In any amend- ment which may be proposed to the bill, I do insist and desire that that second clause of the first paragraph should be left in such a way as that, by the use of these patents, the users should be liable only to a license- fee, and not to the profits and savings. I will notice one or two of the points that have been made during the argument, and only one or two. First, as to Mr. Walker's point as to vested rights. I intended to prepare a brief for the committee on the question of damages, but all is found in Mr. Smith's pamphlet, page 20, and the cases are there referred to which are in point. I also had it in mind to quote from Cooley's Constitutional Limita- tions, and from other authorities, which I have not time to do, to show that profits in equity and damages at law in patent suits constitute a siugle recovery. There is not the difference between them that there is between a horse and a mule, as Mr. Walker has suggested. Thej^ are one and the same thing. The provisions of this proposed statute go not to the right; they do not take it away ; but to the manner, mode, and the extent of recov- ery. There can be no possible question in my mind but that Congress, and even the legislatures of the States under the prohibitions of the Constitution which do not apply to Congress, can alter any such meas- ure, or mode, or extent at will. Especially is that true when the right sought to be enforced is not a common-law right, but is based upon stat- utory provisions. Patents only exist by virtue of the wise provisions in the Constitution, and, as I think, the unwise present provisions of the statute. I had the honor to submit these considerations to the Ju- diciary Committee of the House last year, and they passed upon these questions separately, and unanimously sustained these views, and espe- cially because of this additional consideration. The Constitution says that Congress may grant an exclusive monopoly for a limited time. That is not a prohibition upon Congress from making anything less than an exclusive monoBoly, but it is an express grant that they may give to the patentee anything less than an exclusive monopoly, on the familiar principle that the greater includes the less. There is no doubt in my 118 ME. RAYMOND. miud, and I am unusually strong in my opinion on tbat point, but that this provision is perfectly constitutional and perfectly wise. At least the most that Mr. Walker contended for is that it is a case not perfectly well settled in the courts, and because of that it should go there to be settled. Mr. Walker. You misstate me. Mr. Eaymond. I shall not submit to an interruption . Mr. Walkee. I cannot be misrepresented. I made no such state- ment of fact. It is not worth while for you to misrepresent me. Mr. Raymond. What misstatement did I make ? Mr. Walker. You stated that I admitted that it was a doubtful question. I admitted no such thing. I submitted a brief to the com- mittee, and I claimed that, beyond all question, such retroactive effect would be unconstitutional, and the only interest I took in the contro- versy was that my client should net be put to the expense of going to the Supreme Court to particularly af&rm my positive view. Mr. Kaymond. I must have been unfortunate in ray language if I said that Mr. Walker so stated. I intended to say that the least he could maintain was that it was a doubtful question, not perfectly well settled in the courts. I submit that that question cannot be settled ex- cept by the courts. Of course it is a purely judicial question. If the present measure of damages or the present statute of limitations or any other provision of the patent law is unjust, iniquitous, is it proper that Congress, the legislative brauch of the government, should decide a judicial question and preclude us from going to the courts to decide this question? Senator Morgan. Still there is a great difference between Congress giving retroactive effect to a statute and providing for future difficulties. If it is a question of policy, it is one that ought to be very gingerly dealt with. If they are not under a constitutional obligation to take away from these people rights already accrued, it seems to me a strong and hazardous movement to undertake to do it. Mr. Raymond. I would not take away their right. But I cite the committee to the arguments in Cooley's Constitutional Limitations, and of Chancellor Kent upon retroactive statutes of limitation, starting in the first place with the theory that the statutes of limitation have been looked upon as a disgraceful defense to interpose and have been gingerly granted, whereas they should not be: maintaining the dignity of that defense and of the policy in certain circumstances of making statutes of limitation retroactive. If there is a radical wrong existing under these statutes and it is possible to make the remedy retroactive, as to this measure of damages (but not as to the right of recovery) and as to the statute of limitations, it seems to me right as a question ot policy to do it rather than perpetuate a wrong of the past, if it is an original wrong. I do not pretend to say that it is settled that these provisions would have a retroactive effect at all. I simply say that they should retroact in view of the necessities of the case if it is possi- ble to make thetii, and that in my opinion the true policy would be to say nothing in this bill about it at all, but let that question come up and be settled in the courts after the enactment of the bill. I certainly cannot see why, where there is so wide a question of difference and so wide a discretion on these two provisions, we should be precluded from trying that question in the courts. I will not spend any further time with the suggestions that have been made, except that I want to indorse most emphatically everything that SEC. l: LIMITATIONS. 119 my brother Livermore said about tbe reissues, aud everything that Mr. Hyde said iu his address. Senator Morgan. On this subject of the statute of limitations in the first clause of the bill, I think I shall find myself compelled by my con- victions to suggest an amendment to it. My idea, suggested perhaps very indefinitely the other day, has been matured since your argument has been proceeding by the use of a word which I think you have very aptly used in the course of your discussion of this section— the word "innocent." I shall propose, 1 think, that the section shall read as follows : That from and after the passage of this act no profits or damages in any suit at law or in eqoity for the innocent infringement of a patent shall he recovered which shall have accrued in one year — I do not commit myself to one year — next preceding the commencement of such suit, and all other cases more than six years next preceding the commencement of the suit. Discriminating between an innocent infringement and one not innocent. As I propose to offer such an amendment, I should like to suggest it for the benefit of the gentlemen of the bar who are present, in order to get their opinion, if they please to give it, in any form that they choose, as to whether the word "innocent" in that connection would be a sufid- ciently definite word to reach the object I wish to accomplish. Is the word " innocent," as understood iu the practice of the patent law in ref- erence to infringements of a patent, a sufiQciently definite legal terra to be incorporated into a statute of this kind ? To say " for the innocent infringement of a patent" would avoid great circumlocution, if we could get one word to embody the idea. Mr. Eatmond. I had planned to submit a number of points to the committee on this section, and the first was that the statutes of limita- tion that have been in force, and that have survived any length of time, have been statutes of repose, and should be; and it is directed to the suggestion which the Senator has just made, as well as to the sugges- tion which was made the other day, that the statute of limitations should not apply to those who willfully, and more or less maliciously, in- fringe patents. All these arguments which I have hinted at are char- acteristic of, and reasons for, statutes of limitations as they have imme- morially existed. The history of the statutes of limitation would insist that it should be a positive unlimited statute of repose. As to the first point, of a willful infringement, let me refer you to the cases that have arisen under the bankrupt law, wherein, without any modification of the statute itself, or conditions in the statutue, the courts have held that a willful failure did not come under the statute of limitations at all, and that the statute did not bar against such things ; and I am clearlj' of opinion that where you can establish a willful infringement of a patent, this first section would not apply at all. Senator Morgan. There is nothing in the first section to indicate it, because it includes all infringements. Mr. Eaymond. The point I am making is that all statutes of limita- tion are of that character, and courts created the exception, for this reason, that it is imi)ossible to put into the statute provisions and ex- ceptions which will be certain, and clear, and satisfactory. Take, for instance, the bill proposed last winter, which provided that no damages should be recovered except for a year prior to the notice of infringe- ment, f Senator Morgan, I notice that when the courts create exceptions to any statute of limitations, they always accompany them with jcremi- 120 ME. RAYMOND. ads against the legislature for not having more sense to include that which ought to have been included in the act. I do not say the word "innocent" is a proper word to be used. It looks like a contradiction of terms to say the innocent infringement of a man's patent. Senator Wadleigh. Is there any exception to the statute of limita- tions except what is based on fraudulent concealment that would be cause of action by the defendant? Mr. JJaymohd. There is no exception in the statute. Even fraudu- lent concealment is not a matter of statutory provision. Senator Wadleigh. I do not think the courts hold so in all the States, but that fraudulent concealment is a cause of action and prevents the statute from running. It is so held in jny State. Mr. Storrotv. Not any concealment, but intentional concealment. Senator Wadleigh. Fraudulent concealment. Senator Morgan. I should like to have the bill passed in such shape as to be understood by the Supreme Court as to what Congress means, and, more than that, I think there is justice in discriminating in the statute in reference to the man who has innocently infringed another's patent and one who has willfully infringed it. I threw out the sugges- tion in order to get an opinion on that point. Mr. Eatmond. The suggestion, which I did not intend to close with until just now, was in reply to the suggestion that was made the other day and assented to by Brother Smith, to take the last clauses of this second section, giving to the courts the widest discretion, and leave it at that. That would be to us a tremendous relief. Judge Drummond, in the swage-block case, reduced the decree from $1,700,000 to $416,000, and said he felt himself bound by the rules of the court and by the statute, and he admitted that that was a ridiculous decree, aud said he would have reduced it more if he could. The point that I am making is, that it is not safe to leave the measure of damages to be established by the courts. This has been demonstra- ted in the most emphatic way you can demonstrate it by the history of their action in the past. This whole country for the last ten years has been patent-mad, courts and all. They have treated- patentees as they would treat idiots and insane people, and as they used to treat married women. They have built up a series of rules, wherein they prostitute the doctrine of trusts entirely as the measure of damages for recovery, and it will take them ten years to get over it by their own operation. It is a crying necessity that the legislative part of the government should lay down some rules to amend and modify the rules they abide by, and • to repeal those rules of practice and recovery which should not obtain at all. It has been suggested that the inventor should never lose, and the iniringer should never gain. The inventor never does lose. What he gets is not a measure of compensation, but is clear gain, is a reward. The infringer sliould always gain, or there is no reason in law or in logic for the existence of a patent law. I will submit some additional considerations to the committee, and thank the committee for listening to my remarks, which have been heterogeneous. Senator Wadleigh. I want to ask you whether or not the parties you represent would prefer this bill to be as it is now, or whether they would prefer to have the period of limitation amended, as suggested by Senator Morgan? Mr. Eaymond. If you will pardon me I will say that, as to the dura- tion of the limitation, it does seem that a man should not be precluded and shut off from recovery while he is litigating his patent ; that is to SEC. 1 : LIMITATIONS. 121 say, the only rule that I know of, except a mere general judgment and discretion, and guess at what ought to be the time, is that the statute of limitations should be measured by the time it takes the patentee to establish the validity of his patent, not the time it takes him to go through with that litigation, or, as will be the case after this bill passes, under the second section, to get through with the jury trial, because they will go back to the law for damages, where they belong. Except in very extraordinary cases, which should not be taken into considera- tion, the longest that equity suits take to establish the validity of a patent, that is, to go to an interlocutory decree, which is just as satis- factory as the final decree on that subject, is about three years ; and I can see no reason in the world for making the statute longer than three. But, to cover these exceptional cases, to be conservative in all this radical amendment, and to get a law the enactment of which will be sustained by the people in all its branches, to which no serious or strong objections can be made, I heartily support the provision of the law as it stands, of four years, but certainly there is no good consideration for extending that time in any case. Senator Morgan. It is not the doctrine of notice which arises from Us pendens. It does not seem that there ought to be any exception to the statute after the party has brought suit. Senator Wadleigh. Suppose the party was entitled to a limitation of one year under the law ; would not the word " innocent" in that case apply only to a party who did not know that he was infringing a valid patent, and in that case would not the question of innocence or no in- nocence be one which the court would send to a jury'? Senator Morgan. The jury would have to pass upon it in every case. Mr. Raymond. Yes, sir. Senator Wadleigh. In that case would not your clients be very lia- ble to find juries who would say they were not innocent, and therefore you would have six years instead of four 1 Mr. Eaymond. Six years is not retained. Senator Morgan. Six years would be retained in the amendment. Mr. Eaymond. That applies to a reversal of the doctrine that now obtains, that we must know the law — must know all the patents that are issued. The word " innocent" would have no legal signification in that section. It cannot be used without some further statutory pro- vision taking away and annulling the presumption of law that he ought ■ to know all about these fifteen thousand annual patents. Then, again, the question of proving what is innocent and what is not is almost im- possible. Senator Morgan. I inferred from the manner you spoke that it was understood among patent lawyers that there was a clear legal line of distinction between "innocent" and "willful." Mr. Kaymond. It is perfectly well understood among patent lawyers when talking together, but it has no legal signification whatever. I do want to say one word about the suggestion made by Brother Christy that there are three provisions here : one for the annulling of patents, one for the perpetuation of testimony, and one to compel the patentee to bring suit, any one of which, in his opinion, would be snfii- cient. Take the case of a railroad company sued for a device used on their road twenty years ago. If lucky, we find one or two men who re- member what the device was. They make a drawing or a model of it and submit it to the attorneys. They say that is not an infringement ; but I do not want that man to commence suit and involve me in litiga- 122 ME. EAYMOND. tion aud decide the question of the validity of the patent, for I have no interest in that question. I do not want to commence a suit against him to annul his patent, because I have no interest in that in the world. What I want is simply to perpetuate the testimony of these two men to show that the machine I used twenty j'ears ago was not an infringement of the patent. Then it was said that the section of the Eevised Statutes as to per- petuating testimony is snfflcient. It is not for this, if for no other reason, that under that section two persons not jointly interested could not join in such a petition without a statutory provision for it, and the merchants, the dentists, the railroad companies, the farmers, any class of employ- ment in any section would want to join in any petition to perpetuate testimony showing the invalidity of a patent in any suit to annul a patent or to compel a patentee to bring suit. The latter provision was put in for the remedy of an evil which exists in New England much more than in the West, of advertising that a man's business is an in- fringement of another's patent, for which the proper remedy is to compel that man to bring a suit ; for, in that case, you will see it would be ridiculous to give the man against whom the claim is made and upon whom the notice is served the affirmative in a suit wherein the validity of another's patent was in question. The one charging infringement wants to manage his own case, of course, and he wants to be plaintiff In the case where the validity of the patent is concerned. Therefore, the only way to bring that to a point is to enact that third provision, which will compel him to bring his own suit and manage it. There is an un- doubted necessity for each one of these provisions, and they are not ad- ditional provisions, one lapping upon the other, giving the infringer of the patent or the defendant in a suit additional advantages over a poor patentee. Mr. HuBBELL. Would he not have a right to an action on the case at common law for damages ? Mr. Eaymond. Certainly. Then, as to those limitations in the first section of the bill, nothing in the bill prevents the right pf an injunc- tion ; and if it is the theory of the law that I may have a close monopoly of my pin-machine 1 have this remedy, and I do not care what the stat- ute of limitations is ; I can stop further operations by an injunction. If a man has willfully infringed on my patent, and I know it, I can stop him by an injunction, if I have such a claim as we ought to recognize in the statute. Senator Moegan. The patentee might choose to let the infringer go on in the business and prefer not to stop him. Mr. Smith. The courts have held that that is an implied license. Senator Morgan. If he does not bring suit within a reasonable time! Mr. Smith. Yes, sir; if he allows a man to go on and build up his business and allows all his money to be invested. Judge Shipman ruled that it was an implied license. Mr. Eaymond. The limitation and the demarkation of what makes a stale claim in patent law, of what would be an equitable limitation, has not been defined by the courts at all, as I am advised by older aud better counsel. We are going to make that defense in some important suits in the West for the first time. Senator Morgan. It looks to me that there ought to be a statute of limitations of some sort. The committee adjourned until Monday, November 19, at 1.30 o'clock p. m. SKC. n : PEKIODICAL FEES. ' 123 Monday, Fovemher 19, 1877. Tbe committee met at 1.30 p. m., puriuant to adjourument. ADDITIONAL AEGUMENT OF J. H. RAYMOND. Mr. Eaymond. Mr. Chairman and Senators, iu my remarks on Satur- day I broke from the line of argument I intended to occupy and did not return to it, and therefore omitted some considerations which are to me of importance. I shall be very brief this morning, simply touching upon points upon which 1 would otherwise like to dwell. First, as to what my brother Dodge said, that the amount of the pen- alty or annual tax upon patents should be $5 and $10 instead of being $50 and $100, as fixed by this bill, I desire to say we are following a well-established precedent abroad by not making it a mere nominal sum. In the second place, the grant of a patent by the government to anybody is at the very least either a taxation upon or a deprivation to the public which should not be continued in any instance unless the invention, which is the subject of that taxation or deprivation, is of sufficient value so that the inventor could well afford to pay a consider- able fee. In the third place, we want the feeling to be among patentees that this provision is not one under which they may carelessly put a finger into their vest-pocket and hand over a little small change, but that it is something of impoitance and dignity, worth enacting by the Congress of the United States, predicated upon a certain value in the patent and its benefit to the i)ublic, and that they must put a hand into their pocket book to get it. In the fourth place, the result of this pro- vision would be the annulling of a large number of patents that are good for nothing except as the bases for infringement suits. Following the illustration in the argument which I made on Saturday, that there is a large class of patents extant that do not cover practical machines, but contain principles upon which other more practical in- ventors have builded, and which are infringed by the other patented devices, and are good for nothing except to be bought and speculated upon by those who are justly called patent sharks — those practically useless patents come into value only at a very late stage in their his- tory, after the line of inventions has proceeded to a practical result. Those patents are a curse to the public, and by this fee, if you make it large enough, we would get rid of them before the progress of inven- tion has come to that stage where a practical inventor gets up some- thing which the public desire to use, and patents it, so that the public, buying of him, may buy and pay for what they get with one transac- tion. That is one of the greatest evils in the present law. Amendments are proposed in the House of Representatives to-day which provide that the government shall not issue a patent unless upon the face of the pat- ent shall be stamped the names and numbers and dates of those patents which are infringed by it, so that the public may have notice. That, of course, is an impracticable provision. There are other provisions of the same character proposed, tending to cure the evil, one of which is that not the user but the vendor, the manufacturer, the middle-man, should be responsible for these damages, which is alike impracticable. There are certain evils about the patent system for which no one has been wise enough to suggest practical remedies. One evil is that of which T am speaking, and a very great remedy in that direction is to put upon these useless patents (useless except for the i)urpose of infringe- ment suits)- a taxation that shall rid the public of them before the line 124 * MR. RAYMOND. of iuvention to which they belong shall proceed to that point where some other man, building upoa the first patent, shall create a demand in the public for the thing which he has invented and patented. I desire also to call attention and to emphasize the argument made by my brother Livermore, that the assignee of an invention should not make oath to the facts of the invention at the time of reissue. Whether the oath he makes is upon information or belief, or upon his positive knowledge, is not a material point. It is in the bill which is presented by myself and my friends to the committee, but at the time that pro- vision was put into the bill, I strongly protested against it, and reserved the right to oppose it before the committee, as I have not time to do this morning. It seems to me an absolute absurdity, ridiculous upou its face, that the assignee of the patent should make oath either on in- formation or belief, on any ground, as to what the inventor did invent iu the first place. Then I revert to the argument I tried to make on Saturday, namely, that these reissues of patents are a greater cause of evil than any other element of the patent law, and that it is impossible for the committee or for Congress to err in the direction of putting restrictions upon reissues. It was suggested also by my brother Livermore, I think, that a pro- vision should be added to this section as to the measure of damages, adding interest to the judgment until recovery. A judgment, as is well known, carries with it costs and interest; it is a complete, well-rounded thing. A decree in equity, which is the result of most patent suits, is a specific direction, and carries interest with it only when it is included in the decree in express terms. I see no reason for abolishing that dis- tinction between a judgment and a decree. Then, again, it is the policy of the Supreme Court of the United States, as laid down in their rules, and as contained in all the mandates which they issue to the court? be- low, that interest shall be received upon judgments or decrees accord- ing as the statutes and laws of the States from which the cases come shall allow interest or not. That seems to me a well-devised rule, and 1 see no reason for altering it. In other words, I see no reason for in- corporating any provision in this bill as to interest, for the reason that the law and the present rules of the Supreme Court sufQciently and wisely provide for it. I desire to submit one or two additional considerations upon the first and second sections of the bill. I desire to call attention to, and em- phasize, the argument of Mr. Hyde, that if the statute of limitations is too long, it results in absolute loss and irreparable injury to the defend- ant, whereas if it is too short, it only results in a multiplicity of suits. I revert again to the part of my argument on Saturday citing the provisions of the bill before Congress last jear as to notices. There is no cheaper, no easier, no more effective way by which a patentee can give notice to the public and to infringers of his rights than by com- mencing suit. I do not think that the committee can err in that direc- tion as to the statute of limitations resulting in a multiplicity of suits especially in view of the proviso that is in the bill to the effect that if the patentee be in good faith contesting one suit in which is involved the validity of his patent, the rule of law that the plaintiff is always iu court may be avoided by the court granting a stay of proceedings iu any pending case. I think I may assume safely that the argument has demonstrated that the statute of limitation which may be adopted by the committee should be an absolute statute, strictissimi juris, and that it should be a statute of repose. The history of statutes of limitation which have sur- SEC. 2: DAMAGES AND PROFIT?. 125 vived show that it is policy always to include in statutes of limitation no conditional provisos that are not absolutely necessary in the special cases. Are any such conditions in the case before the committee "J I think I may well assume that no provision or condition has been sug- gested to which insurmountable objections have not in turn been pre- sented; for instance, the words ''innocent infringement" would leave the statute open to wide discussion and debate in the construction of jt, the words proposed not having any legal signification at all; in which discussion and debate and determination by the court we would be liable to lose the effect of the statute which is desired by the com- mittee, by Congress, by the public, and by all the gentlemen present. Then, again, in making a distinction in the statute between the vendor and the vendee, the middle-man and user, you are simply transferring, if that provision be adopted, the burden of the present law from the con- sumer to the middle-man — from one class to another; and it does not affect at all the real ethics of the case. Now, the patentee has a right of action against either the manufacturer, the seller, or the user. Be- cause the user in one case is a railroad corporation, or in another case a large miller, or in another a large manufacturer, he prefers to sue him. In another case the users are the farmers or the mechanics scat- tered abroad through the country, whom he may easily black-mail, if the case is a fraudulent one, or from whom he mny easily get damages in a large amount, if the case is not a fraudulent one, by sending agents through the country to collect damages from them. You are not reme- dying the evil any Isy transferring the burden of it from the consumer either to the middle-man, the vendor, or the manufacturer. With that, I leave the subject of a statute of limitations, confident that the committee will come to the conclusion that no other change is necessary than such amendments as may be suggested by the discretion of the committee in shortening or lengthening the time of the running of the statute. The length of the statute should be determined largely by the measure of damages which the plaintiff would recover. I desire to suggest, in that connection, that while now all suits are con- tested in equity courts, if this second section should be adopted in its present shape substantially, suits, will be brought hereafter on the law side of the courts, which present a more speedy and satisfactory remedy than the equity courts now provide ; and the necessity for a long stat- ute to avoid pressing an interested patentee would not be the same in that instance as it is now, whereas the patentee is subjected to long equity litigation in every case by reason of its offering him so great a reward. I come, then, with these brief considerations, to the second section, and suggest that any provision that may be adopted that would result in reducing patent royalties and recoveries to reasonable and certain amounts would benefit inventors by increasing the number of settle- ments in a degree that I hesitate to estimate. Almost all patent claims now are fought by those who are able to fight them. I speak of the public. I do not speak of large manufacturers or railroad companies, because they employ counsel by the year to advise them in these matters and they are governed by their advisers as to what the law is ; but as to the public generally, everybody who can afford to do it on general principles fights a patent. Why ? Because the recovery is so ridicu- lously high at the end, and therefore the demands made by the patentees are so ridiculously high in the first instance. If the recoveries are re- duced to a reasonable and certain amount, like a license-fee, the demands made in the first instance by patentees would not be anything like so 126 ME. RAYMOND. great, and the number of settlements would be increased in a ratio that I hesitate to estimate. It was suggested the other day, as I think the argument was put by my brother Walker, that the abolition of profits in equity cases, either entirely or wholly, would be in fact a premium upon torts. That is an argumentum ad hominem which perhaps requires some attention. It is equivalent to my saying to the committee that if, in the opinion of the legislative branch of the government, the penalty of death for murder is ridiculously and wickedly excessive, and entirely contrary to the public policy (as undoubtedly is this measure of recovery of profits in equity proceedings in patent causes), if the legislative branch of the government should come honestly to that conclusion as to the death penalty for murder, and therefore should substitute imprisonment for life, would that be a premium upon murder ? I do not feel at liberty to make any further argument in favor of the entire abolition of profits in patent cases, or of close monopolies in patents, than is necessary to sus- tain the second clause of the first paragraph of second section, which I hope will practically have this effect in the particular cases in which those I represent may become interested. If, then, in these cases the measure of recovery were reduced to the damages — and that is the intention of the first paragraph, although I believe you will come to see that as it reads it does not mean that, and for that purpose I sliall submit to the committee some amendments to the second section which will make it plainer in that regard — if in cer- tain cases the recovery in patent litigation is limited to the damages which in turn shall be solely determined by the license-fee, think for a moment what then the patentee would get, and compare his recompense or reward (I care not which yon call it for the present purpose) with the recompense that is paid in the theory of reward and of compensation to any and every other product of the intellect, or that is paid for pro- fessional service that is created and rewarded by statutory provisions, as for instance the judges of our Supreme Court, the judges of our circuit and district courts, the members of the legislative branches of goveru- raent, both National and State, and the executive officers of the govern- ment. Taking any other instance that you may find where the value of the property in the service is created by statutory provisions and the reward also is created by statutory provisions, I ask the question, would not the damages which the patentee would recover, if limited to his damages, and in turn as the measure of damages if limited to the license- fee, be the best compensated man in the world who holds that kind of property ? In the statement with which I conclude I desire the critical examina- tion and careful criticisms of the members of the committee and the gentlemen present, for I desire to submit some propositions concerning the Paris-green compound case that has been referred to during the argument. J shall be very glad to be corrected if I am mistaken iu the statements that I make, for they are strong statements. The patentee of the Paris-green compound for killing a worm that was destroying a large part of the cotton-crop was the first to invent such a compound that would accomplish this and without damaging the cotton. We will suppose that at the time of his invention compounds were known and used which produced like effect, but also damaged the crop to a consid- erable extent. Go further and suppose that another subsequently in- vented and patented a compound which did not involve the ingredients or principles of combination of the Paris-green compound, and therefore did not infringe the first patent, and that the planters, for the purposes SEC. 2: DAMAGES AND PROFITS. 127 of defense upon the question of damages in a suit under the first patent, had acquired rights under the second patent. Making that a strong case, then it must be admitted that under the mildest form of the present rules of recovery in equity the owners of the Paris green patent would recover from the planter the full market-value of that proportion of the crop saved by the use of the Paris-green compound which he would not have saved by the use of other compounds subsequently patented. I go further and give the rather immaturely considered opinion (but I am sure this morning that I am correct therein) that the planter hav- ing bought rights under the second patent for the purposes of evading what would be considered the rights of the first patentee, and not for the purposes of use, because from the necessities of the case he is obliged to use the Paris-green compound, the courts would not admit him to the above comparison, but would hold him for the full market- value of the proportion of the crop saved by the Paris-green compound, which would have been lost by the use of any compound at that time public property and free to the use of any one. Even in the case I stated, where there was a subsequent patent, that would accomplish the purpose, although not so well and perhaps not so economically. The comparison was not between the Paris-green com- pound and the other patent, although the planter might have bought rights under the other patent, but the comparison is between the results of the use of the Paris-green compound and the results of the use of any other compound which at that time was free to all the public to use and was public property. Mr. Walkbe. Do you mean to say that is law now ? Mr. EiAYMONB. I do, and 1 say that is the law in the case iu which you are interested. Mr. Walkee. I submit to the gen tlem c nf the committee that that is a very important statement of law. Mr, Eaymond. I ask gentlemen present to criticise that statement of law after I get through. I cite the case of Umigli v. The Chicago, Burlington and Quincy Railroad, and the swage-block cases, which were decided last May in the Supreme Court. I may say that some of those swage-block cases will go back into the Supreme Court on another question, and it is intended, if possible, to raise the question there. I do not think this is good law, but it has been held so, in the cases cited. It has been held repeatedly by Judge Drummond in the Tanner-brake case, which my friend Walker represents, that the comparison was not between the Tanner-brake patent and the other patents which the road had bought the right to use, but it was between the Tanner-brake patent which was issued in 1852 and any other device (the old single brake) which the public were entitled to use at the time of the infringement of that patent. The courts have held this doctrine in cases in which I am interested, and so far as I am aware have not reversed it. This rule is not changed by the provisions of the bill, if only the fact is added that in the cultivation of that part of his crop affected by the worm the planter has made a profit of one dollar, for this abominable rule of profits is repealed only in cases (and I now refer to line 16 of the second section) " where the invention has enabled the defendant to realize an actual profit in that part of his business connected with the use of his invention." If he has not realized an actual profit of one dollar, or more, in that part of his business connected with the use of his invention, then the rule of profits does not apply under the provisions of the statute as proposed; but if he has made a profit of one dollar or more, the rule of profits, as it now obtains iu courts of equity, will apply, unless, perchance, he escapes, as I hope to escape in a large number of cases, 128 ME, KAYMOND. through the provision iUjIine 5 of this section, that " where it is for the interest of the patentee that other persons generally should use the same in like manner, the damages, measured by the license-fee, shall apply." .1 do not think the case would come under this latter provision. If, as in the case of a pin-machine cited the other day, or in the case of a sewing-machine, or sleeping-car, or any other case where there is a close monopoly — that is not a legal term, but the gentlemen present un- derstand perfectly well what I mean — where it is for the interest of the patentee, and he desires to be the only manufacturer, and, in addition to such royalty as his caprice may establish, to reap a manufacturer's or middle-man's profit thereon ; if it is for his interest that he should be the sole manufacturer or the sole vendor, then, again, you see, under the provisions of the second section, that it is not for his interest that other persons generally should use the device, as in the case of the Paris- green compound to which I referred. We hope to escape from this rule of profits, because, in the case of railroad devices, it is " for the inter- est of the patentee," &c., except in the Westinghouse brake, the Pull- man palace-car, and a limited number of cases — perhaps there are some half dozen others that I might mention — where they have invested a million of dollars or more in the manufacture, and it is to their interest to maintain what I call a close monopoly in the patent. In the army of inventions that are presented to railroad companies, the man has sim- ply the broad seal of the United States in his hands, and wants us to manufacture and introduce the article. In such a case the license-fee would, apply, and, so far, we are getting relief by this bill. I will submit my amendment, to cure the ambiguity suggested by brother Christy, as to what the word " same " means. I have adopted the language of the pamphlet which was prepared in my office in Chicago by the (ionsultation there, and which was scattered among the members of the profession. It was subsequently altered within the last two weeks, by my consent, to be sure. I have also included another sentence, which is entirely new to our consideration, which came to my mind this morning. I would amend section 2 by striking out, in line 8 (I refer to the bill as printed by the Senate), the words " shall be the same," and by inserting after the word " equity," in said line, the words " shall be the price of said license-fee." 1 would also amend section 2 by striking out the words " the same," in line 13, and by inserting, in lieu thereof, the words " what would be a reasonable license-fee." That is the intent of what is in the pamphlet prepared at the consultation in Chicago. Then I want to suggest, and it is a new thought to me, to add, at the end of the sentence in line 14, after the word "case," the words "and that shall be ths full measure of the plaintiff's recovery." That is what we mean, and we ought to say it. I believe in the old Irishman's maxim, " If j'ou mean it, say it ; and if you don't mean it, say so." Then the section would read, commencing with the third line — OT ■where it appears to the court or jury that, from the nature of the invention, it is for the interest of the patentee that other persons gecerally should use the same in like manner and pay him a license-fee therefor, the measure of the plaintiff's damages, both at law and in equity, shall be the price of said license-fee, and no account of profits or savings shall be allowed. If a license-fee has already been established by a reasona- ble number of transactions of a character applicable to the case at bar, that shall be adopted as the measure of said damages ; but if not, then the court or jury shall deter- mine what would be a reasonable license-fee from all the evidence in the case, and that shall be the full measure of the plaintiffs recovery. I have no doubt in my own mind, unless I am very much mistaken, but that was the intent in the original section among those who pre- pared the bill. If it was not, I should be very glad to be corrected. SEC. 2: LICENSE-FEE. 129 ADDITIONAL ARGUMENT OP OHAUNOEY SMITH. Mr. Smith. Are you aware that throughout all the discussion here last spriug, and in Chicago, I contended that the introduction of the words "reasonable license-fee" was not the sound rule, and that it was an unsound rule, onerous even for the railroad companies that were in- terested ? and instead of saying that that was the understanding, you will see that it was contrary to my views. I have always contended that that is an illegal phrase, and I do not believe, if it is ever adopted, that it would apply to railroad cases. Mr. JSaymond. We must certainly understand that the word " same" in the 13th line refers to license-fee, and not to damages. Mr. Smith. We discussed the propriety of using the words " license- fee," and finally dropped the phrase throughout the bill. Mr. Raymond. I would be very content to strike out the word " same " and make it " license-fee." Mr. Smith. It might lead to this, that in determining what a reason- able license fee was, you would resort to the advantages which the de- fendant had derived from the use of the patent, and that it would be reasonable for him to pay the full benefit of what he got. That is one view that might be contended for. The court, in assessing damages, look to the injury of the plaintiff, not to the benefit derived by the defendant mainly, and I have no idea tbat that rule can be introduced without working greater hardships to the defendant, except in cases of account, than the present rule. I should myself regard it so, and cer- tainly the idea of introducing the words "reasonable license-fee" as an element to be taken into account in determining the damages, was one that we discussed in Chicago, and it was finally dropped. Mr. Raymond. I was absent at my home, you will remember, when the discussion took place on that point. Mr. Smith. I remember. I cannot believe it would be your interest to introduce such a phrase as that, because it would carry you at once to the advantages that the defendant had derived as an element to de- termine what was reasonable for him to pay. Mr. Walker. Tour idea of the bill, as it now stands, is that that is excluded ? Mr. Smith. Perhaps not excluded as one means of determining dam- ages, because the courts sometimes look to that. Still it is not a con- trolling element. Mr. Walkek. That is only resorted to when the other means fail. Mr. Smith. That, I think, is so. The courts have sometimes allowed juries to look at the advantages which the defendant has derived, not as determining the measure, but as one element that might be resorted to in determining the damages. Any rule which introduces the ele- ment of a reasonable license-fee would, I think, carry the case just where parties stand in making a trade, and that directly involves the question of advantage to the defendant. Parties meet to trade. The thing they talk about is what vallae it would be to one party to buy, and how much he can afford to pay for what he is going to get. Mr. Hatch. Looking at this matter, not from the point of the in- fringer or the railroad company, but from the point of the inventor, would it not be proper to have the word "reasonable" in the law, so that if there is to be a license-fee assessed it should be a license-fee that would be reasonable 1 Do you suppose that there is to be an unreason- able license-fee assessed ? Consider the inventor, as well as the infring- S. Mis. 50 9 130 MR. C. SMITH. ing railroad that comes -in and proposes to take what it desires and use it and then settle for it afterward. Mr. Smith. The word "reasonable" introduces no idea that the law does not write there without the word. I do not think it is a proper rule to undertake to substitute in courts of law or equity for the phrase "damages," which has a pretty Well settled signification. Take the price of an article. Whether you call that the price or the reasonable price, its value to the defendant is not the proper element in these cases of claims for damages. I only meant to say that I thought my brother Baymond had fallen into a mistake in saying that it was the intention at the consultation that the words reasonable license-fee should be used. We discussed that subject very fully, and came to the conclusion that the phrase should be dropped. Tou will recollect that I suggested here last year that the phrase " license-fee" was misleading, and that no one could tell where it would lead. Our object was, as I understood it, to take away the right to an account in a large class of cases, and limit the parties, both at law and in equity, to the establishment of damages by the appropriate means, recognizing that in a very large class of cases that rule has been already settled to mean an established license-fee. It takes away all danger of excessive recoveries under the guise of profits and substitutes therefor, as I think, the more conservative rule of law in damages where the object of the court or where the inquiry of the court is to view the damages which the party has suffered, and only incidentally what the defendant has realized. Mr. Htjbbbll. You say that where a man has an exclusive right granted to him under the Constitution, where the inventor has not licensed the party, and perhaps does not wish to license him, they are to have the privilege of taking his invention and using it, and then they are to be rated as though he had licensed them, and they are to be assessed on the ground of a license-fee, and not as compensation, or as damages ? Tou use the term " license fee." License fee would express volition on the part of the patentee, when there is no volition on his part that you should use the invention at all. Probably he has his own ideas and reasons for not allowing others to use his invention at all, and why should they pay him only a license-fee ? What right have you to take his invention, in which he has the exclusive right, and rate it on the ground of a license-fee when he is giving no license ? What right has the law to do it? What right has Congress to do it, when the (. Con- stitution does not give you a limited or restricted right in any way, but says that it shall be an exclusive or an absolute right ? Here you would give i^ this conditional, contingent, and defeasible character by putting the inventor upon the ground of a licensor, when he is not a licensor. Mr. Smith. That is the ground where I understand the law now puts him in that case where he has not established a license-fee, because the law undertakes to fix damages by evidence in the case; and in equity it goes beyond that, and says he may recover profits that are clearly to be recovered. We propose to exclude the courts from inquiring into profits, and confine them to damages. Mr. Htjbbbll. Why put a bridle on the judicial power ? Why not let them take all the facts and circumstances of the case, as in other causes, and fix that compensation which the Constitution recognizes as a compensation for the use of the invention II Mr. Smith. I think we come as near that as possible. Damages at law do not in all cases certainly, and probably in very few cases, reach the whole measure of the plaintiff's injury. There is a great deal of injury in many cases. The plaintiff may suffer a great deal of damage SEC. 2: PEOFITS. 131 which is too remote to be reached. The law does not undertake to reach all the damage which the plaintiff may have suffered; therefore we wanted to confine the scope of the law as far as possible, and only step outside in the last clause when the rules for damages were plainly so injurious or so excessive in one direction or another as to do injustice. Our object was to make as little change in the law as possible, as we understood it, except in the matter of accounting in a class of cases, and yet place in the hands of the court a corrective power over the results of the rules of law when they plainly did injustice to the parties. Mr. Httbbell. The judicial power has that right anyhow. Mr. Smith. Not quite. The Supreme Court said in the case I quoted here that the chancellor in equity had a wide scope, but that the rules led to results which made them hesitate about their application, and, as I think, plainly indicated that they had not quite the freedom which sometimes might be desirable. We were seeking to place in their hands greater liberty than they seem now to think they possess. Senator Morgan. Mr. Smith, I should like to call your attention, for the purpose of getting the views of the bar and any gentlemen who may see proper to present their views, to this inquiry, which seems to me to affect the question of the statute of limitations and also the question of the admeasurement of damages : A person who uses a patented invention is treated in the adjudications under the patent law as a truv«tee in invitum, Mr. Smith. In equity ? Senator Morgan. Yes, in equity. Now, is it not a principle of the law of trusts that a trustee in invitum, who holds under color of title, or who holds in absolute innocence, is not charged with profits unless he has actually realized profits ; and ought not that principle of law to be applied to the patent system ? Mr. Smith. I should hesitate to say that that is a general principle in all cases, but 1 am quite sure it was the principle which the courts started with in patent causes, and which ought to be the rule in patent causes. That, I believe, answers your inquiry. Senator Morgan. That answers my inquiry. It seems to me the adoption of such a principle as that in patent law, both in reference to the statute of limitations and in reference to the admeasurement of damages, would meet a great deal of difBculty that has been suggested here. Mr. Smith. I am free to say that the case of Dean v. Mason shows that no party should be held responsible in equity for profits unless he had made profits, because they there held, if he had not made as much as he ought, he was not chargeable for his lack of diligence. Senator Morgan. That would depend upon the motives, the animus, with which he took that property. If I take another man's property willfully, knowing it Is not mine, out of which he could have made profits, and deprive him of the opportunity of dbing so, I ought to be chargeable with everythfng that that man could have made by a proper use of the property ; but if, under color of title or entire innocency of his right, I take his property, and they charge me as trustee against my will, though I have not voluntarily put myself into that position, I ought not to pay profits unless I actually realize profits. Mr. Smith. That, I understand, is the law now ; but it does not go so far as the case which you put, as you seem to think it might be carried, or at least it did not until this recent decision in Mevs v. Con- over, 11 Official Gazette, p. 1111. Our object in this provision, if we have happily expressed it, is to bring the court back and limit them to 132 ME. A. H. WALKER. a case where profits have actually been made, the trust attaching (if I can make the distinction plain) not to the invention in the hands of the party, but to his fruits of the use of it. I think the law really was, until the courts pushed it to an extreme, that they never contemplated in the outset just what you expressed in regard to the equitable cases. FUETHEE EEMAEKS OF J. H. EAYMOND. Mr. Eaymond. I desire to thank the committee for the patience and consideration which they have shown me, and I think it proper certainly that the committee should receive the thanks of the public for the great consideration that they have given this important question. ADDITIONAL EEMAEKS BY A. H. WALKBE. Mr. Walkee. I wish to say a single word, with the permission of Mr. Storrow, in reference to a point that occurred in the course of remarks here and in regard to another point suggested by Senator Morgan, I refer him to the case of Livingston v. Woodworth, in 15 Howard, which was a case that came before the Supreme Court, in which this equitable recovery of profits was sought. The circumstances of that case were these: The infringer used unlawfully the Woodworth planing-machine. It was an equitj' case. On the trial, it turned out that, with proper man- agement, he might have made a dollar a thousand on all the boards he planed. That was one fact. Another fact was developed that he made, in point of fact, only fifty cents a thousand. Mr. George T. Curtis was of counsel for the complainant in that case, and he urged, on the prin- ciples of trusteeship, that the defendant was bound as a trustee not only for what he did make, but that he was bound as such trustee to use due diligence to make all he could. He obtained a decree from the court below for the full dollar a thousand. When the case reached the Supreme Court of the United States, the Supreme Court of the IJnited States used almost precisely the same language that Senator Morgan used this morning. The Supreme Court of the United States said this infringer was an innocent infringer, and, being an innocent infringer, he should be required only to pay over in equity the exact sum he re- ceived ; and if, under any circumstances, it was deemed desirable or proper or just for the complainant to get the full amount he might have received, he should proceed at law, by an action on the case, on the theory that he had been injured to that amount, inasmuch as it was then supposed that every time the infringer planed a thousand feet of boards he deprived the owner of the patent of the opportunity to plane them, and therefore the infringer injured him to the extent of the profit that the owner of the patent might make. Senator Morgan. I suppose that would depend npen whether he was there ready with the machine to do the planing. Mr. Walkee. Exactly. That doctrine never has been held, so far as I know, in any case in this country except in 1857 in the case of Pitts v. Sail, and a few years afterward in the case of Seymour v. McGormick, the Supreme Court held that it is of very limited application in actions at law. Several remarks were made by brother Eaymond to which I wish to PATENTED IMPROVEMENTS ON PATENTED MACHINES. 133 refer. The idea that the patent law as it now stands makes a man who uses a machine upon which there are two or more patents pay more than once for the benefit he has derived, that is, pay all or a portion of -what he has derived, to one patentee, and then afterward be forced to pay all or a portion to another patentee. To enforce that, he has said this morning that the courts held that when the owner of a patent pro- ceeds in equity to recover profits, and when the case is referred to a master to take an account of those profits, the master is directed to take an account of what he would have derived by the use of this machine over and above what he derived by the use of any machine then open to the public aad free to the world. Brother Raymond endeavored to ex- clude the idea that this measure of compensation was not confined to machines open to the public, but machines that were patented and which the infringer had no right to use, could also be set up as a standard of comparison. Now, in point of fact, the Supreme Court never has made an infringer pay two patentees for the same thing. He referred to the case of Emigh v. The Railroad Company. That is a case in point and illustrates this matter to a dot. The brakes about which we have heard so much, and which are used on almost all cars in the United States, are subject to three patents, the Tanner, Hodge, and Stevens, in their successive order. The Tanner brake was the first successful double brake ever used. Hodge invented an improvement on Tanner, and in addition to the benefit that was conferred upon the public by the invention and patent of Tanner, he conferred another benefit upon the public. Stevens took another step and perfected the art by invent- ing his particular combination of levers. Stevens's assignees brought suit in equity against the Burlington Road many years ago for profits, and all the profits claimed was the amount of the benefit he had con- ferred upon the Burlington Road over and above what they would have received by using the next best machine. He did not pretend to re- cover the entire profit derived from the use of that invention. It was precisely the case of a horse, saddle, and a pair of stirrups. When the Tanner brake was invented it conferred upon the public the horse. When Hodge invented the improvement, it put the saddle on the horse; and Stevens by his improvement added a pair of stirrups to the horse and saddle. A horse is very good even without a saddle or a pair of stirrups, but it is better to ride on a horse with a saddle and stirrups. Now, a saddled horse is better than an unsaddled one, and a saddled horse with stirrups is still better than a saddled horse without stirrups. All that Stevens ever asked in equity is the benefit that has been derived from the use of the stirrups ; all that Hodge ever asked on his patent is the benefit derived from the use of the saddle with stirrups. Tanuer said, " Ton have paid for the stirrups and the saddle honestly, and now pay me for the horse which never was claimed by Hodge or Stevens." There does not seem to be any confusion or any injustice in that. All the companies are called upon to pay is the whole, and to pay it to the right men. The value of the horse is divided up into three parts; but in some instances they have paid Stevens and have not paid the other two; iti some instances they have paid Hodge, and have not paid the other two. In some instances they have paid Tanner, and have not paid the other two, and in some instances they have not paid anybody at all. Senator MoEGAN. There is not any question on that point when you go into equity, because the master might separate between the three patentees. The question would arise in an action at law for damages. Mr. Smith. That has been done by the Supreme Court. 134 ME. A. H. WALKEE. Mr. Walker. My remark was intended to meet brother Raymond's remark, which I presumed, although it did not intend to create that impression, might make the impression that an infringer is bound to pay more than once for the same thing. I wish to say just another word about the doctrine of trusteeship and the theory upon which I understand it. Suppose that Senator Booth has got $50,000 In government bonds, and he thinks that he may die. He wants some good man as an executor of his estate, and he makes his will, appointing Jay Gould, of New York, his executor. That of course is a very absurd supposition, but it answers my purpose. He imposes no duty upon his executor except to cut the coupons off the bonds, and pay them over from time to time to the heirs of Senator Booth. Jay Grould says, " I have more points on stocks than any man alive, and I will do better for Senator Booth's heirs than he thought I could possibly do. I will take that money and invest it in some sort of stocks that I know exactly how to manipulate, and instead of making 6 or 7 per cent, a year 1 will make 50 per cent, per annum, and then I will pay over 25 per cent, of this profit to the heirs, and keep the other 25 per cent, for my trouble." He goes on and the thing turns out as he expected. He makes 50 per cent, per annum. The heirs learn of it and file a bill against him to require him to pay over the $50,000 and the last cent of profit he has derived, on the theory that he is a trustee not only for the exact amount of money which Senator Booth confided to his care, but also for the profit he derived from the use of the money. Mr. Gould puts in an answer and says, " Those heirs could not speculate on Wall street any more than they could fly ; they do not know a single point about these things. There is not a man in the world who could have made that money except myself. Is it possible, because I used my remarkable talent and splendid experience in making 50 per cent, upon the investment, that I am bound to pay it over to a lot of people who could not have done it to save their lives 1 No ; if I give them one-half that is abundantly liberal." In such circumstances equity says, " That is no defense ; you must pay over to the cestui que trustent the last cent of money you have derived from its use." The railroad companies have infringed our patents. Take the swage-block patent ; that is a remark- able case. I happen to know that the Lake Shore and Southern Michigan Railroad agreed to take out a license for the sum of $1,000, and when they came to pay a thousand dollars they desired to pay it in bonds of tbeir own, depreciated to 90 per cent., so that the owner only would have received $900 instead of a thousand dollars. The in- ventor would not give the license for that sum, and the railroad never took out a license. He sued them in equity and got a decree against them, for the exact profit which they received, of over $130,000. Mr. Raymond. The doctrine of profits carried it up to $291,000. Mr. Walker. That was the doctrine as the master understood it, but not the doctrine of profits as Judge Davis and Judge Drummond under- stood it. They understood that the master had made errors in applying the law, and cut down the decree more than one halt. I say under these circumstances, when that company had the chance to buy that improvement for a thousand dollars some fifteen years ago, and then when they attempted to defeat the patent for a great many yenrs, and finally when the patent was held to be valid and it was held that they were infringers in the Supreme Court this last year, is it an injustice and a wrong that they should be required to pay over to that i)atentee the exact amount of money they pocketed by the use of the property ? SEC. 2: PROFITS. 135 Senator Morgan. The difference in the cases is that one is an express trust under seal, and the other is a case of implied trust. Mr. Walker. Tou will see that implied trusts are subjected to the same considerations as express trusts. The distinction exists, but it is not a controlling consideration. Senator Morgan. I think in the case of an implied trust a man gets credit for the application of his skill, and in the other case he does not. Mr. Walker. If you are right about that, I am wrong. It is my im- pression that there is no such distinction between constructive and ex- press trusts. I did not quote the illustration as an authority that should bind, but to illustrate the principle. As I understood, there is no such distinction as the Senator indicates between constructive and express trusts. There are many distinctions, but I do not understand that that distinction is laid down. But it is an illustration of our position, that when infringers have derived money from the use of our improvements the highest considerations of equity require that they should pay that money over to the men who own the improvements, and not be permitted to keep nine-tenths of it in their pockets. Particularly in cases where the rights of action have already accrued it is wholly improper and un- constitutional to deprive us of a right to sue for and recover that which the law says we are now entitled to have. Mr. Eaymond. I want to say in regard to Mr. Walker's first illustra- tion (of course there is no opportunity for me to cite authorities to sus- tain my proposition) that the practical trouble is this: We have been presented — not the railroad companies, but all here — with the horse, saddle, and stirrups complete, and we have paid for it and closed our bargain, but find out afterward that the man we were dealing with was only the owner of the stirrups. ARGUMENT OF J. ,J. STOEEOW. Mr. Storrow. I shall endeavor, Mr. Chairman and gentlemen of the committee, if I have to use any illustrations in the course of the argu- ment, not to refer to anything in which I have, or any one here has, any special personal interest in controversy to-day, because if I undertake to look out for the good of mankind and insist in the first place upon going to my ofSce and looking out of my own window, I am afraid there is a great deal that I should miss and a great deal that I should see in a very peculiar and one-sided manner. I do not expect under this law, and none of us expect, that we shall entirely do away with all cases of hard- ship. We cannot do that under any system of government which depends npon law and due process of law, that is, rules laid down in advance for the guidance of judges, instead of the mere unrestrained conscience of the judge himself; and yet we would not 0ve up that system, although the practice of an Eastern cadi allows greater menjbal freedom and in some individual cases perhaps greater justice. There will still be cases, in spite of any changes we make in the law, where practitioners at the Patent Ofiftcewill impose upon the office and induce it to grant patents which ought not to be granted, where attorneys will get out patents that are worthless, which they know are anticipated, and betray their client for the sake of winning a fee from him, although they know that when such a patent is obtained it will be mere waste paper in his hands, or only useful to defraud the public. There will be cases undoubtedly where defendants will willfully infringe patents. Nay, there will be cases 136 MB. J. J. STOEKOW. where rich defendants will band themselves together and say to the patentee unless he will sell his invention to them at a price agreeable to them, that they will drag him for ten years through the courts at an ex- pense which is a flea-bite to them but ruinous to him. I do not look to amendments in the law simply or chiefly to get rid of those cases of hardship. I do not think that the way to stop abuses of rights is to destroy the rights themselves. I think we have to look a little to an educated public and private sentiment which will cause counsel and clients to understand that though they look to the law to ascertain what their rights are, they must look to their consciences to ascertain when and how, to what extent, and in what manner it is decent and seemly for them to exercise those rights, whether of attack on the one side or of defense on the other. These remarljs lead me directly to a consideration which Mr. Senator Morgan suggested the other day — and it is of a good deal of importance — the distinction between innocent and willful infringers. It is of impor- tance not only under the statute of limitations, but still more, I think, upon a good many other questions — questions of damages, or questions of the amount of recovery against infringers. The difficulty we have in applying that, or putting that distinction into the statute, is this : Who is an innocent infringer? We must take the phrase, not in the moral sense, I think, but in a legal sense : some distinction that can be seen by the law as distinguished from morals. If a man studies my patent carefully, with good, competent advice, and concludes that the machine he is about to build, and, thereupon, does build, does not infringe my patent, I do not think he has done any moral wrong; yet, certainly, he is not legally innocent. His fault has been that he misread the state- ment of my claim, which the court, finally pronouncing the decree against him, says was so clear and precise and definite that he ought to have known it and understood it. On the other hand, there is the case that occasionally, though, I think, not very often, happens, where a man has invented an improvement himself, and built a machine in accordance with it, totally ignorant that any one else had previously invented and patented that improvement. That case may justly be said to be thor- oughly innocent morally and I think legally. Senator Morgan. I am satisfied the word " innocent " would not be suflBciently definite. Mr. Stokeow. I go a little further. I cannot make the idea itself sufiQciently definite. Senator Morgan. Perhaps the words "knowingly and willfully" should be used. Mr. Storrow. The word "innocent" does have in equity a pretty definite meaning. We know what an "innocent purchaser" is, and the kind of defense that is set up under that name. There is an element in those case in equity which cannot be put into patent cases. That element is this: the innocent purchaser is one who has been led into his position by some act or omission on the part of the plaintiff. If the plaintiff" has refrained from recording his deed; if he has got an equitable interest and has failed to bring in the legal title, or put a mark upon the legal title; if he has made a promissory note payable to bearer; there is an act or an omission on the part of the plaintiff calculated to lead the defendant to change his position. We cannot incorporate that into the patent law, because in these cases there is never any act or acquiescence by the plaintiff authorizing, or impliedly authorizing, the infringement, except in a few cases that have been referred to, where a man by long acquiescence or by sitting by and seeing the work go on seems to ap- "innocent" infringers. 137 prove it; but for these cases equity already affords a sufficient remedy. The difficulty is, we think, that the idea which, by the word innocence, or some other, we should like to express, turns upon the state of heart, the state of mind, the state of knowledge of the infringer himself. Now, if you require the court and jury in every case, in order to find out whether the statute of limitations applies, to determine the condition of heart and mind and knowledge of the infringer, you make that statute, which ought to be a statute of repose, introduce into the trial of every case where it is invoked an issue of the most difficult and complicated character ; you make the question of the application of the statute de- pend upon the verdict of the jury or the judgment of the court upon the most difficult question, I think, which ever comes before tribunals, a ques- tion which relates to the intention and purpose and secret knowledge of the defendant himself. It is for that reason that, although we should like to see the distinction put into the statute of limitations, and we should like to see it put into the section about damages, we have not been able to find ourselves in a position where we could suggest any way in which that end could be reached without, on the whole, doing more harm than good. Senator Morgan. My suggestion had reference to the time of the bar: First, that there ought to be a distinction made between those who are knowing and willful infringers and those who are not, in regard to the time of the bar. I think that there ought to be au absolute statute of limitations in regard to these patent suits. Mr. Storrow. Now let me take a case which is perhaps the most fre- quent in patent suits, and see if we can apply that distinction in a prac- tical way. Suppose one of the clients of my brother Hjde, who spoke here the other day, and represented the shoe manufacturers of Massa- chusetts, to go into market and undertake to buy the latest piece of shoe machinery, with all the latests improvements in it. He buys it at a fair price in the market, meaning to get all the inventions known to the community in that machinery. He does not take the trouble to find out who owns the inventions, but he buys from a party without know- ing, except by inquiry from him, and without going to the proper sources of information to find out who does own the invention. He cannot be said to be an innocent purchaser. The man would have the latest in- vention, and yet he does not mean to take the trouble of finding out who owns it. If a man buys a horse or buys a piece of land in that way, he gets no title. That is only one of a great many cases that arise ; and I think you see the difficulty of laying down any rule, which shall be in the nature of a rule, to determine between one and the other. Senator MoRGkiN. The case you have stated is where he buys a pat- ented invention. Mr. Storrow. I have put the case where a man buys a machine, de- siring to get the shoe-machine or the reaper with the latest improve- ments, not knowing or inquiring whether it is patented or not, or inquir- ing merely of the man from whom he buys it, and, being told that it is covered by his patent, is satisfied, and does not inquire further. Senator Morgan. There never was any relief for that in respect to a question of title. A man has to take the risk of every title he buys. There is no doubt about that. If he buys it from the wrong man he is just that far mistaken. There is certainly, however, a very great class of cases to which that idea will not apply. A gentleman mentioned here, and it seems to be a fact, that when the art has progressed to a certain extent, half a dozen men in half a dozen days or half a dozen mouths may become possessed of the idea which is suggested perhaps 138 MH. J. J. STOEEOW by the very state of the art. It leads to a farther improvement and a most important and valuable one. One of these men takes out a patent for it. Another, living, it may be, a thousand or three thousand miles away, builds a machine and uses it without knowing that the other partj' has taken out a patent. They are both equally inventors ; they are both exercising equally a faculty beneficial to the country ; but I think the man who is innocent in that case ought not to be mulcted in damages from the fact that he exercises his ingenuity or skill or ability in the invention or maturity of the machine. There must be cases of that sort that ought to be protected against, it seems to me. Mr. Stokrow. There are cases of that kind, but I do not think they get in the courts and cause trouble very often. 1 think the amount of damages covered by those cases is very small. Those are the only cases it seems to me to which you can properly apply the idea suggested by the word " innocent." There is one distinction between the different <5lasses of infringers and the different classes of plaintiffs which I think it might possibly be right to make. There is no doubt that many de- fenses and many claims are, if not exactly malicious in the common-law sense of 'the word, at any rate oppressive and vexatious. If we could find any way by which the court should be authorized to make a hand- some allowance for expenses and counsel-fees against the party, either a vexatious plaintiff or a vexatious defendant, who had made a frivolous and vexatious claim or a frivolous and vexatious defense, it seems to me that would be a step in the right direction. We have considered that matter somewhat. I am not quite prepared to say how it ought to be remedied or whether a remedy ought to be provided. In our circuit we have not had much trouble from that class of suits. In other places I believe they have had. Senator Morgan. It seemed to me in regard to the second section that it would be well to modify the language so as to give the power to the court, instead of increasing or diminishing damages at its pleasure, to tax the parties with costs and reasonable attorney-fees and make that in the nature of compensation or in the nature of punishment for the frivolous proceedings or defense. Mr. Storrow. For my part I should be glad to see that made a part of the se(^tion. I think there is one suggestion with reference to that •class of suits which I may make. It seems to me, from what I have «een and heard, that that class of suits aud defenses more often arises where counsel defend or prosecute the action on shares. I understand that in some parts of the country that is done very much. In our part of the country it is not consi a certain extent, mold the remedy, it must do so subject to the other 192 MR. J. J. STOEEOW. provisions of the Constitution wliich relate to tbe remedy, and one of those provisions is that the remedy shall be given through the judiciary and not through members of the legislature or any one else. Take an instance. If Congress should grant the right for seventeen years to mine minerals, to search for, raise to the surface, and take away min- erals from a certain tract of government land, that would be a right created by act of Congress, molded and formed by act of Congress j its terms and conditions would be learned only from the act of Congress; and yet I think no one would say that a right like that could have a remedy attached to it that for a trespass upon it no jury should be sum- moned ; that neither plaintiff nor defendant should have a right to trial by jury to ascertain the damages caused by trespass upon that incor- poreal right. Take the case of a ferry franchise, a franchise to maintain a bridge over navigable waters, a franchise to build a railroad, a fran- chise to become a national bank — all these are rights created by acts of Congress. In the great case of the United States Bank the Supreme Court held that inasmuch as the bank was created by Congress it could give exclusive jurisdiction to the United States courts not only in matters involving the existence of the bank, but in all rights connected with the exercise of its powers ; that that power to give the remedy in the United States courts extended to an ordinary action on a promissory note, because all the rights connected with that bank grew out of the act of Congress which created it ; and yet no one, I think, would say that Con- gress should declare that no action which touched the interest of a national bank should be tried except in a court of chancery, and that no jury trial should be had upon it. Mr. HuBBBLL. The common-law rights of property are prohibited from a denial of jury-trial by the Constitution ; but this is not a com- mon-law right of property in any way ; it is simply a statutory right, in accordance with an express provision of the Constitution. There is the difference. You deny trial by jury at law, but 1 say you may give a judge discretion, and I would modify it in that way, so as to send spe- cial issues to a jury. Mr. SxoREOW. That is taking away the right. It seems to me clear, therefore, that to say because a right is created by Congress we may take away the trial by jury, is too broad a statement, and it does not rise to the accuracy of a definition of the power of Congress on that subject. One reason why limitations must be put upon that power is that the remedy for the infringement of a patent right does not con- cern the patentee merely. Inasmuch as the patentee asserts his right under the act of Congress, he may possibly be said to submit to every- thing which Congress annexes to the grant; but the defendant does not have his right under the act of Congress. If the patentee has an exclusive right and it is infringed, and he says to the defendant, " Pay me a thousand dollars out of your pocket; transfer it from your pocket to my pocket; not because it was my money when it was in your pocket, but because, being your money, it ought to be paid to me to afford com- pensation for the injury you have done me" ; that is a case where the de- fendant does not hold his thousand dollars under any act of Congress. It is a case where the power of the law comes in and takes from him that which was his own, because he has inflicted an injury upon another or because he has destroyed the property of another. In every case, therefore, the remedy for the infringement of a patent involves the right of a defendant who does not claim under the act of Congress, as much as of the patentee who does claim under it; and that is where the limitation begins to come in. I stated the other day RIGHTS AND REMEDIES. 193 the distinction between the right of the patentee to the exclusive use o his invention and the remedy which the law gives him for an invasion of that right. I want to make another distinction in regard to the rem- edy, and that is between the character of the relief which is given to the man and the mode of procedure by which or the forum in which that relief is sought. For example, Congress may say to the inventor, " You «hall have an injunction." It says to him, "You shall have damages for the Invasion of your right." That is the kind of relief which may be given. When we come to the mode by which that relief is to be sought, the tribunal which is to measure the extent of it, then we come to a somewhat different class of questions. To state exactly the position, if I can, of the parties, I will say Con- gress has established a legal right in the patentee. His right is a right, I mean, which can be recognized by a court of law, and not merely by a court of equity. It is transmissible ; it is assignable ; it may pass by devise or Inheritance. Congress has recognized in him (and this bill proposes emphatically to recognize in him) the right to have damages for the invasion of his exclusive right. That right to damages, in what- ever forum it may be sought, is in its nature a legal right as distin- guished from an equitable right ; that is to say, it is a right which, ac- cording to the course of law at the time the Constitution was adopted, was a remedy given him by courts of law and not by courts of equity. The Constitution recognizes the distinction between claims which at the time the Constitution was adopted were the subject of common-law ac- tions, and claims which could be enforced in equity or admiralty. It undertook to say that with respect to all those matters which at that time were proper subjects of suits at law, the right of trial by jury should not be taken away. It seems to me, in the first place, that this claim for damages was in its nature a claim given by the common law, and was intended to be enforced in the courts of law. It is entirely true that the xight which is created is one which was not in one sense a right at com- mon law ; but the claim of the party for the damages for which he brings his suit is a claim which was recognized by the common law; it is a right to maintain an action of trespass on the case for the invasion of an incor- poreal right ; and whenever Congress created an incorporeal right in the patentee, without any provisions in the statute giving jurisdiction to any <;ourt to enforce those rights, without any provision giving remedies for their violation, the law and equity jurisprudence of the country would have taken hold of those rights and furnished that remedy. The law of England, long ago — long before the adoption of the Constitution — fur- nished a legal remedy for the invasion of patent rights by an action of trespass on the case for damages, or an equitable remedy in which prof- its or an injunction could be obtained. Senator Morgan. We call this a right of property. There is great force in the reasoning ; but, after all, it is more of a privilege than a right. Senator Chaffee. It is a franchise. Mr. Storrow. What is the right to build and maintain a railroad? Senator MORGAN. That isi a franchise. Mr. Storrow. What is the right to be a corporation 1 Senator MORGAN. That is a franchise. Mr. Storrow. What is the right to mine and take away ore from land of the United States ? Senator Morgan. You get into a different element there. One is a pure franchise granted by the government; the other is a privilege granted upon some basis of right, resulting from the discovery, or some- S, Mis. 50 13 194 MR. J. J. STOREOW. thing like that. It is something like the mine you spoke of. You take elements of nature and combine them into the discovery of some new combination of forces or principles, so as to produce a certain result in a convenient way. Kow, that combination, though said to be a discov- ery by you, is not created by you by any means at all. There is not an element of it that the man creates who makes the discovery. The gov- ernment, the world, mankind at large, possessed these elements before in free use, and another man had a perfect right before you became the patentee, if he could do it, to discover and combine the same things and use them freely. You have done so, and the law of the land gives you a privilege in connection with that thing, not because it is absolutely property of yours, but because it was simply made so by the acquies- cence of the government, that you should have the exclusive right to enjoy it for a certain length of time. Mr. Storrow. Is that a franchise ? Senator Morgan. No, it is not a franchise in strict terms. Mr. Storrow. It is an incorporeal right. Senator Morgan. The mere thought or idea is in the nature of an incorporeal essence granted by the government out of its own powers. The use is a privilege granted in connection with sooiething which ex- ists independently of the government as a privilege to mine lands. Mr. Storrow. It is based on something which the inventor has in the most just sense created: anew and useful art not before known, or a new and useful improvement. It is not something which he has sub- tracted — self-appropriated — from the world's possessions, as in the case of the old monopolies. The whole world has become, and forever after his patent has expired will continue to be, stronger or richer for what he has done, for the new use he has taught it to make of the forces of, nature; this is the highest creation open to human power. But to tate even what seems to me to be the lower class you mention. Suppose the government said to a man, "If you discover a gold mine in such a tract you shall have the exclusive right to dig out the gold for one year"? Senator Morg-an. That is a mere incorporeal right, not a franchise. Mr. Storrow. That is an incorporeal right, and I have no doubt that is a right which is within the purview of the clause of the Constitu- tion which provides for trial by jury. Let me go a step further to meet exactly the suggestion you make. Suppose we concede, as was laid down distinctly in the case of Parsons m. Bedford, 3 Peters, 447, that the provisions in the 5th and 7th amendments to the Constitution apply to only those claims and causes of action which, at the time of their adoption, were recognized by the laws of this country. Senator Morgan. At common law. Mr. Storrow. Not simply by the common law. Senator Morgan. I mean the laws of the country. Mr. Storrow. You will find that decision expressly says that those provisions apply not only to those rights recognized by what is popu- larly called the common law of England, the unwritten law, but to those rights which existed at that time under the statutes and practices of this country. Of course the court in saying that did not mean to say that if the claim existed under a statute. Congress, by repealing that statute and the next week re-enacting it- in the same terms, would so change the right that they could take away the trial by jury; but they referred to the nature of the right in itself, the character of the right, as distinguished from the precise language of the statute which created it. Now, you will find it true, if you look at the dates, that the first pat FOBUM FOR PATENT SUITS. 195 ent law of tbis country was passed in April, 1790. That law gave to the patentee, for the invasion of his right, the right to damages, to be assessed by a jury. That was the law of this country before the 5th and 7th amendments were adopted ; so that upon precisely that ques- tion you have the fkct that when those two amendments were adopted not only the law of England recognized the common-law right of action of trespass on the case for the invasion of a patent right, and gave a iury to assess damages, but the laws of this country had created it and recognized it. It seems to me it would be very bold to say that a right of that sort, which existed at the time of the adoption of these amendments to the Constitution — for th«y were not adopted by all the States until 1791^ could be so modified by Congress as to take away the right of trial by jury, which those amendments were intended to preserve inviolate, be- cause, if you should take that construction, I hardly know any right at all which is created by statutes from which the right of trial by jury ctin- not be taken away by simply repealing the statute and re enacting it in different terms. I have stated the argument against the power of Congress to authorize a court of equity to find damages. But the argument in favor of that power is very dififlcult to answer. When a court has acquired jurisdic- tion in equity, by reason of the peculiar relief asked, or for any other reason, it can go on and give entire relief to avoid two sets of actions for the same wrong, even though a court of law would be competent to give part of that relief; at least this is true as a general principle. It is true, also, that a court of equity can, in some cases at least, include unliqui- dated damages in its decree, ascertaining them either by a master or by an issue ; so the Supreme Court declared, through Chief Justice Taney^ in Kelsey vs. Hobby, 16 Pet., 279 ; so, also, the supreme court of Massa- chusetts, in Milkman vs. Ordway, 106 Mass., 242. Is it not, therefore, true that where a court of equity, in a patent cause, as one part of its relief, gives damages assessed by a master, it exercises only that juris- diction and power which was in courts of equity at tho adoption of the Constitution, and which the Vllth amendment left to them 1 If this question should ever come before the Supreme Court, I am sure that the extreme convenience of the practice would be pressed upon them, and they would feel that convenience; it ought to weigh with them on a close and doubtful question. This is not ail that should weigh with them. The Vllth amendment provides that tlie verdict of a jury in the cases to which the amendment applies shall not be re- examined otherwise than according to the course of the common law. The patent-act of 1790 was repealed by the act of February, 1793, and I believe that since that repeal there has never been a time when the recovery in an action at law on a patent was limited to the amount found by the verdict of a jury. During part of the time it was three times the usual license-fee ; during part of the time it was three times the damages; during more than half the time the court has had the power to increase the veidict up to three-fold, at its own discretion. Certainly this departure from the simple damages found by the jury is not accord- ing to the course of the common law ; it is not obedient to the Vllth amendment; and it has been universally acquiesced in by Congress, the community, the courts. Upon the.que^ion whether damages for the infringement of patents came within the Vllth amendment, a long line of honored authorities would justify, perhaps would require, the court to say that this construction (upon whatever theory it arose), con- temporaneous with the Constitution, ratified by the consent of all men, 196 ME. J. J. STOREOW. at all times, in all places, has become too firmly a part of the established jarispradeuce of the country to be overturned by abstract reasoning. We must not forget, also, that the powe|? of the chancellor to pass upon questions of title, of validity, of infringement, has been established, and the only question open is the comparatively subsidiary one of dam- ages, and, perhaps, even if reasoning cannot solve that diflQculty, the armory of the law can furnish means to cut it when it arises. * I confess the question is one of considerable difftoulty. It was first suggested to us several months ago by some gentlemen who were of opinion that the right to assess damages was in its nature a common- law right to be tried by jury, and ought not to be given to courts of chancery ; though when the suggestion was first made to us, it was not made in the view which Senator Morgan suggested, but upon general principles. When the suggestion was first made I will say I thought there was nothing in it, because it seemed to me that if Congress created the right they could mould the remedy, but the more I have studied it and thought of it since, the more difficulty I find in taking that view and the more strongly it seems to me that the nature and form of the procedure is something which is regulated by the Constitution ; that Congress may mould the remedy so long as they do not violate other provisions of the Constitu- tion ; and those other provisions apply, for the various reasons I have mentioned, to these cases. The case has never been passed upon by the Supreme Court, and I cannot bring myself to say that I can have an opinion definitely as to how the court would decide it when they come to pass upon it. In that condition of mind, it seems to me that, inas- much as by this bill we have restricted a certain class of patentees to damages alone, and taken away from them the right to recover profits, we ought not to embarrass them by taking away from them the only forum or court in which, possibly, they can recover damages. I think we ought not, also, to take away from any suitor the right of trial by jury in a class of cases where it has existed from a time anterior to the provisions of the Constitution, unless it be clear that we have a right to take it away, in the first place, and perfectly clear, in the second place, that we can give him another forum in which to reach the same relief; and also that it be perfectly clear that there is an overwhelming necessity for taking away that right ; for, as was said by the court in the case I have referred to in 3d Peters, the right of trial by jury is justly dear to the American people. I think upon such a question, particularly, as the assessment of damages, the jury tribunal is worth a great deal in a great many cases, for there is no tyranny that the citizens of a free country can suffer under so grievous as the whims or fancies or peculiar turn of mind of a judge who is too good and too honest to be removed, and yet whose turn of mind inflicts great hardship upon suitors before him. Although I believe it to be true that very few cases will be tried at law, yet the right to go to law when you want, the right to require a jury when you want, I think is a good corrective against that kind of injury and that sort of abuse. I think, therefore, if it is not entirely clear what the law is on the subject of trial by jury as applied to patent causes, the right ought not to be taken away, because the existence of that right and the use of that right has involved no hardship and no evil which it particularly demands remedy. Senator Morgan. Allow me to ask you for information, if under the patent laws as they now exist a chancellor upon a bill filed on the equity DAMAGES IN EQUITY. 197 side ol the court has not the right to award damages to the complain' anf? Mr. Stoerow. Under the law of 1870 he has. A great many gentle- men have doubted whether that law is constitutional, but the question has never been passed upon. Senator Morgan. Still they award damages. Mr. Storrow. It has been done since that law was passed, but never before. Senator Morgan. Then is that a violation of the right of the defend- ant? Mr. Storrow. That is just the question which I have endeavored to discuss. It never has been settled. I understand there is a case pend- ing in which that question has arisen, and is likely to be decided by the Supreme JOonrt, unless the case goes off, as it may, on some other point. Senator Morgan. The constitutionality of that grant of power is doubted. Mr. Storrow. Tes, sir. Of course, it is the defendant who raises these objections. The plaintiff might prefer to go on. I happen to have a case now where I am counsel where there is no question at all about the infringement; it is admitted; the right of the plaintiff is admitted, and the sole question in the case is the amount of damages. That is peculiarly a case for a jury. Senator Morgan. Neither the plaintiff nor the delendant can elect to avoid the law side of the court, if we have no power to deprive either of the parties of a jury-trial. They are obliged to go to the law side of the court if either party desires it as the statutes now are. Mr. Storrow. Either can compel the other to go on the law side of the court if the right of trial by jury exists, though there is another way out of it, I suppose, under the act of February, 1875. The circuit court sitting in equity in a patent cause has a right, instead of sending an issue to a jury, to summon a jury of not less than five nor more than twelve, to whom the issue is transferred. It is a very convenient way. I suppose, if the defendant made the objection that the case ought to go to a jury the court could call one, but still that does not give it to him as a matter of right; it is a matter of discretion on the part of the court, unless indeed the court should determine that the seventh amendment required them to give him a jury. Senator Morgan. How would it strike you to transfer the whole juris- diction to the equity side of the court and let him proceed by a bill in equity, and preserve the right of trial by jury, by permitting either party upon a demand made in a certain form to have a jury ? Mr. Storrow. Limiting that right to the question of damages, I think that would get rid of a constitutional objection. Senator Chaffee. Let me inquire in a case of that kind, suppose a plaintiff commences on the law side of the court and the defendant pre- fers to have a decision by a judge? Mr. Storrow. He cannot help himself. A suggestion of the opposite kind was made in the old case of Goodyear v. Day. The objection to taking away the common-law right of trial by jury applies only to a claim for damages, because that is the only one which the common-law recog- nizes. It does not apply to the question as to the validity of the patent, or infringement, or profits, or an injunction. Senator Morgan. I do not see how a right of trial by jury can apply to one point in the case when there are five other points to which it does not apply. Mr. Storrow. Suppose the case was one where the courts at law and in equity had a concurrent jurisdiction. There is one remedy in a court 198 MR. J. J. STORROW. of law and one remedy in equity. Now, the Constitution says as regards the relief which you at that time had a right to obtain in a court of law, the right of trial by jury shall not be taken away; but as regards the relief which at that time you had a right to obtain in a court of equity, the ordinary forms of procedure of courts of equity shall be afforded. Senator Morgan. Here is a case involving five or six different propo- sitions of law and fact, and it turns out that the judge will have a right to decide four of these propositions, and the fifth must be decided by a jury. Then you have to go through a jury trial and exhaust the juris- diction of the law court before you can get at a decision which will affect the equitable rights of the parties. Mr. Stoerow. Not entirely. If we allow the plaintiff to have the same remedy that he had before the act of 1870, he might elect to take no damages and go into equity and get his injunction and his profits. That was the course before the law of 1870. The plaintiff went into equity, but got no damages; he got profits and an injunction. The cair for a jury only arises when there is a claim made for damages, eo nomine. Senator Mor&an. That is your view of the Constitutional obligation resting upon Congress to furnish a jury, that a jury is demandable as a Constitutional right where there are damages to be given in a case ? Mr. Storeow. It is my view that the question is doubtful, and we have no power in this room to settle it. Senator Morgan. And where there are no damages claimed the jury is not needed ? Mr. Storrow. Yes, sir ; that is, if the right is one that the courts of equity can, in their nature, take hold of, and the party can go there and get equitable relief, profits, and an injunction ; but if the right is one which the courts of law, in their nature, take hold of, then the party can go there and get a trial by jury and his relief in damages; an,d trial by jury is secured to him under the seventh amendment. Senator Morgan. Unless there is some plain Constitutional objection to it, I should like to see the difficulty removed. Mr. Storrow. Is it a difficulty I No one has found it so ; no one at any of our conferences or before this committee has complained of any evil from the right to bring actions at law. Should you not put it the other way, and say you ought not to take away or embarrass the power of the plaintiff to get damages, when by this bill you provide that in certain cases he shall recover nothing except damages, unless it is clear he has got a remedy to collect those damages which the Supreme Court would not declare nugatory? Senator Morgan. Of course I have seen few patent causes tried, because patentees generally live in the Northern States, and send their inventions down South. We use the inventions made here, and if you go before a jury in my country as a foreign patentee, you are just as apt to get no damages as otherwise, whatever the nature of your case may be. Senator Keenan. The parties in that country elect to take the profits. Mr. Storrow. I think there is a little of that feeling at the West. I have no doubt that there are fifty equity suits tried tor one at law, and that there will be, because the chancellor can understand a complicated machine better than the jury can. There are only one or two points in Mr. HubbelPs argument that I wish to refer to ; the rest, I think, are sufficiently answered by what has already been said by the friends of the bill. Section 9, to which he re- ferred, the section allowing patents to be repealed, does not introduce any new feature into the law. It is, I think, clear beyond much doubt REJECTED APPLICATIONS. 199 that the proceeding to annul a patent can now be brought in the name of the United States, first getting the permission of the Attorney-General to use that name. The grant of a patent is not a grant by the United States of something that belonged to it. It is an exparte grant, affect- ing the private rights of other persons ; and any person who is ag- grieved, if his grievance is of a suitable nature, upon applying to the Attorney-General, can get leave to bring a bill in the name of the United States to annul that grant. (See act 1793, § 10; op. Atty. Genl, Nov. 19, 1874, Pat. Off. Gazette, vol. 6, p. 723 ; Atty. Genl. vs. Kumford Works, 9i6., 1062.) Senator Morgan. A bill in equity or a quo warranto f Mr. Stoerow. It has been an information in equity when it has been tried. In England I understand it is by a scire facias. I think a bill in equity is the form. The change introduced by this section is that instead of lobbying the Attorney-General, if I may use that expression, to get that right, you shall ask the court when you may be allowed to do it, and that the court shall decide. Certainly that is a great deal better. I will say in regard to all those sections — the 8th, 9th, and 10th, to which Mr. Hubbell objected so much — that every one of them is guarded in this way, that the proceedings therein contemplated cannot be set on foot unless on application to the court, and after the hearing they find, in their discretion, there is good cause for having it done. Section 20, to which he referred, is one which, I confess, as it stands, does not exactly suit my mind. Mr. Dodge, Mr. Eaymond, aud myself all thought that it ought to be changed a little; but 1 find a majority of the patent bar here, who are more familiar with that precise subject than I am, do not wish the change made. I do not know what the Com- missioner's views are on the subject. It seemed to Mr. Raymond, Mr. Dodge, and myself that when the application was abandoned the inven- tion should be abandoned, and abandoned to the public, so that it would become open to the world after that time, and not be put in such a posi- tion that some one else could come in afterward and take the benefit of it and get a patent for it. It does seem to be, I should say if the Supreme Court had not expressed a dictum on the subject, incomprehensible that when one man has made a proper application to the Patent Ofttce and it has been rejected for want of invention, another subsequent claimant can come in and file a duplicate of that application and get a patent. Yet that seems to be the law, and such things have happened. Senator Morgan. The practice, you mean. Mr. Storrow. I do not know whether it is the law; it is the prac- tice, because the Commissioner is of opinion that the Supreme Court has so decided. I do not think that if it were presented to the Supreme Gourt, and argued on that question, they would decide so; yet the tiend- ency of their decisions has been in the direction of not allowing a pat- ent to be anticipated by anything except a printed publication or the actual use of the device. Two or three ways have been suggested to get rid of that difficulty. One is, that all rejected applications should be printed; and I do not see any reason why it should not be done, here. The expense would not be very great; and then they would be- come printed publications; the public knows what is in them ; and that of itself is a sufficient defense. Another way would be to put into the section a provision that, upon the rejection of any application or upon failure to prosecute the application under that section, the invention should be abandoned to the public, not merely the application. For my own part, I rather prefer the method of publishing the rejected applica- tions themselves, after they have been six months or three months re- jected. The expense would not be very great. 200 MB. J. J. STOREOW. Senator Morgan. This applies to a matter of practice in the office. Is not every patented invention numbered and published 1 Mr. Storeow. Every one that is patented is published. Senator Morgan. This applies to patented inventions that have been forfeited by the non-payment of fees ? Mr. Storrow. I beg' your pardon. It is the application for a patent on which the patent has not yet issued which this section applies to. Senator Kernan. What is the object of this part of the clause ? Or upon failure of the applicant to prosecute the same within two years after any action therein, of which notice shall have been sent to the applicant or his agent, they shall be re- garded as abandoned by the parties thereto. Mr. Storrow. The intention of that is, that after a man has got Ms- application in the office he shall not sleep on it more than two years» Suppose the Commissioner or examiner rejects the application or re- quires an examination to be made, suggesting some amendment which ought to be made Mr. Dodge. They write an official letter. Mr. Storrow. They write an official letter, and send notice in that way. Senator Chaffee. Suppose the party dies and the estate is not settled up in two years, what would become of his application °l Mr. Storrow. The application may be prosecuted by his executor within the time. He must attend to it. One difficulty arising in those cases is when a man makes an invention and puts in an application he sometimes lets it sleep for three years, and by and by he gets out a pat- ent, and that prolongs the monopoly longer than the law allows. Senator Morgan. Then he flies a caveat, which will keep everybody else away. Mr. Storrow. A caveat only lasts for a year. Mr. Dodge. It may be renewed from year to year. Morse's patent was preserved thirteen years by caveat. Senator Morgan. Then you can delay your application as long as yoa choose, and after you get it you have two years to enjoy it before the patent need be be granted. Mr. Storbow. It must not be used for more than two years before your application. Mr. Senator Morgan suggested the other day something about dis- pensing with security for the costs on the part of the plaintiff' in patent cases. That is not a provision peculiar to the patent law at all. It is not a part of the patent law. In United States courts all suits must be between residents of different districts, and they must be brought in the district where the defendant lives ; and therefore the plaintiff is al- most always a non-resident, except in patent and bankruptcy cases^ where by reason of the nature of the controversy jurisdiction attaches without regard to the fact of the residence of the defendant in the dis- trict in which the action is brought. If there is to be any change on that subject, it seems to me the amend- ment ought to be of the judiciary act and not merely of the i)atent law. I should not like to see a patent act loaded down with things which be- long to other matters. In accordance with Mr. Senator Morgan's suggestion, it was under- stood that a clause should be inserted in the latter part of section 2, authorizing the court at its discretion to award against the defeated party in patent causes such sum as it saw fit to cover counsel fees and expenses of suit, if the claims set up by the plaintiff, or defenses or in- fringements of the defendant have been vexatious or upon frivolous SEC. 2: COSTS AND EXPENSES. 201 grouuds. Perhaps those phrases restrict the power to cases of malice. I would, therefore, use the words " without probable cause," instead of " upon frivolous grounds." These words have an established legal mean- ing in the revenue laws, and in the law of prize, and are there used to dis- tinguish between acts which the court thinks are not deserving of cen- sure, though not justifiable as matter of law, and cases where the party offending has shown a lack of a proper respect for the rights of others.. The answer to the rest of Mr. Hubbell's remarks is found iu the views ■which have already been presented to the committee. There is one great beauty of the constitutional provision about patents which he seems to lose sight of and which I think cannot too often be insisted upon. Government does not collect taxes from the people and pay them to the inventor in the way of reimbursement for his time and ex- penses. It gives him the exclusive right to his discovery — the right to use, to sell, and to license others. His reward, therefore, not only is a part of the general gain of which the public have all the rest, but it is directly based upon, dependent upon the money value of his invention,, irrespective of the cost to him ; it is exactly what, under the operation of the inexorable laws of trade, he can sell his rights for. The remedies should be based on the same theory. He should have the profits which come for the use of it or the damage he suffers from interference with his enjoyment of it, and they are to be based on the commercial value of his invention, its market-value, just as his gains would be if he were left alone. Otherwise dull, wasteful, expensive, tedious, and use- less mediocrity will get overpaid and the brilliant genius that invented the cotton-gin will get little or nothing. I had one or two verbal amendments which I thought of suggesting,, but I can as well leave them with the reporter. I will say with regard to the longer amendment suggested to section 8, it is one that I have- been asked to hand to the committee. It seems to me to be proper. Without it the section is one-sided. The public have always the patentee to notify under this section, but there is no one to be called the public and notified by the patentee. Practically the patentee cannot avail himself of this section. It is there- fore quite reasonable that when the petitioner starts an inquiry upon a particular subject and puts in all the evidence on one side, the patentee may, in the same proceeding, and on the spot (always under the direc- tion of the court), put in the evidence on the other side and thus, so to speak, complete the record ; and when any one opens that record to. avail himself of it, the whole may be used if part is. I ought to say that I have not conferred with all my associates about it enough to say that all of them approve it, though I do not know of any disapproval. One of the other amendments is intended to prevent the depositions from being destroyed by technical or formal objections when it is too late to remedy them. I did want to say one word on another subject. Mr. Hubbell says the inventors are not represented. I beg leave to say that Mr. Smith, Mr, Livermore, and myself have undertaken to work upon this bill partly at the request of some inventors and patent-owners, who are far-sighted enough to see and to believe that a bill which is best for everybody is best for their own interests ; and between us and other gentlemen, I think that not only inventors, but both sides have been fully repre- sented, and probably as large interests on both sides as were ever col- lected in this room before. The arguments upon the bill having been concluded, the committee adjourned. APPENDIX. The amendments suggested November 30, 1877, by Mr. Storrow to Senate bill 300 are Section 8. Line 12. After " examined " insert " and the facts proposed to be proved by each." Line 15. After "may" iusert "if it deems it just and reasonable so to do." Line 16. After " directing " insert " before whom and." Line 19. At end, after "and," insert "the petitioners may." Line 20. Strike out "which" and insert "relating to the facts set forth in the peti- ition ; and thereupon, in relation to or in rebuttal or avoidance of the matters put in evidence by the petitioners, the respondents may introduce the legal testimony of such witnesses as they or any of them may see fit to call, and as the court, upon application, •in the same proceeding may permit. All said." Line 21. After " shall be" insert " certified by the person or persons taking the same, and by him or them, respectively, returned to the court and." Line 28. After " party " insert " No testimony taken hereunder shall be rejected by •reason of failure to comply with this act in respect of the form of the petition or the manner of taking the testimony, or upon the ground that it relates to matters not set 'forth in the petition, application, or orders, unless, upon objection duly made, and upon motion filed in court, not later than one calendar month after the return of the testi- mony objected to, the court, in said proceeding, shall sustain such objection." Line 52. At end of section add : " But whenever testimony taken hereunder by the petitioners shall be used, testimony taken in the same proceeding, by the respondents, in relation to or in rebuttal or avoidance of the matters referred to by said evidence of the petitioners, may be used by the party against whom said evidence of the petitioners is used." Section 10, Line 5. After "shall" insert " within a reasonable time." Section 11. Add at end of section : " It shall be the duty of the Commissioner to keep a record of said payments, and a receipt therefor, or a certificate that the payment has been made, sealed and executed in the manner required by law for certified copies, shall be conclusive evidence of the payment ; and upon request it shall be the duty of the Commissioner to cause such a •certificate to be indorsed upon or annexed to the letters patent." Line 5 and line 8. Before " patent " insert " original." Suggestions of Mr. Dodge as to section 1 of Senate Mil 300. 1. This is not a statute of limitations of the ordinary kind. It does not limit the ■time within which an action must be brought, but it limits the time for which a recovery can he had ; hence it is a limitation of the amount to be recovered. 2. It will work a great wrong in certain cases, because it will cut off the right of re- covery in cases where patents are infringed without the knowledge of the owner of the patent, and such cases are numerous. All process patents, and a large proportion of mechanical patents, can be infringed secretly, because no one can tell from an examination of the article whether it is made by a patented process or machine. All such may be shut np in a room and worked for years and the patentee know nothing about it. In nearly all manufacturing estab- lishments the public are shut out — not admitted ; hence can't find out. Besides, the owner has no reason to suppose his patent is being infringed, is no way put on his guard, and how, then, can he know it? Again, this is a very large country, and in order to spread himself all over it at once, BRIEF OF ME. HATCH. 203 a party must be spread out exceedingly thin ; in short, it is a physical impoaaibility for him to know wliat is being done all over this vast country. As a prominent law-writer has said : "Patent property is the most difficult of all prop- ■ertji to defend. It cannot, like real or personal property, be defended by possession or force, because it is intangible ; and a thousand different persona may infringe it in a thousand different places at the same moment." Why, then, should the owner be cut off for damages that accrued in a distant part of the country, or by a secret use, when in the nature of things he could not know of the in- Jringementf It is clearly unjust. It would be like a law prohibiting a citizen from recovering his horse or other property that had been stolen, because, being from home, he did not know when it was stolen. Hence the section should be so amended as not to let the limitation run against a party before he had knowledge of the infringement. 3. On the other hand, it does sometimes happen, though not often, that a party in- nocently infringes a patent, or some claim of a patent, and the owner of the patent has knowledge of it, and purposely keeps still, in order to let the infringement go on, so as to pile up the damages. This is all wrong; and therefore the law should be so amended as to compel the owner of a patent to give notice in writing, or bring suit, say within one year after he has knowledge of the infringement, or be barred from recovery. These two amendments would obviate the wrong or hardship on both sides, and make the operation of the statute just to all parties. I do think the committee will see the force and reason of these suggestions, and hope they will draw or amend the bill accordingly. Respectfully submitted by W. C. DODGE. As to jury-trials in patent causes, they are very seldom resorted to, and generally only in cases where the party hopes to secure, by the sympathies or prejudices of the jury (generally his neighbors and friends), that which he feels assured a court of equity would not give him. I would as soon have a patent cause of my own, if I had one, decided by a toss of dice, as by an ordinary jury ; not because they are dishonest, but because they are utterly incompetent to understand the various inventions involved in the consideration of the case. Hence I would give courts of equity exclusive jurisdiction of these cases. What we ought to have is special courts for the trial of patent causes, as is proposed in England, with judges who have such a knowledge of mechanics and the arts as to enable them to dispense with the services of " experts," as a general rule. This would relieve the present overburnened courts, secure early decisions, and greatly lessen the expense and delay of litigation, which is becoming something appalling. But I su])- pose this cannot be had at present, though it certainly ought to be. W. C. DODGE. UNITED STATES PATENT ASSOCIATION. Mr. Dodge presented a series of resolutions adopted by the United States Patent Association, composed of manufacturers and others interested in patents, and residing in various sections of the country, with the remark that they related to certain changes of the law, some of which are provided for in the present bill. At the annual meeting of the United States Patent Association, at Philadelphia, September 7, 1876, the following resolutions were adopted : Resolved, That in the opinion of this association the best interests of the public and the Patent Office demand that the law be amended to provide as follows : First. That the Patent Office be separated from the Interior Department, and organ- ized as a separate bureau, on a basis similar to the Agricultural Bureau. Second. That the tenure of the Patent Office officials, from the Commissioner to and including the principal examiners, should be for life, or during competency and good behavior ; and that their appointments be made with especial reference to their qual- ifications for the duties to be performed, regardless of politics, under a proper civil- service reform. Third. That the entire receipts of the Patent Office, under proper safeguards, should be used for securing increased facilities for the transaction of its business with prompt- ness and efficiency. Fourth. That before any one shall be permitted to practice as a patent solicitor he must first have passed such an examination, before a board approved by the Commis- exoner, as shall satisfy him that he is of proper character and has sufficient capacity and edfflcation to properly conduct applications before the Patent Office. 204 BRIEF OP ME. HATCH. Fifth. That all transfers of any rights under a patent, of whatsoever kind or nature, including licenses, should be recorded in the Patent Office within sixty days from their execution, so that the record shall show how and in whom the title stands. Sixth. That the law should be so amended that when a patent Is reissued the owner thereof shall not be deprived of his right of recovery for infringements that occurred prior to the reissue ; but that such right shall be preserved notwithstanding the reissue, and so that machines or articles made prior to such reissue shall not be held liable for infringement of any new claim made in such reissue. Seventh. That in the case of an application for the reissue of any patent the applica- tion and oath may be made, and the corrected specification signed by the assignee or assignees of the entire interest. Eighth. That the examination system of the United States Patent Office, although it may be in some particulars defective, and may admit of improvements, is base^ on just principles, and is to the best interests of inventors and the public. Ninth. That whereas, in a recent decision by the circuit court of the United States, the doubt has been expressed whether there is any authority in law for direct pro- ceedings in the name of the United States or of any officer of the United States, for the repeal of letters patent for inventions : Therefore, Eeaolved, That an amendment to the existing statutes to provide for such direct pro- ceedings for the vacation of letters patent for inventions, on the ground of fraud or improvidence in the grant thereof, is desirable. Suggestions filed hy John E. Hatch vpon proposed amendments to the patent laws 'before the Senate committee. Section 1. Some statute of limitations upon suits under the patent law is desirable, but especial care is necessary to so frame it as to avoid any features which may facilitate powerful corporations or combinations in their efforts to thwart or crush out struggling pat- entees whose resources are comparatively limited. We respectfully suggest two modifi- cations of the proposed section : First. The four years' limitation should apply only where the infringement is public and open. Where it is a secret or concealed manufacture or use, the statute should begin to run from the time when it becomes public, or is brought to the knowledge of the patentee or assignee of the patent. Infringements are often carried on stealthily for years. This is especially true where the invention relates to a process, as, for in- stance, a chemical process. Infringers should not be protected by law in such infringe- ments so long as they can successfully evade detection. The analogy of other statutes of limitation should be observed in this respect. Second. Where the patentee is prosecuting in good faith one suit in which the valid- ity and construction of his patent is to be tested, he should not be obliged to increase the expense by commencing a large number of other suits which may be scattered through many districts in which only tha same issues can be raised. Such a suit often consumes, from the time of service unto the entering of the inter- locutory decree of the circuit court, more than the time allowed by the proposed stat- ute of limitations, when the patentee is pushing it with all possible diligence. It is not uncommon for the circuit court to hold the case under advisement more than half that time, after it is submitted on argument, before rendering its opinion, and prob- ably all lawyers of any considerable experience In this branch of practice will recall cases which, after argument, the court has held under consideration much longer than this. There may be scores of similar infringements within the same district, and many more scattered over the country. It is neither considerate toward the patentee nor in the interest of a wise public policy to compel the owner of the patent, under pain of forfeiture, to institute a large number of suits involving the same issues. The court costs alone, irrespective of attorneys' fees and other expenses, would, in many instances, consume a fortune. The courts are already behind their dockets and overcrowded with business. Such suits, whether commenced to be immediately prosecuted or to be stayed by order of the court, would clog the dockets and greatly increase the labor of the chancellor and all officers of the court. Even under the provisions for granting a stay of proceedings, the difficulty is but partially remedied. The costs of commenc- ing the suit alone usually amount to from one to three hundred dollars in each suit. The moving party is often required to give bonds in a considerable amount. Under the provision of this section he might repeatedly be compelled to appear before the courts by his counsel in remote districts to attend upon motions made by defendants. The defendants are also put to the cost of employing counsel and appearing in court. Nothing is gained by either party by all this expensive proceeding beyond a notice of the claims of the owner of the patent and a suspension of the statute of limitations^ BRIEF OF MR. HATCH. 205 A powerful combination could soon multiply expenses upon a patentee to, such an extent that he must surrender in despair. We suggest the following amendments as accomplishing all that is necessary in the way of protecting alleged infringers from delay and bringing the issues before the court, and at the same time as far as possible restricting the expense and labor to which the owner of the patent is put in preserving his rights : "Provided, That where a party has commenced, and is prosecuting in good faith, and with reasonable diligence, a suit in which the validity or construction of the patent sued upon is in issiie, he may serve upon any infringers of such patent notices that they are infringing, and of the pending of said suit, stating the court in which and parties between which the same is pending ; and in any suit upon said patent against any party so served with notice, commenced within ninety days after the entry of the decree or judgment of the court of original jurisdiction in said first-mentioned suit, determining the issues therein raised affect- ing the validity and construction of said patent, such notice, if pleaded in the declaration, petition, or bill of complaint therein, shall have the same effect in preserving the right of re- covery as such declaration, petition, or bill of complaint would have if filed at the time of service of said notice : Provided, however, That if any party so served with notice shall at any time make it appear unto the court in which said first suit is pending that the same is not being prosecuted in good faith and with reasonable diligence, such court shall have power, by its order, to limit the time thereafter within which said notice shall continue to preserve the rights of recovery against the party moving for such order. And in any suit against said party, commenced after the expiration of the time so limited by court, said notice shall be of no effect for the purposes hereinbefore recited." Under this provision, court-costs and counsel-fees in commencing suits to be subsequently stayed are saved. The alleged infringers themselves are relieved from considerable expense ; they suffer nothing from the notice. Patentees will be deterired from serving notices unne- cessarily by the fact that they by so doing invite co-operation i n defense. The courts will be relieved from a large number of unnecessary suits. The alleged infringers will be enabled, upon notice, to examine the scope and validity of the patent, and to determine their action accordingly, without the expense of appearing or obtaining any orders of court in suits against them. They will also, if they prefer, be enabled to avail themselves of their remedy, under section 9 or JO, by a suit in equity against any party who serves them with such notice. Perhaps, instead of this provision, it would be quite as well to so frame the section that it shall read as follows: "That from and after the passage of this act no profits or damages in any suit at law or equity for infringement of a patent shall be recovered which shall have accrued more than four years next proceeding the service of notice of the alleged infringe- ment upon the defendant;" and strikeout all that follows the seventh line. This would leave persons who served with notice to seek their remedy under the ninth or tenth section, if they do not choose to wait the commencement of suit by the patentee. Section 2. The latter part of this section, from the twenty-seventh to the thirty-ninth line inclusive, is desirable as an amendment to the law as it now stands. The first part of this section would not, in most instances, vary the operation of the law as contained in tlie Revised Statutes. Wherever an established license-fee seems to afford any measure of the damages actually suffered by the plaintiff, the courts would, under the present statute, invariably adopt it as the measure of damages. It is only in the absence of such a license-fee, where the plaintiff has chosen some other method of obtaining the benefit of his franchise, or where some pecu- liar equity arises which cannot be satisfied by a license-fee, that the court adopts a different measure. In such cases it would be unwise to limit the discretion of the court. Suppose, under this section as now proposed, an exclusive license had been granted to certain parties, who are the sole manufacturers under the patent, the territory within which they have the exclusive license is invaded by infringers ; all their profits, which might otherwise be large, are destroyed. The license-fee would be the measure of recovery for the owner of the patent under whom they were licensed, but it would leave nothing for the exclusive licensees, who have perhaps suffered several times the injury inflicted upon the owner. Under the present statute the courts would be authorized to give actual damages or the profits acquired by the infringers by reason of the wrongful use of the invention. Under the statute proposed there would seem to be no relief for the exclusive licensees. There are also instances where the owner of the patent finds it extremely important to limit the licenses granted to certain localities, w hich will not affect the profits of his own manufacture. Infringers coming directly into his market may inflict upon him an injury manifold greater than the amount of the license-fee which he has established in reference to the remoteness of his licenses. In all such cases latitude is allowed, the courts under the law as it now stands to look into the actual damages suffered, adopting as their measure either the license-fee or such other evidence as may under the circumstances of the case seem to afford a more just and accurate means of determining the actual injury. 206 BRIEF OF ME. HATCH. Id cases where the license-fee is the proper measure of damages, the proposed amendment would not change the operation of the law as it now stands ; in cases where this is not th& proper measure of damages, it is better that >no change should be made. The question as to in what way it is for the interest of the patentee to use his franchise,, whether by license or otherwise, is not a proper one to be determined by either court or jury. This property, so long as it exists, should be treated, like other property, as belongin^f to the owner, to be used by him as he may see fit, provided by so doing he inflicts no injury upon others. The theory of the patent law is that he has a right for a limited period of time to retain for himself the benefit of his invention. The inexpediency and injustice of sub- mitting to a court or jury to determine how a person shall use other property than that se- cured under letters patent would be at once evident. The public have an interest in having all property wisely used. It is for the interest of certain communities that certain crops be cultivated to the exclusion of others, and it would be as reasonable to empower courts and juries to determine how a land-owner shall cultivate his fields, and what produce he should bring into the market, as to submit to the same authority the question as to whether the pat- entee should reap the advantage of his franchise by manufacturing and selling the article covered by it himself in person or through his agents or by licensing the public at large to manufacture and sell it upon a license-fee. It is as proper for courts and juries to determine whether a man ought to sell his timber and fix a price upon it, when he chooses to preserve his forests undislurbed, as for the same iribunaJ to determine that he should grant licences under his patent and fix the price on such licenses, when he chooses to reserve the 'rights to himself. It is a fundamental rule of law, not in any way peculiar to this subject-matter, that any person who has been wronged by another is entitled to such compensation as shall indemnify him, so far as pecuniary damages can, for the injury inflicted upon him, and that no person who has availed himself of the property of another wrongfully shall be permitted to retain any profits made through his own wrong. The peculiarity of the present statute is not that it entitles a patentee, in seeking his remedy, to either rely upon indemnity for the injury inflicted upon him, or upon the profits made by reason of the wrongful appropriaJaon of his property by a wrong-doer; it is in the fact that it enables the same court, and that a court peculiarly adapted to the purpose by its mode of procedure, to apply either remedy, as the equities of the case may demand. In this provision the statute is peculiarly fortunate. There is no reason why patentees should be deprived of both these remedies any more than why they should be withheld in cases where the rights pertaining to other classes of property are involved. There are difficulties in the application of these rules to all classes of property ; none that are peculiar to property existing under the patent law. As the law now stands, the patentee, in an account of profits, is only entitled to such sav- ings as are shown to be due to the use of his invention, except, possibly, where the law in regard to confusion of property might apply. The only substantial change introduced by the portion of the proposed section, from line 16 to 26 inclusive, is that under this section, if a defendant could show that by reason of mismanagement or misfortune in any part of the business in which he had wrongfully used the invention he had recovered little or no profits, this would be so far a bar to recover, although it might be that through the use of the in- vention he had actually saved a very large amount. For illustration : A railroad company might wantonly use an improved brake for years, saving to itself many thousands of dollars ; but if by mismanagement in some of its departments the company had squandered the profits so saved, and was able to say that, as a whole, it had accumulated no profits through its business, the owner of the patent upon this brake could make no recovery. The proper rule is the one adopted by the Supreme Court under the present statute, by which the actual savings by reason of the use of the invention is the measure of the recovery. We suggest that the present law, that is section 4921 of the Revised Statutes, amended by substituting for its last clause the portion of this section extending from the 27th to the ^9th line inclu- sive, would be preferable to the entire section as proposed. If the first part of the section proposed is to be retained, the license-fee should be made a measure of damages only as against a party who has established such fee. It would be un- fair for a territorial assignee of a valuable patent to be precluded from recovering substantial damages by reason of the fact that the owner of the same patent for other territory had some time granted licenses for a trivial sum . The 4th, 5th, 6th, and 7th lines of this section and the 14th and 15th seem somewhat at variance. Would it not be better to have the 14th and 15th read : " But if not, then the court or jury shall determine from the evidence in the case what is an adequate remunera- tion for the damages sustained by reason of the infringement," striking out what precedes the middle of the ] 0th line ? Section 3. This section is needed,Iand seems to be in all respects free from objection. BRIEF OF ME. HATCH. 207 Section 4. Query, whether this amendment has not the effect of lessening the importance that should he attached to a final decree in the court of original jurisdiction, and of encouraging a dila- tory preparation for the trial upon the assumption that, if it should go against the defendants, they will still have an opportunity of loolsing up and presenting new defenses. The practice in some of the circuit courts has become such already that in many cases the final decree is but the beginning of litigation, to be followed by motions for rehearing and petitions for re- view almost indefinitely. It is on many accounts desirable that when a patentee has fought through a suit to final judgment, that final judgment should, so far as a judgment of the, court in which it is entered can, set the question between the parties at rest. The parties should be made to feel that in preparing for trial they are preparing for a final adjudication of the issues between them, and while there may be exceptional instances where justice might be furthered by this statute, it is probable that the advantages obtained in this way would be more than counterbalanced many times over by the embarrassments and hardships that would be inflicted upon the patentee. If such a statute is passed, should it not be with the provision that the courts should have power, whenever motion is made for the relief there- in provided for, to award to the plaintiff in the original cause, costs sufficient to compensate him for the labor and expense occasioned by the same ? Section 5. This section appears to be an improvement upon the law as it now stands. Should not the reissue be confined to that which is suggested in the original specification as novel with the patentee ? Models showing entire machines are often filed where the invention relates to a subordinate feature. Where the patentee does not suggest that he has origiuated any- thing more than a particular feature of the machine, should he, after evidence that other features were old has disappeared, be permitted to reissue and claim aU that is shown in the model ? As the section stands, a patent which suggests no novelty in anything beyond the wheel or axle of a carriage, may be reissued ten years after to cover the carriage-seat that happens to be shown in the model. The fact that a feature appears in a model is not even presumptive evidence of novelty. Section 6. This is also an improvement. We suggest that there should be inserted in the twelfth line of this section, after the words "and no suit shall be barred or abated by such surrender," the words, " except as to claims not retained in the reissued patent." The provision at the end of this section as it now reads, would seem to exclude subsequent reissues of letters pat- ent that have once been reissued prior to the date of the passage of this act, from the opera- tion of the act. This probably is not intended, and the language should be so changed as to avoid this construction. We suggest that instead of reading " shall apply to letters patent reissued prior to the date of the passage of this act," it should read, "shall apply to reissues granted prior to the date of the passage of this act." Letters patent reissued prior to the date of the passage of this act should, so far as all subsequent reissues are concerned, be un- der the operation of the amendments. Section 7. This is an improvement much called for. It is possible that there should be some provis- ion by which either of seveial persons who had by mistake joined in the application as joint inventors, might, upon a proper showing to the Commissioner, and upon indemnifying the other nominal joint inventors against any costs to which they might be put in the proceed- ings, he entitled to have the patent corrected. Otherwise, one obstinate party might exact unreasraiable terms of those joined with him, or prevent their obtaining the relief to which they were in equity entitled. Section 8. We think there are some objections to this section, and that its purposes are better answered by sections 9 and 10. Under section 8, as it now stands, it would be possible for powerful combinations, by serving notices of taking testimony in remote poitions of the country and perhaps contemporaneously, to inflict enormous expense and hardship upon patentees, and^virtually to prevent their attending upon the taking of all the evidence that was to be' used against them. The statute would often be abused, and made the instrument for crushing out patentees whose resources would soon be exhausted. If this section is to pass, it should be with such limitations as will enable the courts, by their order, to indemnify the patentee or owner of the patent for all reasonable costs and expenses, as well as for hia time. 208 BRIEF OP ME. HATCH. It would seem, however, that sections 9 and 10 answer all the reasonable uses for which section 8 is intended, while not exposing the patentee to the expense of attending upon tes- timony that is not to be used in a case actually pending and to be prosecuted to determi nation. Sections 9 and 10. These are both much-needed amendments, and appear to be properly drawn. Sections 12 and following, appear to be substantially correct, JOHN E. HATCH. EOBT. H. PARKINSON. Section 11. This section could not be justified upon the score of increasing the revenue of the Patent OfiSce, for this avowedly is not the object of our patent-system, as it is of some European systems. It would probably hardly be within the scope of the authority conferred upon Con- gress by the clause of the Constitut'on relating to this subject, to impose an additional tax- ation upon inventors simply for the purpose of increasing the national revenues. This clause would be justified, if at all, upon the theory that it would serve to eliminate the worthless patents after a limited period. The practical difloiculty is, that it is oftener the most valuable inventions than the most frivolous that only begin to pay for themselves after a period of years, during which they have been the source of both labor and expense. The statute would operate quite as strongly and probably more strongly against the most meri- torious inventions. The more novel an invention is, the wider departure it makes from estab- lished usages, the more opposition it encounters in the market. The history of the most valuable patents would show that few of them have remunerated the patentee for actual cash expenses during the first five years, while many have fallen far short of such remuneration during the first ten years. Fifty or one hundred dollars is, to many inventors, who are struggling against the difficulties of introducing a new manufactura, and exhausting all their resources in the effort, a very considerable sum, sufficient in many cases, when added to the difficulties they are encountering, to complete their discouragement. The more frivo- lous patents often bring a speedy remuneration, and are quite as likely, if not more likely, to be continued under the provisions of this act than those of greater originality and scope. If a patent is worthless it does no harm to have it still nominally in force. It is sometimes said that it serves to deter subsequent invention. If it covers nothing that is really essen- tial and valuable in subsequent inventions it cannot do this ; if it simply shows some feature which is inoperative and invalid in the mechanism which it covers, the patent would itself be invalid, so far as this feature is concerned, and could not be the means of preventing its use in combinations where it is operative. If it covers some improvement which is found to;ibe essential in subsequent inventions, it is but fair that so far as this improvement has contributed to the public by the original inventor, he should have the right of property in it during the term for which patents are usually granted. Moreover, if at the end of four years, the only purpose which a patent serves is to restrain subsequent invention, the fee is quite as likely to be paid for ihe purpose of continuing the patent in use and obtaining roy- alties from the owners of subsequent patents involving this invention as it is for any other purpose ; in any case tbe statute would not seem to discriminate between frivolous and meritorious inventions, to the advantage of the latter. EOBT. H. PARKINSON. We agree as to the suggestions above made, except as to the eleventh section. If, at the end of four years, a patent has not shown sufficient utility to justify an expenditure of fifty dollars to keep it alive, should it not expire, so as to leave the field open fo.' subsequent in- ventors of really valuable improvements ? JOH?f E. HATCH. HON. ASSISTANT COMMISSIONEE. 209 STATEMENT OF THE ASSISTANT COMMISSIONEE OP PATENTS. Department op the Interioe, Washington, D, C, December 10, 1877. Sir : In compliance with the request of the Assistant Commissioner of Patents, I have the honor to transmit herewith, for the consideration of your committee, a communication embodying his views on section 21, Senate bill No. 300, for amending the statutes in relation to patents. Very respectfully, A. BELL, Acting Secretary. Hon. Newton Booth, Chairman Committee on Patents, U. S. S. Patent Office, Washington, December 7, 1877. Sir : I desire to submit, as briefly as possible, some remarks on the last proviso in section 24 of Senate bill No. 300 for amending the stat- utes in relation to patents. The proviso referred to reads as follows : "And provided further, That ia the case of reissues no interference shall be declared with any patent of later date than that sought to be reissued, except when the origical applica- tion for such subsequent patent is shown by the office records to have been of prior date to the application of the patent sought to be reissued, nor with any application for a patent filed subsequent to the date of the patent sought to be reissued ; but, if desired by such subsequent applicant or patentee, on an application for reissue, an interference may be had with the reissued patent, after the same shall have been issued." An interference is a proceeding to determine which of two or more parties is the first and original inventor. The scope of a reissue and the power of the Commissioner in granting the same is thus set forth by the United States Supreme Court : Power is unquestionably conferred upon the Commissioner to allow the specificaliou to be amended, if the patent is inoperative or invalid, and in that event to issue a new patent in proper form, and he may doubtless, under that authority, allow the patentee to redescribe his invention, and to include in the description and claims of the patent not only what was well described before, but whatever else was suggested or substantially indicated in the specification, drawing, or Patent Office model which properly belonged to the invention as actually made or perfected. Seymour v. Osborn, 11 Wall., 5)4. The act relating to patents of February 21, 1793 (sec. 9), first author- ized the proceeding known as an interference. It provided that in case of interfering applications the same should be submitted to the arbitra- tion of three persons, one of whom to be chosen by each of the appli- Obnts and the third person to be appointed by the Secretary of State ; the decision or award of such arbitrators in writing was final as far as respected the granting of the patent. The reissue of a patent was first provided for by section 3 of the act of July 3, 1832 (4 Stat, at Large, 559). The ground for such reissue as there expressed was, that the original pateijt was invalid or inoperative, by reason that any of the terms or conditions prescribed in the third section of the act of February 21, 1793, had not by inadvertence, acci- dent, or mistake, and without any fraudulent or deceptive intention, S. Mis. 50 14 2U) HON. ASSISTANT COMMISSIONEE, been complied with on the part of the said inventor; and the Secretary of State was therein authorized, upon the surrender to him of such de- fective patent, " to cause a new patent to be granted to the said inven- tor for the same invention for the residue of the period then unexpired, for which the original patent was granted, upon his compliance with the terms and conditions prescribed in the said third section of the said act." The conditions of the third section of the act of 1793 were that the applicant should swear or affirm that he was the true inventor or dis- coverer of that for which he solicited a patent; that he should deliver a written description of his invention in full, clear, and concise terms ; explain the principle thereof, distinguish the invention from others known before, furnish drawings, &c. Ju8t prior to the passage of the act of 1832 the United States Supreme Court (Chief-Justice Marshall delivering the opinion) had, in the ab- sence of any statutory regulation, upheld the Secretary of State in re- issuing patents to correct inadvertent omissions or other accidents in the description of the original patent. (Grant vs. Raymond, 6 Peters, 218.) Section 8 of the act of July 4, 1836 (5 Stat, at L., 117), gave to the Commissioner of Patents the power to determine " the question of pri- ority of right or invention " between pending applications and between the latter and any unexpired patent; and section 13 of the same act the power to reissue patents. Section 8 of the act of March 3, 1837 (5 S. L., 191)^ provided that " whenever a patent shall be returned for correction and reissue, the specification of claim annexed to every such patent shall be subject to revision and restriction in the same manner as are original applications for patents," and further required that the Commissioner should not graut the reissue until the applicant shall have "altered his specifica- tion of claim in accordance with the decision of the Commissioner ; and in all such cases the applicant, if dissatisfied with such decision, shall have the same remedy and be entitled to the benefit of the same privi- leges and proceedings as are provided by law in the case of original ap- plications for patents." The laws relating to interferences and reissues remained as thus pre- scribed by the acts of 1836 and 1837 until the passage of the act of July 8, 1870. (16 S. L., 198.) Section 42 of this act, which is precisely the same in terms as section 4904 Rev. Stat., provides : Whenever an application is made for a patent which, in the opinion of the Commissioner, would interfere with any pending application, or with any unexpired patent, he shall give notice thereof to the applicants, or applicant and patentee, as the case may be, and shall direct the primary examiner to proceed to determine the question of priority of invention. And the Commissioner may issue a patent to the party who is adjudged the prior inventor, unless the adverse party appeals from the decision of the primary examiner, or of the board of examiuers-in-chief, as the case may be, within such time, not less than twenty days, as the Commissioner shall prescribe. Section 53 of this act (sec. 4916 E. S.), relating to reissues, continues the restriction placed upon their grant by section 8 of the act of 1837, above cited, viz: "The specification and claim in every such case shall be subject to revision and restriction in the same manner as original applications are." From the time of the passage of the act of 1837 until nearly this pres- ent ilate the Patent Office and the courts, so far as the matter came be- fore them, held that these pro visions requiring reissue applications to be revised and restricted in the same manner as original applications are, authorized the Commissioner of Patents to declare interferences with reissue applications and original applications and unexpired patents to HON. ASSISTANT COMMISSIONER. 211 determine the question of priority -whenever the reissue applicant claimed that to which another applicant or patentee asserted title. De- cember 20, 1859, in the sewing-machine case of Wilson (assignee of Alliens & Felthousen) vs. Singer, the circuit court of this District, on appeal from the Commissioner, held, in affirmance of the Commissioner on that point, that under the 8th section of the act of 1837, on a reissue " the question of joint invention is open, as is also priority of invention, laches, or any other legal cause, which on an original would lead the Commissioner to refuse a patent. * * * It is not only competent for, but the duty of the Commissioner, to declare an interference if there is an existing claimant asserting right as original first inventor, and so the ofiQce has properly decided in this very case. * * * xhe duty of the Commissioner to the public calls him to decide these questions when they arise and appear in the evidence before him, before he issues the 1 atent applied for. Mr. Wilson, the applicant for the reissue, must meet the questions not only of priority, as to Singer, but the right to a joiut patent of Aikens & Felthousen, his assignors in the original pat- ent granted to them August 5, 1851." (3 Book of Appeals, Patent Offlce, 334.) . ^^ ' The same reissue application of Atkins & Felthousen was made sub- sequently the subject of a second interference with another party, and in sustaining the right of the Commissioner to declare such second inter- ference, Mr. Justice l^elson, in the case of Potter vs. Dixon, 2 Fisher, 381, remarked that section 8 of the act of March 3, 1837, conferred on the Commissioner the same power on a reissue, over the question of grant: ing it, which he possessed in the case of an original application for a patent. The rightfulness of declaring interfferences with reissue applications- was reaffirmed by the circuit court of this District, in the cases of Hicks vs. Shaver, 3 Book of Appeals, Pat. Off., 439, and Snowden w. Pearce,. lb., 4C8. In June, 18G8, however, a decision was rendered by his honor Judge Fisher, of the supreme court of this District, in the matter of the appeal/ of Merrill and Carlton, assignees for reissue of patent issued to C. Reich- man in 1858 for improvement in lamp-burners, in which it was held that the Commissioner's power over a reissue apj)lication was a limited one, to " revise and restrict " the same as original applications were restricted as to form, and to confine the same to the invention set forth in the original patent, and that teas all. " He has no right," the court observed, " to review and revise prior decisions of the office made upon the original application, but only to restrict the specification proposed for reissue, so as to limit it to the original invention." The court, therefore, ordered the interference in that case to be dissolved. The effect of this decision would have been, if observed, to have prevented not only the declara- tion of an interference with a reissue application, but all inquiry on the part of the office as to the novklty of the invention at the date of the original patent. This narrow construction of the law as to the power of the Commissioner over reissues had never before been ad- vocated, and was not followed by the same court, as the records of this offlce show. But in two recent cases the supreme court of this District orally held that the Commissioner of Patents had no authority of law to de- clare interferences with reissue applications. Mayall ex parte, Snv,&, 1875 ; Mayall and Williams ex parte, May 21, 1877. The decree in the case last named was amended June 19, 1877, to read that the reissue application should not be withheld " by reason of interference with any junior application." 212 HON. ASSISTANT COMMISSIONER. TLe practice of this office was modified iu accordance wiih these de- crees. The views of the Acting Commissioner of Patents on this subject were set forth as follows in the case of Carroll vs. Morse, 9 Off. Gaz., 453 : In the caFe of Grant is. Bajinond (6 Petern, p. 218), which was decided before the statute relating to reissues was incorporated in the law, it was held, that " the new patent and the proceedings on which it issues have relation to the original transaction. The time of the privilege still runs from the date of the original patent. The application may be con- sidered as appended to the original application." So in Shaw vs. Cooper (7 Peters, p. 314), " the new patent has relation to the original transaction, and the application may be considered as appended to the original application." If the application may be considered as appended to the original application, I see no reason why it should not be revised and restricted precisely as the original application was, not only for the purpose of considering whether or not the claim and the description are the same as those set forth iu the original application, but whether or not the thing claimed was new and original with the applicant. The purpose of the reissue is not to enable the appli- cant to set up any claims which he may choose, regardless of the state of the art, bat for the purpose of enabling him to give a more perfect description of his Invention. (O'Kielly IS. Morse, 15 How., p. 112.) The terms of the act relating to reissues appear to me to clearly point out the duty of the Commissioner in respect to this matter. He is directed to subject the specifications and claims in every case of reissues to revision and restriction iu the same manner as original applications are. Now, the duty of the Commiseioner iu respect to the examination of original applica- tions is not simply to see that no matter is introduced by way of amendment subsequent to the filing, which was not shown at the time of filing the application, for this would be a small matter, and of verj infrequent occurrence ; but he must distinguish between what is old and what is new in the application, judging it by comparison with the state of the art existing at that time. It must follow, therefore, that the revision and restriction of reissue applications, in order to be the same, as in case of original applications, must cover the same ground. Any other view of the matter appears to me a departure from the plain sense of the words — a departure not required by the spirit of the law, or to harmonize any conflict- ing seciions, ano with no other result than a wholly mischievous one. When an app ication, then, is made for the reissue of a patent, the duty of the examiner .is first to determine what the invention of applicant is. Whatever existed prior to his in- vention, in any patent or printed publication, is not his invention ; and both he and the cffice are required to make a distinction between what is new, and of which a monopoly may le granted him, and what is old and must be denied him. In addition to this, the office must decide whether this new invention, which so far as appears from an examination into the state of the art may be conceded to him, was in any way shown in his original application. An examination into the state of the art is the very basi^ on which must be determined what liis invention is, and without which nobody can know, not even the applicant himself. What a man invents is not necessarily his invention in a patentable sense. It maybe the in- vention of a former generation, and any examination of an application for reissue which would leav« out of sight the slate of the art would not half fulfill the plain requirement of tlie law. This was the view of Judge Dunlop, in Wilson vs. Singer (MS. Appeal Cases, D. C, 60). And as follows by the Commissioner and Acting Commissioner in the case of Sargent and Biirge, 10 O. G., 285 : In the case of Brooks vs. Fiske (15 How., 212), the court, in passing upon a reissued patent in controversy, said : "It is deemed proper to remark that the fact of proouring a patent for anew and useful machine in 1845, under the assumption of a reissue, which was not useful as patented iu 1828, for want of feed and pressure rollers, now used, as alleged in defense, would present a question of fraud, committed on the public by the patentee, by giving his reissued patent of 1845 date as an original discovery made in 1828, and thereby overreaching similar inven- tions made between 1828 and 1845." In Burr is. Duryee (1 Wall., 531), the court, after stating clearly and explicitly the fact that the invention embraced by the original patent in controversy was entirely new at the time of the filing of the original application, proceeded to say, however, that the purpose of the patentee was clearly transparent, by the means of elastic and equivocal claims and de- scription, to cover up inventions sub.sequently made. The court not only condemned this practice, but indicated the duty of the Patent Office in the premises in the following language : HON ASSISTANT COMMISSIONEE. 213- "The Pateot Bureau in this country is composed of men of scientific attainments, who- examine the merits of every claimant of a patent, and decide whether, in their opinion, it attempts to claim a monopoly of things before known or invented. They are not expected, as formerly, to grant a patent, without inquiring, to every applicant who is ready to pay the fees. Such a course of conduct would be highly injurious to the public, by furnishing means to impose on the public by false pretenses, and with threats of expensive and ruinous litigation. "The surrender of valid patents, and the granting of reissued patents thereon, with ex- panded or equivocal claims, where the original was clearly neither ' inoperative nor invalid,' and whose specifications is neither 'defective nor insufficient,' is a great abuse of the priv- ilege granted by the statute, and productive of great injury to the public. This privilege was not given to the patentee or his assignees, in order that the patent may be rendered more elastic or expensive, and therefore more ' available ' for the suppression of all other in- ventions." Again the same court, in Carlton vs. Bokee (17 Wall., 471), remarked : " We think it proper to reiterate our disapprobation of these ingenious attempts to ex- pand a simple invention of a distinct device into an all-embracing daim, calculated by its wide generalizations and ambiguous language to discourage further invention in the same department of industiy and to cover antecedent inventions." ****** It being the duty of the office, then, to restrict reissue applications, in view of the state of the art, in the same manner as original applications are restricted, it remains only to inquire whether an interference is a necessary part of such restriction. The only evidence, in many cases, which the office has of the state pf the art, as opposed to a particular patent or appli- cation, is the fact that the same invention is claimed by a different party. Whenever a claim is made, of which the office has jurisdiction, it becomes its first duty under the law to ascertain whether the claimant is the first and original inventor. In the case of a patent opposed by an application, it is necessary to settle this question, in order to ascertain whether a patent shall also be granted to the applicant ; and jurisdiction is given to the office over the patent, not for the purpose of correcting, restricting, or invalidating it, but for the purpose of ascertaining the rights of the opposing parties to the subject-matter thereof. So, in exercising the jurisdiction the law gives over a reissue application, no at- tempt is made, or lawfully can be made, by the office to invalidate the original patent. Tlie surrender of that is not effected until a new one issues in its place. But the applicant for reissue having come within its jurisdiction, and the question being whether to him or to an- other party belongs the title of first and original inventor of the precise matter on which the government is asked to extend further and fuller protection, the office cannot avoid the de- termination of that question without violating the first and paramount duty required of it by the law. That question cannot be settled without an interference, or some other similar proceeding, by which the rights of the respective parties to this species of property cau be judicially investigated and determined. Whether a patent is valid or not is a question for the courts; but whether the patentee is the first inventor is a question for the office whenever the protection of the office to a partic- ular invention is asked by one who opposes the claims of the patentee to that title. It is said that reissue applicants, under the practice of deelafiug in- terferences therewith, are subject to the embarrassment of having their patents frequently held up in the Patent Office, while the life of the same is running out, to determine the question of priority between such re- issue applicant and another subsequent patentee or applicant who may have intentionally incorporated into his patent or application matter found but not claimed in the original patent of the reissue applicant. In such cases, too, it is urged, the right of the reissue applicant to sue in the courts is so greatly delayed, that often, by the time the applicant has succeeded incorrectinghis original patent, no sufficient time remains to bring suit before the patent expires. Without now contending that, without any exception, reissue appli- cations should be put in interference whenever, upon coming into the office, they are confronted by patentees who have already claimed and applicants who are claiming the same invention, now for the first time perhaps claimed by the reissue applicant, it may be well to state that between six and seven hundred patents are now yearly reissued, and it is submitted that the power of the Commissioner to revise and restrict 214 AMENDMENTS BY HON. COMMISSIONER reissue applications should not be curtailed or hampered to the detri- ment of other patentees and applicants and to that of the general public. I am, very respectfully, vour obedient servant, W. H. DOOLITTLB, Assistant Commissioner of Patents. Hon. Newton Booth, Chairman Senate Committee on Patents. Amendments proposed and transmitted by the honorable Gommissionek OF Patents to "A bill to amend the statutes in relation to patents, and for other purposes." (Senate 300.) Page 4, section 5, line 10, strike out all after the word " invention" to and including the word " entitled," in line 14. Page 5, section 5, line 30, after the word " act" insert "ftw* noneio mat- ter shall be introduced into the specification not shown, contained, or substan- tially indicated in the specification or draicings of the original application or its amendments." Line 25, after " restriction" insert " and rejection." Line 37, strike out from " shown" to end of section, and insert " con- tained or substantially indicated in the specification or drawings of the original application or its amendments, and to which he would have been entitled." Section 5 will then read as follows : Sec. 5. Section forty -nine hundred and sixteen of the Kevised Statutes is hereby amended so as to read as follows : Whenever any patent is inoperative or invalid, by reason of a defective or insuflBcient specifica- tion, or by reason of the patentee claiming as his own invention or dis- covery more or less than he had a right to claim as new, if the error has arisen by inadvertence, accident, or mistake, and without any fraudu- lent or deceptive intention, the Commissioner shall, on the surrender of such patent and the i)ayment of the duty required by law, cause a new patent for the same invention, and in accordance with the corrected specification, to be issued to the patentee, or in the case of his death or of an assignment of the whole or any undivided part of the original patent, then to his executors, administrators, or assigns, for the unex- pired part of the term of the original patent. Such surrender shall take effect upon the issue of the amended patent. The Commissioner may, in his discretion, cause several patents to be issued for distinct and separate parts of the things so shown or described upon demand of the applicant, and upon payment of the required fee for a reissue for each of such reissued letters patent. The specifications and claim in every such case shall be subject to revision, restriction, and rejection in the same manner as original applications are. Every patent so reissued, together with the corrected specification, shall have the same effect and operation in law, on the trial of all actions for causes thereafter arising, as it' the same had been-originaliy filed in such corrected form, except as otherwise provided in this act; but no new matter shall be introduced into the speci- fication not shown, contained, or substantially indicated in the specifica- tion or drawings of the original application or its amendments. In any suit at law or in equity upon a patent hereafter reissued, the defendant, having given notice or pleaded the same in the manner set forth in the forty-nine hundred and twentieth section of the Eevised Statutes, may prove in defense to the whole patent, or any of the claims thereof, that the new patent, or any claim thereof, is not for the same invention shown, contained, or substantially indicated in the specification or draw- AMENDMENTS BY HON. COMMISSIONER, 215 ings of tbe original appUcatiou or its amendments, and to which he would have been entitled. Page 15, section 16, line 7, after the word " price" insert "/or uncer- tified manuscript copies, the reasonable cost of mailing the same.'" Page 17, strike out all of section 20. Page 38, strikeout all of section 22 and insert, "^ny peiaon who has ah interest in an invention or discovery, whether as inventor, discoverer, or as signee, for which a patent was ordered to issue upon the payirpent of the final fee, but who fails to make payment thereof within six months from the time at irhich it was passed and allowed and notice thereof was sent to the ap- plicant or his agent, shall have a right to make an application for a patent tor such invention or discovery the same as in the case of an original applica- fion. But such second application, in order to be a continuation of the orig- inal application, must be made within two years after the allowance thereof. But no person shall be held responsible in damages for the manufacture or use of any article or thing for which a patent iias ordered to issue under such renewed application prior to the issue of the patent. And upon the hearing of renewed applications preferred under this section, abandonment shall be considered as a question of fact." Page 19. section 24, line 7, strike out the words " as the case may be." Also, line 12, strike out all after the word "chief" to and including the word " be." Also, line 27, strike out the words '' application of the." Revised S'J'ATUTES, sectiou 483, is amended to read as follows : The Commissioner of Patents shall cause to be classified and arranged in suitable cases, in the rooms and galleries provided for that purpose, models, specimens of composition, fabrics, manufactures, works of art, and designs which have been or shall be deposited in the Patent Office; and the rooms and galleries shall be kept open during suitable hours for public inspection. The Commissioner may also receive such working models of patented machines or specimens of patented articles of suitable size as parties interested therein may desire to furnish and us will illustrate the prog- ress of the arts. Such models and .specimens shall remain in the cus- tody of the Commissioner. Revised Statutes, section 4891, is amended to read as follows : In any case which admits of representation by model, if the drawings filed be deemed insufficient, or there be doubt whether the machine or device forming the subject of the application will operate in the manner set forth in the specification, or if in an interference or on appeal a model be deemed desirable for more ready illustration, the applicant, if required by the Commissioner, shall furnish a working model of convenient size to exhibit advantageously the several parts of the invention or discovery. Such models may, in the discretion of the Commissioner, be retained in the office or returned to the applicant. All such models, together with exhibits in interference cases, not deemed suitable to be retained in thQ office, and not removed after due notice, may be sold by the Com- missioner, and the proceeds paid into the Treasury, as other i)ateut moneys are directed to be paid. 216 HON. COMMISSIONEE OF PATENTS. STATEMENT OF THE COMMISSIONEE OF PATENTS. Department of the Inteeior, Office of t!he Secretary, December 11, 1877. Sir: I have the honor to transmit herewith a communication from the Commissioner of Patents, relating to amendments of the patent law. Very respectfully, C. SCHURZ, Secretary, Hon. Newton Booth, Chairman Senate Committee on Patents. Department of the Interior, United States Patent office, Washington, D. C, December 11, 1877. Sir: I beg leave to submit, through you, to the Senate Committee on Patents, some suggestions touching the proposed amendments to the law relating to patents, now under consideration by the honorable com- mittee, together with some further amendments in relation thereto. Sections 1, 2, 3, 4, 6, 8, 9, 10, 13, 14, and 24 of the bill (Senate bill 300) relate to matters pertaining more to the courts, and not directly to the organization of the offlce or the conduct of business therein, and I have left the discussion of these sections to the learned counsel who have heretofore presented this matter to the committee. I desire, how- ever, simply to add that the sections specified have my hearty ap- proval. Of the other sections, a part were suggested by myself, and the rest were given definite form after I had been consulted in regard to them.. "With some less important exceptions, particularly specified in a paper accompanying this, entitled "Amendments proposed by the Commis- sioner of Patents to Senate bill 300," it seems highly important to me that the amendments offered in the bill should be incorporated in the law. I suggest, in amendment to section 5 of the bill referred to, that all reference to the model in reissue applications be erased from the section. Under the present law, following the decisions of the courts, it has been the practice of the oflflce to permit parties to amend their specifications and drawings in reissue patents by the model, and this although the model forms no part of the patent itself. This proceeding is objection- able, first, because it introduces into the patent matternot necessarily covered by the original oath, not described nor illustrated in the draw- ing, and not attested in any way by the applicant's original signature or that of his witnesses. It affords opportunity, therefore, for the in- troduction of matter of which the public could have no previous notice except by inspection of the model deposited in the Patent Office. The part shown in the model, not described or illustrated in the specifica- tion and drawing of the original application, would not appear in any copies which might be ordered of those original papers. Further, the amendment of the specification on reissue by the model gives oppor- tunity lor and suspicion of fraud in many cases. These models occupy HON. COMMISSIONER OF PATENTS. 217 large space, and it is not practicable to keep them in such close and faithful custody as not to give sometimes the opportunity to change a model by adding or subtracting some part so as to materially change the invention, a very slight change in some instances amounting to a very substantial difference. At the present time, it should also be stated, nearly half of the models in patented cases have been consumed, and to that extent patentees have been deprived of the opportunity to amend by models under the layr as it now stands, so that the proposed amendment would simply place all patents now existing on the same basis. I think the amendment, whether considered in relation to pat- ents already granted or hereafter to be granted, imposes no serious hardship, and is necessary for the protection of the public. The section, as amended, also omits the provision of the present law, authorizing the Commissioner in reissue cases, where there is neither model nor draw- ing, to allow an amendment of a specification upon proof, outside of the record, that the matter sought to be introduced by the amendment was a part of the original invention. The only evidence which can be pro- duced in such cases consists of voluntary and exparte affidavits. The opportunity for fraud is so great and the temptation in some cases so strong, that it seems wise to omit the provision. If any case of hard- ship should arise under the law amended as proposed, ii would be due to the patentee's own inadvertence in not originally describing his inven- tion, and the probable damage to individuals in particular cases would be less than that likely to be inflicted on the public by a reissue of patents improperly enlarged. The seventh section explains itself. Such cases have arisen from manifestly honest mistake, and the department has held that there was no authority under the law to justify the Secretary of the luterior in af- fixing his signature to a certificate of correction. The issue of a new patent seems unwise, and would not avail in case the invention had been in use more than two years before the mistake was discovered. The eleventh section provides for the payment of certain fees during the life-time of the patent, at fixed periods, in default of which payment the patent shall expire. The object of this section is to abridge the life of patents which may be useless for the legitimate purposes for which patents are granted. Itis to be presumed that any patents coveringan invention brought into use, or which the patentee is endeavoring to bring into use, will be worth the payment of the small fee specified in the section, and patents not having such value may as well be allowed to expire. Included among such patents are those granted for inven- tions which contain some elements of useful machines, but which are not, in themselves, organized so as to be of commercial value, and are never made or used. Such patents sometimes lie dormant, and are re- vived and reissued after improvements have been made which render the machine of value. There have been many instances of hardship in this respect ; and many of these old patents, unthought of, unappre- ciated, and worthless in themselves, have been reissuedto cover inven- tions subsequently made and of great value, but which contain some elements shown in these prior but, in themselves, useless patents. The amendment in section 15 makes provision for the filing of a bond by the assistant commissioner. It seems proper; but as the assistant commissioner is liable to be in charge of the office for only short periods, I have suggested that the amount of bond for that office be fixed at $5,000. Section 16 is intended to give the Commissioner enlarged discretion in the sale of printed copies, specifications, and drawings. The law now 218 HON. COMMISSIONEB OP PATENTS. fixes the price of copies of specifications and drawings of patents at ten cents per copy as the minimum. This is a fair price for single copies, covering the expense of the copy and the attendance necessary for the prompt delivery of single copies. Applications are freqa«ntly made, however, for large numbers of copies, including a whole class. In such case the price is deemed to be exorbitant, and, in fact, is greatly in ex- cess of the cost of the material added to the expense attending the se- lection and delivery of the same. Section 17 simply adds models to the list of those matters in the cus; tody of the office, certified copies of which may be furnished by the offtce and used as evidence, and provides that copies may be certified to by the assistant commissioner. The amendment appears to me just and convenient for the public and office, The change contemplated in section IS is simply for convenience in the transaction of business in the office. Under the law as it now stands the final fee must be paid within six months after the allowance of the application, but the issue of patents is made upon a certain day of each week. The proper conduct of the business requires that the issue should be closed upon a certain da,y. In case the final fee is paid on the last day of the six months, occurring before the date of issue, it is impossible to give the patent the date of issue next preceding the date of payment of the fee, and the patent must be issued upon the regular day of the week following. In order to come within the terms of the law, which requires the issue of the patent within six months after the allowance, the office has been compelled to resort to the fiction of issu- ing a new letter of allowance of a later date than that originally issued. Further than this, the patent takes date and begins its term of seventeen years prescribed by law on the day on which it is signed. The present arrangement requires that these patents shall be signed in blank, and that afterward the specifications shall be printed, the drawing photo- lithographed, the patent made up, and the seal affixed thereto, the whole business for each week's issue requiring about two weeks after the date of signing, and after the commencement of a life-time of the patent. The present section will permit the Ootnmissioner to have the papers all prepared and ready for delivery on the day when the term of the patent begins. It seems also necessary in connection with this that the proviso should be added, that after the allowance of a claim, and the payment of the fee, which completes all the duties required by law of the appli- cant, the patent should not be withheld by reason of any interference with an application filed after the payment and allowance as aforesaid. Section 19 is intended to remove the restriction placed upon patents in this country by reason of the prior issue of foreign patents for the same invention in foreign countries. Under the existing law the life- time of an American patent is abridged if the inventor has taken out a foreign patent prior to the issue of the American patent, when the foreign i)atent "expires before the termination of the seventeen years which, otherwise, the American patent would run. The simple effect of the present law is to tend to discourage American inventors from taking out foreign patents. I know of no advantage whatever arising from this provision of the law. In the case of American inventions which the parties desire to patent abroad there arises this dilemma: if the in- ventor takes out a foreign patent first, he is liable to have Ids American term abridged thereby. If he apply first for an American patent, and that be issued, and he desires also to make application for an English patent, he is compelled to exercise extraordinary diligence in order to anticipate the arrival in England of the printed publication of liis HON. COMMISSIONER OF PATENTS. 219 American patent, which would defeat his English patent. In order to prevent (what might be, perhaps, considered some disadvantage) the enjoyment of an invention abroad by a foreign patentee daring any considerable part of the lifetime of his foreign patent, and the subse- quent taking out of the patent for the same invention in this country, a provision has been added to the section requiring such foreign paten- tees to make application in this country within two years after the date of their foreign patent. The twentieth section of the bill under consideration, in connection with the twenty-second section of the same, contemplated simply put- ting applications allowed and forfeited by reason of the non-payment of the final fee upon the same standing as applications' abandoned by non- action for more than two years. Under the existing law and practice, an application abandoned after rejection and inaction over two years does not debar the same applicant from commencing de novo ; but if the same application had been allowed and not renewed within two years, he could not make a new application, but is forever barred from receiv- ing the patent for that invention, notwithstanding that the invention may not have gone into public use or been known except to the appli- cant and to the oiHce. No reason appears for this discrimination, and I propose to remedy it without any other change in the statute than simply by inserting in section 4897 the words, " in order to be the con- tinuation of the original application." Tliis renders unnecessary the amendment of section 4f-94, and the repeal of section 4897, some of the provisions of which should stand. Section 21 is a modification of the act of 1870, so as to restore the law in this respect to the form in which it existed prior to the act of 1870. It permits the owner or owners of the entire interest in a patent to make application for a reissue, and sign and swear to the corrected specification. I know of no reason why this should not be done. The amendments introduced must be substantially covered by the original oath of the inventor, or they could not be properly introduced on re- issue, and there, is no good ground for referring to him when the inven- tion has gone wholly out of his hands. The law, as it now exists, gives an inventor control over a patent after he has sold the entire interest therein, and compels the purchaser to resort to him for aid in amending the patent in which he has no more right of property than any other party whatever. The twenty-fourth section of the bill referred to provides that the ap- plication of the successful party to an interference shall not be put into a second interference with any application filed subsequent to the clos- ing of the testimony taken on his behalf in the pending interference. Cases have arisen in which parties defeated in one interference have appeared in the ofQce as assignees of some other inventor before the issue of a patent to the successful party, and put him to the expense and de- lay of a second interference. It is frequently alleged in such cases that the second interference is merely for the purpose of delay, and it is a matter of complaint that in such cases the defeated parties have the benefit in the second interference of knowledge of their opponent's case obtained in the first interference. The section excludes from interfer- ence with the application only such parties as file their applications after the closing of the testimony of the successful party. An inter- ference may then be declared, but it must be with the patent, the suc- cessful party having that presumption and advantage in his favor. The second proviso relates to interferences in case of reissues. The present practice of the offlce, following the decisions of the supreme court of 220 HON. COMMISSIONER OF PATENTS. the District of Columbia, is not to declare interferences between applica- tions for reissues of patents and any application for a patent, or with any patent, whose date of filing in the office is later than the date of the patent sought to be reissued. The ruling of the court has been that the application for a reissue should be revised and restricted precisely in the same manner as it would have been had the claim made in the reissue application been made in the original application. The prac- tice of the office has varied somewhat under different Commissioners. The provision referred to simply embodies in the statute what is under- stood to have been held by the courts, and what appears to be wise and just. I have added an kmendment to section 4891 not contained in the bill re- ferred to. The amendment contemplates dispensing with models in a very large number, perhaps a large majority, of cases. The practice hitherto has been almost uniformly to require models in all cases which admit of illustration by model or drawing. The result has been an immense ac- cumulation of models ; so great that before the destruction of one-half of them by the recent fire the collection had already become to some extent unwieldy. They required an immense space for such storage as would allow the exhibition of them and ready access. They are accumulating by the addition of from twelve to flfceeii thousand per year. It would be- come a matter of serious emb.irrassraiut to provide ro):n for those be- longing to cases already patented, ami have them propsrly arranged f jr exhibition, as the law requires. These models constitute no part of tie patent. They are not referred to in the speciflcatiou or drawing, and the law requires that the specifleatioa and drawing of the patent shall be complete in themselves, and shall disclose the invention so clearly that any one skilled in the art shall be able therefrom to make the in- - vention, in order that tho patent may be valid. The present model system tends rather to the issue of patents with imperfect drawings and imperfect description. The model illustrates more readily the machine. In the examination of applications for patents, the examiner, having before him the model and the drawing, derives his knowledge of the in- vention most readily from the former. It may easily escape his notice , that the knowledge which he has of the invention may have been con- veyed in some respect solely by the model and that the drawing may be defective. But in any event the specification and drawing should dis- close to him fully the invention, if they are sufficiently clear and full to disclose it to the public. In case there be any doubt as to the suffi- ciency of the drawings, or capability of the machine to operate, the sec- tion proposed contemplates that a working model may be required. It also contemplates the requirement of such models in interference cases and upon appeals, where the ready illustration of an invention may be particularly necessary. In all these cases, however, working models are required. Where they are furnished and retained iu the oflice, they illustrate to some purpose the state of the art. If not deemed worthy, they need not, under the proposed section, be retained. Under the present system, a very large proportion of the models are not practically working models ; not half of them are of practical value as illustrations of the arts to which they pertain, and often the really valuable are ob- scured in the crowd of comparatively worthless models. Under the section proposed, it will be practicable to retain all the advantages that can be derived from models, and at the same time the large bulk of models iu cases hereafter patented may be dispensed with, thereby re- lieving inventors of a heavy expense, and also relieving the government of the expense attending the storage and custoily of the models which HON. COMMISSIONER OP PATENTS. 221 are of no material benefit to the public, or to any one, after the patent lias been issued. In connection with this matter, I have suggested in the paper referred to an amendment to section 484, which provides for the reception and custody by the Commissioner of Patents of working models of patented machines, and specimens of patented articles and the like. These mod- els and specimens, it is contemplated, will be only such as parties are manufacturing or using. A gallery filled with such specimens of arti- cles of practical value will be au object of great interest, and will show in a substantial manner the manufactures of the country. If the pro- posed amendments are incorporated in the law, it will be practicable to fill the halls made vacant by the recent fire, with models of machines used in various parts of the country and of practical value, or with speci- mens of American manufactures, and without any intermixture of ma- terial practically valueless for the purpose of illustration or exhibition. I have the honor to be, verv respectfully, your obedient servant, ELLIS SPEAR, Commissioner of Patents. Hon. Carl Schuez, Secretary of the Interior. ARGUMENTS BEFORE THE COMMITTEE ON PATENTS HOUSE OF EEPEESENTATIVES, ON HOUSE BILL No. 1612, TO AMKND THE LAWS RELATING TO PATENTS (Which is identical ioith S. 300, printed on pp. 1-9, supra). H. E. 1612. fS. 300.1 A bill to amend the statutes in relation to patents, and for other purposes. Argument of J. H. Raymond, attorney, &c., representing Western Eail- road Association, Chicago. Mr. Chairman and gentlemen of the committee : The subjects to be presented to the committee this morning are so manifold, and depend so largely upon peculiar facts, that, to cover the ground I desire to go over within reasonable limits, I have found it necessary to severely condense my remarks. I may have done so at the expense of perspicnity. If so, I will be obliged if any of the committee should interrupt me and ask an explanation of any statement I may make. In discussing general amendments to the law and questions of public policy, no man can entirely divest himself of the prejudices which naturally grow out of his peculiar experience and business relations. I therefore deem it necessary, as well as advantageous to my argument, to frankly explain, on this my first appearance before this committee, the business in which I am and have been engaged. And it would materially assist the committee in weighing the arguments to be pre- sented if you should require a similar explanation from all those who may appear before you upon this bill, which proposes a revision of many of the general provisions of the patent law. You are aware that the patent statutes form the basis of a distinct department of the law, in which no solicitor, however able, is competent to advise in the simplest matters, unless he has given it particular atten- tion. As an illustration, we are continually forced to rebuy licenses under patents, costing in the aggregate many thousand dollars, because the first licenses taken, though drawn by the ablest general solicitors in the country — and drawn, too, with care, and intended at the time to convey full protection — still have some loop-hole, through which the sharks with whom we are forced to deal can drag us into court and technically mulct us in damages. For instance : A grants a license, in- cluding any possible extension, to two connecting railroads, B and 0, which interchange cars. Because the respective licenses did not in terms give to B and C the right to run the other's cars, having the patented improvement, over its road, or to run its cars, so equipped, over the other's road, the assignee of the patent claims and recovers additional compensation. This department of law, also, has this peculiarity, that each case, to a greater extent than in any other department, is sui generis. There is so little of logical, consistent sequence running through the system, and so few general principles which govern in all cases, that the patent counselor must have his eye upon the whole field of statutory provisions and adjudicated cases in order to give competent advice in any single case. Accordingly, in January, 1867, the railroad companies centering in Chicago, having common interests iu a very large and frauduleot pateut claim, put all their defenses into the hands of a gentleman who had had some experience in that particular matter, and for that purpose organ- ized the Western Eailroad Association, of which I have the hoaor to be S. Mis. '50 15 226 MR, J. H. RAYMOND. an executive officer. The smaller claims followed that larger one, and we soon found that it was not safe to experiment with or to introdace any improvement, although bought from the owner of a patent, without a full investigation by experts and attorneys of its patent relations, on account of various and intricate questions of infringement involved, of which I shall speak more fully hereafter. The business, service, and membership grew, till now the association acts in the matters I have referred to, and in similar matters, as the general solicitor of eighty-one railroad companies, operating about thirty-two thousand miles of road, running from a line drawn through Buffalo, N. Y., and Knoxville, Tenn., north to Saint Paul, west to San Francisco, and south to Georgia and Texas. It would be gratifying to me to inform the committee as to the manner of our doing business and of the results thereof, but I will con- tent myself with citing the opinion of the attorneys who appear before us, that the association is of as much real benefit to the honest inventor as it is to the railroad companies. So fair and so full are our investiga- tions, that of the hundreds of claims which we have rejected during the last five years, only three are now in litigation. As the members of the committee, solicitous only for the public inter- est, represent more largely the users of patents, and also the small portion of people comprising inventors, so the railroad companies represent, primarily, the business interest which is the largest user of patents, and secondarily the small number of railroad ofHcers and employers compris- ing the inventors of the more valuable f f the improvements we use. So far forth as it is consonant with the public interest to grant monopolies in inventions for the purpose of encouraging progress iu science and the useful arts, it is for the interest of the railroad companies that inventors in their department should be so encouraged. Plainly, the duty arid, without doubt, the intention of the committee is to consider the questions presented by this bill from the single stand- point of the public good, the greatest good to the greatest number, be- ing mindful of the interests of the inventor only as to resulting benefits. There is no other foundation for any action by Congress. The Consti- tutional provision is a limitation as well as a conferment of power, and confines Congress in the purpose of any and all legislation upon this subject to " promoting progress in science and the useful arts." May I insist that this rule, which cannot be gainsaid, shall be kept in mind throughout this discussion, that all the arguments shall be made by coun- sel and weighed by the committee from the single selfish and arbitrary stand-point of the " general welfare and progress of the public " ? Ar- guments, specious and plausible in appearance, will be presented in ob- jection to the provisions of the bill, and amendments will be proposed which would keep from the public benefits which are proposed to be con- ferred by the bill, and which are proposed simply and cunningly in the interests of particular patents and private interests. I shall leave it for my friend and senior, Mr. Chauncey Smith, of Bos- ton, to give you the history of this bill and to inform you as to the care and time, the ability and experience which were bestowed in its prepara- tion ; only remarking that a bill embodying its more important provis- ions in a modified form was first presented to Congress by our association in December, 1875 ; and, after a thorough ea?-j>arte consideration before the Judiciary Committee, was passed by the House of Eepresentatives. Nor need I dwell upon the importance of the patent system as affect- ing all branches of trade and industry, or upon the necessity of its im- mediate and radical revision. A simple illustration is that of a loaf of bread which is produced by the use of and pays tribute to twenty-one UTILITY OP PATENT SYSTEM. 227 classes of patents, in each of which classes many patents are now alive. The plowshare, point, handles, and tackle ; the harrower, the seed-sower, the cultivator, the harvester, the thrasher, and the separator ; the bolts, the hopper, the stones, and the gearing of the mill ; the bag, the holder of the bag, and the strap or string with which it is tied ; the yeast or baking powder, the oven, the extension table, and the dishes are each the subjects of patents to which tribute is paid. Everything visible in this room has at one time been the subject of a patent monopoly ; and a fact important to me is covered in the extravagant expression of another, " that you can't drive a nail into a railroad-oar without driving it through one or more patents." The number and importunity of the requests which are coming to Congress from the people for such amendments as are now proposed are suflftcient evidence of their necessity, to which I will only add the reso- lution adopted by that able and conservative body of business men, the National Board of Trade, at its annual meeting in August last, "that, in the opinion of this board. Congress should take action upon the sub- ject of the revision of the patent laws." The nature of the provisions proposed require a general consideration of, 1, the utility of the patent system ; 2, its present defects; 3, the na- ture of the grant conferred upon the patentee and of the title held by him ; 4, the specific provisions of the bill under consideration ; and, 5, the Constitutional powers of Congress in the premises ; for which I beg your indulgence, promising to be as brief as possible, and confining myself, as to the specific provisions of the bill, to the sections relating to patent litigation, and leaving it for my brothers, Whitman and Dodge, of the Patent Office Bar Association, to explain those provis- ions, which relate more intimately to the administration and practice of the Patent Office. UTILITY OF PATENT SYSTEM. Article I of the national Constitution confers upon Congress a dis- cretionary power " to promote the progress of science and useful arts by securing for limited times, to authors and inventors, the exclusive right to their respective writings and discoveries." We are confronted at the outset of any general discussion arising under this provision with the question whether the practical results of existing statutes for the enforcement of this Constitutional provision and of the judicial rules which govern in the administration of the statutes demonstrate the wisdom of the provision and the statutes. The cry of the utilitarians, Cuibono? has here peculiar propriety and force. I answer that the wisdom of the Constitutional provision cannot be doubted, A wise patent system does encourage invention, and therefore promote public progress in science and the useful arts. The difficulty to be guarded against, but which, in my opinion, the public have been pushed head- long into by the statutes and judicial rules which have obtained for the past seventeen years, is that the system should not cost the public more than the necessity or justice of the case requires ; and I unhesitatingly answer the question as to these statutes and rules in the negative. We are usually treated, upon occasions like the present, and frequent- ly in the courts, to eloquent panegyrics upon the patent system by able men, in which it is held up as the primary agent in the attainment of the civilization which we enjoy; as one of the principal guarantees of the permanence of our government ; as the incentive upon which inven- tion solely depends ; as the great cheapener of the articles of common 228 ME. J. H. RAYMOND. ■coDsumption ; a,8the enticer and protector of capital, and the j)romoter of competition in trades and manufactures. I have not been in the habit of so considering it. The consideration •^of the elements which have caused the wonderful progress, patriotism, «nd peace which have characterized the last twelve years of American history and the guarantees given for the permanence of our principles of government form a favorite theme of my feeble thought. Of these elements the first is the Christianity which gives us an eternal and an immualable foundation by which to measure and on which to base our civil and social laws. Then follow the general principles of our govern- ment, involving, among others, the sovereignty of the individual and the perfect enjoyment of the inalienable rights ; then the institutions of our civil liberty, with its freedom of the press, of public assemblage and discussion, its trial by jury, and its common schools; and the last elO' meut is the statutory provisions punishing wrong, protecting property, and encouraging development in character, knowledge, and, indeed, in invention. 'Nor does the inventive genius of the people, which seems to be indigenous to the very soil, depend for its further development or exer- cise solely, or even primarily, upon the incentive and inducements of the patent law. The true, natural inventor invents for the same reason that the preacher preaches, the philosopher studies, the statesman edu- cates and guides, and the attorney advocates — I speak not of those who are in those professions by accident or mistake — because he can't help it. If you will pardon the homeliness of the illustration, the inventive genius making improvements is like the hen laying eggs, and she, un- like a few others of the female persuasion, knows well the sphere for which from all eternity she has been destined, and with commendable modesty and faithfulness sticks to it. 1 will not detain you to demonstrate the falsity of the theory that granting a monopoly upon any improvement in an art cheapens the price of the product of the art or creates competition therein. It, however, is to be remarked in this connection that, while the Improvement itself cheapens ultimately the price of the product of any art, it is equaled, if not surpassed, by some other of the many elements which forever tend toward this result. I am not one of those who share the growing belief that there is no necessity for or commensurate benefit from a patent system, and who favor its entire repeal (which class of persons is much larger than is gen- erally supposed), nor do I sympathize with those other extremists who attribute all progress in science and the useful arts to the patents issued upon improvements and the law permitting and regulating the same. At the risk of being unjustly classed as an extremist ot the first kind, and of being characterized as inimical to a just and equitable patent sys- tem, I unhesitatingly and confidently assert that that part of the prog- ress of recent years, during which the genius of the people has been exclusively directed to the arts of peace, which is directly the result of the patent system which has obtained during same period, when put into the scales with the tax, the annoyance, the burden, the " scarecrow- ing" of capital, the unnatural strifes, the unhealthy speculations, the inflated values, the exorbitant prices, the blackmailing, the tedious and expensive chancery litigation, and the other unholy practices which the patent law has of late hatched and fostered, the progre-ss which it has brought about receives a shock which throws it up into the thin air. Tbe complaint, I repeat, is not against the Constitution and any patent sys- tem, but against the rules and provisions which now obtain, which seem to have been piled one upon another with the sole purpose of benefit- EFFECT OF THE BILL. 229 ing the speculator in patents, who for years now has been treated withr the same consideration as married women used to be and as fools and minors still are. With these general considerations bearing upon the question how, much of a reward the interests of the public dictate should be given to^ inventors, some of the EXISTING DEFECTS to which the provisions of the pending bill are directed will be noticed : 1. The practices of black-mailing which have been described to the committee in the consideration of another bill are not limited to the two- cases then cited, but characterize some of the patents in each of the nu- merous classes we find in the indexes of the Commissioner's report. The practice consists of threatening suit to individuals unused to litigation, or living in the country, or away from the seats of Federal courts. 2. To meet this and other evils, bills have been proposed which, in my opinion, are clearly unconstitutional, for the protection of innocent pur- chasers in opeu market. If constitutional, such provisions meet but a small part of the difficulty ; for while it is perfectly safe to say that from eighty to ninety per cent, of the infringements of patents are, on account of ignorance, innocent, in my opinion not more than twenty per cent, are caused by the purchase of devices in open market in such a way that an inaplied license to use the device does not go with it. This illustration, which I shall have occasion again to refer to, is in point. Some time ago, say five years, acompound, of which Paris green was the base, was so m ade that it could be used to kill the cotton-worm without affecting the cotton, and was patented. Mr. Smith and Mr. Brown, in North Carolina, bought the right to use the compound from the inventor. It was not six months before the compound, traveling from mouth to mouth, from plantation to plantation, was being put up at a drug-store for Mr. Jones in a village on the Gulf. The question in the practices and facts already noticed is, How to pre- vent the threatening of suits, and how to protect not only the innoceut purchaser, but generally the innocent infringer, having a just regard for the rights of the patentee. 3. The association which I represent is defending fifty-seven suits, which were not commenced until after the patents had run for their original term of fourteen years, had exhausted their extension of seven years, and until the statute of limitation of 1870, of six years (making about twenty-seven years), hart nearly run out. When I refer to the scores of suits now pending under the " middlings purifier" patent, "the Paris-green compound for killing the cotton-worm," " the conductory patent for mills," and hundreds of other suits that are now threatened, the evils resulting from the want of an arbitrary, short statute of limi- tations need not be enlarged upon. 4. There are many patents that are void and fraudulent, the parties to whom the patents were issued not having been the inventors of the devices claimed, or who, if they were the inventors, were not the first inventors, and therefore have no legal or equitable rights in the matter. The testimony, however, necessary to show the illegal or fraudulent char acter of these patents depends upon witnesses of advanced years. These patents have several years yet to run, and the parties who own tliein are simply waiting for these witnesses to die, when suit will be commenced and the defendant will be remediless. A statute of limitations does not reach this difficulty, and tlie defendant should be allowed to perpetuate. 230 ME. J. H. RAYMOND. testimony in this as in the protection of other kinds of property. If it be objected that the general provision of the Eevised Statutes concern- ing the perpetuation of testimony is sufficient, the reply is, first, that it is the opinion of a cousiderabte number of able patent counsellors that that provision has no application in such cases ; and, second, if it had, it does not allow any number of manufacturers, farmers, plantCTS, tradesmen, or railroad companies, having merely a general community of interest, to join in such proceedings, and therefore reap the benefit, by a single proceeding, of the perpetuation of such testimony. 5. There is a considerable number of patents issued annually from the Patent Office which are of no force or value except for black-mailing and for ipterfering with the business of parties competing with their owners. I am glad to say that the present Commissioner of Patents appreciates this fact, and is doing all he can to correct the practice; yet from the nature of the case this fact is uuavoidable, and must continue to a greater or less extent. These patents should be repealed and annulled. The only mode now available for doing so is by a bill brought in the name of the United States, by and with the advice and consent of the Attorney-General. Individuals, as well as the government, should have the privilege, under proper restrictions, to commence proceedings upon their own motion and in their own right for the annulling of invalid patents. 6. Another useless and pernicious class of patents is what I call the considerable number of accidental patents issued annually to ignorant and officious meddlers in arts in which they are not skilled. An Irshman from the backwoods, while taking his biennial trip along the railroad track " to town," sees that some of the nuts attaching the fish-plates of the rail are loose, and having heard of " the squire" who got rich out of somebody's patent, proceeds to invent a nut-lock. The only benefit which ever arises from such an invention is to some Ifew York patent agency, whose sole object in business is to get as many patents as they can, no matter how narrow and frivolous they are, and as many fees as possible out of the people who are attracted to their office by ex- tensive advertising. 7. Another great evil is the interfering with settled branches of trade and art by the granting of extensions and reissues. Many extensions have been granted, both by the Commissioner and by Congress, which were due and compatible with the public interest. Many more have been granted that had not these characteristics. If a digression from the subjects presented by this bill be excusable, it is proper to suggest that the determinative consideration in any application for an extension which may come before the committee is, how much would progress in sciences and the useful arts be promoted by granting the application, and what would it cost? There is no privity in such matters between Congress and any particular inventor. The present practice of granting reissues, while based upon a sound theory of giving opportunity for the correction of accidents and mis- takes, is an unmitigated fraud. That it constitutes a great evil is ad- mitted by all. A very large majority of such reissues are taken out for the sole purpose of incorporating into the patent some element that the inventor had not even dreamed of at the date of the original invention, and for the sole purpose of either covering or interfering with some part or all of an improvement subsequently made. I am free to say that I was overruled by the able attorneys with whom I was associated in draw, ing up this bill in this matter, adding only that my solution of the diffi EFFECT OF THIS BILL. 231 culty would be to enact that no reissue should be allowed after three years from the date of the patent. 8. One of the greatest, if not the greatest embarrassment under which the public labor by reason of the patent laws, is on account of the many and very intricate questions of infringement and equivalents which at- tach to almost every patent issued. The flrst and simplest of these ques- tions affords an illustration. Having to deal largely with inventors of but a single improvement, and with business men whose attention is almost exclusively directed to other matters, I have found great difft- culty in satisfactorily explaining how one patent may be valid and yet infringe another. This illustration, although the plainest one I have met with, I have used unsuccessfully. A invents a watch with but an hour-hand, B im- proves it by adding a minute-hand, and C adds a second-hand. These inventions are made very near each other in point of time. C's patent is the one operated under. It shows all the parts of the watch with the three hands, and the public buys of him upon his exhibiting his specfi- cations and drawings bearing the great seal, not knowing that sooner or later they must account to B and also to A. In the case supposed, A, B, and C have each valid patents, but B's cannot be used without paying A, and O's cannot be used without paying both A and B. Add to this simple case the thousand and one questions of mechanical equiva- lents which determine questions of infringement, and the difficulty is ap- parent. The ingenuity of the profession has not been able to devise any direct, practicable, and just solution thereof. This matter has not escaped the appreciation of the present Commissioner of Patents, and I am at liberty to incorporate in my remarks the following circular in point recently issued by him : Department of the Interior, Uni'I'ed States Patent Office, Washington, D. C, January 15, 1878. [Circular No. 4.] In the present condition of the patent system, with great numbers of patents issuing every year, I am impressed with the conviction that more and more care ought to be exer- cised by examiners in requiring applications for mere improvements to be distinctly defined fiom generic inventions, and that applicants should discriminate between what they claim as new and what they deem to be old. The remarks of the United States Supreme Court in the recent cases of Merrill vs. Yoe- mans, 110. G., 970, and Keystone Bridge Company vs. Phoenix Iron Company, 12 O. G., 980, plainly indicate the duty of the office in this regard. It is doubtless a matter of common observation with the Examining Corps that the tend- ency on the part of the applicants for patents is to avoid or neglect reference to prior patents upon which their invention is an improvement. I think much of the odium attached to patents, and much of the injustice and vexation arising from patents with narrow claims would be obviated were the applicant compelled to state specifically, where it can be done, on what his patent is an improvement, and define accurately the state of the art prior to his invention, so that any one reading his patent, even if unskilled in patent matters, would see not only what is claimed, but would see set forth clearly the state of the art upon which his invention was based. At this time, when patents have been brought into disrepute, principally on account of those of a trivial nature which are used to embarrass persons not able to determine the scope of such a grant, it seems especially necessary that the office should exercise great caution in this respect. I think the practice of the office has hitherto been lax on this point, and I desire earnestly to call the attention of the Examining Corps thereto, and to urge the exercise of care and more rigid requirement in the examination of cases which may hereafter be brought before them. ELLIS SPEAR, Commissioner of Patents, 232 ME. J. H. EAYMOND. 9. I come now to the greatest injustice now being perpetrated in the name of law, namely, the rules which obtain in ascertaining the measure of damages in patent litigation. Its importance will be appreciated when it is remembered how manifold are the ramifications of patents, and that their value depends primarily upon the amount that can be re- covered for their infringement. A fair average estimate of the living expenses of every inhabitant of our country is $100 per annum. That equals $4,500,000,000. Those ig- norant of this subject will not, but those versed in it will admit that ten per cent, of this amount is a fair average for the amount paid annually as patent royalties, which equals the annual amount of $450,000,000. In short, it thus appears that the amounts paid on account of patent royalty would, in five years, more than pay the whole amount of the national debb. The law of 1790 gave such damages as the jury might assess and the forfeiture of the thing made. This was changed in 1793 to three times the license fee, and again, in 1800, to three times the actual damages. In 1836 the jury were to find the actual damages, and the court to treble ; em in its discretion. This was at law. In the mean time the courts ave establised the rule, without seeing where it led, that in equity, the efendant's profits or savings should be the rule, and under this rule it has been recently solemnly declared, by judicial decisions, that a single patent may be worth ten, twenty, thirty, fifty, and, in one case, sixty millions of dollars. It would seem as if such results ought to satisfy the most graspin.g. In 1870, however, a new provision was added to the law, by which, in addition to the profits, the plaintiff is to have the dam- ages he may have sustained by reason of infringement. These profits and savings are proved up in equity largely by expert testimony, which, to use a familiar phrase, "can be bought by the cord," and as a sole basis of ascertaining the damages for an infrlngment is capable of being justly applied in very few, if any, cases. I shall return to this subject of damages in a few minutes. We have seen how that it is impossible to remedy some of the defects in the system by direct, positive, and effective amendments to the law. This bill which I present to you as the result of the mature and labo- rious consideration and consultation of many of the ablest attorneys from all sections of the country, while conservative in its character, pro- vides great relief and goes as far in amending the law as we deemed it prudent to go at this time. A few brief considerations as to the NATURE OP THE GRANT conferred upon the patentee, and of the title held by him, will aid to a full understanding of the specifi* provisions of the bill. The Constitution and the law grant to the inventor " the exclusive right" to his invention for seventeen years. It is a close monopoly which, in my opinion, should be given in no case. While the law grants to the inventor the exclusive right to practice his invention for seven- teen years, there is no process by which he can be forced to practice it, and, at his discretion, he can lock it up in a closet and deprive the public of its benefits for the period named. This is especially onerous in view of the fact that almost every important invention is made simultaneously in different parts of the country by different persons. All patent litigation proves this fact. I know of Unt one case — the Eng- lish case of Smith vs. Davidson [1857J, 19 C. S., 697 — in which it has SEC. ]]. 233 been impossible to ascertain with reasonable certainty whicb of two original inventors was the first to perfect his invention, yet in almost every case in the books a prior invention by another is set up and con- fended for. In the second place, the sole object of the grant being the public good pro tanto, its very object is defeated by the provision depriving the pub- lic for any period of the benefits of the improvement. This is especially true, if, as I claim in the third place, that an in- ventor has not a natural right to the exclusive enjoyment of his inven- tion, and that while the granting of exclusive monopolies forms a part of the common law of England, it has no natural place among the in- stitutions of our government, but is flatly opposed to its general prin- ciples. [Vide Web. Pat. Oases,, I, IV, and V.] You will be told that the highest title that man can have to property is the title of creation and discovery and possession. So in tangible property, less so in intangible property, and not at all " so by natural right" in the creations, discoveries, and possessions of the mind, which were intended by Him after whose likeness mind was made to be given freely and fully, as through the air itself, to all men for their progress toward that which is to come. If, perchance, there be a single thought in these remarks which is new and useful it is not and was not mine by natural right, but was given me by Infinite intelligence to be by me given again. So of every operation and result of the mind. And the most arbitrary, unnatural, and dangerous right that can be conferred upon man is to say that he shall have the power to prevent others from enjoying the results of his intellectual creations and discoveries. Time does not suflftce to discuss the hardships which result from the conferment of this exclusive right, but in my closing remarks I shall at- tempt to show that the substitution for this exclusive right, of a right of property which would not be exclusive would be constitutional, and I would like an opportunity to argue that such a substitution would be of benefit to the inventor. THE SECTIONS OF THE BILL which relate especially to patent litigation and require any explanation,, are, the 1st, 2d, 3d, 8th, and 9th, and, adding the 11th, I shall briefly explain them in the reverse order. Section 11, providing for a tax upon patents of fifty dollars at the ex- piration of four years, and one hundred dollars at the expiration of nin& years after the date of the patent, under penalty of forfeiture, is copied,, except in the amounts of the tax and the dates of its maturing, from the English law. The evils resulting from trivial, impracticable, and invalid patents, and from those which become of value late in their ex- istence, and then only for the purpose of infringement suits and specu- lations, have been noticed. It has also appeared that it has been im- possible to prevent the issuance of such patents in the first instance. The remedy lies in this provision, which, in the English law, where the tax is more frequent and of greater amount, results in annulling seventy- five percent, of all the patents issued. The provision of this section has been criticised somewhat, because the tax was too great and too frequent. It has been criticised more as being too small and not frequent enough. In my opinion, if changed at all, it should be increased both in amount and frequency. The grant, in any case, is a tax upon, or a deprivation, to the public, and should not be perpetuated unless it is worth a good fee. 234 ME. J. H. RAYMOND. Section 9 allows suits to be brought for repealing and annulling pat- ents. I have already alluded to the necessity for this provision, to which need only be added a citation to an opinion of the Attorney-General of 19th November, 1874, printed in volume 6 of the Patent-Oflice Gazette, at page 723. I have full confidence that without any further explana- tion or discussion you will find the provision to be suflacientiy guarded to protect the owners of patents against vexatious and malicious pro- ceedings of this character. Section 8 is a provision for taking testimony in perpetuam in patent cases, introduced because the general law applicable to all cases is not adequate in patent causes, as has already appeared. My reading of the section will sufiiciently show that the onus of this proceeding is upon him who wishes to perpetuate testimony, and that the interests of the owner of patents are sufBciently protected in this regard. Section 3. In patent suits in equity, the court first determines the validity of the patent and the question of infringement; it then orders an account. An appeal cannot be taken unless the account has been completed. The accounting is very expensive, and consumes much time, and if the decision as to validity or infringement is reversed, or even modified, on appeal, it becomes useless. This section authorizes the court in such cases to permit the appeal to be taken at once. 1 pre- dict confidently that where an iuterlocutorj' decree has been given sus- taining the validity of the patent and the infringement, and an appeal is taken to the Supreme Court before a reference to the master for an account is had, and the proceedings of the court below are sustained in the Supreme Court, in nine cases out of ten no accounting will be had, but the case will be settled, and this the most expensive and the most unsatisfactory part of and the greatest delay in patent litigation will be thus entirely avoided. I come now to the first two sections of the bill, which at once form its most important features, and would afford the greatest relief to the pub- lic. With your permission I will consider the first section first. It pro- vides : — That from, and after the passage of this act no profits or damages in any sait at law or in equity for the infringement of a patent shall be recovered which shall have accrued more than four years next preceding the commencement of such suit : Provided, That where a party, in order to preserve his right of recovery, finds it necessary to institute a number of suits involving the same issues, and he is proceeding with good faith and with reasonable diligence to bring one of them to final judgment, any court in which any of them are pend- ing may, in its discretion, grant a stay of proceedings from time to time in any other cases pending before it : Provided also. That rights of action existing at the passage of this act may be enforced by suits brought within four years thereafter, if not previously barred by laws already existing; but nothing in this section contained shall revive any right of action already barred, nor prolong the right to sue on any cause of action already existing. There is now no statute of limitations applicable to patent causes. This proposes that no recovery shall be had for an infringement more than four years old, leaving the right to sue for what has been done within four years where the infringement has continued. .It allows the court, where many suits are brought on one patent, to have one brought to trial, and meanwhile to stay proceedings in the others. It is proper that 1 should remark that in explaining these provisions I have quoted somewhat from a " memorandum of the principal changes" made by the bill, which was prepared by Mr. J. J. Storrow, of Boston, to whom you will have the pleasure of listening during the prog- ress of the discussion. In support of the unquestionable doctrine that statutes of limitation SEC. l: LIMITATIONS. 235 should be considered statutes of repose, and are strictissimi juris, I read from Cooley's Constitutional Limitations {vide ibid., p. 364 and note) : It is evidence of the mildness of this section that it is not a limitation upon the right to commence a suit, but upon the extent of the damages that may be therein recovered, and bears in character a perfect analogy to State limitations upon the recovery of mesne profits in actions of eject- ment, which limitation in the State statutes varies from one to three years. Under this section, the plaintift must delay bringing this suit for more than four years after the defendant has ceased to infringe, in order to have his right to recover barred. Eeferring again to the fact that so large a proportion of the infringe-, ment of patents are innocent infringements. He who doubts that the policy of the government and the policy of the patent law is to giveno- tice of these monopolies to the public, certainly has not read the stat- utes with intelligence. The government goes as far as it is practicable to go, in my opinion, in this direction, in publishing the printed copies of patents, and in requiring tlie stamping of patented articles. And yet the people are supposed to know (they are bound to know the law) the full force and effect of the fifteen thousand patents granted annually, whereas in fact they know very little about it. The bill which passed the House by a large majority last year con- tained a limitation upon the recovery of one year prior to notice of in- Iriugement. While the raising iu such a provision of the vexatious question of actual and constructive notice is objectionable, there is no so cheap, satisfactory, and complete way of giving notice as by the fil- ing of a bill. The term of four years is named, because in contested patents it takes about three years to carry the contest to an interlocutory decree, and de- fine the validity, force, and effect of the patent. It has been objected that this section should not apply to cases of will- ful and secret infringement, to which there are two satisfactory answers: First, such cases are very rare — so rare as not to deserve notice in a gen- eral enactment ; and, second, it is well established to be bad practice to incorporate such exceptions in a statute of limitations. As evidence of the second statement, I refer to all the statutes of limitation which have had any permanence, and especially to those pertaining to bankruptcy matters, which, while not having any such exception, are not applied by the courts to claims which, through fraud, accident, or mistake, are barred by the general provision of the statute. In other words, the courts will make all the exceptions which justice requires in these and similar cases. It has been suggested that an amendment should be added eliminat- ing from the operation of the section cases of willful or concealed infringe- ment, to which there are two satisfactory answers : First, such cases are very rare — so rare as not to deserve notice in a general enactment; and, second, it is well established to be bad prac- tice to incorporate such exceptions in a statute of limitations. As evi- dence of the second statement, I refer to all the statutes of limitations which have had any permanence, and especially to those pertaining to bankruptcy proceedings. The court will make all the exceptions which justice requires in these and similar cases. I desire, however, to call your attention to the second proviso of the section. The first part thereof reads as follows: ^^ Provided, also, That rights of action existing at the passage of this act may be enforced by suits brought within four years thereafter." * * * It is a general rule of all statutes of limitation that a reasonable time should be given 236 ME. J. H. KAYMOND. after the passage of the enactment within which to commence suits to recover for rights of action already existing. That provision is put into almost all laws of limitation, and varies from ten days to (in this case) four years, the longest case I know of. This had escaped my attention, and I want to demur to that proviso. It was put into this section be- cause the limitation in the body of the section was made four years; and we drifted along, I suppose, thinking the one provision was just hitting on it as a compromise betwean six years and a shorter time, and, therefore, adding the other provision of the same length. In the second place, that question of how long a time should be granted to escape the operation of any statute of limitations, is wholly and entirely within the discretion of Congress, and cannot, except in very extreme cases, be reviewed by the courts. In my opinion, six months is all the time that should be allowed for the commencement of suits that will not be subject to this provision. And this is because of a good many reasons, which are apparent on the face of the matter. Whether or not the statute of limitations of 1870 has any force or effect at all ; whether the repeal of the Eevised Statutes (if, indeed, it was re- pealed) wipes out its effect entirely, is a mooted question. If it did, then we have no such recourse against patents that were granted twenty- seven years ago ; more than that, we have no recourse at all for any patent that has ever been granted by the government. Any hour they may trump up a case where we infringed forty years ago, unless we have relief very soon from this bill. A MEMBER OP THE COMMITTEE. Do I understand this provision to cut off' suits absolutely? Mr. Kaymond. Never, except in the case I supposed, where I infringed your patent six years ago, and continued infringing six months, and then stopped, and you delayed suing uutil to day; in such a case it would. There is a bill pending before the committee, introduced by Mr. Lathrop, of Illinois, which provides for a limitation against the commencement of suits unless it is done within two years (I think it is) of the commencement of the accruing of the right of action. The pending bill was put in the condition in which it now is as the result of a modification of the bill thait was before Congress two years ago, and to avoid the intricate questioning of notice which was therein involved. The evil of this matter is, that ninety per cent, of the infringe- ments that occur are innocent infringements; and the patentee should be obliged to give the public notice. The government is doing all it can in this direction by scattering its volumes of reports. It is the theory of the law that the parties shall give notice, and the public should not be mulcted in damages unless they have notice. The theory started out with was to make the statute of limitations apply one year prior to the notice; they could recover for one year prior to the notice. To obviate the difBculties of that notice, it was changed to this form. A MEMBER OE THE COMMITTEE. Why docs not the general statute of limitations with reference to actions apply? Mr. Raymond. There is no general statute of limitations in the Re- vised Statutes. A MEMBER OF THE COMMITTEE. Why don't the statutes of the States where the court is held apply? Mr. Stoerow. It has been held that rights created by the United States authorities are not subject to State limitations, because it would allow the States to interfere with Congress. It was supposed for a long time that the State statutes would apply, but it has been decided that THE BILL. 237 they would not, for this reason, that every State could put a six months' limitation on the right given by Congress. Mr. Raymond. 1 would like to make this suggestion to the committee: There is hardly a word in this bill that has not been thoroughly consid- ered by the best talent in the country and very thoroughly discussed. Everything in it means something A HBMBKR. Was it discussed oy parties representing both interests^ Mr. Raymond. Tes, sir ; by parties representing both interests and all interests — the interests of the patentee and the interests of tbe user of the patent. It has received the attention of all the gentlemen pres- ent who have participated in the discussion, and who met in Chicago and Boston during the summer, from time to time, to consider the pro- visions of this bill. A thousand copies of the first draught of the bill were sent from my office to the patent attorneys of the country, reqnestipg them to make suggestions as to the revision, and a committee met iti Boston afterward and considered the objections and suggestions made by the patent attorneys of tbe country ; and they made such modifica- tions and as they could before presenting it to Congress. Mr. Storrow and Mr. Smith will give you the history of the bill, however, if you de- sire it. Allow me to say that, unless there are some radical objections to the provisions of the bill, I hope the committee will be a little jealous about making amendments to it, so that we may get through without a difference of action in the two branches of Congress, which causes de- lay, and which prevented the passage of any bill at the last Congress. The two things that 1 insist upon that the committee shall consider in the way of amendments to the bill are, first, as to tiie matters of reissues ; whether the provision abolishing all reissues from three years after the issuing of a patent is not preferable ; and, second, reducing the time within which the parties may bring suits on existing causes of action after the passage of this act. I come now to the second section of the bill, which is the most impor- tant provision in it. [Reading the section.] A MEMBER. What rule does the court adopt as a measure of dam- ages now ? Mr. Raymond. If a party sues now at law before a jury, he recovers damages. His damages are measured by his license-fee, if one is estab- lished. The question arises. What is the license-fee? It is hinted at in a phrase used in the section, and is determined "by a reasonable num- ber of transactions applicable to the case at bar." If I have just re- ceived a patent and want to introduce it, and I go to a railroad company and say, " 1 want the prestige of having it introduced by your company, and I will give it to you for $500," that has no effect at all upon the li- cense fee. If I am in straitened circumstances and obliged to sell the thing for much less than it is worth, to keep myself from starvation, that has no effect at all on the establishment of the license-fee. But a reasonable number of transactions, varying from three to three hundred, according to the nature of the case, to be judged of by the court— a reasonable number of commercial transactions, free from restrain*-, or duress, establishing in practice tbe patentee's estimate of the value of his patent, and fixing the value as between the buyer and the seller of the thing which is the subject of the controversy, will constitute the li- cense-fee, and limit, in an action at law, the plaintiff to that recovery. There is now a one-sided provision that the court may increase the sauie three times. " It is a poor rule which will not work both ways," so this bill gives to the court full discretion to increase or decrease. As a ncat- ter of fact all patent litigation is now brought ou the equity side of he 238 ME. J. H. KAYMOND. court, but that provision, which applies both to law and equity, allow- ing the court to increase three times, has never yet been used in a single instance. The reason is that the recoveries which have been obtained in patent cases were so ridiculously high, that the court has never dared to use that provision, or the advantage of that discretionary power. That being t^e rule of damages which now obtains at law, the amount of damage is ascertained in equity largely by expert testimony as to what the defendant has made or saved, or what he might have made or saved, and what the patentee (if that is the basis he wants to go on) would have made or saved, or both, and they award that amount to the patentee. Of course we don't find any such statement as that in the adjudicated cases, but that is the fact about it : the damage is ascer- tained in equity largely, if not entirely, by the theoretical profits, or savings, or both, of the user ; that is the rule of damage in patent cases, and the practice of the courts. Mr. Blanchard requested an opportunity of saying a few words as a meclianic and in- ventor, and not as a lawyer. He said all the speakers before the committee were lawyers, so far as he knew. Mr. Raymond. I would be glad if the rule would be established by the committee that anybody who has a material amendment to present to the bill can be heard, so that the friends of the bill may be present and have an opportunity of answering any objection that may be raised to it. Adjourned until Saturday, February 2, 1878, at 10 a. m. House Committee on Patents, Ten o'clock a. m., February 2, 1878. Mr. Eatmowd continued. Mr. Chairman and gentlemen of the com- mittee : 1 would like to give the committee some additional illustrations and arguments on the point submitted yesterday, but can only indulge, and that very briefly, in two particulars: And, first, as to the character of the grant giving to the patentees, and the exclusive monopoly which he enjoys. I refer again to this be- cause I believe the principles set forth in the pending bill, and the pending public agitation, constitute the first step in the abolition of this kind of a grant ; and I think it may be added, the first step in the abo- lition of the rule of profits or savings as having any consideration in the measure of damages to be recovered. But as to the exclusive grant, I take this illustration of the only case in which it is possible that such a grant should be the real objective desire of the patentee. If a half- dozen or more manufacturers through the country are now making pins by hand, and a machine is invented by which the whole market can be supplied from a room not the size of this room, the inventor wants a monopoly of that market; what his selfish interests require and demand is, that he have a perfect monopoly, so that he can control the market, being able, through making these pins by machinery, to make them much cheaper than by hand, and thus control the market at a little less than the usual price and at a greatly enlarged profit. That and similar cases are the only ones in which it is the true interest of the patentee, even, to say nothing of the public interest or questions of public policy, that he should have a close monopoly upon the things granted. All such classes of cases, in which close monopolies are desired, must result, of course, in hardship to the people, which I need not delay the com- SEC. 5: REISSUES. 239 mittee to ennmerate. Secondly, they defeat, as I have already shown, pro tanto, for the term for which the grant was made, the object and the sole purpose of the grant under the Constitution, and without any com- mensurate and without any immediate advancement of the interests of the people. In the third place, such a grant, on such terms, is directly contrary to public policy. , The second point in the argument yesterday, to which your attention is again called, was that concerning reissues ; and the proposition was submitted to abolish the right of reissue after three years after the date of the patent. I desire to add an illastration given by a member of the present House of Eepresentatives, who is president of a sewing-machine company and a large manipulator of large manufacturing patent inter- ests, who is in full sympathy with this bill, and in full sympathy with this provision concerning reissues. In fact, the provision is proposed by him. In his sewing-machine business they are manufacturing ruf- flers — an article which every lady in the land uses — which picks up the cloth, makes a tuck, and holds it until the needle passes through and takes the stitches. It is one of the simplest combinations in the world, requiring simply the stamping out of a piece of metal in the proper form. It costs him to make it, twenty cents. For seventeen years, and I think longer than that, he made it without paying anybody any royalty on it, being advised that there was no patent claimed on that trifling machine or device. At least, until after seventeen years after the grant of three patents (the original grant and their extensions), there was no patent claim upon this device, and no royalty paid. But they were then so re- issued that he now pays upon this device, the cost of which is twenty cents, twenty-seven cents as patent royalties. That royalty must be, of course, a small amount per machine, on account of the number of them being made. That royalty is paid to men who are not entitled at all to it, and never were, but got it by the reissue of old patents. No claim was made until after the seventeen years had run. Mr. Clark. After he had found it an article of such utility, why did he not patent it? Mr. Kaymonb. I think he had a patent on it. The Chairman. And then did he have to pay a royalty on all he had made previously 1 Mr. Eatmond. No, sir; that is the only salvation or palliating cir- cumstance about this question of reissues. Heretofore, when a man surrendered a patent to have it reissued, he surrendered all rights under it. There is one clause in this bill which I leave others to advocate to the committee. It is that clause which saves to the patentee any right of action under the original patent, even though he surrenders it for a reissue; but does not continue any such right of action unless it is con- tinued in the reissued patent. I pass now to explain the provisions of the second section of the bill, having yesterday stated the rules which now govern in ascertaining the damages through profits or savings, both at law and in equity. I am well aware that this provision of the bill amounts to a little less than a revolution in equity jurisprudence in patent cases; but it is a revolution such as is demanded, in my opinion, not only by the princi- ples and the purposes of the patent law, but by the prevailing economy of the times and by the unmistakable demand which comes from the people in this regard. The provision is as to the measure of damages in patent cases, estab- lishing the same rule for both law and equity that now obtains in law. 240 ME. J. H. BAYMOND. and says what this shall be — being, as to cases at law, simply declara- tory. If the committee will pardon me, I have made statements which con- tain the provisions of this section, though not in the order in which the provisions are found there, hut which, I think, will serve to a better understanding of them than if the provisions were read again. The section abolishes, in the first place, the distinction in these matters between law and equity, the reasons for which distinction no man within the past two years has been able to give. That distinction is abolished, and the rule is made — subject to the provisions which I shall further notice — the same in equity as it is in law. - Second. The section abolishes profits and savings in all cases " where it is for the interest of the patentee that other people generally should use" his device. I have referred to the pin-machine. That would not come under this provision which 1 am now citing. The controlling clause is in the fourth, fifth, and sixth lines, which read: "Where it appears to the court or jury that, from the nature of the invention, it is for the interest of the patentee that other persons generally should use the same in like manner, and pay him a license-fee therefor." In such cases the license-fee, and not profits or savings, shall govern the measure of recovery, with the provision at the end of the section, which applies not only to profits and savings, but also to the license- fees — allowing the court to increase or decrease the amount of recovery so found, at its discretion. The proviso reads: "Bat if, in any case, it shall appear to the court that the damages or profits, ascertained as above, shall be inadequate to give the plaintiff a just compensation for the injury done by the infringement, or shall be in excess of such in- jury, the court shall have power to increase or diminish the amount to such an extent as may be just and reasonable." I noticed on yesterday the provision of the present law, allowing the court to increase the damages three times, and said if it was right to give that discretion to increase, they should also have the discretion which the courts wish they had, to decrease the damages in cases where they were excessive. We thought it better not to direct the court to in- crease or decrease threefold, but give in this matter, as in similar mat- ters, the widest discretion. It should be a proper discretion to either increase or decrease the damages, according as the justice of the case may require. The Chateman. Why should not the court, if this power be given to increase or diminish the verdict of the jury — if it is proper for the court to do that — why should we have any trial by jury at all? As I under- stand this provision, it gives the court discretionary power to increase or decrease. Mr. Eaymond. There are a great m'any reasons for that. I will simply say this, that the present provisions of the statutes allowing courts to increase the damages have been found to be of advantage, and reasona- ble in their operation in actions before a jury. In a law case, it is well known that a jury know little or nothing about jiatent law. They go by their prejudices iu such matter, very largely, aud if we have a jury made up of a certain class of men, whose business interests are on a cer- tain side of the matter, the minds of the jury will be molded thereby; whereas if this discretion, wiiich should be double, to increase and de- crease, and that discretion, too, being the subject of review in the higher court, be given, no injustice follows it ; it is a relief from injustice which might otherwise follow, aud require an additional trial of the case. SKC. 2: DAMAGES AND PROFITS. 241 Mr. TowNSEND. What would be the use of a jury trial at all, then ? Mr. Eaymond. We are bound to open the case to be passed upon by a jury on account of the fifth amendment of the Constitution, which pre- serves inviolate the trial by jury. The proposition was argued before the Senate committee, under a suggestion to give the trial of patent causes only to equity. That was clearly in the face of the Constitution, and was abandoned. Mr. ToWNSEND. But yon propose to abrogate the trial by jury in- directly, if not directly. Why not directly 1 Mr. Eatmond. If it would amount to abrogation of trials by jury, I think it would be unconstitutional. We can reach it by indirection, and not directly, and thus save the violation. It saves setting aside the trial and granting a new trial, which power is given to the court in many cases, and has been sustained as a proper provision. Mr. Ward. I wish to call attention to one expression of yours, that this reduction or increase is a subject of review by a superior court. Don't you think the affirmative power to increase or diminish, is a question of discretion, and not a question of review by a superior court? Mr. Raymond. It can be reviewed in equity cases, where all questions are considered on appeal, but in a case of law, where the basis of the action in the superior court was on a writ of error, where questions of law simply were reviewed, probably it could not ; but in an equity cause the questions of fact are reviewed, as well as the questions of law. I defined, 1 think, yesterday, what a license fee is sufi&ciently to show that it, as a measure of damages, would not be unjust in any sense. You will see that where it is for the interest of the patentee that other people generally should use his device, then the license fee obtains. The remaining portion of the provision is directed to what I consider to be a prostitution, by the courts, of the doctrine of trusteeship, and no matter how much we may differ as to what the rule now is as to re- coveries in equity courts, the Supreme Court has held that a man may be decreed to pay to the plaintiff, say $50,000, where it appears from the expert testimony in the case that he saved $50,000 by use of the device, although in his business he has not actually made a cent. In other words, to make myself plainer, if he had not used the device he would not have lost as much as he did lose into $50,000; under which circum- stances the court holds that he is bound to pay that amount although he has rot got fifty cents in the world. One becomes a trustee for the conversion of property only where he has had that property in his pos- session, or for damages from the use of a patented device where he has had that money in his pocket, and there is no justice to require him to pay that which he has saved when the use of the patent resulted in no profit to him. The remedy is contained in lines 14 to 24 of the bill, as follows : In taking an acoouut of profits in any case, the defendant shall not be charged with any saving he may have made, unless it has enabled him to realize an actual profit in that part of his business connected with the use of the invention. And the court shall determine what proportion of such profit is due to said invention, and what proportion to the other elements from which such profit was derived, capital and personal services excepted ; and the proportion of actual profit so found to be derived from the use of the invention shall be the measure of the profits to be recovered'. I will say, in passing, that it is my opinion that " capital and personal services" should not be excepted, but I do not wish to call your atten- tion specially to that point. I would like to review this explanation of the section again, but time 4oes not allow. The closing sentence in the section reserves and maintains inviolate S. Mis. 50 16 242 MR. J. H. KAYMOND. the writ of injunction, as it now exists, so as to protect that right which is the utmost conferred under the Constitution, viz, the exclusive fight. The first, principal, and practical remedy — that by injunction — is still retained to the patentee, without any alteration. It has been objected on former occasions that this section in question very largely reduces the amount of damages to be received in any suit at law or in equity by a patentee, and for that reason amounts to a pre- mium upon torts. No comparison can be made between a tort which is committed in an infringement of a patent and the other torts known to the law, such other torts being, in almost every case, a wrongful con- version of property, without any palliation.' The value of patents, ex- cept those referred to under the illustration of a pin-machine, depends upon their being generally used and infringed ; so that, while the in- fringement is technically a tort, it is only technically so. If, in answer to this, some one should say it is necessary for his interest that the pub- lic should pay the owner of the patent first and use afterward, the answer is plain. I refer again to the illustrations used as to the com- pound for killing cotton-worms. It was for the interest of the patentee that it should travel from mouth to mouth, from plantation to planta- tion, and that in the mean time every farmer should be using it, and that he should take a reasonable time to collect the damages. There is not the least semblance between this kind of a tort and any other known to the law. Infringements, also, are necessary on the part of common carriers. Take, for instance, the operations of the laws under which they are suffering. Being obliged, far the protection of persons and property, to use the very best devices known, whether patented or not, if the railroad company sets a man's house or barn or hay-stack on fire through a smokestack which has not the latest improvement in smoke- stacks patented — if this patented improvement is not used the railroad company is mulcted in damages for accidental burning; and if it is used, the company is mulcted in heavier damages for infringement. Then, again, refer to the laws of trade, which are just as inexorable and abso- lute. It is an absolute necessity in almost all the branches of trade that patents should be infringed by merchants, farmers, tailors, carpen- ters, masons, &c. The idea that the infringer is, in any degree or man- ner, guilty of a tort in any other sense than a mere technicality, is ab- surd. If the present rule of damages is wrong, is iniquitous, and a burden upon the people, and Congress can change that rule and make it a reasonable one, it is for the iiiterests of the patentee that it should be done. I met, a year since, a gentleman engaged largely in the manufacture of machines in the West,and he gave me these figures as indicating how men in the West engage in the manufacture of reapers, mowers, &c., who own patents and have to account to men who own patents that an- tedate theirs. He gave me one instance of where the whole cost of a machine, estimating the money invested in the manufacture, the amount of the wages of the men employed, the cost of timber and time for the sale of the machine, was $40, and yet he had to sell it at $150, in order to make himself whole, and to enable him to receive twenty per cent, from the business to cover profits and depreciation. The great differ- ence between what the machine ought to sell for and what he is com- pelled to ask for it in the market, is paid to these speculators who own the patents which his patents and productions infringe. The Chairman. Do you know what machine that was, Mr. Ray- mond? SEC. 2: DAMAGES AND PROFITS. 243 Mr. Eaymond. It was either a reaper or mower, or harvester, some- thing of that sort. The Chairman. Where was it made 1 Mr. Eaymond. In Illinois. It was an Illinois man who told me, but I cannot tell his name. It would not, perhaps, be proper for me to do so. I am quoting from an argument that I made before the Senate Committee on Patents last year, during the last Congress. Another machine so costing $80, he tells me, is for like reasons sold for $280. Another one again, costing $250, he is obliged to sell for $650. It is the farmers who are paying these prices. Eeferring, again, to the rule I spoke of a few moments ago, that the basis of recovery in litigation determines the basis of settlement under these patents with these speculators ; you, gentlemen of the committee, are simply asked to modify this rule which requires the people to pay these enormous royalties. Before the Patent Committee of the House of Eepresenta- tives of last Congress, an application was made for the extension of a sewing-machine patent. The chairman of the committee, in a unani- mous and lengthy report to the House, stated this fact as proven by testimoiiy taken before his committee, viz, that the cost to the public of extending this patent for seven years would, under these rules, and under the practice, be more than owe hundred and fifty-nine million dol- lars. It has been a fact, until recently, that you could send to Eng- land and buy a sewing-machine and transport it to this country cheaper than you could buy one here. Another illustration from the railroads shows the absurdity of this rule of profits and savings under a patent. A man will commence to figure, for instance, how much fuel his device will save — it being some- thing pertaining to the furnace-box — and he will demonstrate, upon the theory of his figures, so that the ablest mechanical experts on the rail- road cannot show a flaw — cannot tell where there is a mistake — that 33 per cent, can be saved by its use. Well, experimentation shows that it saves something, but exactly how much cannot be estimated, on ac- count of the difficulty of the problem. Pretty soon another man will come on with a device pertaining to the cylinder — a balance and relief valve — and show that it will utterly prevent any equilibrium of the pis- ton in the cylinder, by which another 33 per cent, in the fuel is saved, the power formerly used to destroy the small degree of equilibrium which existed being now applied to the ultimate purpose of locomotion ; and then another man will come in with a device for the exhaust-cham- ber, a petticoat-pipe, or a set of blinds, and he will demonstrate a sav- ing of another 33 per cent. Put them all on to the locomotive and it is the old story of the Irishman "eating his cake and saving it too." While that is ridiculous, still it is a fact that, if we go into the courts to defend infringements of these patents, we will, under the pending rules, be charged with every pound of coal we have ever used. I beg to again refer to the cotton-worm compound. Under this rule the inventor of that compound may start from the Ohio Eiver and go South, and by employing able counsel can recover from the planters from one-fifth to one-third of all the crops of cotton cultivated there for the years during which his device has been in use, every particle of cot- ton that has ever been saved by the use of that compound. If they had saved one-third of the cotton crop which otherwise would have been destroyed bv the worm, the whole of that third belongs to the pat- entee and not to the farmer. I need not multiply these illustrations. I desire to call the attention of the committee to a general principle concerning this rule of profits and savings. It is a mistaken idea which 244 MR. J. H. RAYMOND. bas been controlling in the courts for the last ten years, and as well among the people, that a patentee is to be compensated for bis invention. It is entirely wrong. The theory is simply to give him a reasonable re- ward, not a compensation. Every part of a locomotive bas at one time or another been subject to a patent, and it is fair to consider the whole thing as a simple patent. There are no figures that can convey the benefits which have accrued from its use. Take as well the utilization of electricity for conveying intelligence between distant points ; there is not money enough in the country to compensate the inventors for the benefits which have been conferred upon the public thereby. The public cannot afford to com- pensate, they can only reward. The grant is a gratuitous grant ; it is for the purpose of promoting the progress of science and the useful arts, in order that the public may reap the benefits of it ; and all that is ever intended, or even practicable or possible to give to the invention, is a sure, a certain, a reasonable reward, which shall be an incentive to him, through getting a return for a class of labor which no other man gets a similar return for. The rewards given to patentees are not in any true proportion to the allowances made to others for similar labor, where property is created or protected, or a reward given by operation of law ; and in this respect it is fair to compare the reward of the pat- entee with the salaries of the legislative, executive, and judicial ofiQcers. The operation of this second section sends us to the courts and jury to ascertain the measure of the recovery. It is strictissioni juris, a right which the people have. The courts are constantly estimating the value of all kinds of property, acquired in all kinds of ways ; and why this should be any exception to the rules which obtain in other kinds of property in this respect, I do not know. It might result in a possible injury, in one case out of a thousand, to a patentee ; but that is unavoid- able in every general statute. While this is true, I have no doubt that the patentee would be perfectly satisfied, in ninety-nine cases out of a hundred, with what the courts would do for him ; and there is no doubt that the settlements would be more prompt than under the present rule, and the burden of tax and annoyance of chancery litigation thus be gotten rid of. If you make the measure of recovery reasonable and easy of application, the number of suits and the number of patent speculators will be decreased, the rights of patentees will be more easily ascertained, more patents will be used, and the inventor will get bis recompense easier, quicker, and oftener. The public are afraid of these patents. They won't use them now, if they can avoid them. The people of this country are under very great obligations to invent- ors. I do not underestimate their value. I agree with every other man who has construed the Constitution rightly, that what the inventor wants and should have is a certain and reasonable reward. By making this reward just and reasonable the public will be better satisfied ; the growing hostility to patents will be allayed ; the users of patented in-ventions will be more numerous, and will pay for such use far more willingly; and the temptation to buy patents for the purposes of speculation be in a great measure done away with. What, then, shall be the measure of value of a patented invention ? There is probably none that would be entirely free from objection ; but we believe that a fair and reasonable license-fee will come nearer to accomplishing the desired end than any other, especially if you leave, in addition, the rule of profits and savings in cases where it is not for the interest of the patentee that the people should generally use his de- vices. SEC. 2 : DAMAGES AND PROFITS. 245 As the closing part of my argament, I desire to anticipate some very important objections to the first and second sections, which will be made during the argament, as to the constitutional powers of Congress in the premises, and the argument that the bill as it now stands will result in the taking away of any right of property, and therefore would be in contravention of some constitutional provision; and that, therefore, provisions should be attached to these sections of the bill making them only applicable to the extent of the constitutional provisions. The pur- pose for which these amendments are proposed is to protect certain speculative private interests, and with the object that the public agita- tion of the present may be allayed, and that these amendments to the law, to be enacted by this Congress, may be repealed during the time that these sections are inoperative by virtue of amendments to the bill to be proposed. Arid, first, as the power of Congress to grant to the patentee less than an exclusive right, the Constitution providing that '^Congress shall have power to promote the progress of science and of the useful arts, by giv- ing to inventors for a limited period the exclusive right to their respective inventions." I quote the following from Cooley's Constitutional Limitations, page 187, as bearing on this question : Every positive direction contains an implication against everything contrary to it, or which would frustrate or disappoint the purpose of that provision. I am utterly mistaken if it does frustrate the very and sole object for ■which the constitutional provision was enacted, to give to inventors an exclusive monopoly for any considerable period. I quote again from the same volume, page 129 : Taxes should only be levied for those purposes which properly constitute a public burden. But what is for the public good and what are public purposes, and what does properly con- stitute a public burden, are questions which the legislature must decide upon its own judg- ment, and in respect to which it is vested with a large discretion, which cannot be controlled by the courts, except, perhaps, where its action is clearly evasive, and where, under pretense of a lawful authority, it has assumed to exercise one that is unlawful. Where the power which is exercised is legislative in its character, the courts can enforce only those limitations which the Constitution imposes, and not those implied restrictions which, resting in theory only, the people have been satisfied to leave to the judgment, patriotism, and sense of jus- tice of their representatives. The last authority seems a sufacient answer to the theory which con- tends that Congress cannot grant to the patentee a right of property that shall not be an exclusive right. Just about as hopeless is the argument that the Constitution, con- taining a limitation as well as a conferment of power, and providing its single and sole purpose, also provides the single and sole means, namely, " ah exclusive right," by whicli the purpose can be carried out. To sug- gest that the less includes the greater ; that the discretion is one that is proper to confer upon the legislature ; that such an iron-clad provis- ion would be almost useless under the Constitution, and not in accord- ance with the established construction of other provisions of the Con- stitution : that the afarmation of that power implies the discretion for which I am contending, and that it was manifestly intended that that discretion should be left in the hands of Congress, simply foreshadows the argument, which is conclusive upon the subject. The Constitution provides that an exclusive right may now be granted, and the natural, the first, and, if forcibly administered, a sufil- cient means therefor is the operation of the writ of injunction. No other statutory provision is necessary to embody the provisions of the Consti- tution. Congress, however, lias wisely granted additiona remedies to 246 ME. J. H. RAYMOND. enforce this right, and to compensate authors and inventors for the infringement of this right. The provisions of this bill relating to litigation — those to which I am directing my attention — do not change the right of property in the pat- ent itself, except remotely and indirectly, but are directed solely to the manner and extent and mode of recovery. A modification by Congress of these additional remedies, having a retrospective application, can only be objected to as being ex post facto ; as impairing the obligations of contracts ; as infringing vested rights, or as being in contravention of some limitation of the Constitution. For it has been repeatedly held that retrospective laws, when not of a criminal nature, do not come in conflict with the national Constitution unless obnoxious to its provisions on other grounds than their retro- spective character. (Cooley's Const. Lim,, 264.) Though the infringement of a patent is technically a tort, plainly the regulation of the damages therefor by any enactment cannot be classed as ex post facto, there being nothing of a criminal nature involved. Proceedings to recover such damages are not ex contractu, but are ex delicto. Certainly there is no shadow of a contract between the owner of a patent and a tort feasor, and I am relieved from sustaining a denial of any contract between the government and the owner of a chose in action to recover these additional remedies, for there is no inhibition upon Congress, though there is upon the States, not to impair the obli- gation of contracts. I will, however, add in this connection : A patent is not based upon a contract between the patentee and the Crown, in which the patentee, by communicating the secrets of the invention to the public, gives a valuable consideration for the grant, but is simply an exercise of the royal prerogative. (Feather vs. Queen [1865], 8 B. andS.,a85.) If I had time I would answer that there is no contract between the government and the patentee, from the fact that there is no sufficient consideration for which the public should enter into such a contract. The contract cannot be sustained for want of an adequate compensa- tion. 1 have heretofore demonstrated that the United States patent system is based upon a gratuitous grant (and in no sense a contract) made for the purpose of public progress. There are few laws which concern the general policy of the State, or the government of its citizens, which may not affect contracts made both before and after their enactment. " For what are laws of evidence, or those which concern remedies, frauds, * * * or acts of limitation, * * * butlawswhichaffectthevalidity,construction,orduration,ordis- charge of contracts?" (Vide Ogden?;s. Saunders, 12 Wheat,259.) "What- ever merely belongs to the remedy may be altered at will, provided the alteration does not impair the obligation of the contract, and it does not impair it provided it leaves the parties a substantial remedy." (Vide Bronson vs. Kinzie, 1 How., 316 ; and 3 Grant's cases, 243.) " Without impairing the obligation of the contract, the remedy may certainly be modified as the wisdom of the nation may direct." (4 Wheat, 122, per Marshall, Ch. J.) Whether or not an infringement of a patent extend- ing over ten years is considered a continuous infringement or a succes- sion of daily infringements, certainly none will contend that there is any contract between any of the parties to the patent, or to the infringe- ment thereof, that a certain amount should be recovered for such infringement, or that the damages thereof should be computed upon any particular basis of duration. The only remaining objections are that the proposed provisions, if SEC. 2 IS UNCONSTITUTIONAL. 247 made retroactive, would infringe vested rights, and be in contravention of tlie fifth amendment to the (Jonstitution, prohibiting the appropria- lion of private property without " due process of law." Probably a sufficient answer to that objection is the fact that, while ■ " due process of law " is generally not satisfied by mere legislative en- actment, but must include judicial action, still in a number of cases it is satisfied by mere legislative enactments, and in such cases as this. I am not able to give a full and satisfactory review from the decisions as to the meaning of this term, "due process of law." The Supreme Court has, however, held that it does not necessarily imply judicial pro- ceedings. Nor have I been able to review the cases to demonstrate that the present case is one in which judicial proceedings would not be re- quired, and in which legislative action is final. Mr. Pollard. The Supreme Court has given, within a few days, a full definition of the term " due process of law." ' Mr. Eaymond. I have not had access to the opinion. The answer to the objection which I am now considering is twofold. In the first place, I think that the provision of the Constitution is avoided entirely by the character of the provisions which are now pending be- fore the committee. But, secondly, the question is, what vested right of property has the owner of a patent in the damages to be recovered for an infringement thereof? It is a general and familiar rule that "there is no vested right in a particular remedy." Any rule or regulation in regard to the remedy, which does not, under the pretense of modifying or regulating it, take away or impair the right itself, cannot be regarded as beyond the proper province of legislation. The utmost of the rights under con- sideration — the utmost of the rights which Congress, pursuant to the Constitution, can confer upon authors and inventors — is " the exclusive right to their respective writings and discoveries." The "particular remedy" and the "right itself," as above, in the patent law, is the "ex- clusive right" of the Constitution, and the remedy is by injunction. Congress has added other remedies, but they are so founded and of such a character that no right can so vest therein as to take them out from Congressional control. A right of action itself (here we are con- sidering only the method and extent of the remedy attaching to the action) is undoubtedly property, which may in some cases become vested. But it is competent for the legislature to take away the right of action itself, unless it springs from contract or from the principles of the common law. (7 Johns., 477; 12 N. Y., 211, etal.) "It has been held that the legislature may even take away a common-law remedy altogether, without substituting any in its place, if another and efhcieufc remedy remains," (Cooley's Const. Lim., 288.) The case of McClurg vs. Kingsland, 1 Howard, 570, seems to me de- terminative of the questions now at issue. In this case the question was as to the validity of a patent granted under the patent acts of 1793 and 1800, those acts having been repealed, subsequent to the commence- ment of the suit, by the act of 1836; and the Supreme Court therein said, speaking of the right of property in the patent itself, i. e., its validity, " This repeal, therefore, can have no effect to impair the right of prop- erty then existing in a patentee or his assignee, according to the well- established principles of this court in 8 Wheaton, 493. The patent must therefore stand, as if the acts of 1793 and 1800 remained in force ; in other respects, the lith and 15th sections of the act of 1836 prescribe the rules which must govern on the trial of actions for the violation of patented rights, whether granted before or after its passage:' 248 ME. J. H. RAYMOND. I continue quoting from the same case : The power of Congress to legislate upon the subject of patents is plenary ; and as there is no restraint upou its exercise, there can be no limitation to the right to modify at pleas- ure the laws respecting patents, so that they do not take away the right of property in ex- isting patents. It IS no objection to the validity of the laws respecting patents that such laws are retro- spective in their operation. (MeClurg vs. Kingsland, 1 Howard, 206; Sup. Ct., 1843 ) Eeferring now to the particular sections (1 and 2) under considera- tion : The limitation of section 1 does not take away any right either of ac- tion or recovery. It simply directs the court, in decreeing the remedy, to ascertain the same, with reference to the general principles of stale claims and laches in a definite manner herein provided. If the infringe- ment sued for had continued but for four years, the statute would not apply at all. If it had continued for five years, the extent of the remedy- would be modified accordingly, but not denied. So of the second sec- tion : in certain cases it simply provides that the courts shall not be governed, as now, solely by certain rules in ascertaining the remedy, but for the purpose of equity and justice shall broaden their vision beyond the horizon of profits and saving. It has been the habit and the animus of the bench, and of the mem- bers of the bar representing patents, to erroneously consider the rights of which we are speaking as more sacred than vested rights in real estate and other kinds of property, which, after being vested, are con- stantly being affected in their values and titles by legislative acts in prwsenti. It is because this incorporeal right, inhering merely in the effusions of genius and in letters-patent which give expression thereto, depends, on account of public necessary practices of infringement which are beyond legislative control, not for its existence, but for its specula- tive value upon these rules of recovery, that my brothers of the bar are so tenacious and jealous of such enactments by Congress. I had intended, Mr. Chairman, to refer the committee to some con- siderations as to the public policy of making these acts in prwsenti. I will indulge myself in one of them, though I feel that I have already occupied too much time. However much the gentlemen of the committee may differ from the views that I have expressed, they will allow me to say I think that is our right, and the right of all those I represent to present these views in the forum which the Constitution has given us, namely, the courts of the country. We do desire that, so far as possible, the provisions of this bill shall be provisions in prcesenti, and apply to existing causes of action, to existing patents, and to any evils which now exist where no risk is run of losing their benefits entirely by having them held uncon- stitutional as illegally retroactive. Where there is any such danger we have obviated it by making the sections apply only to subsequent rights. [A general conversational consideration of facts followed, in which the members of the committee and others present took part.] J. H. EATMOND. NOTE. In the printing of this argument, I take the liberty of adding to the general notice of the many untruths and misstatements of A. H. Walk- er's arguments, which appear immediately after the same in this record. AKGUMENT OF ME. CHRISTY. 249 This which I mean to be an unqualified denial of the truth and fairness of almost every allusion made by him to either Mr. Payson, the Western Hailroad Association, or myself, and especially the statements made in his brief dated March 4, 1878, as to Mr. Payson's opinion of the con- stitutionality of the second section, as evinced by the telegrams ap- pended. And I call the attention of the committee to the mauifest unfairness and bad faith in the manner in which the statements of this, his last effusion, is made up. J. H. EATMOND. Washington, March 5, 1878. To George Payson, Esq., Chicago : Walker is reprinting the falsehoods with which he regaled his argu- ment, and alleging, that because undenied, they are admitted. Telegraph me immediately a denial for print of his statement that you told Mr. Kales second section was unconstitutional, because made ap- plicable to existing causes of action. J. H. RAYMOND. Chicago, III., March 5, 1878. Mr. J. H. Eaymokd, Washington, D. G. ; I never told Kales any such thing. It is absolutely false. GEORGE PAYSON. Chicago, III., March 5, 1873. To J. H. Raymond, Washington, D. G. : Kales says must be a misunderstanding, that he never had any con- versation with me on the subject. GEORGE PAYSON. ARGUMENT OP MR. G. H. CHRISTY. Mr. Cheisty. I will take up the question under discussion right where my brother Raymond left it off — on this question of profits and losses. The suggestions made by one of the committee are exactly in point. I fail to see the injustice as regards purchasers and users as to gains and profits on business carried on ex delicto ; and I take a case in point, in which I brought a suit for infringement of a patent on a horse- rake. It involved litigation running through some years, and I got a final decree, sustaining the validity of the patent, awarding an injunc- tion, and ordering an account. I put the defendant on the stand, in order to get the number and the amount of his sales, to ascertain his gains and profits ; and, to my utter dismay, he produced his books, showing the sale of two thousand machines and an actual loss of some $2,000 in the business. The sole value of the rake depended on his using the patented device. It was the only thing that gave it market value. There, I could not recover profits uuder the law of 1836 and 1839. Now, then, that man was a man of wealth; he carried on other branches of business, and he was able to respond in damages or profits. He had carried on his business in such a negligent manner, he built 250 ME. G. H. CHRISTY. these rakes so poorly in respect to mechanical workmanship, using green wood for wheels, that they were all returned to him, and, as a matter of fact, he did not make anything. I had to settle the suit the best way I could, and my client got little or nothing. In that case the rule of license- fee could apply; but now I submit a case in which the rule of license-fee would not apply. I presume the com- mittee have noticed the quality of sheet-iron used for locomotive jack- ets — a dark-blue sheet-metal. That metal is made by a client of mine, who is the only manufacturer of it in the United States. He and his father, and grandfather before them, have been in that business now for over half a century. They have built up the business and made it pay by putting into it their own capital — the best years of their lives ; and a fourth descendant is coming onto the stand. They have put into it the best work of their brains, and have got an article of sheet iron which is superior to any sheet-iron in the world, and vastly better than the best Eussian sheet-iron. Now, he has a manufactory established which is able to supply the entire demand. Suppose this bill passes, and under it it shall be held that a reasonable license-fee shall be the measure of recovery. His neighbor says, as I am only responsible for that reason- able license-fee, which will run about so much a pound, I will put my money into that business ; 1 will go into that trade and undersell the business, and I will crush him, and account to him for a cent or two or three cents a pound on what 1 make, insteadof 20 per cent, profit which my friend spoke of as being a fair manufacturing profit on reaping-ma- chine manufacture. Now, there is a case of gross, rank injustice, which this law would authorize by virtue of abolishing the rules of damages ex delicto, and allowing them a license-fee to measure the injury done after a long operation in taking testimony. My brother Eaymond has made, I think, some very rash statements, and I only wish I had time to follow them all. He has done it not through any intention, but through failure or forgetfulness to weigh words. The committee will remember that on one point he claimed that the action for infringement was only in the most remote degree an action technically ex delicto, and also that the issue of a patent by the govern- ment and the public is not one ex contractu, but merely a gratuitous grant; and thus he argues that the injury done is one in the nature of an act ex delicto. I call attention to the inconsistency of the entire argu- ment, where inone case he claims it is an action ex delicto, and that in another case it is ex contractu. I wish to state one word on the cotton-worm question. That worm was hatched up before the Senate, I am surprised that as much weight has been attached to it as has. The argument that a man who has in- vented a compound of Paris green and flour is therefore entitled to all the benefits of the cotton crop which results from the killing of the cot- ton-worm, is the most absurd theory I ever heard in connection with a patent law. Suppose I should patent a remedy which was a sure cure for cholera infantum; on the same plan I could say every child has got to account to me for the value of its life daring the ordinary term of human existence. I would not like any softer thing than that. The measure of the damages resulting from the killing of the cotton-worm must be simply the gain or profit on the sale of the mixture, or a reason- able license-fee. The effects derived from it do not come from the Paris green and the flour ; they come from the wind and the weather and the sun. You kill the worm : there is the end of the invention. Whether or not you get a good crop depends on the wind and weather, for they "innocent purchasers. 251 are alone the sole cause, and to charge the results to the remedial agency of the compound is absurd. When a case was called for and our friend responded with the Tanner- brake case, it is sufficient to say that that was a mechanical and not a chemical device. A question of mechanics involves the using of ma- chinery, and every time that machinery runs it is an infringement. You use your medical remedy once, and that is the end of it. The profit or gain in reference to chemical mixtures — Paris green and flour — ends when you have made the mixture and sold it. In reply to the question raised by one of the committee, in reference to a purchaser in a drug- store, I will say that if the compound is made by the patentee and put ou sale, the right of the patentee has gone when the sale is established; the sale carries with it a license to use. But I apprehend the question arises in a case of this kind : where the cotton-grower goes to the drug- store and buys his Paris green, and then goes to his flour-barrel and mixes it and puts it on the crop. The only liability of the party then is for the gains and profits he has made by the mixing, or a reasonable license on the mixture. Now, iu answer to the query, I say I do not think that question has ever been passed upon in any court, and the Tanner-brake case is not a similar one. Mr. Aiken. You know that there is a great monopoly in cotton-ties — the iron bands used by the manufacturers of cotton in baling their goods, and also in baling the raw cotton. Now, you also know that there are a great many methods of tying this band, all of which are claimed to be infringements of what is known as the "English arrow " tie. Suppose, as a private individual and planter, I am using one of the other devices, am I responsible for damages to the cotton-tie company ? Mr. Gheisty. I suppose you are. Mr. Aiken. Even though 1 buy that tie from the manufacturer him- self!, who publishes to the world that he manufactures it 1 Mr. Christy. If you purchase from any person who is authorized to make it by the owners of the patents Mr. Aiken. Suppose I know a man in Pittsburgh, or in some other city, who makes a tie, and I go to Pittsburgh and buy this tie in the stores or on the market, the representative of the English Arrow Cot- ton-tie Company follows me to my farm and sees me using it, am I lia- ble to him tor an infringement? Eemember, I have bought from this manufacturer in Pittsburgh, who has advertised that he is manufacturing these ties. Mr. Christy. As the law stands you are, and that is what the Baker bill is intended to correct. That is one of the principal objections some- times alleged to the patent law as it now exists. You are put, by vir- tue of this, on your guard, in reference to where and of whom you shall buy your ties ; and yon are required, as all men are required, to look to the article you purchase, just as you are in other matters. You go to a horse-broker to buy a horse, and you are expected to use caution to find out whether the man has a right to sell it. Supposing a stranger comes along and says, " I have got a good horse here, worth $150, which I will sell for $75," the presumption or suspicion will at least arise in that case that the man did not come honestly by that horse. Mr. Aiken. Suppose he asks $150; he wants to get the money that the horse is worth ; there is no means of determining, in the first case, except by the oftier below market price. Mr. Christy. I can only say the vendee must look out for his title, and as to the right of the party from whom he purchases, the same as 252 MR. G. H. CHEISTY. in real estate. You have got to make sure in real estate that the ven- dor has a good title to transfer to you, and the same rule prevails in patents. You are put on your guard in that respect. Mr. TowNSHEND. It would be impossible for a man to discover whether the vendor of a title was entitled to sell it. How can he ever ascertain, by any record anywhere, that the person has a license ? Mr. Christy. It is one of the necessary evils of the system. Mr. TowNSHEND. It is one, however, that cannot be possibly avoided by an innocent purchaser. Mr. Christy. I do not know that. I may say in reference, for in- stance, to reaping machines, that the way for the farmer to protect him- self is by purchasing from responsible parties. He is technically liable for infringement for the use of that machine, and every time he uses it he commits a new act of infringement; but the cautions farmer will look well to the party from whom he purchases. If be purchases a Mc- Cormick, or a Marsh, or a Wood mowing-machine, he knows that, on ordinary business principles, the maker will protect him. I know a party in Ohio who brought two hundred suits against the users of a harpoon hay-fork, used to hoist off a load of hay and dump it into a hay-mow. He did it to compel the manufacturer to go there and defend the suits, which the manufacturer did. The farmer was not hurt a dol- lar. It was simply a little sharp practice, in order to get the infringing manufacturer away from the forum where he lived, and where he wanted the cases to be tried, and compelling him to go where the patentee lived ; and the suits were brought simply to put the manufacturer in such a position that he had to defend his interest. The same applies in refer- ence to this cotton-tie question ; and I may say here that in three suits I am retained against the American Cotton-tie Company. It is for the interest of the parties in Pittsburgh from whom you purchased — and I presume they are my clieuts, though I don't know whether you were referring to any particular case or not — it is for their interest to protect you, because if they don't you tell your next neighbor, " I can't buy that tie, because I was sued ;" but if the party from wiiom you purchased comes forward and defends that suit, and the fact is known that you will be protected, why you have no hesitancy in purchasing, and the suits don't hurt you. And this is almost always the result, and is in- tended to be the result, when individual users are sued. The suits against single users alone wouldn't pay the patentee. Now, a word on this reaper question. The figures that Mr. Raymond gave were that the machine costs $40 ; that after allowing a manufac- turer's profit, amounting to twenty per cent., he sold it for $150. Take off one-fifth from these as the manufacturer's profit, and that is only the beginning. Brother Raymond forgot to tell us, or the reaper men forgot to tell Mm, that there is an additional profit that has to go to the re- tailer of that machine, who sells it to the fanner — the middleman. You take off, then, twenty-five or thirty-three per cent, more from that. Now, take off the losses from bad debts. Mr. Raymond. The prices he gave me were the prices of the manu- facturers to the middlemen. The figures I get are from representatives of the company, from the machine company, and they are large manu- facturers in Northern Illinois, at whose request Mr. Lathrop introduced his bill to make the limitation short, and to repeal this profit and sav- ings principle entirely. Mr. Christy. The Marsh Harvester Company you refer to. I know them perfectly well ; they are clieuts of mine, and I know those figures are not true. I fought against the extension of those patents, and tried ROYALTIES ON REAPERS. 253 to show how large license-fees they had received, and it was only a small traction of what you name. I have since been counsel for the patents, and I know from personal knowledge that he did not state the facts cor- rectly, or else you did not understand him correctly. One great allow- ance of the profit is a large sum which has to be paid out in insurance, transportation, and bad debts ; and there is one villianous part of this business: they take notes— McOormick has got a safe full of them— with mortgages to secure the debt ; and the costs of collecting, and various other things of that kind, and the carrying all your sales for three years in these long notes, bearing very little interest, and then taking out your $40 cost (they cost more, I am sure), and you have not a very large margin left for royalties for machines. 1 simply want to present this to show that this royalty is nothing like what JVIr. Eaymond would en- deavor to make it appear. Another rash statement is, that the value of a patented device results from the infringement of it. That is very much like the old theory of doing wrong that good may come of it. The reverse is true : the value of a device depends upon the honest use of it, the lawful use of it, and there is no patentee from one end of the land to the other, unless he is a speculator, who wants his patent to go into use by infringement; but he wants that the parties who desire to make use of it shall come to him and pay a lawful price. A number of other statements were made, that I have not time to re- fer to. I wanted, also, to refer to other sections which I consider either good, bad, or indifferent; but- 1 only propose to refer to those which I consider positively bad ; and my opinions upon the others are divided between the good and indifferent. The provision for taxing patents is one which meets my highest ap- probation, and I sincerely hope it will be reported, as the result will be undoubtedly to remedy a large portion of the evils which brother Eay- mond has set forth, such as speculations in patents, &c. Again, after a patent has got established and become successful, it is a common thing to hunt up similar prior issues, purchase the patents, and, under the facilities afforded by law, on reissues obtain a reissued patent, covering what somebody else has invented, and then sue the real inventor. This will wipe out at least seventy -five per cent, of that class, and then we will have a great deal less trouble from that law. I turn to sections 8, 9, and 10, and will refer to them, premising, how- ever, under the law as it now stands, that we have but one remedy, and that is at suit for infringement at law or by bill in equity. This bill, as I understand, proposes now to provide for three remedies in the hands of the infringer ; and I think my brother Eaymond remarked in the Senate committee that this was a bill in the interests of infringers. In the first place the law makes provision in section 8 for testimony, that a party or a number of parties — for instance, the association of rail- roads which my brother Eaymond represents — may associate together, and by certain proceedings in court lay up testimony to be used at some future time. In the second place, by section 9, they may file a bill in the circuit court in order to repeal the patent, abolish it, wipe it out of existence. In the third place, if they do not wish to resort to either of these remedies, they may go into court in case of the patentee's threatening to bring suit, and require him to proceed in an action of infringement. . J^ow, it is a very rare thing to put three remedies in the hand of ori,e man, and that man presumably the wrong-doer. I submit, now, that sec- 254 MB. 6. H. CHRISTY. tions 9 and 10 give abundant remedy, and that section 8 gives a remedy that is very dangerous. Section 9 I approve of fully. In case it appears that a patent is un- justly granted, or that it is informal, the parties may proceed under that section in equity and wipe it out of existence. I have no particular objection to section 10, though I think it is need- less. That is one under which the patentee or owner of the patent may be required to proceed by suit. I think two remedies certainly are enough, or ought to be enough, for one wrong. But now these parties corae here represented by their attorney, and want an additional pro- vision for testimony'. I think the statement made yesterday was wise and sufficient, that the law at present gives sufficient remedy. I think, further, that it is a dangerous remedy to put into the hands of a wrong- doer, particularly if he is a wealthy party or corporation, and I use the word corporation not in any ill sense, for it is one of the most honest and legitimate ways of carrying ou business ; bat it is specially danger- ous to give the power to seventy or eighty wealthy corporations to pounce down on an inventor and snatch from him all his just rights, as was the case with Goodyear, and reduce him to absolute beggary ; and as was the case with Pullman when he was jacking up houses in Chi- cago; or as with Westinghaus, who was not able to pay me his first fee for his first caveat. Now, if it is good to put in the hands of an associated power representing such a consolidated amount of wealth, and with the unscrupulous character for which railroads are noted (f speak of it only as an entity, and not in regard to its officers) — I say it is a very dangerous thing to put such a grant of power into the hands of such an organization, in order that they may sit down on and squelch an inventor without any money to fight them. There is another way in which they may squelch him by virtue of sec- tion 8. Suppose the bill passes in its present form. A patent is issued which I should like to kill on sight. It don't make any difference why. I serve notice to take testimony, and begin by calling the patentee on the witness stand and asking him, " When did you make this inven- tion V I interrogate him by a vigorous examination — and any lawyer knows how to conduct one who has had any experience of that kind — in reference to the very foundation of the grant of his rights, when he is oft" his guard, when he has not his papers to protect himself as against me, and when 1 am trying to get the worst record against him I can. I put him on record as to the date of his invention. I do it when he has not an opportanity to put his best record in shape. Having established the record against him as to the date of his invention, I proceed now to antedate him. Mr, Ward. Does not the section provide that he shall receive due notice 1 Mr. Christt. No, I am not bound to give him notice of what ques- tion I am going to ask him on the liue of my investigation. 1 will take him off his guard and make him answer these questions. Now, then, if I have got seventy or eighty railroad companies at the back of me with their capital and their employes, it is a very singular circum- stance if I cannot cook up some testimony among them. 1 do not say that brother ]{aynioud would, but I do not know who his successor might be. Now, what do 1 do with this testimony ? I can bring in any teftimony I please, bearing no relation to the subject, and a master in chancery has no control over the admission or rejection of it. I will put- in hearsay testimony ; I will put in a story — that of garrnlous old wo- men; 1 will make extracts from an old newspaper; 1 will lumber all PERPETUATING TESTIMONY. 255 that iuto the record. ]!fow, if this came to a decision before a judge he would throw out all this refuse, and, knowing it, I would not then put it in. This bill does not provide for any adjudication. There is no means by which the defendant can force it iuto a trial. I can put in anything I like, and put it all iij. 1 make the worst case against him I can, with- out his having any opportunity to go before the court and expunge the irrelevant testimony. It is all put in, and put on record in the Patent Office, and there is a cloud at once put on the title. Now, what man here would like such an action taken in relation to his real estate? For instance, I buy a farm of sixty acres ; I have a rich neighbor, who pounces down on me and says : " I don't think I want you here. I will file a bill to perpetuate testimony, showing that John Smith, squatter, or Bill Jones, or Jack Thompson, or somebody else, came and squatted on the property under the homestead act, and that his title is superior to yours. I will put that testimony on the records, and it has got to stay there, and you can't have any adjudication." And it becomes a cloud on your title as long as you remain there, thus allowing gross in- justice to be done. It is putting a dangerous remedy in the hands of a most dangerous class — the wealthy part of our country, who want to use an invention without paying for it — in order that they may use it if they want to. I do not think they will ; but I say it is a dangerous experiment to grant a power which they may use against a class of men who cannot defend themselves. Mr. TowNSHEND. Would this affect the inventor, unless he was a party to the proceeding? Mr. Christy. The bill proposes to make him a party. Mr. TowNSHEND. Then the bill proposes to give notice to him of any proceeding, does it not ? Mr. Christy. He does not know what will be the direction of the ex- amination. Mr. TowNSHEND. The bill must set forth " the date, number, and subject of the patent, and the name of the patentee, the names and resi- dences of the several parties interested in said patent, so far as known to him, the names of witnesses proposed to be examined." Mr. PoLLAKD. There is no issue made up beforehand ; nothing as to the direction or scope of the examination ? Mr. Smith. The first clause provides that it shall set forth, &c. Mr, Christy. There may be no issue, and no suit ; and worse than that, it is followed by no adjudication. It is the maxim of the law that there should be an end of litigation. I am utterly opposed to any such provision as will allow any litigation to be carried on unless followed by adjudication. I think it is a dangerous thing. Mr. Wakd. How much more notice, on the contrary, would come from the patentee as plaintiff"? Mr. PoLLAKD. But there is an issue there. Mr. Wakd. Anything more than a formal issue ? Does it give any more light to the cause of action than a formal declaration does — and that does not give any. Mr. Christy. Well, it involves certain questions, but you do not know what the power to perpetuate testimony involves, nor does it render it necessary that the bill filed should state that. Mr. Smith. Your difficulty would be remedied by requiring a very particular description of the suit. Mr. Christy. It would be remedied iu part; but it would enable tes- timony to be introduced to aftect the title of a party who has a j)rma- 256 MR. G. H. CHRISTY. fade title, and would not be followed by any adjudication; in other words, you and I do not want any cloud thrown on tbe title of a patent we own. The Chairman. Is there not in every State in the Union a law for perpetuating testimony, and cannot the same objection be made with the same force and effect in all those cases that you make now, and has any such evil ever arisen from that law by which testimony is perpetu- ated, as you suggest? Mr. Briggs. Does the statute in any State for perpetuating testimony require the testimony to be recorded in any court where the titles are recorded 'I Mr. Stoeeow. It does in Massachusetts. Mr. WiLLiTS. There is nothing in my State that has the effect of lis pendens. I think there is soniething in the suggestion I made yesterday about what is the extent and effect proposed in this notice by filing in the Patent Office. Now, they say this cannot be used as testimony, except between the parties. Well, if that is the case, what is the use of filing it in the Patent OfQce ? It is to be a notice, and if that is the notice, is it to be a notice for the benefit of other than parties to the petition ? And if it is notice to all parties, won't it be something in the nature of an es- toppel ? Don't it affect parties outside of the petition and outside of the proceeding? In taking this testimony, of course I have not looked it through. It looks as if the very fact of filing it in the Patent Office is intended to reach beyond the parties that are really involved. Mr. Briggs. It does, by the terms of the bill, reach all subsequent pur- chasers. Mr. Christy. The exact purport and object is to crush the patentee, or to prevent his making any sales. For example, I take out a patent for tooth-picks ; my neighbor, or friend, or enemy wants to make use of my mode of making tooth-picks, and without paying me anything for it. He says, "I will infringe"; or, "I will buy a license." Or I will change the illustration : He is making tooth-picks in some other way. Now, he says, " This mode of yours is better than mine, and I want to crush you in the business." He files a bill to perpetuate testimony. He throws out his drag-net (lawyers have always heard of fishing suits)-^ he throws out his drag-net in order to drag in testimony to affect the validity of my patent. He puts that on record in the Patent Office, in order that any manufacturer of tooth-picks who might be disposed to buy a license from me might have access to it, and through him find out some serious question as to the validity of my patent ; and, if so, he may be dissuaded from buying a license from me. That is the object of it. It does not appear on the record what it is for; but that is the practical effect. Mr. TowNSHEND. Is the evil here any greater than the evil growing up under the law of the different States ? Mr. WiLLiTS. I think you will find this statute a great deal broader than anything of that kind. Mr. TowNSHEKD. I use the question of land-titles as a parallel case for illustration. There is no Federal law authorizing the perpetuation of testimony. Mr. Christy. Unless it be the present provision in the Eevised Statutes. My opinion of the point, now, is just this, that the present act covers all the remedy that' is needed. It is such that, when an ex- treme case arises, an exceptional case, one associated with a vast amount of fraud, it will enable the courts to take jurisdiction on pres- PERPETUATING TESTIMONY. 257 entation of proper facts, and provide for the perpetuation of testimony : and that is all the remedy they need. The Chairman. Is not the same objection tenable against the gen- eral statute for the perpetuation of testimony ? Mr. Christy. No, sir; for this reason: Under the general statute, as it is now, the whole responsibility must devolve upon the judge. He has to be on his guard, so to speak. Now, the manner in which that authority is to be exercised is a matter devolving upon him ; but you pass this law, and the judge then will say, " Why, I am relieved of a vast responsibility in relation to this by the legislative enactment, and as long as I follow the act it will be the fault of the legislative enact- ment If any wrong is done." The master in chancery in United States courts has no authority to pass on what is legal testimony. He is bound to take down everything that is offered. Who is going to say what is legal testimony ? Mr. TowNSHEND. Could not the court always decide that in review- ing the testimony ? Mr. WrLLiTS. But the evil is done. Mr. Christy. Suppose I file in New York a petition for taking testi- mony iu Chicago. 1 drag my fishnet through the shops of the railroad companies. I gather testimony, good, bad, and indifferent, and put it on the record. The master in chancery has taken down the testimony, and cannot pass upon the sufficiency of it. The law makes no provision for making issue, and how are you going to expunge what is immaterial ? I can put in anything I please. I am five hundred or a thousand miles away, and 1 will carry on the examination just as I please, and you can- not stop me. I have already stated that 1 think section 9 is a wise one. Section 10 I have no serious objection to. Mr. TowNSHEND. Why do you say this testimony will be necessarily taken by a court commissioner 1 Mr. Christy. I do not know any other way. Mr. TowNSHBND. I think it is to be taken by the circuit judge. Mr. Christy. If you can get a circuit judge to sit for that, you can do more than any one else can do. They will do just as Judge Blodgett did, and as he is doing to-day. I went out there and entered a motion that the time be extended in a case. Judge Blodgett said, " I refer you to Mr. Bishop, master ; he will decide it." There is the answer that you get before the judge. Mr. TowNSHEND. It does seem to me if the counsel on the other side brought out the fact that the evidence is not proper testimony before the case is presented, that, upon exception being filed to the report of the master, the court would strike out such testimony. Mr. WiLLBTS. The case might not be tried for ten years. Mr. TOWNSHEND. But if all the parties are there in isfeue, no matter whether the case is tried or not, the court will have the power to exclude the irrelevant and improper testimony. Mr. Briggs. The objection is not that it is improper testimony, or that there is no discretion given the master or examiner, but that it must be put upon the proper record in the Patent Office, and thus cast a cloud on the title. Mr. Christy. They do not intend to bring the suit to trial, but intend to crush the patentee. Mr. Tovi^NSHEND. And, supposing the testimony was taken before the commissioner, and he should make his report to the court, as has been suggested, would not the court order that the irrelevancy be stricken out before they would allow the case to be tried ? S. Mis. 50 17 258 MR. G. H. CHRISTY. Mr. Christy. There is uo trial. Mr. Raymond. There is a trial provided for, and this question has all come up, allowing the party appealing to take testimony. Mr. TowNSHEND. If we should provide a way by which the trial could be had, perpetuating this testimony — in other words, provide a way by which the court could sit upon a case, and expunge from the report of the master such testimony as he deemed proper — would not that avoid the difficulty ? Mr. Christy. It would avoid a portion of the difficulty. There are many kinds of improper testimony. One is hearsay testimony, which is inadmissible for any purpose. Another is secondary testimony, which may become admissible, in case you lay the ground by proof of the loss of the original testimony. So, in reference to a loss of assignment, you may prove the contents of the assignment when yon prove the original is lost. There is a great deal of testimony which may be competent under certain circumstances, though not generally. The courts are rather free in proceedings as to the order of taking testimony, and a party can generally put in secondary proof of the state of facts, without proving the facts, and render that secondary testimony admissible ; but the court would not strike it out, because, when the case comes up for trial, the parties may lay their ground for that testimony. They un- doubtedly would strike out any testimony inadmissible tor any purpose, but not testimony which was conditionally admissible, or possibly d- missible under any circumstances, for any purpose, because, when a case comes to be tried, there may be ground laid for the admission. But it does not remedy my objection, which is, that it is not followed by an adjudication. It does not remedy my objection, that it is throwing a ' cloud unjustly on what seems to be a sufficient title ; and also the addi- tional objection, that if even you could, after a long job of taking testi- mony of that kind, go into court with your motion to expunge, it com- pels the patentee to employ the very best talent he can get in the pat- ent profession, and, such counsel not being cheap, a poor inventor can- not pay them. Thus it would have been in the power of the railroad companies to have crushed Pullman effectually, and so with many others. Mr. Pollard. I understand you to say that the present act requires the deposition to be taken and the testimony perpetuated by a judge. Mr. Christy. I say the judge cannot do it. The judges have already more than they can do. Mr. Pollard. Ton said one reason why the depositions taken under the proposed law would be more in violation of the principles governing the introduction of testimony than under this law was because, under the statutes, the testimony had to be taken by a judge. I say it does not. Mr. Christy. That is Mr. Eldredge's suggestion. Mr. Eldredge. My suggestion relates to section 8: " He may file a bill or petition in the circuit court of any district in which the parties," &c. Mr. Christy. A man may file his bill in equity or in the circuit court, but that don't compel the judge to take the testimony. Mr. Pollard. This clearly means to be taken in the usual way. Mr. Christy. And it does not give the officer taking it any right to pass upon the sufficiency. Mr. Ward. Now, follow that one step further, and give the patentee the right to bring this matter immediately to issue. PERPETUATING TESTIMONY. 259 Mr. Christy. Then you have the 9th section, and this 8th section is superfluous. Mr. Pollard. No ; give the patentee the right to call upon the party interfering. Mr. Christy. That is the 10th section. Mr. Pollard. Whenever this railroad association, which you seem to fear, commences steps to trouble the patentee, by clouding his title with these bills to perpetuate testimony, why not give the patentee the right to call upon the party interfering with him to meet him at issue ? Now, that is analogous to the proceeding in some of the States where the party vrbo files a mechanic's lien may be called upon by an owner of property to proceed and have the question tried under the laws, so that the owner of the freehold shall not be troubled. Mr. Christy. That is still further complicating the litigation. Mr. Eaymond, He has that right now. He can file his bill in equity or under this very section, and the section is as much a benefit to the patentee himself as to the infringer — not only in that case, but in the other case. I have now, I think, at least a thousand cases — claims made against railroad companies — in my ofiice, where I have given the pat- entee a reference to a prior use or ipveution, and in some instances he is not satisfied with it. I am perfectly satisfied when the case comes to trial that I can defeat that patent, as it is utterly invalid, and I there- fore refuse to pay anything. In a great many instances the patentee himself wants to perpetuate the evidence on a particular reference. Mr. Christy. Supposing the railroad companies say : "Well, I guess we won't use that patent now; we will perpetuate the testimony and put a cloud on the title, and we will prevent him from selling to any- body, but we will not ourselves infringe the patent. He cannot throw us into court, because we don't infringe; but we effectually prevent him from selling to anybody else, and sooner or later he will have to come to terms." Mr. Raymond. Cannot he perpetuate testimonyto show that it is ma- licious, and will the court permit such proceeding unless the petitioners have an interest at stake ? Mr. Christy. Why, you can allege, as the interest you have, that you want to use the invention and don't know whether it is safe. I say my whole point is this — that it is dangerous; that it is unexampled in the history of our legislation — looking to the administration of rights and the prevention of wrongs — in our whole system of jurisprudence, to al- low a cloud to be put on a title by putting this weapon in the hands of powerful parties without being followed by any adjudication, and where under some circumstances no adjudication may be possible or probable. Mr. Ward. I say make it possible, then, to have the adjudication, if you can. Mr. Christy. Very well; then you remove a large part of my objec-' tion. Then, when you have got that, you have the present remedy, which enables the patentee to bring suit for recovery. Ton have then got the present law, or sections 9 and 10, in substance, and that is enough ; and so there is no need for section 8, Mr. Storrow. I desire to call your attention to the amendment in- troduced by you and proposed by M'r Hatch, which is found on page 80 of the Senate proceedings, and which reads as follows : " That no depo- sitions taken under this section shall be used except as against persons who were parties to such proceedings and were served persunally with notice, or those claiming under them," &C. There is also the following amendment proposed. (See Senate appendix, page 190.) It will be seen 260 ME. G. H, CHRISTY. • by these amendments that the respondent may take testimony to rebut the facts in the same proceeding, and put them together, and they all go in the same lot ; wherever one part is used the other can be. Mr. Eaymokd. So that the petitioner may be made to pay the cost. Mr. Pollard. In my State the petitioner has to go into a court of record and make aflidavit that the testimony which he is about to take is or will be needed, in all human probability, or that he expects to prove some facts concerning property in which he is interested. If you make these railroad companies come into court, and, before they get this com- mission to take testimony, swear that they are using the patent now, and that they believe it is necessary to protect themselves that this de- cree for testimony should be made, would it not cure the defect? Mr. Christy. That simply develops another point of danger. My whole point is, that it is dangerous. It is giving them that which they are not entitled to, and which is not their right; and that to strip it of its objectionable features will leave you nothing more than the law as it now stands, and the other two sections. Of course, if you strip it of all its objectionable features, by putting it in the power of the court to pass upon the sufilciency of the testimony and ex])unge any portion of it which may be deemed improper, and then follow it up with the sug- gestion that an adjudication may be at once had on it, then you have so far turned it into something else that it is something else. Mr. ErAYMOND. Except you do not allow the parties to join. Mr. Christy. I think it is provided for In the present law that par- ties having conjunction of interest can unite in the same suit The court, to prevent a muUiplicity of suits, will allow suits to be joined, and if your whole eighty railroadis are each of them using the patented device they are interested jointly, and then they may join as interested parties in the proceeding, and iu case the court is of opinion that such a dangerous state of facts arises as justifies it. Mr. Storrow. At least the court will have all the cases tried to- gether, or will bear one and let the others abide the result. Mr. Eaymond. We have no Federal statutes saying that thing is to be done. The reason is that the English chancery proceedings, which govern in Federal equity courts, do not permit any such proceeding. Mr. Christy. We have the English chancery practice in full force as It existed prior to the adoption of our Constitution. Mr. Eaymond. That practice does not permit of such proceeding. Mr. Christy. My impression is, that in chancery practice yon can unite all parties that have a common interest, and save a multiplicity of suits. Leaving out the question of any law, the judge would per- mit, and the defendant would not object, because to object would result in eighty suits being brought against him instead of one. Mr. Pollard. We could make a provision to remedy the difficulty on that subject. Mr. Townshend. As I understand you, the old statute can be made available. Mr. Christy. But the court will be very slow about using it, and will only allow it in an extreme case, and only then. I never heard of its being used, in my practice. Mr. Townshend. It was stated that the present law was not appli- cable. Mr. Storrow. It is legally applicable, but, owing to the peculiarity of the subject-matter and the relations of parties who may be interested, it is not adequate. Mr. Christy. Then the section that is now pending (section 8) is SEC. 5: REISSUES. 261 clearly objectionable, because it deflaes just what the court may do, and the court will say " We are relieved from any discretion in the mat- ter by the direct provisions of law. A general power, under which the court may exercise equity powers, will enable it to exercise them so as to reach the evils complained of. I want to talk about reissues and the amendment as provided in section 5. The law as it now stands requires the filing • Mr. Storrow. If you will take the form of section 5 on page 202 of the Senate document, the revision which the Commissioner of Patents made, and which is generally conceded to be better than the one in the bill. Mr. Christy. The point I was going to speak of was the authority the present pending bill gives with reference to the use of the model in a reissue. Mr. Storrow. The change made by the Commissioner strikes out the reference to the model as a basis for reissue. Mr. Christy. The present law requires the filing of a specification or description, a drawing showing it, and a model — three things — and al- lows, iu case of any errors, the drawing to be corrected by the model, on a subsequent application for reissue, the model by the drawing, and the specification by either of the other two, but not outside of them — not by any matter aliunde. Now, in administering that law, the Supreme Court have laid down this, if I rightly apprehend their meaning : that when a suit is brought on a reissued patent, and the defense is taken that the reissued patent is not for the same invention as that described in the original patent, that that question must be determined solely by a comparison of the specifications and drawings. You have got to com- pare the two documents, and you cannot get outside these two docu- ments, in order to ascertain the identity, except by reference to the model, and the Patent Ofiloe is permitted to go to that extent. The purport of this section, to amend the description or the drawings, either by reference to any written records contained in the Patent Oflice, or in the files of that office, gives them the right to use anything they find there. 'Now, the objection comes, and it comes with great force, from parties in the West ; from the railroad associations ; from the Grangers: from the South, and from the East, of the injustice of allow- ing patents to be unduly expanded by virtue of a reissue, so as to cover things not contemplated by the original inventor. Now, it is this provision which enables an examination to be made of the description attached to the original patent, in case of reissue, so that whatever descriptive matter the inventor may have put in his old orig- inal case, or his attorney may have put in for him, may be a basis for a new issue. In my opinion, we should, instead of reopening those doors, and making these fraudulent reissue cases possible, shut them a little tighter. I think that it is unduly expanding a right which is too broad now. Now, you may amend your reissue by reference to original pat- ents entirely, and the models and drawings under this section, and they say that is too broad and encourages the perpetrating of frauds in con- sequence. In this section you can proceed not only to amend by refer- ence to the models and drawings, but by reference to any matters of rec- ord which were put into the old file, and which have been lying there in concealment for five or ten years. Mr. WiLLiTS. Put in what f Mr. Christy. Put in what can be found in the old original applica- tion. Take the case in 3 Sawyer, and it illustrates my point. A man named 262 MR. G. H. CHRISTY. Nobell, I think, applied for a patent covering the utilization of nitro- glycerine as an explosive. In that patent, he described some four or five inventions — over in England you can put in half a dozen inventions in the same patent. He filed it, and afterwards put in a new specifica- tion, striking out, say, four or five of the inventions, and took the pat- ent on the one, the original specifications remaining on file m the office, describing the five inventions. I am not accurate as to numbers, but just use them as pertinent to my point. In the case of the Giant Powder Company against the California Powder Works (3 Sawyer), the patentee came to my partner and myself, and, under a practice then prevailing and still prevailing, I surrendered that patent on the one invention, and took out four or five patents based on the description which the man had put into the Patent OflSce five years before. Now, this case came up before Judge Sawyer, of Califor- nia, and he said it could not be done ; that it was, under the present law, without authority of law, and he sustained the reissue, which was based on the surrender of the patent which we had taken, and set aside those claims of the reissue which were based on the descriptive matter put in with the old description five years before. Now, this section will sanction that practice, and as it is a very dangerous practice — I felt at the time it was — it was the practice, and there had been no decision on it, and the courts will not allow it; and without further knowledge I am satis- fied that the law should remain in this respect as it is. If you will turn to section 5, lines 10, 11, and 12, which read as follows : " The Com- missioner shall, on the surrender of such patent and the payment of the duty required by law, cause a new patent for the same invention shown in the model or drawings, or described in the original specification or its amendments," — you will see it goes back to the old description, which has been lying in secret in the Patent Office for five, ten, or twelve years, of which the public have no notice whatever, and j)ertaining to inventions which other manufacturers have commenced using. You can go back and revive an old secret document, making that a basis for re- issue, and shut down on some of the largest manufacturing interests, as has been done. Mr. WiLLiTS. Does not section six obviate that difficulty ? Mr. Christy. It does as to infringements previously made ; but sup- pose a man has invested $100,000 in business, it does not cover subse- quent infringements. Mr. Eaymond. I would like to hear about the proposition to abolish reissues after three years. Mr. Christy. It is clearly unjust. Under our old Federal procedure, before we had the present patent laws, the Secretary of State issued all patents. He issued a patent which came up in Grant v. Raymond, 8 Peters, which for some reason or other contained an error. Before there was any law whatever on the subject of reissues, the patentee goes back to the Secretary of State, who at that time granted patents, and says: " My patent has a mistake in it." The Secretary says, " Surrender your patent and I will give you a new one," and he did so without any law whatever. That case went up to the Supreme Court and they said it was proper, that he had the right to correct mistakes, and that it was the business of the government to correct its own errors, and that mode was one to which no objection could be taken. Now, if you prohibit all reissues, you are going to prevent the government from correcting its own mistakes, and you are also going to deprive the party of correcting innocent mistakes made by himself — a thing never tolerated or allowed. SEC. 5: REISSUES. 263 Mr. Raymond. The proposition is to limit if: ; to give it three years from the time the patent runs. Mr. Ohristy. I do not know why it should be limited to three or five years. Yon made a remark to that effect in your argument. My opinion is that the value of the patent, or merit of the invention, would not be discovered until long after the patent is granted, and your restriction of three years simply compels the man to find out "within a short time the actual value and the precise scope of his patent. I do not know why it should be limited to one or Ave years, nor why it should be three years instead of seventeen. Mr. ELDEEDaE. Would not that be a reasonable limitation — three years? Mr. Christy. There is no fixed time which is reasonable. Now, there are some patents taken out away in advance of the progress of the art, and it takes five, ten, or fifteen years to grow up to a point where a patent can be used. I recall a case of that kind. A patent was taken out a number of years ago for putting a carburetter in a railroad-car so as to light up the car. Theoretically that is very nice, but that could not be done for apparent reasons. It could not be utilized for practical purposes until the Westinghouse air-brake, which furnished a supply of air through the trains continuously, was invented. Then the inven- tion became practicable. ISTow, in that case the patentee had all the elements, say, five years before the thing became practical, simply be- cause the air-brake had not arrived at the proper perfection. Now the public have the benefit of his invention. Where it depends on the growth of the art we cannot fix the limitation, because one art may grow in a year. The Westinghouse air-brake reached its present state in three or four years, whereas those experimenters had been working for •forty years in order to do the same thing. It may develop itself in one year or in twenty years. You cannot so fix the period of limitation as to affect justly all patents. Mr. Storrow. I was concerned in a case where the owners of a pat- ented device put it into a machine which went largely into use; after fifteen years a man made a machine of a different form, but having the same invention lor its basis. This was the first infringement, and when the owner prepared to bring a suit, he found that the infringer, fully availing himself of the invention, had made a machine which was just outside of the claims. Often, also, the necessity of a reissue is known only when the court has passed upon the patent when it is ten years old. Merrill v. Yeomaiis, 94 TJ. S., is such a case. Mr. Christy. On the argument of a suit last November on an ex- tension of the patent — the patent was originally granted in 1858 and ex- tended in 1872 ; it will run out next year — the first suit ever brought on it was after the extended term. In that patent there was an erroneous reference to another patent as a matter of description. The effect of that error had not been found out until eighteen years after the patent was granted, and until that suit was brought they had never discovered an error, and it had beeu extended; the Commissioner of Patents had revised it; it had been extended, and the defect was not discovered until in the course of the suit. 1 say that in such a case as that the limitation is not fair. I have one word farther to. say, which is with reference to the com- plaints which come up from different parts of the country about patents. I am aware of the hue-and cry which comes from the Grangers of the West, the manufacturers of the East, and I may say from the South .(in reference to this same matter of parisgreen). It is a characteristic 264 ME. J. J. STORROW. of human nature, of you, and I, and everybody else, that we grumble most about paying for the necessities of our existence. I doubt if there is anything which excites more grumbling than the paying of gas- bills, unless it be butchers' bills, and it simply results from the fact that we have got to have the gas and pay that bill. As long as it was merely optional, we were willing to burn tallow-dips, or gas ; bat when in the change of our social relations and the progress of society we have got to buy gas, we immediately begin to say it is too high, and ought to be lower. When the sleeping-cars were first started, we did not mind paying two dollars or two dollars and a half for a seat ; but when the change in business habits it brought about first enabled us, and afterwards practi- cally compelled us, to travel all night, and we were then brought into such relationship with the sleeping car that we have got to have it, grumbling commences. It is the same way with water, &c. Now, when in the progress of the arts the farmer, instead of swinging his scythe as he could a few years ago ; when, in consequence of the pro- gress of arts, and the scarcity of labor, or a low price of crops, he is com- pelled to make the purchase of a reaping and mowing machine, he be- gins to grumble right off; and it is simply carrying out a characteristic of human nature. The necessity of the thing arises from the perfection of the invention. It is not necessary for a farmer to buy a reaping-machine until the machine is so far perfected that it is largely preferable to swinging his scythe, and thereupon he goes and buys one. Now, the necessity has been created largely by the brains of the inventor that have gone into that machine, and the farmer makes use of the fact of its being neces- sary as a reason why the patent which created the necessity should be abolished ; and in that respect 1 must take the liberty of criticising my friend Eaymond's argument. A great many of his reasons, while tend- ing to support the bill, go to show that the patent system ought to be abolished altogether; but I will do him the credit to say that he has repeatedly disclaimed any such object. Now, I do not mean to say that there is n) good groundfor a great many of these complaints. My point is this: that it is proper to make allowances for a great many of these complaints, simply because of the characteristics of humanity — because we complain of what we want most to buy. The committee, on motion, adjourned to Taesday, February 5, 1878, at 10 a. m. ARGUMENT OF MR. STORROW. [Feb. 5, 1878.] Me. Chairman and Gentlemen of the Committee : House bill 1612 (the same as Senate 300) grew out of a hearing which took place before the Senate Committee on Patents about a year ago, on a bill that had passed the House without debate, without any hear- ing before you, and had been referred to the Senate by its committee. That bill contained a great many clauses, which, the momeut they be- came known to parties interested in patents— rather by accident, for it had gone through the House very quietly — seemed to them to be destructive of the patent law ; seemed substantially to take away all protection and allrightsofinventorsand patentees. It wasopposed upon that ground. In the course of the discussion in the Senate, whicb was had just at the end ORIGIN OF THE PATENT LAW. 265 of the session, so that no action took place afterwards, it was suggested that the gentlemen who were present and were largely interested — invent- ors, representatives of railroads, and others — should endeavor to frame some amendments to the patent law which would meet the necessities of the case, and which would not impair the efficiency of our patent sys- tem. In that view a draught was made, and a large number of copies printed and distributed to gentlemen who were likely to be interested in it and familiar with the subject. After that there was a meeting at Chicago, in the early autumn, of a dozen or fifteen gentlemen, repre- senting a great many diverse interests. That meeting lasted seven days, and at it there was a very long and able discussion of many amend- ments which were suggested to the patent law. The result of that was a revision of the first draught of the bill, a thousand copies of which were printed and distributed throughout the country, to persons known to the framers as likely to be interested, and likely to have opinions worth considering on this subject. That revision was again revised at two subsequent meetings at other cities. Various sections were added to the bill relating to proceedings in the ofllce, specially drawn by gentle- men here in Washington, who were familiar with the practice of the office. The whole bill was communicated to the Commissioner of Patents before being presented to Congress. It was that bill which was pre- sented to the Senate and to the House, and it is upon that bill, so framed, that the hearing took place before the Senate Committee on Patents, and upon which the hearing is now being had before this com- mittee. The object of the framers of that bill was to guard against the abuses which had crept into the administration of the law by reason of the great extension of the patent system ; and by reason, we think, of mis- apprehension on the part of the courts, to say the least, of the true* principles which should govern them in administering the law. Before we consider the details of the bill, it is right that our atten- tion should be called to the practical workings of the patent system, its eflect on the inventor and the public, and the manner in which it comes in contact with various interests, in order that we may know where to apply a corrective, and what kind of a corrective to apply, because the patent law is not a proper subjeci for theoretical legislation simply. The origin of the patent law is generally supposed, to be the English statute of James I (1625), which in terms destroyed all monopolies, but allowed the crown to grant to inventors patents for new inventions and new processes of manufacture. I think that is very properly consid- ered the origin of the law, because up to that time the obtaining a pat- ent had not been a matter of right — it had been a mere matter of grace on the part of the crown. By the statute of James I, the law stepped in and regulated this matter. It gave, so to speak, to the inventor a right to obtain a patent, and thus converted the system from a mere arbitrary reward for past merit when it might be discovered, or might clamorously make itself known, to a promise of protection held out to all inventors — changing it thus into an incentive to obtain the reward which he knew they could obtain if he was successful. That statute did not in terms, and no English statute has since in terms declared the absolute right of the inventor to have a patent as ours does. In language, the statutes leave it, at least until quite recently, as a grace from the crown ; but, according to the English theory of government, the regulation of the right by Par- liament practically required the sovereign to grant it when the inventor had complied with the necessary formalities. In this country, of course, before the adoption of the Constitution, we 266 MR. J. J. STORROW. knew of this English system ; moreover, the different States had repeat- edly and to a considerable extent granted patents for inventions. This practice of the different States was stated, and a good many illustrations of it given in the Patent Ofiice Report for 1850 ; and was referred to in one of our earliest statutes, that of 1793, in which Congress enacted that no one should take the benefit of that law unless he first surrendered the patent which he had obtained under the State authority. The system of this country was started by that clause in the Constitu- tion which has been read to you so often in the last few days, giving to Congress the " power to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." One of the first laws passed by the new Congress was that of 1790, which was amended in 1793, and again in 1800, and, with some minor amendments of detail, which did not essentially change its character, it remained until 1836. At that time the law was changed in this respect; previous to that, the ofHcers charged with the duty of issuing patents {i. e., the Secretary of State and Attorney-General, copied in that respect from the English system) examined inventions and determined whether they were to be patented or not, but very inefficiently. The act of 1836 created the Patent Office and put an officer at the head of it, and charged him with the duty of examining all applications in order to ascertain their novelty and utility. That system — the American system — has ex- isted in this country ever since, and it does not exist to any practical and useful extent in any other country. In 1860 the term of a patent was changed from fourteen years to seventeen years, and the power of the Commissioner to grant an extension was taken away. It was again re- vised in 1870, and by the Revised Statutes; but with those exceptions it •has continued substantially as it was before, with exceptions of the pro- ceedings in the Patent'Office, which have been quite frequently changed in some particulars. Our law originally was for fourteen years, and that is pretty conclusive proof that it came from the English statute, for the statute of James I provides fourteen years as the life of a patent, and under or subsequent to that statute the practice grew up of extending our patents for seven years more. Erom the fact that the term for which the patent existed by our first law was fourteen years, it is obvious that our law-makers had before them and had in mind the English patent system. In pursuance of these laws, an inventor, in the first place, gets the idea of tiis invention, and when he has so far perfected it as to have put it into practical shape, he applies for a patent. That application, by the terms of the statute, must set forth the nature of his invention, and, in the case of a machine, the principle thereof, and the best mode in which he has, up to that time, contemplated applying the principle, all stated in such full, clear, exact, and concise terms as to enable any one skilled in the art to which the invention belongs to practice it. Then, in the application, he must distinguish between what is new and what is old; that is, he must put into the application what are techni- cally called the claims, declaring what it is that he claims as new, and pointing out precisely what it is. The application is then referred, un- der our system of classification, to an examiner having this class of matter particularly in charge, and whose supposed familiarity with the subject enableshim to ascertain whether the matters are new or old. If the applicant is not satisfied with the decision of this examiner, there is a method of appealing from his decision to other officers in the office, and finally to the supreme court of the District of Columbia. If the ap- PROCESS OF INVENTION, 267 plioant is referred to the patent or application of another person as an- ticipating him in the invention, and he thinks that other person is pos- terior to him in time, he can then raise a contest in the office, called an interference, between himself and the other person, to determine who, in the eye of the law, is the prior inventor. In this contest evidence is taken on both sides by depositions, and the case argued ; and it may be twice appealed. If he is successful in all this, the patent finally issues. The next legal step is where the patent is infringed, and in the ordi- nary course of events a patent that is valuable is very apt to be in- fringed. To meet that difflculty the law has provided remedies for in- fringement. The right of the patentee is different from the right which any other property-owner has. The invention is not a physical thing which he may stand over and watch. His own care and strength will not help him in the least. The right exists only iu the law itself, and, therefore, it is to the law only that he can look for protection. If the right is to be exclusive, is to be worth anything, as the Constitution in- tends it shall be, the law must protect him ; it mast afford the means for his protection against injury, and recompense in case of his injury by its invasion. The right absolutely has no existence except by force of the remedies which protect it, and unless Congress provides efficient protection, it has not done what the Constitution contemplates, viz, " secured " to the inventor an exclusive right. That, speaking generally and leaving out the question of reissues — which I will come to in an- other connection — is the legal part of the system. In the course of the practical part, the first step of the inventor is to arrive at what is sometimes called an inchoate invention. He has con- ceived in his mind the idea that certain things can be done in a certain way. The patent may be for a mechanical invention. It may be for an entirely new kind of machine to do something which had hitherto been done entirely by hand — a generic invention, as it is sometimes called. It may be for an improvement in an existing machine to enable it to work better or turn out a more perfect product. It may be a pro- cess, which can be a mechanical process, such as was described the other day in the well case, where the invention consisted in making a well and getting water from the earth by driving down through the upper strata into the water-bearing strata a tube with a sharp plug at the end and boles near the bottom for the water to come in, and then applying a suction-pump, creating a partial vacuum, and drawing the water first into the tube and then to the surface. It may be a chemical process. Such would be a new process for making sulphuric acid. It may be, and very often is, a patent for a product. Such was Good- year's vulcanized rubber, and that rubber is a good illustration of what generally happens with patents for product or process in the case of chemical patents; it generally implies the invention of both process and product. In Goodyear's case, he invented a new process of treat- ing rubber by mixing it with .sulphur, plaster of Paris, lead, and lamp- black, and expjsing it for a definite length of time to a ce tain heat, and by that new process way he brought out a new product. So, since the driven well was first invented and made with common, unpatented tubes and a sledge hammer, there have been many improvements in the tubes, atid particularly in the strainers which are used in this process. In what I have to say, I will confine myself more particularly to the mechanical patents, because they are the most common; and, in some respects, the easiest to consider. When the inventor of the mechani- cal contrivance has got his inchoate idea, has determined that he can take the raw material and, by means of certain devices, manipulate it 268 ME. J. J. STOKEOW. in a certain way, the next tbing for hitu to do is to embody that idea in wood or metal. He has not done enough to make progress in the asefal arts, he has not made an invention within the meaning of the patent law when he has only got the idea that the thiug can be done and the general notion of how he will devise his machine and manipulate his materials. He must go further. He must embody his invention in some particular form ; and, therefore, the next thing he has to do is to build a machine which shall embody it. It need not be the best possible form. It should be the best form that he knows of; but it is conceivable that the idea of the inventor may be embodied in a great may diflferent forms. When he has embodied it in some form which is capable of work, then he goes to the Patent OfiSce to take out the patent. It may be that after he has got his inchoate idea he thinks it best to expend a great deal of time in perfecting it. In that case he files what is called a caveat — that is, a statement of how far he has gone, and what he intends to do — and that serves to prove at what time he arrived at certain points in his invention, and also serves to give him a certain standing in the ofiQce against subsequent applicants, or against anybody who attempts to steal his invention. When he has obtained his patent, he has by no means got through the work which the public demands of him. He has his invention em- bodied in some useful form, but probably not the best. If it is a generic one, it is perfectly certain that the best form for using the invention will not be discovered until there has been a great deal of practice with the machine; because it is not enough, as you understand, in order to benefit the public, and therefore to make them demand the invention and desire to use it, and therefore bring to the inventor the profit he is working for — it is not enough that the invention should be made and put into some machine capable of work. It is not truly successful, in the broad sense, until it is financially successful — until it works so thoroughly, with so little trouble, with such results of product, as to make men desire it above everything else which has ever been used for the same purpose. In the most important inventions, it is necessary, therefore, immediately after the inventor has got his patent, to build experimental machines, and try them in actual use. This is a matter oftentimes, and I think generally, of great diflculty and expense. The machine, as he first built it, subsequently requires improvements before it is brought to a suitable state, and every one of these improvements may require invention, and be itself the subject of a patent.' The inventor must make experimental machines for use, and gentlemen familiar with the subject are very well, aware that it is very easy to run away with five, ten, fifteen, or twenty thousand dollars in building experimental machines which, when perfected, will sell for a couple of hundred. To do this will require the employment of the skill and labor of the inventor or of some other inventor, and the most skill- ful mechanics, and the most excellent practical mechanical judgment, in order to bring the machine to the point at which the public will de- rive the most benefit from the invention.. It is only when the machine has been built and used, and proved itself to be so perfect that the public desire to use it in preference to any other, that the inventor gets his reward. Therefore, there is a very great pressure on him to bring his machine to the point which the public good requires it to be brought to. Now, it generally happens that the men who have the ingenuity to make these generic inventions have no capital to develop them, and the first thing an inventor has to do is to induce some capitalist to take a PATENTEES OFTEN DEPENDANTS. 269 share in the patent, or to go iu with hitn in some manner and advance money to the inventor to build the machine. After it is developed it has to be introduced, and that of itself is a work of great .difficulty. It might seem that a manufacturer would be anxious to have a machine which would do his work more cheaply than it would be done by old processes, and would buy the machine immediately, but it is not so. He says to the inventor, "I have got a hundred thousand dollars invested in my machines now at work, and they work quite well, and even if you should say that your machine will do more and will work perfectly well and cheaper, still I don't want to throw away my existing machines." The consequence is, that it is a work of great difi&culty to introduce the new machine. The only way to get at it, often, is for the inventor and his friends to put in capital and build the machine themselves, in order to convince manufacturers that they must use it, or be left behind in the price of their product. It is for that reason — because of the labor and «xpenditnre required to perfect machines and introduce them into public use — that I think the right which the statute gives to an inventor to assign his interest in wiiole or in part, and the protection which the statute gives to the assignee as well as to the inventor, is as important a part of a patent law as the original grant of the patent itself. It is that which enables the public to get the benefit of the invention at the earliest possible date, because you will understand that it is not merely a question whether the public is some time or other going to get the benefit of the invention; whether a saving of $100,000 a year to the public is to come to-day or five years hence is a matter of national im- portance. The life of the patent is limited, and so the system necessarily presents a very strong stimulus to its beneficial introduction. The patent does not run from its introduction to use ; it runs from the time of the original grant, and all the time that intervenes between the grant and its introduction to use is lost to the patentee and to his assignee; and therefore they have every possible stimulus to hurry as much as possible. I said, in speaking of the legal part of the system, that it was essen- tial that remedies to prevent infringement and measures to redress in- juries done by infringers should be prompt, thorough, and efficient. It is necessary, also, that, while they should be prompt and efficient, they should not be hard, harsh, and unreasonable. They should not be op- pressive. What is harsh, unreasonable, and oppressive is a question upon which gentlemen will not agree. But the remedies should be far from that character, and nobody is so much interested that they should be so as inventors themselves. For I suppose it happens, in nine cases out of ten — certainly in four out of five — that in lawsuits some paten- tee is defendant as well as plaintiff. It is a contest between two pat- ents. Two men have devised two different machines to make an article in common ilse, and the question arises whether the later one infringes the first. The question is, whether the machine the second has con- structed is generically a new machine, or a mere improvement upon the machine of his predecessor. Because, the man who invents the ma- chine in the first place, and who has obtained a patent for it, is entitled to have the exclusive use of what he has invented, and nothing more. If another man comes along and adds another device, or takes away one device of that machine and substitutes for it another which performs the same functions in a better manner, or takes away two or three of the devices and substitutes one which performs the work in a a simpler and better manner, he is entitled to the exclusive use of that improvement, just the same as the man who invented the original ma- 270 ME. J. J. STOKROW. chine is entitled to the exclusive use of what he invented. The man who invented the original machine cannot use the improvement without a license from the patentee of the improvement, nor can the patentee of the improvement use the invention of the original man without a liceuse from him. There are a great many more questions of this kind that necessarily make the inventor and patentee a defendant, because the work of the dealer in or manufacturer of the newest and most improved machinery is always on that border-line which separates the known in the arts from the unknown. He of all others is the man who comes in contact with those who are inventors and creators of what was unknown, who ac- quire for themselves parts of that territory by right of discovery, and therefore you will readily understand that certainly in four-flfths of the patent cases there is a patentee who is carrying on the defense as well as the attack. That is the reason why I say that it is just as much for the interest of inventors as anyone else, as much for the interest of owners of patents as any one else, that, while the law must be efficient to protect each man's right, it should not be any more oppressive than is necessary to afford efficient protection. It is for their interest that the best possible means should be employed in ascertaining exactly what one patent means and covers and what another means and covers. I want to call your attention a little to the growth of the patent system of this country, as shown by the number of patents granted. From 1790 to 1836, forty-six years, there were 10,020 granted. Since 1836 to the present time, forty-two years, there have been not far from 200,000. In 1876, there were between fourteen and fifteen thousand patents for new inventions, besides trade-marks and designs, and about 20,000 ap- plications received. The fees received were $757,987.65, showing at the end of the year, after taking out the expenses of the office, a surplus of $105,445.05, so that the administration of patent law does not cost the country anything in that respect. That is, it does not cost the tax-pay- ers anything. Fees from patentees more than make up the expense. There were recorded last year about fourteen thousand assignments of patents. I don't know how many patents that refers to, because a great many assignments cover five or ten, and sometimes twenty or thirty patents each; but I thiuk there cannot be less than twenty or twenty-five thousand patents that have been assigned during the year. These are largely transfers of interests from the inventor to the capital- ist, who takes an interest with him in order to have a basis upon which he may spend money to perfect the machine and introduce it to the publie^_ The progress of patents in our country has been rather curious. Of course, in the earlier years patents were mostly granted to the citizens of the seaboard States, but that is quite changed at the present time. For many years New England received more patents than any other six States (except JSTew York). Tliat is changed now. In 1870, for the first time, the six States of Ohio, Indiana, Illinois, Iowa, Wisconsin, and Missouri took out more patents than the six New England States— 2,915 for the West, against 2,757 for those Eastern States. During the last year, 1877, the three States of Ohio, Indiana, and Illinois took out, for the first time, more patents than the whole of the New England States — 2,579 for those three States, against 2,479 for New England. And in comparing the proportion of the total number of patents granted in each year in those Western States, I find that it has grown up amaz- ingly within the last twenty years. The Chairman. How did you find it in the Southern States ? AfiGUMENT OF ME. COFFIN. 271 Mr. Storrow. They have been growing in that respect very consid- erably within the last few years. Of course, there was a series of years before that when no applications for patents came from the South. There have been quite a number of patents for improvements in cotton- gins and various things of that sort from Texas. The Paris green pat- ent, which I don't believe is valid as a broad patent, is from the South. There have been more from Tennessee, Kentucky, and Texas than from the other Southern States ; over a hundred each for several years. New Orleans is a place that takes out a good many patents — I think 79 from Louisiana last year. There were 51 from North Carolina, 34 from South Carolina, and 63 from Georgia last year (1877). Mr. Bond. I have noticed a good many from Tennessee. Mr. Storrow. Yes; there area good many from Tennessee. New York is the largest State for patents, and Pennsylvania next ; and they always have been, as far back as I have looked ; now they are falling back in proportion to the West and the South, though New York for twenty-flve years has taken more than all New England. In 1851 those six Western States took one-half as many patents as New England ; in 1877 they took fifty per cent. more. One cannot help noticing this fact in connection with the manufac- turing industries of those great Western States, which within the last ten years have grown enormously — out of all proportion to the manufac- tures of the Eastern States. In that connection, if the committee will allow me, I want to lay be- fore you some facts with relation to the growth of the industries of this country that are directly affected by patents, especially in the Western States, where the growth has been most rapid. I want to do that for two reasons. I want you to perceive the enormous growth of the indus- tries of the country, and not only the growth of the industries, but the increase of capacity in the operative — the manner in which a man now- adays can produce more, and is worth more to the community, by reason of these patented improvements, than he ever was before, and the man- ner in which the products of his labor have been cheapened to consum- ers. And another reason is, that I want you, as these different indus- tries are detailed to you, to notice the connection between our patent system and the industries themselves ; the direct effect it has had upon them ; how they have been created by it, localized by it, in the homes of the inventors, and have grown up under it. If the committee will allow me, at this point I wish to ask Mr. CofQn, who is present, and who has spent a good many months traveling about the country with a view to procure this information, and who has col- lated the information that he has procured at the establishments them- selves with information procured from the Patent Office from statistics, and from many other sources — I want to ask him to state to us some- thing that he has learned bearing upon these points; and when he has done that, I will call your attention to the lessons which I think are to be drawn therefrom. ARGUMENT OP ME. COFFIN. Mr. Chairman and Gentlemen of the Committee : Some months since I was requested by gentlemen who are largely engaged in manufactures under patents, and who were aware that there were some proposed changes to be made in the law, to take a tour of 272 MR. COFFIN. observation, with a view of studying the industries of the country. They requested me to omit no industry that I could find, and to direct my in- quiries to various points — such as what benefit has accrued to an inven- tor from a patent; what benefit to the public; what royalties have been paid for the use of a patent ; how much of time, labor, and expense an invention has cost ; what it costs to introduce an invention to the public; what grounds of complaint there were against the present law ; and what modifications of the law were desired. These and various other points I was requested to direct my inquiries to, and also in regard to the building up of communities under patents. I was instructed to omit no point of inquiry which would enable me to lay before the committee, when these hearings came on, a full exhibition of the growth of the in- dustries of the country under the present system. 1 began ray inquiries at Albany, taking in the stove and wood manu- facturing industries of that section. I passed on through Oencral New York, stopping at Rochester, where there is a large variety of industries; then going on to Cleveland and taking the industries of that city ; thence to Toledo. I was fortunate enough to find a gentleman at Toledo who was familiar with the industries of Detroit, and therefore I was not com- pelled to go to that city. I visited South Bend, Chicago, RockfOTd, Beloit, Janesville, Saint Paul, Minneapolis, Preeport ; and Decatur, in Central Illinois ; and then, turning my steps eastward, as I was some- what limited in time, I took the industries through Central Indiana and Ohio to Cincinnati, and on to Pittsburgh. After that I visited quite a large number of industries in New England, so that I might be able to present to the committee, from this mass of information, something which would enable them, perhaps, to arrive at a proper conclusion as to what improvements were needed in the present law. It has been said, Mr. Chairman, that the plow is the implement which is at the foundation of all wealth and the basis of all civilization; for without the plow there can be no successful cultivation of the soil. The most exhaustive treatise on the plow is to be found in the transactions of the New York State Agricultural Society for 1867, part 1. And as the plow is the first implement that I shall take up, I will refer to that volume and present two or three passages which will show you the con- dition of the plow at different periods of the history of the country. You remember, perhaps, Mr. Chairman, the plows that were in use in your boyhood. I remember the plow my father used. I think it was about twelve feet long. I know that it required eight to ten oxen to draw it, one man to ride upon the beam to keep it in the ground, and a man to follow behind with a heavy iron hoe to dig up the "baulks." We have a description, in the transactions of the New York Agricultural Society for 1856, how this plow was made : A winding tree was cut do\yn, and a mold-board hewed from it, with the grain of the timber running so nearly along its shape as it could well be obtained. Upon this mold- board, to prevent its wearing out too rapidly, were nailed the blade of an old hoe, thin straps of iron, or worn-out horseshoes. The land-side was of wood, its base and sides shod with thin plates of iron. The share was of iron with a hardened steel point. The coulter was tolerably well made of iron, steel-edged, and locked into the share nearly as it does in the improved lock-coulter plow of the present day. The beam was usually a straight stick. The handles, like the mold board, split from the crooked trunk of a tree, or as often cut from its branches ; the crooked roots of the white-ash were the most favorite timber for plow-handles in the Northern States. The beam was set at any pitch that fancy might dictate, with the handles fastened on almost at right angles with it, thus leaving the plowman little control over his implement, which did its work in a very slow and most imperfect manner. But there is a little more graphic description of the plow, which ap- peared in 1820 in the Rhode Island American, where a writer describes IMPEOVKMENT IN PLOWS. ' 273 the plow that was iu use in the Eastern States at that time, especially in Massachusetts, known as the Old Colony plow. He says: It had a ten-foot beam and four-foot land side; and the Sutton plows are not fit to plow any land that has sod on it; your furrows stand up like the ribs of a lean horse in the month of March. A lazy plowman may sit on the beam and count every bout of his day's work ; besides, the great objection to all these plows is that they do not perform the work well and that the expense is enormous for blacksmith work. Six of these plows cost me on an average, last year, $5 each to keep the shares and coulters fit for work, and the wear of the other parts could not be less than $1 more — $6 per year for each plow. Now, with this description of the plow which was in use in my boy- hood, I will present in a very brief statement the advance of invention. Thomas Jefferson was one of the first to make suggestions in regard to the improvement of the implement, but his plow was exceedingly cumbersome. The first patent taken out in this country was in 1797, by Charles Newbold, who set himself to work to improve Mr. Jefferson's plow. Mr. Newbold resided in the town of Chesterfield, Burlington County, New Jersey, and made the first east-iron plow ever made in this country. Here is his description of it : The subscriber, Charles Newbold, of Burlington County, and the State of New Jersey, has invented an improvement iu the art of plow-making, as follows, viz : The plow to be, excepting the handles and beam, of solid cast iron, consisting of a bar, sheath, and mold- plate. The sheath serves a double purpose of coulter and sheath, and the mold-plate serves for share and mold-board — that is, to cut and turn the furrow. This was dated at Philadelphia, 17th June, 1797. Mr. Newbold was a progressive man. He found, after he had obtained a patent for his plow, that he could not introduce it in the country. There was a great objection to it. The farmers in those times entertained great prejudice against it. There was a universal idea throughout the country that a cast-iron plow would poison the land. I can remember myself when the same prejudice was entertained by the farmers. It was in the year 1837 that my father obtained the first cast-iron plow that was used in the vicinity of his farm in New Hampshire, and I remember very well, sir, of the farmers gathering to see it work, and the remarks that were made. They had the same objection — that they would not have it on their farms because it would poison the land. I will not go over the inventions that were made between 1797 and 1842. There had been great improvement up to 1813, but from 1813 to 1842 there was very little improvement in plows. In that year, Mr. Nourse, of Boston, improved upon the Jethro Woods plow, and brought out what was known as the Eagle plow number 2, which was a great advance upon any other implement that had been used in this country for stirring the soil. You will read in this volume, that the lines of draught adopted in that plow were essentially the same lines of draught ■which you find in the best plows of today. It required from 1797 to 1842 for the inventive genius of this country, together with the obser- vations of farmers and mechanics, to arrive at any just conclusion of what would be the best form for the plow. A Member op the committee. Was this man Newbold a practical farmer ? Mr. CoPFiN. I do not think he was a practical farmer. I will read what it says here in this book : Charles Newbold, the inventor of the first cast-iron plow ever made in America, was born in the township of Chesterfield, Burlington County, New Jersey, about the year 1780, and in 1804 married Hope, the daughter of David Sands, who lived a few miles south of New- burg, New Tork. He was endowed with a large share of energy and genius, which devel- oped themselves in the formation of so many schemes and contrivances which succeeded one another so rapidly in his teeming brain that he had no time to carry any one of them into S. Mis. 50 18 274 MR. COFFIN. successful operation. He had a grand scheme for founding three cities on the Hudson Elver to he called Faith, Hope, and Charity. These were to be the centers, respectively, of trades, manufactures, and commerce. They were to be connected together by the best possible roads, as well as water communication, and from the central city a grand road across the continent, similar to the Cumberland, was to connect the Hudson Eiver with the Pacific Ocean. I think he was not a practical farmer ; I think he was a mechanic. Mr. SaiiTH. Will you give me the date of the publication of that book ? Mr. Coffin. It is the proceedings of the New York IState Agricultural Society for 1867, part 1. I will say here that this is the most exhaustive treatise on the plow that has ever been published. As I have said, in 1842 the Nonrse plow was brought out. Prior to that time Governor Holbrook, of Vermont, had given some application to the manufacturing of plows, and about that time he gave his whole attention, I think, to their improvement. You will find in this volume the part which he took in the improvement of that implement. I will not stop to detail it. In 1850 the New York State Agricultural Society, feeling that the time had come when the country should have the best possible informa- tion that could be obtained, instituted a grand trial of plows. The basis of their calculation as to what saving had been made in plows in econ- omy of power, the difference between the kinds of plows that were then in use, is here given, and the rule by which they arrived at their conclu- sions. They say: We have shown in a subsequent chapter that there is a difference of power required to per- form the same amount of work by different plows, amounting to 46 per cent., as shown by careful trials in England, and to 42 per cent, according to the trials instituted by the society in 1850. It follows from this, that if the plow haying the least draught was brought into universal use to the exclusion of those which require a greater power, it would reduce the cost of plow- ing in the United States 42 per cent., or it would reduce it from twenty million dollars to eleven million six hundred thousand dollars, leaving eight million four hundred thousand in the pockets of the farmers as a fund to be applied to the payment of taxes or the Improve- ment of their farms. If we suppose that the same number of men and teams were employed as heretofore, then they would be enabled to cultivate an area 42 per cent, greater, with the same expenditure of power that they now employ — that is, they would cultivate an area of one hundred and thirteen millions of acres without any more expenditure of power than they now do eighty millions of acres. » * » We do not mean to assert that this sum would represent the actual increase of the annual value of the products of agriculture ; but, allowing each reader to make the deductions which he may think necessary for the increased cost of cultivating this increased area (such as seed, planting, after-culture, aud gathering), it will be seen that the use of the best form of the plow will increase the aggregate profits of agriculture to an extent equal to the aunual, national, internal taxation of the United States. I have taken this, Mr. Chairman and gentlemen, as the basis of my investigation in regard to the improvements of plows from 1850 to the present time. I shall not have time, nor would you have time to listen to me, to go over all the improvements which have taken place since then. Many of you are aware that the plows largely in use in the west- ern part of the country today are the John Dere, the Avery (manufac- tured at Louisville and largely used in the Southern States), and the Oliver chilled plow, manufactured at South Bend, and a great many others. They all have essentially the same lines of draught, because the ijoint as to what are the best lines has been settled, and there probably can be very little improvement in that direction. It therefore follows that the best plow at this time is the one which shall enable the farmer to turn up his soil at the cheapest possible cost, and in that is in- volved economy of manufacture as well as economy of use. I shall have time only to refer to the last invention in this line, and I refer to RKCENT IMPROVEMENTS IN PLOWS. 275 it not to say anything in regard to this plow above any other, but be- cause it shows a new line of departure in manufacture. I refer to the Oliver chilled plow. Mr. Oliver was a manufacturer of common pjows in Michigan. He began at South Bend in 1855, He saw that the de- mand of the farmers was for the plow that would have a mold-board of hard finish — something much harder than iron, because iron was al- most worthless in many of the western soils; something that should be cheaper than cast-steel. Therefore he turned his attention to the pro- duction of a chilled mold-board. It was nothing new ; it had been at- tempted for twenty-five years, and every time had resulted in utter fail- ure — for this reason : it was found that when you attempted to enlarge the surface of the mold board beyond 36 superficial inches, you could not produce a perfect piece of iron. There would be soft spots in it and cavities called "blow-holes." Those who had attempted the production of chilled iron said that these resulted from the gases in the metals. Mr. Oliver came to a different conclusion after a great deal of investiga- tion — that it was from some other cause. I will not detail the amount of money he spent, or the difficulties he encountered. People called him a lunatic, and his friends deserted him. His shop was burned down and he had no means, but he held on to the idea that there was a pos- sibility of obtaining a piece of chilled iron which he could use for a mold-board. He finally concluded that these soft spots and blowholes, as they are called, were the result of moisture in the molding-sand, and therefore he invented a mold with an iron pipe through it, through which he could pour hot water and thus dry out the moisture from the sand after the mold was made. After a great many trials he succeeded, in producing his mold-board in two pieces. That was the first step. Then he discovered that there were some gases in the metals. He started upon another line of invention, to have some holes connected with the mold by which the gases should escape. Through those two inventions he has produced the present chilled plow. He uses Lake Superior iron, and, when he can obtain the Saulsbury ore, he makes a. mixture of that with the Lake Superior iron, and thus obtains an ex- ceedingly hard and tenacious metal, one which will resist the wearing, and one which will also not be easily broken. Through those two inven- tions he has been enabled to produce this mold-board much more cheaply than the cast-steel plow can be produced, and he has reduced the price about $2. Instead of raising his price above all other plows in use, when he made his inventions, he said to himself, " I will put these plows so cheaj)ly that they shall come into universal use." His patent was the first one that was ever issued from the Patent Office for the manufacture of chilled plows. There never had been a claim put in before him. He has taken out eighteen patents as the improvement has gone on. He brought out his first plow in 1870. He had been studying upon it for many years, but only after a long period of time (not actively engaged in experiment all the while, but he had been turn- ing it over in his mind for a quarter of a century) was he enabled to bring oat this plow. If you were to visit his works you would find five hundred men employed in the manufacture. He sent out fifty thousand year before last, and sixty thousand last year. There are one hundred and seventy-five thousand in use. His orders thus far indicate, he stated to me, about seventy-five thousand to be called for the present year. He sent out one train the other day of thirty car-loads of these plows. And he has reduced the price about $2 from the plows which were formerly in use — a plow not any better in its line of draught per- '276 ME. COFFIN. haps, but better in the mold-board which he has produced by his pro- cess. He charges no royalty. The Chairman. What does he charge for two-horse plows? Mr. Coffin. He has different sizes anddifi'ereut prices. I think from $10 to f 12 is the price ; I think that is the minimum and maximum. Now, taking that basis of the New Tork State Agricultural Society: — and according to the report of the Commissioner of Agriculture there were 108,000,000 acres under the plow in this country last year — if we estimate the cost of plowing at only one dollar an acre, and take the basis, as given by the New Tork Agricultural Society, brought about by this invention, we shall have a saving of $45,000,000. The Chairman. What is the difference between the Mohawk Valley plow and this chilled plow ? Mr, Coffin. 1 put that question to other manufacturers. Of course, the answer which I obtained from the manufacturers of the cast-steel plow was, that Mr. Oliver had got a little thing of his own that he was trying to make something out of, but that it would not amount to much. Mr. Oliver himself informed me that he thinks his plow will outlast two to three cast-steel plows. I suppose the line of truth lies somewhere between the two statements. Any one who is familiar with metals will know that a mixture of Lake Superior and Saulsbury ores, with this pro- cess of chilling, must effect a great saving. Perhaps other inventors have made or are making equally good improvements. I do not pretend to pass upon that question. Now, Mr. Chairman, I will refer to steam plows. This is the great want of the country to day. I have met several gentlemen in my inves- tigation who were manufacturers, who had no patents of their own, but who, perhaps, would like to obtain some now in use, who favored the utter abolishing of the patent laws. They say that necessity would com- pel invention; that, when there was a demand for an article, there would be somebody that would produce it. Let us consider the steam plow. It is the great want of the American community at this moment, and the country demands it. In 1556, in Illinois, I saw a steam plow. It ran one day and then was thrown out by the side of the fence, and I think that was the last the world ever heard of it. I happened to be in California in 1868. I saw a steam plow, upon which more than $40,000 had been expended, brought out for trial on one of those large farms. It ran once across the field, and then it went into the junk-shop. Last year I was in Northwestern Minnesota, in the valley of Red Eiver, where I saw a third steam plow, upon which $25,000, as I learned, had been expended. It was tried two or three days. A considerable amount of money was spent in endeav- oring to improve it. If you were to go up to the little village of Glydon, where I happened to be when I saw the implement, you would see that the weeds had grown over it; it is entirely covered with rust ; and that is the end of that steam plow. Here is a machine which the country demands, and yet the inventive genius of the country has not conquered the problem. So that there is an answer to that objection of those who think that the demand always brings a supply. In England I saw a steam plow which is moved by a stationary engine. The plow is drawn across the field by a wire rope. You will find in the English agricultural reports that the steam plow does not make any saving in the cost of plowing. There are, however, two or three advantages which result from its use — a larger amount of acreage of grain can be put in ; the trampling of the horses does not press down the soil. The soil is lighter, and therefore is in better con- CHECK-ROWER. 277 dition for the crop. These are the two advantages of the steam plow. But I will state here that a great many efforts have been made in Eng- land to produce a steam plow which should travel across the lands. One gentleman testified before the committee of the House of Parliament, that he had spent £50,000 ($250,000) upon steam plowing, and had not achieved any success. Another gentleman did not state the amount that he had expended, but said, " I have spent an enormous sum of money in my endeavors to produce a steam plow." Now I pass, in the cultivation of corn, to the corn-planter. The rais- ing of corn is the greatest single agricultural interest in this country. The Commissioner of Agriculture estimates the crop of 1877 as the largest that has ever been produced in this country, at 1,300,000,000 bushels. I remember, Mr. Ohairman, when I dropped corn, a boy, by hand, five kernels in a hill and a pumpkin seed in every other hill- that was the rule. The Chairman. And sometimes, a bean. Mr. Coffin. Six hundred and forty-seven patents for corn-droppers have been issued up to 1873. One of the first inventions in this line, which you will find in the Patent Office, was a box about the size of this book, not quite so wide, that was placed on the shank of a hoe, and there was a spring connecting with a slide that covered a small hole. The farmer would strike his hoe in the ground and make the place for depositing the grains, and then reverse the hoe and give another stroke, and that would let the corn out of the box, and he again reversing the hoe would cover it. Then came an improvement upon that, a hollow hoe-handle with a spring running along the handle ; the farmer could jerk the spring, and that would let out the corn. Then we had the hand dropper or planter. First a man would take one in each hand and walk along the rows and strike them down, and each blow would make a planting, thus enabling him to plant two rows at the same time. The next step was the horse-drill or planter, being a planter drawn by a horse. But these methods of planting corn admitted only of cultivation be- tween the rows in one direction. Then came the idea of cultivating in both directions with a drag. A long beam with pins in it was dragged both ways across the field by the horses, and then the farmer would go along with the hand-planter and plant the corn at the intersection of the rows, and thus he was enabled to save something in cultivation. The next step was the corn-planter, which planted two rows at one time, with the rows running in both directions. A man sat on the ma- chine, and at every point where the drag had crossed at right-angles he moved a lever that dropped the corn, which was covered by wheels that turned and pressed down the soil upon the seed. This was the in- vention of Mr. Brown, and came into almost universal use. The last idea in this direction was the check rower. That is an in- vention which has come into use within a very few years. It is a very simple implement, consisting of a wire chain, or knotted rope, stretched across the field. It is anchored at both ends, and it runs through the machine. As you drive across the field, every time that a knot goes through a little slot in the machine it touches a spring and drops the corn. All you have to do is to anchor this rope on both sides of the field and drive backward and forward all day long, until your acres are planted ; and then you can cultivate in both directions. This was a great step. I will not attempt to detail its advantages. You can see at 278 ME. COFFIN. a glance that great advantages would accrue from such a machine. Those machines are now largely manufactured at Uecatur, Illinois, ■there being two establishments there which I visited, and from which I ■obtained the details. The saving, you can see, would be very great in planting and in cultivation. Under the old way the man with a hand- planter could plant three or four acres per day. With a two-horse check-rower planter, twenty acres can be planted in a day. Ton see that by this process the farmer of Illinois is enabled to increase his acreage — the planting season lasting about ten days — from forty acres to two hundred acres by this simple process. This simple invention, therefore, enables a small farmer to become a large one. I say nothing of the saving in labor, nor the ability of the farmer to put in his crop on a few fair days. The next implement is the cultivator. I remember very well, Mr. Chairman, when the cultivation of corn was carried on wholly by the plow. The farmer used a common small plow. We i^lowed twice be- tween the rows, turning the soil against bobh. That was the process in my boyhood, and was the process down to about the year 1845, 1 think. There have been improvements over that process. First, har- row-teeth were put into a triangular frame, which was drawn through, and you had to pass but one way between the rows. Another form of the cultivator was a series of small double plowshares, which were put into a triangular frame ; but since then there have been one thousand six hundred and seventeen patents taken out for cultivators. One form of cultivator was called the "double shovel." I think it came into use about 1848. It had a very large sale. It was what was called a walking cultivator, and was used with a man walking behind it. Men now ride their cultivators. I have here the experience of an Ohio farmer, who resided near Springfield, in regard to the use of this old double-shovel cultivator, and with one of the cultivators now manufactured in that town. He kept an exact account of the cost of producing bis corn for three years. The highest cost was 12 cents a bushel by the double-shovel cultivators, and the lowest was 9 cents. He obtained one of the improved cultivators, and then kept an account for three years, and found that his highest cost was 8J cents and his lowest 7 cents. Here the greatest saving was 3J cents a bushel and the lowest 2 cents. Now, what is the saving at the rate of 3J cents per bushel on the crop of last year ? $45,500,000. And the saving at the rate of 2 cents would amount to $26,000,000. What is it that produces this saving ? It is in the thorough cultivation brought about by stirring the soil by this implement. It cuts out all the grasses. The entire surface of the grouud to any desired depth may be stirred. You may have it cut deep or shallow, according to the na- ture of your soil; obtain a thorough pulverization of the soil; the roots will run down and get the moisture and fertilizing qualities ;.and there- fore you get this increase of your crop. That is the secret of it ; nothing else — simply the thorough pulverization of the soil. And this was brought about only by long study, which could come only from years of observation and experiment. The next thing which is to be considered, in the cultivation of corn, is the corn-husker. And yet it is the same with that as it is with the steam plow— the world waits for it. There have been a large number of inventions taken out for corn-huskers, and yet there is not one in use to-day in the country that commends itself to the farmers. The inventive genius of the country has nbtyet grappled with that problem. One huu- -dred and fifty patents have been issued since 1858 for buskers, and a COEN-SHELLER. 279 man who will make the successful hasker has an immense fortune before him if he is protected by a patent law. The next machine is the corn-sheller. Perhaps you remember, Mr. Chairman and gentlemen, the shelling of corn in your neighborhood. I remember very well sitting astride the handle of a frying-pan or the barn-shovel and scraping the ears against them, or using the cob of one ear to shell the corn from another, and often shelling the skin from my hands. About five bushels in ten hours a man could shell by hand. Then came the first machine for shelling corn, which was a cylinder turned by a crank, by which a man might shell about forty bushels in a day. There have been three hundred and seventy-eight patents issued for corn-shellers Now, if you will go to Illinois, you will see shellers by which two men, with a machine driven by steam or horse power, will shell one thousand five hundred bushels a day, the cobs being carried off into a pile by themselves or into a wagon, and the corn run into sacks or wagons, to be drawn off in bulk. Only two men are required to run the machine. Here, then, invention has carried us from the time of our boyhood, when one man could shell four or five bushels a day, to the present, when two men with a machine can shell one thousand five hundred bushels a day. What farmer in the West would be without the use of one of these corn-shellers 1 The six great corn States of the Union are, I think, Illinois, Iowa, Missouri, Indiana, Ohio, and Kansas. They produce more than half the corn raised in the country. Now, of what inestimable value is that one machine, the corn-sheller, to those communities ! Those States, by the census of 1870, had 1,775,000 persons engaged in agriculture. It would require the entire farming community of those States to sit astride barn-shovels and handles of frying-pans one hundred days out of the three hundred and sixty-five to shell their corn by the old process. Take the crop of last year, 1,300,000,000 bushels of corn. The entire popula- tion of the United States — every man, woman, and child, every indi- vidual of the 40,000,000 of us— would be obliged to spend the entire six working days of the week and till noon of Sunday to shell the crop by the old process. I do not know what would become of the country, Mr. "Chairman, if we had to go back to those old times. A Member of the Committee. Do you contend that this improve- ment is the result of necessity or the result of the present law ? Mr. Coffin. I put it down as the result of the present law. Mr. Raymond. I would like you to show the connection before you get through with your argument. Mr. Coffin. I will endeavor to show the connection. Mr. Storeow. We propose to show it, I hope convincingly. Mr. Coffin. Of course all the corn that is raised is not shelled. There are 1,300,000,000 bushels raised, but a large portion is fed from the ears, but if shelled by hand I do not know what it would cost in these days. A man used to shell for one tenth of the corn. The Chairman. What do the owners of machines charge for shell- ing? Mr. Coffin. I was not able to obtain that. Mr. Willbts. Half a cent per bushel in our country. The Chairman. In your experience, Mr. CofBn, does the use of the separator— or, take another case, does the planing machine reduce the «ost of the work performed to the people? Mr. Coffin. Tes, sir ; and I will show that before I get through. The Chairman. For instance, in building a house, formerly we used 280 MB. COFFIN. the old-fashioned plane. You have been along there, and so have I. Now, does the improved machine reduce the cost of building a house to the man that has it built ? Mr. Coffin. Yes, sir ; I will show that to you before I get through. There is a great reduction in the cost, and a great improvement in the house. I now turn to the cultivation of wheat. From the time of Adam up to within a comparatively recent period the only method of sowing wheat was to throw it into the air by the hand. Those of you who have had experience in sowing know that if the wind blows with any great force it is impossible to sow it evenly ; and if you sow clover with your wheat you have to go over the ground the second time. And if you put in phosphates or any fertilizers, it must be gone over a third time. Then m the sowing of wheat broadcast you do not sow evenly, because no man, no matter how deft he may be, can always throw out his hand at exactly the same interval every time. He must calculate his steps as he passes over the ground — calculate the gusts of wind that may come to him. No man can sow his ground evenly by that process. Then some of the grain will fall in the hollows, and some upon the ridges. Then when the harrow comes in some of the grains are buried too deep to come up ; others are left under such shallow covering that they do- not get moisture enough, and therefore do not sprout. Therefore, under the old broadcast sowing, you do not obtain the best possible results. Under that system you could not harrow till you had been over with your clover — if you sowed clover with the wheat. I will not go over the cata- logue of the different drill and broadcast seeders which have been in- vented. About six hundred patents have been issued for seeders. Now, what are the advantages of these seeders, as you find them, to- day in use, over this broadcast sowing ? The seeder covers the soil to a uniform depth. It sows evenly, and sows a specific quantity. You may graduate it so that, after a little experience, you can determine the amount per acre even to a quart of wheat. They sow all kinds of grain — wheat, clover, and superphosphate, if need be — at once. They harrow at the same time. Tiiey make the crop more certain. It is the united testimony of manufacturers and farmers alike that the crop is increased from one-eighth to one-fourth, especially in the winter whel labor-saving machinery and manufacturing machinery had reduced the demand for labor. Mr. Stoebow. Not at all, sir. I did not say that, I think. I said they had increased the power of labor, the productiveness, the capacity of the workman. Mr. TowNSHENZ). Let me state a case. I know a farm of over 1,800 acres which is operated almost entirely by machinery. Before these im- provements in agricultural implements, that farm was covered to a great extent with tenants, and also a large number of men were employed to harvest, &c. Since the introduction of labor-saving machinery, the DEMAND AND SUPPLY. 3'21 farm is run by one-tenth the labor, and there are no tenants. I ask you if the introduction of labor-saving machinery has not decreased the de- mand for labor ? Mr. Stoerow. Do you know where those tenants are now I Mr. ToWNSHEND. It is asserted that a great number of them are now out of employment. Mr. Storrow. Isn't it a fact that they have employment elsewhere ? Are they not in Minnesota, or Wisconsin, or Nebraska, farming by ma- chinery at twice the wages they used to get? The experience of the whole world has been that the introduction of labor-saving machinery for the first year or two in a particular industry undoubtedly throws men out of employment; but the cheapening of the product in conse- quence of its use increases the demand for the product, so that there is a continually increasing field for the employment of a larger number of men. Mr. ToWNSHEND. Take, for instance, the shoe-raanufacturiug busi- ness of Massachusetts. Mr. Storrow. There is a great deal more employment in that busi- ness now than formerly. Mr. TowNSHBND. I do not so understand it. I understand that one man now does the average work of what formerly required the labor of ten men. Mr. Storrow. Of about four, on an average; but in certain classes they do the work of about ten men. Mr. TowNSHEND. What has become of the other nine 'I Mr. Storrow. They are making more shoes, or they are doing snme- thing else. There are twice as many used now as formerly. Mr. ToWNSHEND. As I understood you, you said that under the old system the material was distributed to the people, who took it to their homes and made it up. Mr. Storrow. Tes, sir ; quite largely. Now they are collected in factories. Lynn and Haverhill and Brockton and Marlborough have grown enormously since the introduction of machinery. Mr. TowNSHEND. You say that these men have found employment elsewhere 1 Mr. Storrow. Undoubtedly. Let me give you an illustration. I myself remember when railroads were very new in our section of the country. When I first knew railroads, the conductors were the old stage-drivers who had been driven off their lines. The fear which was expressed then — expressed also in England — was, that these miserable railroads would destroy the necessity for horses ; that the stage-lines would be all taken off', and there would be no more market for oats to be raised. Well, the result has been that there is no country in the world so covered with railroads as England, and there is no country where horse-flesh is in such demand. Why, the number of horses re- quired to take people to the depots is far larger than the old stage- routes required. I heard of a case in New Hampshire of an old farmer who was very much disturbed by the introduction of a railroad through his place. He said there would be no more market for his oats ; but what was the result? Why, in three years his oats had doubled in value, because there was a bigger demand for them and facilities for marketing. Now, if you take the introduction of these patented im- provements, you will find that just at that spot where they are intro- duced there is sometimes a diminution of the demand for labor in that particular industry for a few years, but you will also find that the de- mand for the product is so increased that the amount of labor required S. Mis. 50 21 322 ME. J, J. STORROW. is increased. Let me see if I cannot give you some figures that directly show it. In speaking of the great improvement of labor-saving machinery be- tween 1850 and 1870, 1 told you of the increase in the wages paid, which certainly does not show any diminution in the demand for labor. Take the case of the sewing machines, where one operator does the work of I don't know how many women ; I suppose there are twenty times as many workwomen employed now as twenty-five years ago. The whole business of making clothing has gone on increasing, and many more stitches are taken in everything, and the demand for labor has gone on and kept pace with it. In fitting (sewing) uppers of shoes women used to earn half a dollar a day by hand. Now they do it by sewing machines run by power, and they earn $1.33 a day. Mr. TowNSHEND. You doa't think the number of tramps has been iu- creased ? Mr. Storeow. Very likely it has been ;'but one reason is that we are growing to be an older country, and we have more of that peculiar population that makes tramps. Beside, in the past year or two, there, has been great depression in everything, which has thrown people out of employment. Mr. TowNSHKKD. Does not depression mean that men cannot get work? Mr. Stokkoav. I do not think it means that altogether. That is one thing it means. You will remember that the men were thrown out of work by stoppage of establishments ruined by the panic. The want of work did not precede, but followed, the financial troubles, though it has undoubtedly increased and prolonged them — perhaps I should rather say formed a part of them. Mr. AiKKN. It means they don't work, because a heap of them won't work. Mr. Storrow. One way to get out of that difficulty — that depression — is by improving our labor-saving machines, and trying very hard first to export our products, by making them cheap enough to compete with other nations, to export to China and South America. We export from America cotton cloth enough to supply about five million people. There are three hundred and fifty million people in China who want machine- made cloth, and one-half as many iu South America, and that is the way to overcome this depression ; and we have just about got to that point where we can export. And exporting manufactured articles means that all the world comes here to give employment to our work- men. Mr. TowNSHEND. If I understand you, then, you concede that, at the present time, at least, the present improvements of labor-saving ma- chinery does throw men out of employment? Mr. Storrow. I do not concede that. The introduction of one par- ticular machine will undoubtedly throw men out of employment in that particular branch, at one particular moment, but after awhile the de- mand will increase, and more men will be continually employed. Mr. CofQn gave an instance where the demand increased so fast that more men were employed almost from the start. Now, all labor-saving machines are not made and introduced in one day; the change is continual, and therefore continually at different stages ; and when one machine does for the moment at one factory di- minish the demand for labor in one branch of the work, the cheapening of the product as the result of an invention of a previous year, the mere supply of the new and useful thing in perhaps some other "industry EFFECT OF INVENTIONS ON LABOR. 323 is that day calling for more labor. Of course, there are other temporary causes; a financial crisis or other disturbance paralyzes industry or agriculture, and throws men out of work ; but that has happened just as often and quite as severely at periods and in industries not affected by the recent introduction of labor-saving machines. Our people consume more than twelve times as much cotton cloth as they did in 1830, though the population has only increased about three- fold. And this results from the increased product and the diminished cost of it which increases the demand ; and in this not only has the de- mand for labor kept up, but the wages have increased. I think this is the best possible proof, in the long run, that labor'is not less in demand than formerly. Mr. TowNSHBND. Since 1860 you have largely increased the amount of labor that you had in the manufacturing establishments in the East ? Mr. Stoerow. It has been very largely increased. Mr. TowNSHEND. Now, what is the effect of these improvements in machinery in the West and South and the agricultural section of the continent ? Mr. Storrow. Well, sir, the effect on the West is that their manu- factories in those Western States have grown up to be as large as ours in the Bast, and have grown a great deal faster, and that absorbs some of the labor. More wheat is raised, and that absorbs labor. A large market is made for raw cotton, for example, because ib can be spun to a greater advantage, more cheaply, ahd a greater demand is created for cloth, and consequently for cotton to make it of. A farmer can raise more crops, his crops can be better utilized, and can be better sold to other people, because they are comparatively cheaper when he has got them raised; and if you look through the census you will see that the agricultural laborers have steadily increased in number, just as operatives in manufactories have. The suggestions made by the honorable member of the committee are directed to the increase of labor-saving machinery, and are not affected by the fact that that machinery is or is not patented ; but the pertinency of those suggestions is that they assume, and, I am sure, correctly as- sume, that the invention and introduction of that improved machinery is due to the patent system ; and they go upon the ground that a patent system does promote the progress of the useful arts, not only by crea- ting and introducing improved machinery, but by, at once, so cheapen- ing the product that the old system of labor cannot compete with the new; and the inquiry is, whether the progress of the useful arts is help- ful or hurtful to the State, improving or injurious to those workmen who are engaged in the arts. The direct effect upon the moral and intellec- tual condition of the workmen I hope my associate and senior, Mr. Smith, will speak about. The inquiry put relates directly to their em- ployment. The argument that would reject all labor-saving inventions as con- trary to public policy, is answered by the spirit of the age. The railroads will not make it, for those inventions have created them as a means of surpassing the old method of foot and horse, and no one will say that they are a curse. All other interests of this country are in the same position. If such an argument were made, I should not waste time in replying to it. I have only wanted to answer directly the specific ques- tion'put, because the facts stated indicate the reply that society makes to the whole question. The question is an interesting one, b«t it is not new, and experience has answered it. When Lee invented the stocking-frame, in 1589, Eliza- 324 MR, J. J. STOREOW. beth, and afterwards James, would not patent it (it was before the statute of monopolies, so called, the statute which abolished monopolies and allowed patents), because, they said, it would throw the hand-knitters out of employment, Yet there are probably a hundred times as many hosierymakers now as there were then. The inventions of Watt and Arkwright, the introduction of cotton spinning by machinery, led, iuEng- land, to the Luddite or machine-breaking riots of 1812 and subsequent years. Yet there are now employed in the English textile factories over one million people (1,005,685 in 1874), one-tenth of what the whole pop- ulation was when those riots took place. In this country there has been very little of that feeling. Mr. Coffin read you an account of the manner in which our citizens encouraged the introduction of those same spinning-jennies. Our working population is more intelligent than the English, and, moreover, is ready to turn from one occupation to an- other. ■Let me give you some figures from the census. No reliable figures exist for the boot and shoe business, because the work was formerly done to a considerable extent by farmers and farm laborers and fisher- men, who took the materials home and worked at odd times, so that one person in the census-taker's list would represent, perhaps, only two months' work. Still, I find that, by the table, the increase has been : 1850. 1860. 187 Hands 105,254 123,026 135,889 Wages.. $31,622,608 $30,938,080 |51,972,712 Product 53,967,408 91,889,298 181,644,090 The textile industries have been carried on in factories for so many years that the returns from them, collected under similar conditions at the three periods, afford a better basis. I take the figures from Table X, p. 596, of quarto volume on industry, of the census of 1870: The textile induttries of cotton goods, woolens, worsted goods, carpets, and hosiery. 1860. 1 870. Hands 181,550 255,328 Wages $37,301,710 $79,401,567 Product 196,416,400 395,158,565 This table only shows the progress in old-established industries. To get the whole effect, we must take those that have been newly created by patented nventions (e. g., vulcanized rubber, agricultural imple- ments, and a host of others) ; and outside of the great factories, they form a great part of our industries. We must take all our manufact- ures together. The figures from the census, given in the table on p. 112, supra, show that while our population has gained an addition of only 67 per cent, since 1850 (from 23,200,000 to 38,500,000), the hands employed in manufacturing. have more than doubled. The case is the same with farm-labor. Agricultural machinery, as an important element, dates from about 1850 ; it was 1855 to 185» before sowers, reai)ers, mowers, harvesters, and thrashers became so distributed as to have any decided general effect, and the result will be most shown in the grea!|{grain and hay raising States. Now, look at the following figures froiqrthe census : IMPROVEMENTS INCREASE DEMAND FOR LABOR. 325 Fanners and agricultural laborers in the principal reaper and mower using States. 1850. 60. 1870. California 31,257 200, 862 199,641 115,824- 124,541 27,921 264, .385 4,437 370,514 309, 969 249,717 125,331 47, 863 376, 441 • - 266,777 210,263 187,211 75 157' Illinois - 141,099 163,229 32,779 65, 815 563 65, 561 Indiana Iowa Michigan Minnesota Missouri 263 918 Nebraska .. 23 115 New York 313,980 270, 362 207, 495 40, 980 374,323 397, 024 260,051 159, 687 Ohio Pennsylvania Wisconsin Total . . 1,301,863 2, 024, 399 2,641,830 Bushels of wheat, rye, oats, and barley in United States , 266,425,951 Tons of hay in United States 13, 838, 642 Hops in United States, pounds 2, 497, 029 Flaxseed, bushels 562,312 Wool, pounds 60,264,913 382,675,387 19, 083, 896 10,991,996 566, 867 616,532,883 27,316,048 25, 456, 669 1,730,444 100, 102, 387 •^ I bave put the amount of various agricultural products in this table because they are chiefly produced in the grain-raising and reaper-using States, and they tend to show where some of the labor not absorbed by the greatly-increased grain and grass crop has gone. Many new agri- cultural industries, so to speak, have grown up — wine-making, for ex- ample. The raising of small fruits and peaches on a large scale and the can- ning of fruits and vegetables are the growth of late years, and employ a great deal of labor. The table of laborers is interesting in other respects. Missouri had in 1870 a few hundred less agriculturists than in 18C0, and perhaps the war is partly accountable for this. Hew York and Pennsylvania have grown very slightly during those years in that respect ; but the natural growth of that class has partly emigrated to the fast-growing States of the same latitude, and to a greater extent changed its occupation, for the tables of manufacturers show that there are employed in industrial establishments: > 1850. 1860. 1870, 15, 808 199,349 146, 766 19,681 230,112 222, 132 69, 777 351,800 319,487 I will add the number of operatives from the tables found in the quarto volume on Industry of the Ninth Census, page 393. The tables for 1850 and 1860 include mining and quarrying, and I have added miners to that of 1870. I omit California, where the operatives are chiefly miners, and the change to new gold-fields has been great. 326 MK. J. J. STORBOW. Operatives. 1850. 1860. 1870. 11,559 14, 440 1,707 9,344 63 15,808 22,963 21,295 6,307 23,190 2,123 19,681 336 230,112 75, 602 222,132 15,414 90, 483 60, 575 26,660 70, 075 11,341 Iowa ........... ....... ... ... Michigan........--..,.. , ,. ... ......... Minnesota 68,777 2,703 :356, 977 New York 199, 349 51,491 146,766 6,089 Ohio ... 148,443 400,702 44,611 Pennsylvania ................ Total 456, 616 639, 160 1,281,347 It is pretty clear that, wherever those men spoken of by the honorable member may have gone, the progress in agricultural machinery between those years did not diminish the demand for labor. Mr. CofiSn has told you of the cotton-gin, of which one of the latest forms, tended by, I suppose, half a dozen men, can do 4,000 pounds a day, instead of four or five pounds a day, which one man could do before Whitney's time. Instead of diminishing the demand for labor in the cotton States, it has created those States and all the demand for labor that exists in them. No one doubts that the greatest boon to those States would be machinery which should do for their agriculture what machinery has done for the grain-raising States ; if the crop could be raised and gathered at one-third the present amount of labor, there can be no question about the enormously-increased demand for American cotton that would follow; and, I think, no doubtnot only of the increased demand for labor that would spring up there, as it has in the grain-rais- ing States, but in the improved quality of the labor. Whoever works alongside of a machine is driven to be industrious and intelligent to keep up with it. In truth, it is a law of political economy that society tends to employ all useful labor ; and thus the more valuable the labor the more fully it is employed. This is as true of communities as of individuals. The England of to-day is busier than the England of five hundred years ago. For idle hands you do not go to England, or Belgium, or Northern France. Ton go perhaps to Ireland, where there is little invention and little labor-saving machinery ; or to Spain,. or to Southern Eussia. In Italy the beggars are . not in the industrial cities of Turin and Milan and Florence. The biisiest parts are where a day's labor is worth the most. In the existing condition of the world, increased capacity means increased employment and increased wages. And this increased capac- ity, due to labor-saving patented inventions, cheapens the cost of the product to the consumer] he spends as much, probably more, but lie gets more for Ms money, and he earns more by his labor. Mr. Clarke. I don't see how it can be that patented inventions cheapen cost to the consumer. I mean by what I say, that when we buy, we buy with all the entailed expense of the royalties; all this is added upon it; and is it not exhaustive to the West and South, espe- cially to the South ? Mr. Storrovt. It is not exhaustive to the West, because they manu- facture for themselves. Mr. Clarke. But not as largely. A PATENT NOT A MONOPOLY. 327 Mr. SxoRUow. At the present time they manufiicture more largely thaa New England. I spoke of 1870 in my former remarks. At present they are undoubtedly far ahead. It affects the South in this vray : The result of these labor-saving ma- chines, in spite of the higher cost of labor that is used with them, as shown by our competition with England and by a great many other ways, is that the article is produced cheaper, or comparatively cheaper, than twenty years ago. You get now an article for seventy-five cents or fifty cents which formerly cost $1; and that is the net result of the system. Tou must remember the distinction between patents for inven- tions and patents forjmonopolies. When the English Sovereign gave to a man the sole right to import salt, he acquired the monopoly of a business which before that time had been the free right of all; he gained the power to exclude others from what they had freely done before, and consequently he had the power to increase the price of an existing article. Nay, the very object and intent of the patent was to enable him to make money by increasing tlie price, and this was the natural effect. Bat a patent for an invention forbids no man to carry on the industry and business he has always carried on. It cannot raise the price, for people may manufacture in the old way ; the patentee only has the sole right to use the new method he has invented. He can- not make any money by his patent unless he can manufacture cheaper than any one else can by the old method. His temptation, and the inevitable and invariable result, is that he undersells the old manufac- turers, so as to absorb all the trade, unless they take licenses, and so become able to reduce the price also; that is, he at once reduces the cost to the purchaser. Indeed, whether he desires it or not, he cannot help it; an increased supply, capable of being produced at a lower cost, so acts upon the market as to diminish the price by the inexorable laws of trade. So the patent cannot add to the price. It necessarily and invariably cheapens. I said at the former hearing that the patent is based on— is for that which the inventor has in the most just sense cre- ated — a new and useful art or improvement or composition of matter. It is not something which his patent enables him to subtract, to self- appropriate, from the world's possessions, as in the case of the old mo- nopolies. The whole world has become, and forever after his patent has expired will continue to be, stronger or richer for the new use he has taught it to make of the powers of nature; that is the highest cre- ation open to human power. If you could have got all this labor-saving machinery and all these improvements invented, perfected, and intro- duced without paying for them, then you would have undoubtedly gained as much as I could gain if I could buy a barrel of flour without paying for it; but I should hardly expect to do that a second time. Mr. Clarke. I want to give you one particular character of patents —sewing-machines. I have seen wagons, till I was sick of them, peddling sewing-machines all through my country, that cost probably $10 to $16, and they were retailing them to our people at $75, $85, and $125. I think the average cost of those sewing-machines was not over ^ Mr. Htorrow. No, sir; you are wrong about the figures. There is a hook printed which gives the figures and the reason for the large cost. Undoubtedly, in the case of sewing-machines, there was a hand- some royalty, though nothing like what was generally supposed. I think those patents were not judiciously managed, but the question is, whether you would have gotten the machine in fifty years, as at present improved, without the encouragement of patents. It was not simply a2S ME. J. J, STOEEOW. the original Howe machine ; all these original patents are run out, and nobody would build a machine on them alone. There have been sev- eral thousand patents on them since, covering improvements. Mr. WiLLiTS. They use the same needle. Mr. Stoeeow. Yes, sir ; but that is only a small part of the machine. The present machine, for which you pay whatever the price may be, has got in it the inventions of hundreds and thousands of men, who have been laboring and spending money to bring it to that point. Now, at the present time all the bottom patents have expired, and all the more important patents have expired ; there remain only a comparatively few accessory later patents in existence. You get them as cheap as the manufacturer can make them. Whether the community would have obtained the benefit of these things without a patent, or anything lilie as soon, if there had not been patents, is a question upon which theo- retical reasoning is worth little ; but the actual fact of the growth of our industry, the cheapening of our products, our growth, as regards England and other countries, the fact that our growth in all respects has kept pace with the patent system, shows that it does encourage in- vention, and foster cheapness by •encouraging the invention of labor- saving machinery. Mr. Aiken. Isn't there a great deal of truth in what the gentleman said yesterday, that the men who invented the patents are hardly ever the recipients of the profits 1 Mr. Stoeeow. I don't think that McCormick would say that. I will speak of that again presently. But one of the great advantages of the old system of patents for fourteen years, with a chance for one exten- sion by the Commissioner, was that the inventor of a meritorious im- provement always had a chance for a reward by an extension for his benefit, while, as only about five per cent, of the patents were extended, the average life of a patent was shorter than under the present system. It was much better than the present law. We speak sometimes of the reward which the patent system gives to the inventor. I don't think that the proper term to apply. I think the profit he receives is not so much a reward as a necessary prerequi- site to the existence of the invention — to the existence of the ma- chine. Take the occasional case which happens where a man is full of inven- tion, and wants to invent — has got it in him so he can hardly be re- pressed in spite of disappointment. These are precious men, and ought to be encouraged. They make generic inventions, valuable particularly in that they will lead others to improve and perfect. These men are ex- tremely rare, and yet I think you cannot rely on those men to keep up the progress of the arts. I think you can no more rely on those men to keep up the progress of the arts than you can rely upon spontaneous combus- tion to cook your dinner every day. Now, if you meet one of these men, or men who think they are of that character, you will find that the one thing paramount in his mind is his right in liis invention. Talk with one of these men, and he won't tell you much about the ingenuity of his machine ; he will speak most about the wonderful results which it will accomplish when he gets it completed, and what a fortune he will make out of it. Unthrifty such men are, sometimes, in not taking good care of their money; but no one thinks more of their prospects or is more lured on by hope of reward than they. You will find that these men do take out patents, and that seems pretty tolerable proof that they are affected by the desire to take them out. The large body of inveutors,- however, are the men who improve machines; not the great geniuses, but RISKS OF PATENT OWKEESHIP. 329 the men who go on improviag and improving the machines. These men are sometimes employed by the manafacturer at very high wages. I know a man who works in his shirtsleeves, a mechanic, employed at about $6,000 a year inventing improvements. There is not a large reaper manufactory or sewing-machine manufactory, or manufactory of any kind, making patented articles or machinery, that does not employ men at from $3,000 to $10,000 a year continually inventing and improving machines. Then there are a great many people who improve and invent, and sell their inventions at a round price as soon as made, and the as- signee may make upon the patent Ave times as much as he paid, or he may spend a large sum improving and then lose the whole. These men very wisely sell out to avoid the risk and to enable them to turn their mind to inventing something new — and the risk is very great. Any one familiar with the subject will tell yon that time and again a man will take an invention which he thinks promises well and sell it and the as- signee spend thousands on it and get nothing in the end. I happened to know of two cases quite interesting in that respect. One was that of a gentleman who was a patent solicitor, as skillful a mechanical ex- pert as, I think, I recollect. He had a large interest in an invention on which he had worked professionally for many years, and which had been brought to completion. Another invention sprang up for accomplish- ing the same result in a different way, and he was afraid it would super- sede the first. He sold out his interest in the first and bought the whole of the second, and the result was, that after he had spent a large sum on the second he became convinced that it was perfectly worthless, and the old one went on and multiplied about tenfold in value. Another case was that of an extremely skillful mechanical engineer, who bought some patents and paid $50,000; he spent $25,000 more in improving them, and they turned out to be — financially — perfectly worthless to the end. A man not only has to put his money in, but spend his time in the first place in inventing, then pay his money in perfecting and introducing, and all this with the uncertainty that, with the best skill and knowledge, he may never get his money back. Thou- sands and millions have been spent in machines which led to nothing at all. One was the case of the horse shoe-nail, which Mr. Coffin spoke of. The first set of patents, on which one of the companies spent a great many thousand dollars (I think about $60,000), they had to give up as worthless. The owner then took up another inventor, and began all over again in a different way, before he got a successful machine. Now they have got a good machine, but at one time they all thought they were ruined, and would have been glad to get rid of it and throw it away if they could have got clear. Take the case of a man like Goodyear, who certainly showed the greatest persistence in invention. Can any one imagine he would work on as he did, a dozen or fifteen years, in thoSe experiments to vulcanize rubber, without expecting to be repaid ? The best proof is that every stage of progress he made he patented as soon as he made it. His per- sonal history is that he persevered because he believed a fortune would come with success. So it was with McCormick and all those men. They would not have gone on and perfected their machines, and put them into public use, unless they had had the stimulus of the further results to look to. Men have to be of a peculiar turn of mind to persevere under discouragements, but inventors are generally sanguine, and sanguine not only of mechanical success, but of the pecuniary results of it. One of the most interesting, cases is that of Mr. Bessemer, the inventor of 330 MR. J. J. STORROW. the process of making steel — and substantially all the steel of the world is made by his process; all the steel rails and larger articles. It con- sists, as some of you know very well, in driving atmospheric air through a mass of about five tons of melted cast iron. The air is introduced through the iron from underneath, and, passing through the iron, burns out the carbon and silicon in the iron and leaves in it just enough car- bon to make steel, and after blowing about twenty minutes through the crucible and putting in a little manganese iron the whole of the contents of the crucible are converted into melted cast steel. Now, Mr. Bessemer was a bronze-worker in London, a man of some means, appar rently, and he was endeavoring to devise some method of improving metal for ordnance. He wanted to get it to an intense heat, and in the course of two or three years of experiments, costing a great deal of money, he came upon this method, and found out he could burn out the carbon and produce an intense heat by driving the air through the melted metal. He disclosed this to Mr. Nasmyth, the great iron- worker, and that gentleman told him at once it was the greatest progress made in the art of iron- working in a century; certainly since the invention of the hot blast and the use of anthracite coal. Mr. Bessemer was doubt- ful about the ability to handle the metal, but after consulting the iron- masters, they said it could be done without any trouble, any engineer could do it. Mr. Bessemer then sold licenses to one leading iron-master in each iron district. Mr. Bbiggs. He patented it, did he? Mr. Stoerow. Yes, sir; he patented it at once, but he put the fee at a very low rate, in order to get them to introduce it and get it into use; and these men went to work and put up works, spent a great deal of money in building their works — the Bessemer-plant for a rail-mill at the present time costs not far from a million dollars — but after trying it thoroughly, every one of them found they could not handle the iron. The process could not be worked. Mr. Bessemer thought that that was about the time for an inventor to come in, and he went to work devis- ing an apparatus to overcome the difficulty. He worked for two or three years, and spent about $100,000 ; and finally, even after he had succeeded, these iron-masters who had already bought and paid for their licenses would not go on. They said it was a very good thing in theory, but it was a chimera, and would not work, even with his new apparatus. So he was obliged to actually construct works and start as a steel-maker, but only got orders at first for lots of 56 pounds and other small quantities. By and by it dawned on the minds of the iron-masters that there was Mr. Bessemer making for $75 to $100 a ton steel which cost them $200, and then they were glad enough to come in ; but the patent was six years old before it became profitable. The consequence was, that in 1872 and 1873 there were made in England about 250,000 tons of steel rails, sold at a price of about $55 a ton at the particular time this testi- mony was taken, whereas before the invention of this process it cost $200 a ton, and its large manufacture was not practicable. The price now is between $30 and $35 a ton in England, I think. Well, it is perfectly obvious in that case Mr. TowNSHEND. What is the price of iron now ? Mr. Stobeow. Iron rails are about $10 a ton less than steel, and steel rails in this country are about $45 a ton, or less. Mr. Ward. They have come down considerably in price. Mr. Stoerow. They have been, I think, at $42, and iron rails at about the steel rails sold first at about $125 here. Now we have eleven HOSIERY, 331 mills capable of turniog out 450,000 tons of steel rails in all. This in- vention has made steel rails possible, and is a good illustration of the way in which an invention both cheapens the product and increases the demand, Mr. Bessemer granted licenses freely to everybody who would put up works and use them properly ; the highest royalty required on this great process, which reduced the price of steel from $200 to $55— that is to say, $150 a ton — was one pound sterling, or $5 a ton ; that is, but little over three per cent, of the saving. The patent on the Besse- mer process has now run out. He has, however, a patent still existing on the apparatus, and the royalty on that is 2s. 6d. a ton, or 75 cents a ton in this country. Tou see what portion of the saving the public got, and how small a part he was satisfied with, even during the life of his patent, and wisely, for the low price made a great demand, Mr. Bessemer was asked what he would have done if there had been no patent system ; he replied, " I never would have spent a dollar of my money or an hour of my time." " Would you not have worked in secret ?" " How could 1 work in secret an invention requiring a plant costing a million, and requiring a great many hundred men to run it?" And then he gave them an illustration. His father was a type-worker, and had devised two processes which he kept secret, and which perished with him. One was undoubtedly the process of electrotyping — depos- iting metal from a solution by electricity. It was not until thirty or forty years after that it was rediscovered, and the Elkingtons carried it on with great profit to themselves and the country. Now, if that old man had felt the impetus of a patent system, the first thing would have been to patent his discovery, and even if he had never used it, and locked it up for the whole life of his patent, or taken all the profit to himself, still the public would have got it twenty-five years sooner. It certainly was not true in this case that if he had not invented it some one else would have the next week, for the world waited forty years for it. Mr. Bessemer had a secret process of his own, which he worked many years, and no one else discovered it. No improvements were made on it, because he did not dare to have any one around, except a few people. He doubted very much whether the public had ever received substantial benefit from it, because he made so little of the article that he kept the price up, and did not lower it very much, and because he had no com- petition which obliged him to lower it. Very different this from the immediate public gain from his steel. The hosiery business in England is very interesting, because within the last thirty years it has been turned from hand to machine work. It is mostly carried on in Nottingham ; and one of the largest manufacturers is Mr. Mundella, who has been in Parliament. It has been the practice in that industry, different from most other branches, for the manufacturers to encourage the workmen to make inventions ; and the consequence is that the inventions which have revolutionized this branch of industry have been mostly made by the superintendents and foremen — the skilled workmen of the establishment. Mr. Mundella said he asked one of his men, who had made a good invention, and who had worked on it a good many years, as to what he would have done if he could not have got a patent. " I should have gone to America pretty quick," said the work- man. Mr. Mundella said he had received the same answer from at least fifty men. They reduced the cost of certain undershirts, hosiery, drawers, and so on, I think, from ten or twelve shillings a dozen to 2s. 6d., and the highest royalty, Mr, Mundella said, that was charged for any of the ma- chines used in any branch was threepence a dozen ; so you see the mere 332 ME. J. J. STOEROW. Mttle proportion of saving in that case which the patent receives — 3d. royalty for a saving of 8s. — say three per cent. Mr. Mundella was asked whether a great deal of money was not spent on unsuccessful machines. He said there certainly was, but the machines could not be perfected without trials ; if they were not patented the expense and loss would be just as great, only with a patent a man was willing to incur it, because he would get his money back if he succeeded; or if he didn't get it back out of one invention, he might out of another ; and the result of this work was a great public saving. Mr. Oofian told you about the Bigelow carpet-loom, but that is only one of Mr. E. B. Bigelow's inventions. He is still an active man, but I may, nevertheless, say that his career is a good illustration of the patent system. He began as an inventor very early in life. While a clerk in a store he conceived of a machine for weaving coach-lace, and his first thought was to patent it and better his condition by his inventive skill. He was without means, but he walked boldly into the store of a large im- porter of this lace, and the proprietor having become interested by the young man's examination of his goods, entered into conversation with him, and Mr. Bigelow said he had invented a machine for making the article, and wanted to borrow $100 to build his model, &c. He imparted to the capitalist some of his own confidence in the pecuniary success which he felt sure of for his invention, the requisite money was ad- vanced, the machine perfected, and the industry for the first time estab- lished in this country by means of it. He was the original designer of the Lancaster mills, at Lancaster (now Clinton), the first manufacturers of ginghams in this country. From an account written by him in 1851, and vouched for by the offi- cers, I condense the following: The project of a mill for weaving cotton checks and ginghams by power-looms was started in 1844. It found immediate, favor, and stock, to the amount then supposed necessary, was immediately subscribed. For more than two years a large part of his time and attention was de- voted to this object. The systen in use for manufacturing ginghams in England required too much manual labor to be carried on at the high rate of wages current in this country. So he had before him the problem of how to reduce the cost of the product and at the same time pay much higher wages than in England; or, as he stated the case, "it is a generally- admitted fact that in the manufacture of cotton goods our competition with the foreign article is more or less successful according to the ratio which the cost of labor in the fabric bears to the raw material," and as we could not or could hardly compete on even terms in plain cottons, it was apparent that some new force must be brought to bear to enable us to compete in ginghams, which required about twice as much labor per yard. The work was done in England on hand-looms, bj weavers work- ing at home. Obviously the end was to be attained by labor-saving machinery to be invented. " By the improved machinery and methods of the Lancaster mills the gingham manufacture is placed, notwithstanding the high percentage' required for labor and a comparatively short experience (this was writ-'- ten in 1851), on as good footing in regard to foreign competition as are plain cottons and calicoes. The amount of labor saved in this establishment over any other system of methods for producing the goods is equivalent to at least a cent and a half per yard. In other words, no machinery or methods known before the erection of the Lancaster mills," and operated at such rates of wages as are paid in New England, could produce the same goods at a cost so low by a cent and a half per yard. BIGELOW LOOMS. 333 The product of the establishment at this time (1851) is at' the rate of 4,400,000 yards per year." Up to the end of 1846 only 34,000 yards were produced. In 1875 the mills produced 11,560,000 yards, from 1,115 looms, employing 1,041 hands (560 males, 481 females). The town of Clinton, which contains this gingham-mill, the Bigelow carpet-mill, and the mill for weaving wire-cloth on looms invented by Mr. Bigelow fpr the purpose, and numbers 7,000 inhabitants, owes its existence to his ipventive skill ; and each one of these industries has been created by his patented inventions. He was not a manufacturer improving his business, but a poor man seeking fortune by that use of his brains for which Nature had best fitted him. The patent law held out this stimu- lus to him, and he responded to it; and he has attained the reward, but his country has gained a hundred-fold as much. , We hear sometimes of the great fortunes made by the owners of patents. Where are those men ? If we look for wealth, we go among the railroad builders or owners, among the mine owners, among those who speculate in grain or stocks ; not among patent owners. Here and there is one who has grown rich from patents, but their number is few. Why should they not ? All their money must be got back within a few years or not at all. No business is so full of risk ; and in such a class; where fortune rewards only the few successful, you must not limit their gains by the sure and certain payments that are suflftcient in the stead- ier walks of life. You must average the great gains of the few cases among the many men who work to improve the arts by new inventions, before you talk of the profits of inventors as a class. And if you ex- amine the case of any of the successful patent owners, you will find yourself in doubt whether his wealth is due to the protection of the patent law much more than it is to the business capacity which would have made a fortune in any walk of life. And you must remember, while in the case of the few who have grown rich, and the very many inventors who have bettered their condition by the use of their brainsi that the primary condition of their success is that they furnish to the world some supply better or cheaper than it ever had before. People talk about men having a desire to make inventions, and even compare it with the writing of a poem. Tbey say a man does not need to be encouraged to write a poem ; but there is no comparison between the two things, and if there were, I think the encouragement given to invention, over and above that given to literature — the encouragement given by the pecuniary reward and the improvement it has led to — would be a good illustration of the benefits of the system. Tennyson is as much the product of the culture of two thousand years— of the genius of his time — as Homer was the product of his age; and yet no one would say that Tennyson surpasses Homer as the spin- ning frame — where a girl of fifteen will make three million yards a daj' — surpasses the distaff of Penelope. If you go to the museum at the other end of the avenue you will not see such progress in excellence be- tween the Greek Slave of Powers and the Venus of Milo as exists be- tween the galleys of Greece and the modern iron-clad. Will this build- ing (though I think it externally the handsomest parliament house in the world) differ in merit from the Parthenon as much as the latest har- vester differs from the sickles after which Euth gleaned 1 The truth is, mechanical invention and literary invention are different things ; they are inspired by different causes ; they aim at different results. In in- dustrial invention we look to nothing — nothing is considered invention, within the meaning of the patent law, unless the thing is useful — unless it produces something better, cheaper than we have had before. But 33 MR. J. J. STOREOW. you do not refuse to see a play or read a poem because it is inferior to a tragedy of Sophocles, any more than you will refuse to eat a peach next autumn because it is not as good as the one you ate a year ago. They are entirely different kinds of things, and you cannot compare them. It was stated the other day that the patent system was not in accord- ance with the genius of a free country. It seems to me that that is a great mistake in fact ; a great mistake historically. The peculiarity of the system in this country is, that it is not for the capitalist, it is not for a class already selected and favored, but it is for everybody. It realizes the great boast of Napoleon: ib opens a career and a future to whoever has talents to seize it. Our patent system is made for every- body, and everybody can, if they have the capacity, reap the reward. Historically, the patent system arose in England by the statute of James the First. It is called the statute of monopolies, not because it created, but because it destroyed monopolies. The rising spirit of in- dependence in Parliament had protested against monopolies of trade which Elizabeth had granted, and extorted from Elizabeth a promise " to examine all patents, and to abide the touchstone of the law." But she broke her promise, and James did the like ; and so, in spite of the strenuous defense of royal prerogative which was made by the court party in the debates, the House of Commons took away the power to grant those patents which would not " abide the touchstone of the law." The patents they put an end to were patents to cover existing trade and commerce; the patents they retained were those that touched new manufactures ; and they did this not by a grant conferring a new power, but by an act in terms declaring that this was the law, and forbidding the King to go beyond it. It was as much part of the English Constitution as trial by jury, which rests on a not dissimilar protesting declaration and extorted consent of the King, and from thence, first our States and then our Constitution adopted it. In France the patent system came in a year after ours did, in 1791, as one of the first fruits of the free ideas of the Revolution. In this country, it had existed, as I told you, under grants from the States, long before our Constitution, and was put into our Constitution as one of the provisions, and, I think, justly, because it encouraged men to exercise the right of pursuing their own welfare in a manner helpful to the State. I look upon it as a mark of the highest civilization that a country shall recognize by its fundamental law the utilitarian effects of pure brain power ; as a mark both of the highest civilization and of the highest reaches of the law that a nation recogn,izes as property to be protected, because helpful to the State and to all its people, the pure creations _of the intellect ; a species of property not inherent in or at- tached to' any particular portion of matter, but which depends for its recognition on the appreciative intellect of the community, and for its protection — that is, for its existence as property — upon the national def- erence for law and order. P^Mr. Raymond. Do you mean the patent system was created by First James ? Mr. Storbow. The patent system was substantially created by that statute. It was changed from a grant, at the mere grace of the sov- ereign, to something which could abide the touchstone of the law, to a system which held out to the inventor — that is the great thing (it is not to reward him, if the King pleased) — which held out to the inventor the promise of a reward if he should deserve it ; and, as 1 said the other INVENTIOXS BO NOT COME ON CALL: 335 day, the English patent system rested on that statute when our Consti- tution was adopted and until the statute of William IV. An invention which was contemporaneous with the statute of monop- olies well illustrates the effect of the system. Lee invented his stock- ing-frame in 1589— before that statute. Elizabeth would not give him a patent; James would not. So, instead of setting up his frames in England, he went to France, where the King gave him a privilege and he set up his frames. It was not until thirty or forty years afterwards that they were used in Englaud, brought back by an apprentice of his, and then they, or the workers on them, were made the subjects of special privileges. So he did just as Mr. Mundella's hosiery inventors said they would do — carried his invention from his native country, that would give him no patent, to another that would. It is said, sometimes, that inventions come whenever they are wanted. The history of .invention directly disproves that. We have wanted a steam-plow for I do not know how many years. We wanted a binder for I do not know how many years ; and the same with reapers. Ton may look through the long lists of inventions, and it is not the declara- tion of a want and the meeting of it. Tou find hundreds of patents, and years of labor of hundreds of inventors, and hundreds of thousands of dollars of money expended before the want is met, even where the want precedes the invention. You will find, in a large number of cases, that the invention creates the want, instead of meeting it. It is the in- vention of the thing which makes the public desire it : vulcanized rub- ber is such an instance. There are many wants not supplied. For thirty years we have wanted paper-pulp made of something besides rags. It is only within ten years — hardly so long — that the problem has been successfully solved. Twenty years of invention, a large num- ber of patents, and an enormous expenditure of money have been made to supply that want; and I know of two establishments that, in improv- inff one process, spent over $300,000. I know of one company that put i!s a capital of a million dollars, and spent all the earnings for seven ?£&is in experiments. They wanted it badly enough, but it took them &ii that time to come to the result; and now mechanical pulp can be iiiade for 2^ cents, while rag pulp costs 6 cents, and it has kept down the price of rag pulp in addition. Why, if there is anything wanted in this country, it is a cotton-picker to pick cotton in the South. They have been at work for many years on it, and only week before last there was a patent issued for a cotton-picker ; but the demand has not brought it yet. I cut the following from a newspaper : A SHEEP-SHEARING MACHINE. [From a South Wales paper.] Many efforts have been made to produce a machine for shearing sheep that should ena- ble the work to be done as well as by hand, and with greater rapidity. Sonae inventive mechauie in England, some time ago, made a machioe for this purpose, which was tried in Australia, but we had recently to record its failure there. Now we have a machine made by an American mechanic, who has spent eight years in perfecting it, and which seems to be perfectly adapted to the work required. We have tested the machine, and feel satisfied that a sheep can be sheared in five minutes much better than could be done by hand. The fleece is cut off very evenly and closely with this machine, the sheep cannot possibly be cut by it, and there can be no cutting through and injuring the staple. The cutters, made precisely upon the principle of the mowing-machine linives, are of chilled steel, and self-sharpening. The motion is communicated by means of compressed air, and three thousand revolutions per minute can be easily given to it, although one thousand five hundred are sufifioient for a working speed. The air-pump is worked by a crank, and one man can produce sufficient power to work twenty-five machines. The air is forced from the pump through a flexible rubber tube, which allows ample freedom of movement. The working pressure of the pump is five pounds per square inch, but it may be worked up to forty-five pounds by usiag an engine or a wiadmlll. One pump is sufficient to work twenty-five of the machines, and 336 ,. ME. J. J. STOEEOW. these may all be attached to a supply pipe, from which the compressed air may be let off or on to the machine, as needed, by taps. One pump will supply power for twenty-five shear- ers. These, having merely to hold and direct the machine, which barely fills the hand, and requires no muscular force to work it, are not exhausted, or required to stoop over the sheep, if benches are used, and may, -therefore, work more quickly and certainly than with the or dinary shears. The cost of shearing will be much reduced ; and, as the cost of the appa- ratus is very moderate, almost every person owning; a flock of sheep would find it advan- tageous to use it. We should, however, recommend the use of a shearing-bench or chair, by which the necessity for stooping and bending over the work would be obviated. That American mechanic would not have worked eight years out of pure pleasure nor pure philanthropy. If the cotton-picker is to come, it will come as the harvester came, and as perhaps the sheep-shearer has come, under the stimulus of a patent system. It is said that many inventions are simultaneous.; that different men in different places make the same invention at the same lime. That is not the fact. Undoubtedly it has happened from time to time that sev- eral men, striving in the same branch, hit upon substantially the same devices; but the cases are comparatively rare. Why, the best proof of that is, that in not one of these industries will you find any one man at one time inventing a complete thing. If the invention to be made was a single, distinct thing, I could conceive of simultaneous inventors ; but not where the perfected machine — the thing accomplished — is the result of years of work and many inventions^ We have a way of ascertaining.some proof about this from the Patent Office. There are filed in the Patent OfBce about 20,000 applications a year; and I think I rather understate it in saying that each one of the patents contains three claims, on an average, for three different things — separate devices. If that be so, there are something like 60,000 claims filed in that ofiQce in the course of a year by men who swear that they are the original and first inventors thereof. Now, there is a process by which, if one man overlaps other claimants, an "interference" is de- clared; and how many out of this large number are put into interfer- ence in the course of a year ? Last year was the highest number, and that was 614. Now, that is pretty good proof that simultaneous inventions are by no means common. But if they were, what does it show 1 Because men, when stimulated by the patent system to study the same problem, sometimes hit upon the same solution, it does not tend to show that they would have found any solution or bestowed any study if they had not been encouraged to do so. Mr. Aiken. Please explain that again. Mr. Stoekow. There are about 20,000 patents, and each application contains, on an average, as many as three distinct claims. I mean to say that each patent granted may have three or four or five features, all combined in one machine, but so connected that they may all be put into one patent, in different claims. The C3HAIEMAN. Do you know of any cases in interference where the parties live a considerable distance apart 1 Mr. -. That is repeatedly the case. I know one in Tennessee and another in New York, and it occurs very frequently. Mr. Eatmond. What proportion of these cases get. into the Patent Office? Mr. Stoekow. Pretty nearly every man who makes an invention ■himself — I mean if he made the invention and has not copied it — ap- plies for a patent, unless he finds some one so far ahead of him that it is obviously useless ; and so the office files undoubtedly disclose all PATENTS LEAD TO FURTHER INVENTIONS. 337 cases that are near enough in date to be fairly called simultaneous, and most of them get into " interference." Mr. Eaymond. Should you not take the number of patents not is- sued — that are not followed up, for the reason of prior use ? Mr. Storrow. No; for if they are so apart as that, they cannot be called simultaneous. But I am glad of the suggestion, for it bears on another point. If you find the same invention made by different men, many years apart, that shows that it is not a mere question of supply and demand ; and we ought to be grateful to the system under which the first man made, and perfected, and published his invention — the system which gave us early what was not found out for many years by any one else. I have stated sufficiently the manner in which a stimulus is created to induce men to put in their time and their money; let me endeavor to state a little more fully another effect of it, and that is, that the impetus it gives to further invention. Take the case of Mr. Bessemer's secret process : it did not lead to any further invention, because it was not known. On the other hand, the moment any process is made public it leads some one else to improvement, and that is the way it gives the public the greatest results. It does not incite any one as much as it does the owner or patentee himself. Improvements do not come from the general public, the general user, or general manufacturer of machi- nery ; they come from the man who builds improved patent machines, ■whose attention is fixed upon new inventions. And he has two reasons why he seeks improvement : one is, he wants to extend his exclusive manufacture, for he knows that when his patent is run out his business is gone, unless he shall so improve his machine or product that the peo- ple are ready to come and pay a good price for his new machine. Take the case of the reapers. Men to-day will go and bny the highest-priced machine, and won't take the machine wljich made the reputation of American makers in 1858. It is not worth anything. Mr. Ward. Did you ever hear of the McCaffey cast steel ? It is not a patented cast steel — it is a secret process. Mr. Storrow. I never heard of it, perhaps because it is secret. Mr. Ward. I know of two establishments that are running on it. Mr. Storrow. Do they manufacture very much of it? Mr. Ward. No ; it is used for small parts that are required for heavy straining. I remember it in connection with your remark about the Bessemer process. Mr. McOaffey came over from England, having the secret. It was not patented, but the idea was that nobody could ever discover it. He started his works at Chester three or four years ago, and a man who worked in the establishment, and who was not the depositary of tte secret, nevertheless discovered it, and other works have now started, and they are both running. Mr. Storrow. Secret use does not seem to be very encouraging to a man who wants to rely on a reward to induce labor and expenditure. One English manufacturer said he was not sure that a pot of beer would disclose any secret process ; but he knew that two pots would. Mr. Coffin spoke to you about the opinion of Governor Straw, of New; Hampshire, the greatcotton manufacturer, as to the effect of modern machinery upon cotton manufacture. He said that the cotton-mills could not afford to take as a gift the machinery in existence in 1860. I could not help thinking that that was exactly the machinery upon which the patents had expired. No, Mr. Chairman ; a man had better take the S. Mis. 50 22 338 MR. J. J. STOEROW. most expensive patented machinery of today than attempt to use ma- chines so old that all patents on them have expired. Mr. Beiggs. Those large mills break up their machinery and sell it for old iron — thousands of dollars' worth. Mr. Stoeeow. I want to speak more particularly of the prices of pat- ented articles, the saving made by the invention, and the manner in which the saviiug is divided between the patentee and the public. Tou have had laid before you a number of instances of improved ma- chinery whose immediate as well as ultimate effect has been to cheapen the product of the art to which it belongs. I call to mind the horse- shoe, the horseshoe nail, the common cut-nail, the wood-screw, the pegged or sewed boot or shoe, pulp for paper-making, hosiery, steel, and others. These were cases where the product is old, but the process or machine is improved. Let me add a few more. In a report to Congress on the extension of the Marshall knitting-machine, chiefly used for Shaker socks and cardigan jackets, the committee said that there were made about 3,600,000 pairs of these socks per year. By hand, a woman could knit four pairs a day, for which she received 33 cents ; by the machine she could make twenty pairs, and earn $1.33 per day. Cardigan jack- ets, made on the English hand-frames, could be produced at the rate of about five per day per man, and cost for labor 58 cents each. By this machine a girl can make four dozen a day, at a cost for labor of about 3 cents each ; and about 2,400,000 a year are made. The committee doubtless know of the aniline dyes, obtained some years ago from coal-tar, which produced such a change in the arts. Their success, and the value of patents based on such inventions, has. led to further analogous discoveries. The most important material in calico printing and dyeing cottons is extracted from the root of the madder plant, which grows in Europe, but is best found in Asia Minor. The principal substance in it, which contains the coloring properties, is known as alizarine. It was ascertained that this substance, after a very subtle analysis, yielded anthracine as one of its elements. Now, this anthracine is found in coal-tar. So two industrial chemists, Graebe and Liebermann, set to work, and finally succeeded in obtaining the constit- uents which made up alizarine, and then in combining them together, till they had built up an artificial alizarine as good as the natural, or perhaps better, for it contained some newly-discovered ingredients. Of course they patented it, and their patent has recently been sustained ; and when I say that their process consists in first preparing bibroman- thrakinon or bicloranthrakinon and then converting them into alizarine, and that their alizarine contains the newly-discovered bodies, anthra- purpurine and isopurpurine, you will readily believe that invention was required, at least to find language in which to describe their invention. Their factory makes, if I have not mistaken the figures, 168 cwt. a day, and they sell the product at such a price that the natural madder, its competitor, has been forced to come down from 12 and 16 cents to 3 and 4 cents. You see what a saving to the public this represents, over and above all the patentees' profits. When the invention is of an entirely new thing, the saving to the pub- lic is perhaps best shown by the readiness with which the public buy it. These instances could be multiplied indefinitely. Tou can find none to the contrary. The new machine or process or product goes into use because the user or consumer finds a gain in using it over anything known before. If the patentee charges more than the gain, of course no one buys it; so he is continually led to put down his price, in order to patentee's portion of public gain. 339. extend his sales, as low as he conveniently can. Thus, in eftect, the paten- tee divides the benefit with the public, even during the term of his ex- clusive use ; and the public have no idea of how large a proportion of those savings they get, and how small a proportion the patentee gets, m the case of inventions which go into general use. Mr. Eaymond spoke the other day of the Marsh Harvester Company as an example of it, and their counsel, Mr. Christy, corrected the state- ment. I have here a letter from Mr. Bond, of Chicago, one of the gen- tlemen who framed this bill, and who for twelve years has been the local counsel for the Marsh people; he knows their business^ and he says the highest royalty ever paid on these machines was $9.50, and this, together with the cost of another patent they bought up, makes the total royalty to all patentees not to exceed $10 per machine. The testimony of a large number of manufacturers is, that $10 is the highest royalty charged on the ordinary classes of machines. I have be- fore me a list of patents owned by an association which was organized and attempted to buy a great number of patents and monopolize the business, or one class of it. They bought up the one hundred reaper and mowing-machine patents, and told everybody they must take out licenses, and the highest they asked for the license fee for all their pat- ents, and they covered an excellent class of machines and all that were needed to make those machines, was $10, and they often took less. Then on the Buckeye machines — I take the sworn testimony from the files of the Patent Oflace — the license fee was $10 for the large and $7.50 for the small machine, and more were made by licenses at these prices than by the owners of the patent at their own factory. Mr. Raymond. Do these figures which you give include the money paid on account of litigation, &c. ? ' Mr. Stokeow. These figures covered all the fees paid to and received by the owners of all the patents on these machines ; it was only such part of it as remained, after paying expenses of litigation and other ex- penses, that the patentee had for his profit. The day those patents ex- pired $10 was all that was taken off the machine. What some manufac- turers may have spent in defending themselves from ill-advised attempts to use the patents without paying even that small license, I do not know, but a great many took the license without contest. All the patentee's expenses were included in this fee. In some cases of very valuable machines, when new (as, for instance, the self binder), the royalty has run up to $20 or $25; but the tendency 'is always to go down. I have taken all these figures not from hearsay, but from careful examination, and inquiries from factories and gentle- men who, from professional relation to these large establishments, had occasion to know. One was counsel for one of the largest manufactories,, and is probably more familiar with the reaping-machine patents and their history, and has been for twenty years, than any one in this country. Take the saving of labor on the harvester for a year (the larger ma- chine with the royalty of $10, and the lighter machines with a royalty $7.50), and you will find the total royalty to day on these machines is not over 2 or 3 per cent, of the saving to the public. You see what it was in the case of the Bessemer patent, only $5 royalty against a saving of $150 per ton on steel. You heard what Mr. Hyde told you yesterday, that in certain classes of the shoe business — in the one that I spoke of particularly, where the actual saving with labor at the present prices would be about $1.75, and the actual cheapening was 75 cents, although the material had gone up 60 per cent, and the labor 100 per cent., the highest royalty was from 2^ to 3J cents per pair, say 2 per cent, on the 5 do MR. J. J. STOEROW. «aviug. So with the English hosiery trade. Take it all the waj tlirough and you will find that 5 per cent, is as high a proportion of the saving as the patentee generally gets, except with certain peculiar patented goods, where the demand is small, or with others while the invention is new, where, in order to get back his expense and the proper profit, a large per cent, is charged ; but in the articles and products generally used by the public it will not exceed 5, or sometimes 10 per cent. Take the royalties on looms in weaving cloth. A loom will weave, I think, 12,000 yards a year, or some such number, and it will last ten years. Suppose the loom costs $200 or $300 more than an unpatented one, that would amount to nothing on the aggregate amount of cloth manufactured, and really nothing on the saving, if it was worth using at all; it would be a fraction so small that you could not figure it. Now, even if the patentee realized as high as 10 per cent, a year, what ■would be the result to the public ? Why, if all the patent system did was to introduce the invention into use two years or a year and a half sooner than it otherwise would have been accomplished, the public cold afford to pay the per cent, and be the gainer by it. It takes a cer- tain number of years to perfect the machine and to introduce it, and I think twelve or fourteen years is as long as a patentee receives a royalty under our law. If it was 10 per cent., which is twice what he generally gets, then the gain from getting the invention into general use eighteen months earlier would amount to more than all the royalties paid during the whole life of the patent ; and can any one doubt that the eifect of the patent law is at least to advance invention many times eighteen months? Most of the objections to a patent system resolve themselves into ig- norance of what the patents are and of what the system is. The cases of hardship which you hear of, nine times out of ten are submitted to because the party does not know enough to defend himself, or does not know enough to refuse to buy a patent which is not worth what he gives for it. If you have an excellent machine and your operative cannot work it successfully, you do not destroy it ; you teach him about it ; and the remedy here largely is to disseminate education on this branch in the community, and that is being done very fast. The Patent-Ofllce Gazette, which has a very large circulation, and, if the price be reduced, as the Commissioner desires, will have a still larger, has disseminated a great deal of knowledge. The Commissioner tells me that last year alone he sent out over 200,000 copies of patents or drawings, and if he is allowed to reduce the price of the copies to about, cost he will double that number. Those copies of course do not reach every man in the land, but they go into the centers of industry, into the hands of lawyers, into the manufacturing community, and by that means a general knowledge about patents gets spread through the community. In my section of the country they are already tolerably well informed; and in the West, after a few more years, probably the people will have a general understanding of the subject. Nevertheless the law is not what it should be. In some important details, and still more in some parts of its administration, departing from the true principles of the law of 1836, hardships and annoyances have come to be felt. But these can be in large part removed without in the least impairing the efficiency of the system, and it is the aim of the bill before you so to remove them. That this bill will leave the law so that it will never bear hardly on any one would be too much to ex- pect. Legislation never accomplished that. We do not ask it in other matters. We want government, though it entails disagreeable taxation SEC. ] : LIMITATIONS. 341 and abuses ia its administration. We must have courts of justice though they sometimes decide wrong. But we believe that this bill is not only efficient, but that it goes as far as it is prudent to go ; that no other bill is needed ; that it is drawn in what I hope you are satisfied is the proper spirit — a conviction that the patent law, on the whole, is of great benefit to the community. That the bill as drawn is perfect would be almost too much to expect. We want that it shall be, and therefore I am glad that it will receive intelligent criticism at your hands. Its present form is the result of much criticism from many sources, and we should consider it a favor if we might hear the suggestions of the committee — not to argue against them, but to bring before you the special considerations bearing on them or the practical results of changes, better than can be done in a general argument, and to enlighten our own minds by the result of your reflections. I am not sure that too many heads are always best in fram- ing a law, but I am sure that those who have to enact it, and those who want it enacted in its best form, cannot be too ready to invite and to submit to the body that is to pass upon it the sharpest comments of those who are willing to carefully study it, for this will disclose the latent defects which may escape a single draughtsman. AEGUMENT OF MR. STOREOW— Continued. I want to speak now somewhat of the legal questions involved in this bill, and I have handed to each member of the committee a brief upon that subject. The bill before the committee consists of twenty-five sections. Section 1. — Limitations, There is now no statute of limitations appli- cable to patent causes. That one should be provided for actions on patents as well as for every other form of action cannot be doubted. This section proposes that no recovery shall be had for an infringement more than four years old, leaving the right to sue for what has been done within four years where the infringement has continued. It allows the court, where many suits are brought on one patent, to have one brought to trial, and meanwhile stay proceedings in the others. A continuous infringement is a continuing cause of action. If the plaintiff can prove an infringement within four years, he can recover damages for four years before suit brought, but he cannot inquire into profits or damages before that time, nor rely on an infringement before that time. This is analogous to the ordinary statutes of limitation about mesne profits in ejectment; a long adverse use, generally twenty years, is required to bar the right, and this section does not allow the right to be barred by adverse use; a short period, as here, bars the time for which mesne profits or damages can be recovered. • The limitation should not be too short. The owner of the patent can- not have the same physical oversight and care over it that he can over a piece of real estate or a specific chattel. It may be infringed in every town in the United States, and in secret. The rules laid down by courts will, of themselves, except from the operation of the limitation cases where the defendant fraudulently conceals the cause of action. [Bailey v. Glover, 21 Wall., 342; Senate Arg., pp. 124-7.) It is impracticable to make any other distinction between defendants as to the application of the law, without making it a statute of contention, instead of a stat- ute of repose. 342 MR. J. J. STOBEOW. We fixed on four years partly because it is for the interest of the community that the patentee should have time to carry one test case to the conclusion, at least in the circuit court, before be needs to bring many suits to preserve his rights, and four years will generally enable him to do this. It has been suggested that in this proviso in line 15 the term of four years within which the bar shall not apply to causes of ac- tion now existing be changed to two years. I have no objection to this, but the language of the proviso in that case would require considerable remodeling. Section 2. — Damages and profits. It is sometimes said that the law gives to the patentee better remedies than to any other property owner. Nothing can be further from the truth. The great protection of prop- erty — the strong arm of the law, the power of the police and of the criminal courts, the right of every man to defend his own by force — is utterly denied to the patentee in this country. For one who steals the machine of the infringer there is the summary arrest and the prison, but for the infringer who has wantonly stolen my invention, there is no policeman, no prosecution at government expense, no terror of punish- ment. That aid from physical force in protecting one's possessions which belongs to all corporeal property, and to those incorporeal here- ditaments which inhere in or attach to specific property, cannot be had from the nature of the case. But that does not necessarily exclude the aid of the criminal law. Forgery, or counterfeiting, or libel are punish- able offenses, and the European systems generally punish infringements of patents by criminal proceedings, as well as by civil remedies. We do not here, and, I think, wisely, for a criminal court is a poor tribunal to try patent questions. But, if you had no protection, physical or legal, from the burglar, the libeler, the counterfeiter, the forger, except a civil action, you would say that all the power of the law should be concentrated to make those civil remedies more prompt and more efl- cient to recompense you — more terrible towards the tort-feasor than ever civil remedies were before. And yet the patentee has no civil remedy except such as the ordinary principles of law and equity give him. Those remedies are three : an injunction, which a court of equity allows, because his right is exclusive, is limited in time, and an invasion causes irreparable damage; an action on the case for damages; the right, in a suit in equity, to recover profits, such as equity always gives in a suit of equitable cognizance, such as the law gives in the action for mesne profits, such as equity delights to give when it allows a plaintiff to convert a wrong-doer into a quasi trustee. " In an action at law, the plaintiff recovers " actual damages." (R. S., sec. 4919.) And the court may increase this threefold, though this power has rarely been exercised, and only in cases where, without the limitation of the word " actual," the law would give punitive damages. Accordingto the existing rule of damages, if the plaintiff has been in the habit of granting licenses at a certain price, and a market- value has thus been attached to the use of the invention, that license-fee is the primary basis for measuring damages; not conclusive that the damages shall be the same in amount as the license-fee, for it may have been established with reference to a different class of cases, but, generally speaking, it is the basis to start from. (Seymour v. McCormiek, 16 How,, 489 ; Bur- dell V. Denig, 92 U. S,, 720; Paelcet Company v. 8iclcles, 19 Wall., 618; Birdsall v. Goolidge, 93 U. S., 70.) Our section adopts the same rule with the same flexibility. The license-fee is to be the measure, only when the licenses have been "to use the invention in like manner to that in which it was used by the SEC. 2: PROFITS. 343 defendant," and it must be a fee "established by a reasonable number of transactions of a character applicable to the case at bar" ; if the case furnishes uo measure for damages, the court or jnry are to "determine the same from all the evidence in the case." In Seymour v. McOormick, 16 How., 489, the court explained the evil of the old method before 1836, which was that the infringer should pay three times the damages. Of course this was in the nature of a penalty in terrorem, but Congress determined, and justly, in the opinion of the court, that the only proper rule was to give actual damages, to be first ascertained in all cases, and then to commit to the discretion and judg- ment of the court the power to inflict vindictive or punitive damages, in cases that called for such an infliction. The court then made some remarks about the impossibility of applying one rule of damages to all cases. It said, however, that " where an inventor finds it profitable to exercise his monopoly by selling licenses to make or use his improve- ment, he has himself fixed the average of his actual damage when his invention has been used without his license. If he claims anything above that amount, he is bound to substantiate his claim by clear and distinct evidence." Besides his right to recover damages, and inasmuch as the nature of his patent-right and the kind of remedy he is entitled to give him a right to maintain a bill in equity, he may waive the tort, and a court of equity has long been in the habit of considering, in such cases, that the" defend- ant has, by the wrongful use of the plaintiff's invention, realized, gains and profits, and treating him as a trustee thereof for the benefit of the plaintiff, and ordering him to account for them. {Burdell v. Denig, 92 U. S., 720.) Courts of equity do not treat as trustees those only who assumed to act as such, or who deliberately and intentionally entered into relations of trust with the plaintiff. They will, for the sake of the remedy, treat as trustee of gains and profits actually realized, one who acted either as a wanton wrongdoer, or in the belief of a right, and without any inten- tion of acting for or becoming accountable to another ; and it is, this same principle which is applied to patent cases, for an account of profits was never given by any statute, but decreed by the courts, as part of their ordinary equity jurisprudence. {Stevens v. Gladding, 17 How., 455.) In Birdsall v. GooUdge, 93 U. S., 68 (action at law), the court explained the rule about damages and profits, and the distinction between them ; the object of the first being to give to the plaintiff what he had lost — " to compensate him for the injury sustained by the unlawful violation of the exclusive right secured to him by the patent — without regard to the ques- tion whether the defendant had gained or lost by his unlawful acts"; as to the second, the patentee may "proceed in equity and recover the gains and profits which the infringer has made by the unlawfal use of his invention, the infringer in such a suit being regarded as the trustee of the owner of the patent, as respects such gains and profits." In cases where it Is proper to give profits, the courts — unadvisedly, we think — have been led into a rule which they have since declared to often work injustice, and the error of which is easy now to point out. The rule for ascertaining profits is not laid down by statute, but is to be arrived at by a court of equity upon its own principles. In Livingston v. Woodworth, 15 How., 559, and more pointedly in Bean v. Mason, 20 How., 198, the question was presented in a suit in equity whether the defendant was to be treated as trustee in respect of the invention, and therefore bound to use it with the diligence required of a trustee, and to account not merely for profits actually made but 344 MB. J. J. STOEKOW. for such as he ought to have made, or whether his quasi trusteeship ex- tended only to profits actually realized. The court took the latter view, and held that he was trustee of the profits realized, and not trustee to use the invention, and therefore that he was accountable only for " profits received," and not for profits which he might have received. Or, to state It in another form, the plaintiff who waives the tort is entitled to take from the defendant what has actually come to his hands, and no more. In Goodyear v. Providence Rubber Company, 9 Wall., 788, the re- port of the master allowed for bad debts, and held the defendants lia- ble, in the language of the court, only for " ultimate profits." The Su- preme Court approved this, and said : " The calculation is to be made as a manufacturer calculates the profits of his business. 'Profit' is the gain made upon any business or investment when both the receipts and payments are taken into account. (People v. Super. Mag., 2 Hill, 23.) The rule is founded in reason and justice. It compensates one party and punishes the other. It makes the wrong-doer liable for act- ual, not possible gains. The controlling consideration is, that he shall not profit by his wrong. A more favorable rule would offer a premium to dishonesty and invite to aggression." In Howry v. Whitney, 14 Wall., 620, the patent was for a new mode of treating car-wheels after they were cast, and consisted in cooling thera in such a slow and peculiar manner that the " chill" or temper of the rim was not injured, while the inherent strains of the metal, due to the uncompensated contraction which takes place when the wheels are al- lowed to cool in the open air, were avoided, and the wheels made stronger. The defendant made wheels according to this process, and the plaintiff insisted that he should be held accountable for all the profits actually realized in the manufacture, about $90,000. It appeared that this cooling was only one step in the whole manufacture; that there were other modes of cooling which made merchantable wheels, and that the advantage to the manufacturer from using the Whitney process over any other in this step was about $5,000. Thereupon the court held that the $5,000, and not the $90,000, was the gain or profit made by the defendant from the use of the plaintiff's invention. The decision was undoubtedly correct. But that part of the reason- ing which was intended to limit the result arrived at by the master was caught up by the courts as if it was a complete and exhaustive rule, to be applied without regard to results or to the other facts of the case. The idea arose that the defendant was always to be held liable for the difference in cost between the plaintiff's process and any other process open to him ; that is, that he was to be held liable for " savings," neg- lecting entirely the old rule laid down in Dean v. Mason and Goodyear v. Providence Rubier Company, and assumed and acted upon without discussion in Mowry v. Whitney — that the defendant was only liable to pay over " profits actually realized." And, finally, in Mevs v. Conover, 11 Ofi&cial Gazette, 1111, where it appeared that it cost half a dollar a cord less to split wood by the plaintiff's machine than by hand, but the business was such that the defendant made a loss and no profit, the Supreme Court held him liable for the half dollar under guise of profits, because they said the machine saved him from the greater loss of the half dollar, which he would have suffered if he had carried on the busi- ness by hand-labor. This mode of reasoning not only assumes that he would have carried on the business by hand-labor, but it further assumes that the ordinary result of the ownership or use of a patent is, that the patentee or user receives ull tlie gain arising from tlie tiavitig in-cost. FJe never does; SEC. a: PROFITS. 345 Ms right is for a limited time; his object is to create the largest possible demand at once, as the best way of getting a profit. In actual practice this is invariably the case: either he sells the machine and licenses its use at a price far less than the cost of the labor it saves, or the benefit it confers, or he makes the article and sells it at a price far below the old price. The more widely-extended use the article is capable of, the more he strives to popularize it by a low price. A case often put is that of the inventor of printing. He sold a whole edition of Bibles at the cost, perhaps, of two or three manuscript copies. If the process had been patented, and an infringer the next year had done the same, and had been held answerable for the difference between the cost of a thou- sand printed copies and a thousand manuscript copies, no treasury in Europe could have responded ; he would have been held liable for a profit which he did not make, and which neither he nor the patentee would have made in the ordinary course of events. We must not give the patentee the advantage of the large sale induced by the low price, and the high price incompatible with the large sale. Take the case of the horseshoe nail, which has been spoken of; made by hand, they cost seventy-five cents a pound; the patentees make them by machine, and find a satisfactory profit in selling at twenty-five cents. Suppose to-day that all the patents were owned by one man, and that a stranger builds a machine which, after litigation, is held to in- fringe them, the rule of Mevs v. Conover (11 Official Gazette, 1111) would require him to pay seventy-five, less twenty or twenty-five, say fifty or fifty-five, cents a pound as profits, when he did not and would not sell the article for more than twenty-five cents, gross price. Now, this is the exact case which is presented, in a more or less complicated form, in every instance of infringement, by the use of a labor saving or cheapening machine or process. Why cling to a rule which, not acci- dentally nor in a few cases, but necessarily, and from the false assump- tion on which it is based, leads to injustice? Livingstone v. Woodicorth (15 How., 655) went upon the ground of " actual gains and profits." It was a bill in equity for the infringing use of a patented planer. The first report of the master found fifty cents per thousand feet as the profits realized; upon a recommittal he reck- oued at one dollar per thousand feet as being "the amount of profits which may have been, or with due diligence and prudence might have been, realized by the defendants." The Supreme Court declared that it should be restricted to " the actual gains and profits of the appellants during the time their machiue was in operation, and during no other period." The question of "savings" does not seem to have been dis- cussed, but it is clear that the decision excluded that ground ; for, of course, the actual saving by the use of the machine, over the old jack- plane, far exceeded fifty cents a thousand feet. The decision was, that the amount recoverable upon an accounting should not exceed the " actual gains and profits of the defendants," although their failure to make more was not due to the machiue, but to their own want of "due diligence and prudence." But with the remedies which now exist, and which will continue to exist if this bill becomes a law, profits are not the only recovery. A wanton infringer may sell cheap and depress the price, and not only make no profit himself, but prevent the patentee or a licensee, who has paid for a license, from getting any. In such a case " profits" are not a sufficient redress; an actual injury has been done for which damages should be recovered, in addition for profits, for the injury in excess of 346 ME. J. J. STOREOW. the amount recovered as profits ; and if the ordinary remedies will not reach this, the discretionary clause of this section will. It must not be supposed that because an account of profits gives an insufBcient amount in any case, it is the whole recovery that can be had ; in the same suit the plaintifif can claim damages. But the two kinds of recovery are different ; if one does not give enough, it will be supplemented by the other under the present law and under this sec- tion : they are arrived at by different methods ; they depend upon dif- ferent principles ; do not pervert one from its true character by making it do the work of the other, when you have the other ready to perform its proper function. Since the statute of 1870, a court of equity may also give damages where the infringer has so conducted his business that the profits do not give adequate compensation. (§ 4921.) These recoveries are not cumu- lative; the plaintifif takes whichever sum is largest. [Birdsall v. Coolidge, 93 TJ. S., 70.) In England, the present statutes give to a court of law the power to award an account and an injunction in addi- tion to damages. The great advantage of the equity jurisdiction lies in the difficulty of making a jury understand the intricate questions involved in a patent case, and the short time and imperfect means they have of studying them, even if they were competent. Profits actually realized should, therefore, be the rule of profits as such (though never to the exclusion of damages); for any other as- sumes that which is not the fact, and which, in the ordinary course of human affairs, cannot be the fact. Such a rule so applied always leads to unjust results ; but the court has felt itself so bound by previous de- cisions that it could not break away from them. In Packet Company V. Sicldes (19 Wall., 618) it declared that, even with the corrective power of a chancellor, its rule of assuming profits had produced results calculated to excite distrust. The case has arisen, therefore, where the court, powerless to relieve itself, must be aided by the legislature. The purport of the second portion of this section is to enable the court to escape from the mere and absolute rule of savings, and, so to speak, return to the true rule, viz, such portion of the profits actually found in the defendant's hands as are due to the use of the plaintiff's invention. Cases may well arise where the defendant would have made a profit by the use of the invention, but afterwards lost it in some other part of his business. Such would be the case of a farmer who got his seed cheaply into the ground, but lost his crop from drought or fire or a hur- ricane. The inquiry as to profits should, therefore, be limited to that part of the business in which the invention is used. The bill seeks to attain all these ends by that part of section 2 which begins in line 14: In taking an account of profits in any case, the defendant shall not be charged with any saving he may have made, if he shall show that it has not enabled him to realize an actual profit in that part of his business connected with the use of the invention. And the court shall determine what proportion of such profit is due to the use of such invention, and what proportion to the other elements from which such profit was derived, capital and personal services excepted ; and the proportion of actual profit so found to be <3erived from the use of the invention shall he the measure of the profits to be recovered. The limitations contained in the second paragraph quoted are law to- day. (See Rubber Co. v. Goodyear, 9 Wall., 788, and Mowry v. Whitney, 14 Wall., 620.) When we first undertook to draw this section we tried to state rules which should govern the accounting in all the important elements, but every draught we made we rejected upon examination. We came to SEC. 2: PROFITS. 347 the conclusiou tbat it was unsafe to attempt this. We perceived that the cardinal error of the court was in departing from the doctrine of actual profits and adopting the doctrine of savings ; or, to state it as the court did, in assuming that the actual profits were in all cases the sayings. And so we thought it safest merely to relieve the courts from this rule ; to indicate to them the road they must forsake and the direc- tion they must pursue ; and it will be readily seen that this is the plan and the purport of this part of the section. The objection which has been made to the rule proposed is, that it will be difiScult to take the account under it; the chief ground, I think, on which overworked judges have been disposed to adopt the rule of sav- ings, is that they have thought it a cheap and easy method of getting at results. Certainly it is a poor argument that a court shall deliberately adopt injustice because it is easy to obtain, and refnse the labor neces- sary to do justice. A still easier way, and one in many cases tending to more just results, would be to refuse to allow any account at all. But I deny that the objection is well founded in fact. In the planer cases {Livingston v. Woodworth and Dean v. Mason] — in the great Providence rubber case, where profits of several hundred thousand dollars, actually realized, were found by the master and decreed by the court, no insuper- able difficulty was found. In the Tanner brake cases and the swedge- block cases, where the account was taken on the rule of savings, the re- sult so far reached, whether right or wrong, has been after some of the longest litigations on record. In the latter cases, the report was once re- vised, enormously cut down, and recommitted by the circuit court ; and yet, when it came before the Supreme Court, in The Gaioood Patent (94 TJ. S., 605), that court found that it was almost worthless, and hardly presented any data upon which they could find a just decree. Profits actually realized must still be ascertained in all cases where the infringe- ment consists in making, and in many cases where it consists in using, a new product, or in using a machine or process which produces an arti- cle of better quality than before, though at no less cost. The right to recover profits is extremely important. Nothing will bet- ter serve to check wanton infringements than a conviction on the part of the infringer that he cannot retain any profits due to his wrong-doing. But in practice serious difficulties have arisen with regard to the recov- ery of profits as now allowed by the courts. How can you show by any system of accounting what a railroad gains by the use of a safety-switch, more expensive to make and to maintain than the old, but which may save the lives of passengers ? or by an ex- pensive spring or ventilator, which adds to their comfort? or how much a man gains in money from an artificial limb, or an improvement in it, or from a more comfortable shoe ? or how much a city government gains from an electric fire-alarm % From the use of these and many other in- ventions the defendant derives a real advantage, which can be estimated by a jury or a master, but cannot be proved in figures by the technical process of accounting. The attempt to reach justice in such cases — and there are very many of them by the ordinary process of a debtor and creditor account must end in failure ; or if a decree is for the balance of an account in such a case it will be mere chance whether it be right or wrong. The judgment of a court, or master, or a jury may arrive at a just result; bat an ac- count, where judgment and discretion can enter only indirectly and fur- tively, and theoretically not at all, is as incompetent to reach a conclu- • sion in such a case as a jury is to state a partnership account. 348 MB. J. J. STORED W. Let us see if we can define the cases in which this difficulty, or, rather, this impossibility, arises. Clearly, it will be only in cases where the essence of the infringement consists in the use; or, to state in another way, where the gain consists in the use in the course of the infringer's business, and not in making the patented thing, nor selling the patented thing, nor in selling the pro- duct of that which is patented, whether the patent be for a machine or for a process. If the mill-owner makes a new implement, which exactly takes the place of the old, and he uses it in his mill instead of the old, and the only advantage is that it is cheaper to make, there is no insuperable difficulty in ascertaining his gain. If he uses the new machine or new process in producing an article for sale, there is no more difficulty than there would be if he had a quarrel with his partner and a court of equity took an account between them. If he makes and sells the patented machine or composition of matter, there is no difficulty. The trouble arises whenever the effects of the element which belongs to the plaintiff are so interwoven with the effects of the far greater number belonging to the defendant, that the ultimate result of the whole business cannot be dissected, and a due proportion thereof at- tributed to each element with the certainty required in accounting. This case will arise chiefly, and perhaps entirely, where the invention can be used only in connection with, or as a part of, a business or in- dustry of such a character that the patentee cannot carry on the whole of it himself, but must expect to derive profit from his invention by in some manner licensing the use of the thing by others. A patented railroad-switch was instanced in Seymour v. McGormick (16 How., 480), as an apparatus, the actual use of which no patentee could or would de- sire to confine to himself. A valve for marine engines would be another instance. On the other hand, certain patented machines may be such that, with one establishment stocked with them, the patentee can sup- ply the market with the product, and, therefore, may well keep the ma- chines for his own use. The first part of this section attempts to deal with this acknowledged difficulty by providing that in the class of cases where it arises dam- ages may be given, but no account of profits as such allowed, and f think that the only question for debate under this section, the only question upon which the section can reasonably be criticised, is whether the language we have used will include the class which ought to be in- cluded, and will include no more. Within that class the section places, first, all those patents whose owner has declared their character by his course of dealing in licensing freely ; it also places within the class those patents with relation to which such a course of dealing has not yet arisen, but which, from their nature, must obviously be so dealt with. It has been objected that it was dangerous to allow a court to say how the patentee is going to use his patent. There is force in the objection, abstractly considered, but it is thought that the provision is now so guarded that no injustice will arise in practice. Some of the most important of these safeguards were suggested by the course of discussion before the Senate Com- mittee, and will doubtless appear in their report, which we shall lay be- fore you. Experience has shown that the variety of circumstances presented in patent cases is so great and so unexpected that, after the best rules are laid down, it is essential to give the court power to modify the result in exceptional cases, and the third clause has been introduced for that SEC. 2: DAMAGES. 349 purpose, allowing the court to increase or diminish the amount of re- covery. It has been objected that this leaves the whole matter to the court ; and, therefore, that the previous rules are useless. This objec- tion is ill-founded. The previous parts are needed largely to enable the court to escape from the rules by which they now feel bound ; and, naoreover, it is common, especially in equity, to find judicially-estab- lished rules, which guide the discretion, though they do not bind it, as a statute would, in cases exceptional in their character. The patent law has almost always given to the court power to increase the dam- ages. (E. S., 4919, re-enacted from the old statute.) The court has de- clared {Rubber Go. v. Goodyear, 9 Wall., 788) that in equity "the severity of the decree may be increased or mitigated, according to the com- plexion of the conduct of the offender"; and in Packet Go. v. Sickles (19 Wall., 618) it spoke of the " corrective powers in the hands of the chan- cellor." From this experience of judicial action, it is certain that the scope given by this section will be looked upon and used as a cor- rective power, to be availed of in exceptional cases after the rules have been applied, and not as an invitation to disregard all the rules which the previous part of the same section has laid down. In accordance with suggestions made at the hearing before the Senate committee, it was understood that the following clause would be in- serted near the end of the section, just before the proviso : And whenever the court shall he of opinion that the claims of the plaintiff in the suit, or the defenses or Infringements of the defendant are either vexatious or without probable cause, it may award in favor of the successful party such sums for counsel-fees and ex- penses of suit as may be just and reasonable." This will very strongly tend to prevent vexatious claims or vexatious defenses, and will enable persons to refuse to pay claims sometimes made by speculators who will no longer be able to frighten a defendant into a payment to avoid the expense of litigation. (See, upon this point. Arguments before Senate Committee, pp. 126, 188, 189.) This whole section was very much discussed before the Senate com- mittee. (See passages referred to on p. 217.) The present statutes relating to remedies are — E. S., 4919, 4921, taken without essential change from act 1819, c. 19, 3 Stat., 481; act 1836, c. 357, § 14, 5 Stat., 117; (see act 1800, c. 25, § 3, 2 Stat., 37;) act 1836, §17. Two other objections have been made to this section. One is, that it will, in some cases, diminish the amount the plaintiff is to recover, and it is said that, considering the great trouble and expense he is put to. by the wrong-doer, the path of the latter ought not be smoothed. The objection is unsound. The normal rule of profits and damages as it now exists, and also as this section will leave it, applies alike to the wanton infringer, to the men who combine to break down the patentee, and to those who, in ignorance of the plaintiff's patent, or who, with entire good faith and upon the advice of the most competent men that they do not infringe, have embarked in the business which the court finally holds is against the plaintiff's right. All notion of punitive damages, or dam- ages compensating for the expenses of litigation, must be banished from such a rule, as it is from all other rules of damages ; certainly it has no place in a court of equity. We have not lost sight of the consideration, however, but have put in an express provision about expenses of suit, which will enable the court to reimburse the plaintiff his expenses wheu the character of the acts calls for such a decree. The other objection is that this section retroacts on existing causes of action. For this see p. 185, infra. 350 MR. J. J. STORROW. I said that the plaintiff was not barred of recovery when there were no profits ; that he always had his claim for damages, and that great sheet-anchor of the patentee — his right to an injunction. To guard against any possible misapprehension on that score, we originally added a clause expressly saving the right to an injunction, and I now ask you to add a similar clause saving the right to damages in equity, as under the statute of 1870. (R. S., 4921.) Add at end of section 2 the following : Nor to recover in a suit in equity, in addition to the profits to be accounted for, the damages the complainant has sustained by the infringements complained of. Section 3. — In patent suits in equity, the court first determines the validity of the patent and the question of infringement ; it then orders an account. An appeal cannot be taken unless the account has been completed. The accounting is very expensive, and consumes much time, and if the decision as to validity or infringement is reversed, or even modified on appeal, it becomes useless. This section authorizes the court to permit the appeal to be taken at once. Section 4.^--This preserves in the circuit court, pending an appeal, the same power over the parties, with relation to the injunction, which it had before the appeal. The Senate committee have proposed to add after the word " and" in line 5, the words " subject to such rules and regulations as the Supreme Court may establish"; the amendment is good. Section 5. — Reissues. This section was the subject of much discus- sion before the Senate committee; many verbal amendments were suggested, but it is believed that the best are embodied in the com- munication of the honorable Commissioner of Patents, and that the section should be adopted in the form approved by him and printed in Senate Arg., p. 202. The committee are referred to all the passages in the Senate Argumeiit collected on p. 218 of the index, but especially to pages 45, 136, 204, for a full statement of the reasons why a reissue is ' required, and the manner in which it should be made. On page 136 and subsequent pages I discussed the subject at consid- erable length, and gave a number of illustrations. I will not repeat them, but will ask the committee to read them. The views of the Hon. Commissioner are expressed on page 204, and should be studied. It is not enough for the inventor to describe the machine which he has constructed. He must show the public, " in full, clear, concise, and exact terms," how to make it and how to use it. " He shall explain the principle thereof, and the best mode in which he has contemplated ap- plying that principle, so as to distinguish it from other inventions ; and he shall particularly point out and distinctly claim the part, improve- ment, or combination which he claims as his invention or discovery." (E. S., 4888.) To comply with these statute requirements needs a per- fect knowledge of all that has been done up to that moment — that is, of the " state of the art," as it is called — which few inventors possess. It requires a statement of and explanation of the " principle" of the in- vention, which is extremely difQcult in many cases, (v. Senate Arg., p. 136.) For example, Mr. Bell has caused to be constructed a great many telephones, in accordance with his invention. Scientific men have as yet vainly endeavored to discover " the principle thereof." How could Mr. Bell state it and explain it a year or two ago ? If, therefore, through inadvertence, accident, or mistake, the inventor fails to comply with these technical (but valuable) requirements of the statute, and makes his patent invalid by inserting too broad a statement, or an erroneous explanation, or restricts it by so narrow a statement that others can SEC. 5: REISSUES. 351 avail themselves of it and yet keep oatside of its letter, the law ought to allow him to correct his mistake. Indeed, for the same reason that it requires him to make the statement it should encourage hira to cor- rect it when he finds that it is wrong. Experience has shown that plead- ings, even under our untechnical forms, must often be amended, and so the practice of the government, from the begiiining of the patent sys- tem, was to permit such amendments. In Grant v. Raymond (6 Peters, 244) the Supreme Court (Marshall, O. J.) sanctioned this practice, and declared that they were " satisfied that it is required by justice and good faith." They held that it was proper " where the defect in the specification arose from inadvertence or mistake, and without any fraud or misconduct on the part of the patentee." The case of Grant v. Bay- mond was decided at the January term, 1832; and July 3, 1832, Congress recognized and regulated the practice, using language " inadviertence, accident, or mistake, and without any fraudulent or deceptive inten- tion," evidently taken from the opinion of the court; and this has con- tinued to be the statute law ever since. The court said that one case where it was required was where the mistake arose from the fault of the government, because the Secretary of State exercised the power under the old act, and the Commissioner of Patents is required to exercise it under the act of 1836, of obliging the inventor to make his specification conform to their views. Such cases often arise, and one came before the Supreme Court in Morey v. Lockwood (8 Wall., 200). The patent is to be amended so as to express what the inventor sut- stantially disclosed to the office as his invention in the papers which he filed there, or (in the language of Seymour v. Osborne, 11 Wall., 644, 645) " whatever was described, suggested, or substantially indicated " as constituting " the same invention as that embraced and secured in the original patent ;" i, e., what he showed that he intended to secure, but failed to. Against the validity of a reissue two lines of defense should therefore be allowed, one the same as that allowed to original patents, that the patentee was not the first inventor; another, peculiar to reissues, that the amendments introduced go beyond the proper scope of amendments, and interpolate other inventions. The language of Marshall, C. J., in Grant v. Raymond {loVeX,., 242), shows that he con- sidered both defenses open. The courts, however, first inclined to hold that the decision of the Commissioner was conclusive on the second ques- tion [Allen V. Blunt, 3 Story, 744), though perhaps they never came quite to that point. They have since nearly escaped from that doctrine, but by a process of reasoning which has involved them in other difil- cnlties. They declare that if they could see, on comparison of the old patent and the new, that as matter of law they were not for the same invention, the new patent was void, because in granting it the Commis- sioner exceeded his jurisdiction. [Seymour v. Osborne, 11 Wall., 644.) Yet the same opinion declared that the reissue might embrace matter " substantially indicated in the * * * Patent-Office model " which forms no part of the original patent. In Morey v. LocTcwood (8 Wall., 230) the court had no doubt but that the specification might be corrected by the original application. The reasoning of the court in Seymour v. Osborne shows that what they had in view was that the amendment should not go beyond the facts placed upon the files of the office before the original patent issued. This section, as drawn and amended by the Hon. Commissioner, so limits the right of reissue, and clearly leaves all these essential ques- tions open for judicial examination. 352 ME. J. J. STOEEOW. It is thought that the model ought not to be resorted to for reissues ; it forms no part of the patent nor of the application ; its whole function is to " exhibit advantageously " (R. S. 4891) what the application and the patent describe and claim. This new section is so amended. (See particularly Senate Arg., pp. 47, 57, 65, 78, 140, 195, 204, 218.) The present statute allows ex parte oral evidence to be resorted to in certain cases. This section prevents that entirely. The present law is E. S. 4916. A Mbmbbk op the Committee. What is your idea of the propriety of a statute of limitations on that subject? Mr. Stoeeow. The objections to that are twofold. One is that the mistake should be corrected whenever it is discovered. Time and again a mistake is not discovered until the lapse of quite a length of time. If it is corrected in the proper way, it does no harm ; it must be done with proper caution. The difficulty in limiting the time would be that you would practically destroy the right of reissue ; for I think most patents are not reissued until they are more than three years old. The defect is not discovered until after that. If you limit it to three years, then when the court at a trial finds a verbal defect in the specification, which certainly will not be till the patent is more than three years old, you go back to the diflQculty they had in England in the beginning, when for years the courts would find some flaw in the language, and patent after patent was overthrown forever, because the language of the specifica- tion did not aptly describe the invention. The courts were quite astute jn finding that out, and patents were destroyed by them until inventors became discouraged and thought it useless to invent machines if they had also to invent a language to describe them. These are the main reasons why I think the right of reissue should not be limited in time, but should be limited to what the parties have referred to in the papers that were on file in the ofBce at the time the first patent was issued ; and it should be re-examined to the fullest ex- tent. Section 6. — Reissues not to retroaet. The law requires that patents should state what the inventor claims as new ; all that is not so claimed the public may lawfully use. If the patentee amends his claims by a reissue, and these new claims cover a machine which was not covered by the claims in existence when it was made, the patentee may prevent the use of the same machine which the defendant lawfully built and in- vested his money in. [Stimpson v. West Chester B. B. Co., 4 How., 402.) In order to amend his patent, the law obliges the patentee to sur- render it and take out a new one. The courts have held that the de- struction of the patent by surrender destroys his existing right of ac- tion for past infringement. The amendment takes away from the reissue its retroactive character in both respects. The abstract justice of this change is apparent. Its practical utility will be very great. The severest annoyance from reissues comes in cases where a reissue for the first time brings under the claims of a pat- ent some device which, until then uncovered, has gone into general use as a part of expensive machines. If it had been patented, the pjirties might have used something else in place of it; but it would now cost them so much to reconstruct their machines, that they are obliged to submit to some exaction to save that expense. Section 7. — Provides that if a patent be issued to two on the inven- tion of one, or to one on the invention of two, this mistake may be cor- PERIODICAL FEES. 353 reqted as a clerical error, by the conseut of all the inventors and owners. Section 8. — A provision for taking testimony in perpetuam in patent cases, introduced because the general law applicable to all cases is not adequate in patent causes. Various amendments to improve its practical working and prevent abuse were introduced before the Senate committee, and should be adopted. (See Senate Argument, pp. 80, 109.) Section 9. — Allows suits to be brought to repeal and annul patents which are void. Existing laws afford no adequate remedv. (See Opin. Attorney-Gen- eral, of Nov. 19, 1874, Patent-Offtce Gazette, vol. 6, p. 723; Attorney- General V. Eumford Works, 9 ib., 1062.) Section 10. — Supplies a remedy for cases where a person injures the business of another, by advertising that it infringes a patent, and yet refuses to bring a suit in which the validity of the patent or the question of infringement can be tried. Section 11. — Periodical fees. According to the spirit of the Consti- tution, patents are granted to encourage such inventions as promote the progress of the useful arts. If the invention at once takes place in the arts as a practical thing, or if it so clearly embodies a great step for- ward that the inventor or others are incited to develop it to a practical and pecuniarily profitable application, it constitutes a progress, and purpose of the law is satisfied. But features are often patented which are afterward found neither to be useful nor to hold out hopes of usefulness enough to lead to attempts to improve them. A subse- quent inventor, making a truly useful machine, unconsciously uses one of those features, and the patent stops him ; it does not promote the progress of the useful arts that such a patent should live merely to hin- der, and not to constitute, progress. It is impossible for the prelimi- nary examination at the Patent Offlce to weed out such patents, for only several years' trial can demonstrate their failure. Attempts to do it in advance will generally end in mistakes. Patents were refused in Prus- sia for the Bessemer process of making steel and for the Siemens re- generative furnace. Virtual abandonment by the patentee is the only safe test; and this section, for this purpose, requires a fee of $50 at the end of four years, and $100 at the end of nine years ; -non-payment of either is to kill the patent. The system works well abroad. In Eng- land, the first payment of £50 leaves only about 25 per cent, alive, and the second of £100 leaves only about 10 per cent. Our fee is one- fifth as large, and our patents are much better sifted by a preliminary examination than the English, and therefore the system will not have so much effect here, but it will doubtless be extremely useful to merito- rious inventors and to the public. (See Senate Arg., p. 143, and remarks of Hon. Commissioner of Patents, p. 205, and amendments which should be adopted, p. 190.) The result in England has been that the average life of a patent has been shortened from fourteen to about four years ; we think that this section will shorten it from seventeen to about eight years, and it will not diminish the stimulus to invention, because it will only cut off those which, after trial, have been practically abandoned as worthless. Section 12. — This requires exclusive licenses to be recorded in the same manner as technical grants, because, practically, the two are equivalent. It shortens the time allowed for recording assignments from three months to one month ; improvements in the mail-service since S. Mis. 50 23 354 MR. J. J. STOEEOW. 1836 justify this. It allows all agreements about patents to be recorded, and makes certified copies from the record to be legal evidence. Section 13. — The law now is, that each joint owner of a patent may grant licenses without the consent of the other. (Glum v. Brewer, 3 Curtis, 524). The object of this amendment is to give full effect to an agreement between them as to which shall exercise this power, if the agreement be in writing, signed by all the parties, and recorded. Section 14. — This punishes, by not exceeding one year's imprison- ment or $1,000 fine, whosoever sells as unencumbered a patent which he actually knows he has no power to sell and convey. This is new. To be amended by inserting in line 1, after "whoever," the words "with intent to defraud." The following sections amend those which regulate proceedings in the Patent Offtce; and particular attention is invited to the comments of the honorable Commissioner upon them in Senate argument, p. 204: Section 15. — This requires the Assistant Commissioner of Patents to give the same bond as the Commissioner. Section 16. — This establishes the price for Patent-Office copies — in no case to be Ifess than actual cost. Section 17. — The old statute allowed certified copies of papers to be used as evidence wherever the originals would be competent. The amendment extends the provision to models, and also allows the assist- ant commissioner to sign the certificate. Sections 18 and 22.— E. S. 4885 and 4897 allow six months' grace for payment of the final fee, and then two years more, in addition, by means of a renewed application. This amendment consolidates the two sec- tions and abolishes the two years' allowance. The honorable Commissioner advises to strike out our section 22 and to adopt a different phraseology. (See Senate Arg., pp. 203, 207.) He also proposes to add a proviso to section 18 (v., p. 206). Both these changes should be adopted. Section 19. — The law about granting patents in this country to those who have patented their inventions abroad has been changed several times, particularly by the act of March 2, 1861, in a manner which has caused cousiderable confusion. This section establishes what is believed to be a just and reasonable rule. It retains the provision that a foreign patentee cannot come here to get a patent for an invention that has been in use here for two years, and this part, down to the word "applica- tion" in line 10, is copied with merely one or two verbal changes from the present statute. The section then adds a new requirement, that if he makes it known, by patenting it abroad, he must apply it here within two years, or it can be used by the public. Section 20. — This amends sec. 4794 by making two years' neglect to prosecute an application conclusively equivalent to an abandonment thereof. The honorable Commissioner of Patents proposes amodiflcation of this which does not essentially change its character, and the modifi- cation should be adopted. (See Senate Arg., pp. 203, 207.) Section 21. — At one time the surrender of a patent and the applica- tion for a reissue were required to be sworn to by the assignee and at another time by the inventor. This amendment leaves it to be sworn to by the assignee. The oath is of no importance, because the action of the Commissioner is to be based on the sworn statements filed by the inventor on his original application. To require his oath to the new application, is to enable him to extort money from the person who has already bought and paid him for the invention. Section 23. — The law has always required the patentee to mark on SEC. 25: VESTED RIGHTS. 355 the article the date of the patent. About 300 patents a week are now issued, all bearing the same date. This amendment requires him to add the number of his patent, in order that it may be identified. Section 24. — This amends section 4904, about interference applica- tions in the oflSce, so as to include reissue applications, and make the law about them substantially conform to what the decisions have estab- lished about them, except that, in determining whether an interference contest shall be ordered, reference is to be had solely to the dates of the original applications. The subject-matter of this section and the his- tory of the decisions bearing upon it are elaborately discussed and stated by the honorable assistant commissioner of patents (Senate Arg., p. 197) and the honorable Commissioner (p. 207), and the section as drawn is approved, with some verbal amendments. (See also Senate Arg., p. 71.) The honorable Commissioner of Patents has added a new section, by way of amendment to E. S. 484 and 4891. These amendments look to the abolition of models, except in special cases, and also enable the Commis- sioner to require working-models in certain cases. His views (Senate ^rg-? PP- 203, 208) appear to be sound. For a discussion upon the sub- ject of models, see Senate argument, pp. 79, 87. Section 25. — Repeals all inconsistent laws. Careful provisions have been added to each section which relates to substantial rights as distin- guished from the form of remedy, so that the changes introduced by this bill shall not be destructive of existing rights of property. Under this last head, I propose to offer some remarks upon a question which received considerable discussion before the Senate Committee, viz: What is the right of a patentee, and do the retroactive clauses of this bill affect any vested interests — anything which is ''property" — within the meaning of the Constitution or of those rules which should limit the exercise of legislative power? Constitution of the United Statex, article 1, seetionS: "The Congress shall have power * * * to promote the progress of science and use- ful arts, by securing for limited times to authors and inventors the ex- clusive right to their respective writings and discoveries." This provision gives to Congress the power "to promote the progress of science and useful arts." It is for Congress to determine whether it will do this or not; but if it elects to do it, the Constitution provides only one means for doing it, and that is "by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." It is for Congress to decide whether it will secure the right, and for how long it will secure it ; but the nature of the right is fixed by the Constitution; it is to be "exclusive," just as much as the rules of naturalization and laws on the subject of bankruptcy are to be " uniform." As to these two, the Constitution does not say in terms that a law not uniform shall not be enacted ; it is enough that it gives no power to enact any laws of bankruptcy or naturalization except "uni- form" laws and rules, nor to secure any right to the inventor except an "exclusive" right. It is not, however, very material for the purposes of the present in- quiry what, under the Constitution, the right must be ; it would be enough that the existing right-iof existing patentees are exclusive; and we may readily agree that they are, because, for nearly ninety years, all the statutes have in terms given them the " exclusive right to make, use, and vend." We shall not dispute, and, indeed, for my own part, I shall always strenuously insist that the right conferred by the patent is "property," 356 MR. J. J. STOREOW. within the meaning of the seventh amendment and of the rules which protect vested rights. The courts of the United States have put this question at rest. In the case of McGlurg v. Kingsland (1 How., U. S., 206), the question was whether certain defenses allowed by the acts of 1836 and 1839 could apply to a patent granted before 1836 ? It was argued thai these acts only changed the remedy. Bat the court held that even Congress could not make such a change as to interpose new defeases which would destroy the validity of the patent ; for, in effect, it would be to " take away the rights of property in existing patents." " This repeal, there- fore, can have no effect to impair the right of property then existing in a patentee or his assignee, according to the well-established principles of this court in 8 Wheaton, 493." This decision is entitled to peculiar weight, because at the same term the court had before them the very important case of Bronson v. Kinzie, which involved the fullest consideration of the doctrine of vested rights under our Constitution, and which is reported in the same volume. The two cases may fitly read together. In Seymour v. Osborne (11 Wall., 533), they said : "Inventions secured by letters patent are property in the holder of the patent, and as such are as much entitled to protection as any other property consisting of a franchise during the term for which the franchise or the exclusive right is granted." The grant of a patent for an invention is not a pure gift, but is, upon consideration, as much as a patent for land given upon payment. The Government has declared that if any one will invent, will deprive him- self of the ability to work his invention in secret for an indefinite term, and will disclose it to the public, it will protect him in the exclusive en- joyment for a limited time ; and when he has done his part, and the Government has granted its patent, the promise and the grant have all the elements of a contract upon consideration, and it has been so de- clared. {Attorney. General v. Bumford ^Yor^cs, 9 Gazette, 1062.) On the other hand, it is equally well settled that the legislature may modify the remedy ; and the only limitation upon this power — and it is a power which it may become their duty to exercise — is that it shall not be so exercised as to impair vested rights. And the distinction and the limitation are well laid down in Bronson v, Kinzie; and as both that case and the passages quoted from McGlurg v. Kingsland rest profess- edly upon Green v. Biddle (8 Wheat., 493) those three cases will give us the law, and I think all the law, that bears upon the point. Under a contract to pay money, the right of the creditor is to have the whole amount due on the day when it is due. He recovers against the debtor as a contractor, not as a tortfeasor. On the footing of the promise he recovers his debt, not damages, though he may also recover damages, as interest, for the wrongful detention of it. He recovers, in effect, the thing itself; and a law which declared that when he sued he should recover less than the amount promised, or should be delayed two years, would keep him out of his property, and so substantially impair his right, not to his judgment, but to his, property, his contract. But the patentee has no promise from the infringer. Whether his recovery be of damages eo nomine, or whether, at his request and for the sake of the remedy, a court of equity converts the infringer into a trus- tee de son tort, nevertheless the one recovers, not his property, but dam- ages for an invasion of it ; and the other is condemned, not to deliver what he has promised to deliver, but what the court considers compen- sation for a wrong done. VESTED EIGHTS. 357 The right in one case is in the money promised ; in the other it is ia the exclusive use, not in the damages for its invasion. All that relates to the damages belongs to the remedy, and the legislature may change the remedy, so long as they afford one which is efficient, and which leaves no hope of profit to the infringer. That is my position. Neither of the three cases shakes this, but they rather support it. Green v. Biddle (8 Wheat., 490) was a case wliich rested on a contract made by a State. The court established that the State which granted , the land in question and another State which had contracted to respect that grant could not refuse to allow the grantee to recover his land from a trespasser without impairing the obligation of their contracts ; and the question then was, whether the statute under discussion did impair the right in the land. It was in the nature of a betterment law. It declared that a trespasser should, under certain circumstances, be allowed the value of his improvements ; not their value to the owner of the land, but, under the terms of the statute, there might be awarded in his favor an amount much greater than any gain the plaintiff could derive from them, and much greater than the'mesne profits '; and the plaintiff might be kept out of his land until he paid the sum so awarded. There was in the case some general talk about any alteration of the remedy, which the court subsequently retracted ; but the ground of the decision was, that such a statute made it cost the true owner a sum, to be paid to the trespasser (over and above any benefit received), in order to obtain his property, and, therefore, substantially impaired his right in the land itself. In Branson v. Kinzie (1 How., 311); the State legislature had passed a law delaying for a certain length of time judicial sales under mortgages, and further providing that no sale should ever take place unless the land would bring such price as might be named by appraisers. The court held that, though in terms this affected the remedy, it substan- tially impaired the obligation of the contract, because it delayed its ful- fillment. The court (Taney, C. J.) said : " The existing laws of Illinois created and defined the legal and equitable obligations of the mortgage con- tract. If the laws of the State, passed afterwards, had done nothing more than change the remedy upon contracts of this description, they would be liable to no constitutional objection. For, undoubtedly, a State may regulate at pleasure the modes of proceeding in its courts in relation to past contracts as well as future. It may, fbr example, shorten the period of time within which claims shall be barred by the statute of limitations. * * * it must reside in every State, to enable it to secure its citizens, from unjust and harassing litigation, and to pro- tect them in those pursuits which are necessary to the existence and well-being of every community. And, although a new remedy may be deemed less convenient than the old one, and may, in some degree, render the recovery of debts more tardy and difficult, it will not follow that the law is unconstitutional. Whatever belongs merely to the remedy may be altered according to the will of the State, provided the alteration does not impair the obligation of the contract. But if that effect is produced, it is immaterial whether it is done by acting on the remedy or directly on the contract itself." The court then proceeded to rely on Oreen v. Biddle, and to quote from it as follows : "It is no an- swer that the acts of Kentucky now in question are regulations of the remedy and not of the right to the land. If these acts so change the nature and extent of existing remedies as materially to impair the rights 358 ME. J, J. STOEROW. and interests of the owner, they are just as much a violation of the com- pact as if they directly overturned his rights and interests." The proposed section provides — 1. Against further infringement an injunction final or pendente lite, as heretofore. 2. Actual damages as heretofore. 3. All the profits which the infringer has actually realized by the tort in all cases where it is possible to ascertain them. 4. It gives a discretionary power to the court to increase the recovery so as to make it commensurate with the injury sustained. 5. It allows the court to require the wanton infringer to pay the plaintiff's expenses of litigation. It cannot be pretended that it fails to furnish an efficient remedy or that it invites deliberate infringement by telling the infringer that he shall retain part of the profits of his wrong. And the objection that it ought not to retroact, assumes that it is just abstractly. All the change which it effects is to modify a rule which the courts have declared to often work injustice ; or, in the words by which the court, iu Bronson v. Kinzie, described one of the powers of the State in relation to change of remedies, it " insures the citizen from unjust and harassing litigation." It therefore affords a full and efficient remedy for any invasion of the patentee's rights, and it is not obnoxious to any objection, unless the vested right of the patentee suing for damages for a tort is not merely to some adequate remedy and adequate damages, but to exactly such damages as would have been recovered by the judicially-ascertained rule in force when the infringement took place. ^ow, though I agree that a plaintiff has a vested right, if you please so to call it, to adequate damages, and that no recovery is adequate which allows the wrong-doer to profit by his wrong, yet no case can be found which decides or declares that there is a vested right in any particular measure of damages, in an action for tort. On the contrary, the rule, I think, is settled, that the measure of damages is of the remedy, and not of the right. Limitations of actions, rules of evidence, particular rules for the measure of damages, are universally considered to belong to the remedy, and not to the right. The diligent examination of the counsel who represents a special interest — the Tanner brake, so called — has been able to furnish no authority in point. That the patentee is entitled to some adequate remedy and an adequate measure, and that to deprive him of it substantially impairs and therefore takes from him his prop- erty, the authorities and sound reasoning show ; but the right, the property which they affect, is his patent ; the reasoning which would push it beyond that would deny to the State the power to change the remedy, for every such change affects the position of either plaintiff or defendant. On the other hand, the distinction which I insist upon, between the right which is vested property and the damages for its invasion, which are of the remedy, has been pointedly established by the Supreme Court in a case which I used before the Senate committee, and the force of which has never been assailed. Upon a promise to pay money and interest, the interest as well as the principal is recovered upon the footing of the contract; the contract right is to both ; and if the promise is silent as to the rate of interest, the law puts into it the rate of the place of the contract. But if the promise be merely to pay a sum certain, on a day certain, then, what- ever is recovered beyond that, in the nature of interest, is by way of VESTED EIUHTS. 359 damages, and not in the nature of the enforcement of a contract. The Supreme Court of the United States have decided {Foster v. Goddard, 17 Wall., ) that in such a case as that the rate of interest to be re- covered by way of damages is to be governed by the law of the place of trial, and of the time of trial. I am unable to see, under that decision, why the amount to be recovered for the invasion of a patent right must not be settled by the law of the forum, and, consequently, that it may be changed as any other remedy may be changed, by the law of the forum. Indeed, the right of the plaintiff is to such damages, such rem- edy as the law in existence at the time and place of trial will give him, subject only to the limitation that the remedy must be adequate. But do we change the rule? Livingston y. Woodworth and Dean v. Mason, in their facts, presented precisely the cases which our section is supposed to affect ; yet the decision in those cases was exactly in ac- cordance with our rule, and was utterly wrong if the so-called rule of savings alone is to be followed. Which is law ? Or, rather, which will the Supreme Court declare to be law when the question is carefully pre- sented to them ? Are you changing a rule which has become established as a rule of property, and on the faith of which rights have become vested 1 or are you establishing one upon a question which is yet un- settled, and where you are only striving to correct a tendency of the court to depart from what, up to Moury v. Whitney, was settled, and what was not disturbed by the decision in that case, however it may have been partly lost sight of by the learned judge who wrote the opinion "? Could not the Supreme Court adhere to the earlier decisions the next time the question comes up, without being exposed to the charge of disturbing vested rights? Upon precisely that question I call your attention to Olcott v. Supervisors (16 Wall., 690), and cases cited, where the Supreme Court considered and declared when a judicial decision upon a question had so far ripened into a rule of property that it could not be changed without affecting vested rights; and the prob- lem before you is entirely wanting in the elements upon which that case rested. Whether it is wise to make the change is one question, and that is addressed to your discretion. That you have the constitutional right to make it, I cannot doubt. That sections one and two ought to retroact, if you have the power to make them, seems to me clear. If the change is useful, the sooner it takes effect the better. Moreover, the argument of practical usefulness is very great ; for if they do not apply to existing causes of action, then in a suit brought next year for a continued infringement, one rule of profits must be applied up today, and a different rule from to-day on- ward, and that in the same suit. Let me repeat what I said before : No one can feel more deeply than I do the benefits the patent system with all its drawbacks has conferred on the community, and among the interests that I represent here are those who are inventors and owners of some extremely valuable and practically successful patents — men whose business is based on patents. I hope this bill will become a law, because I think it will improve the system, and improve it in the interest of the inventor as well as the user. It will not impair the protection which the patentee receives, but it will relieve the public from many annoyances which are felt from some rules which the courts have declared to work injustice. It is for the interest of the patentee that they should be removed ; for a system which works injustice cannot work smoothly in this country, and is al- ways in danger of destruction. 360 MR. GEO. PAYSON. AEGUMENT OF GEO. PAYSON, ESQ., GENERAL COUNSEL WESTERN RAILROAD ASSOCIATION. IFcbruary 22, 1878.] Mr. Payson. Mr. Chairman and gentlemen of the committee: It is a matter of surprise to me to lind myself here addressing you on this sub- ject after all the argument that has been had upon it; but I take it for granted that as long as you are patient enough to listen, some one will be found to talk. I shall endeavor, for my own sake, as well as for your own, to be as brief as possible, and I shall confine what few suggestions I have to offer to those portions of this bill (H. of E., 1612) which seem to me the most important, and those which I understand are most likely to meet with opposition. LIMITATION. I wish to call your attention, first, to the first section, in regard to the statute of limitations ; not so much with a view of insisting upon the im- portance of this amendment, because I consider -that to be generally con- ceded; but to call your attention to what seems to me to furnish the full- est and most satisfactory explanation of the difflculties with which this whole subject has been attended from the beginning. Congress and the courts, and more particularly the courts, have dealt with this whole sub- ject of patents and patentees as if it were something that lay entirely outside of the general course of judicial and legislative proceedings. They have dealt with the patentee very much as they have been in the habit of dealing with the Indian ; partly as if he were a spoiled child, and partly as if he were a wild beast : only in the case of the patentee there is a great deal more of the spoiled child and less of the wild beast. In doing this they have disregarded what seems to me to be a fundamental maxim of the law, namely, that you shall make no discrim- ination, whether just or unjust, between one class of citizens, or between one species of property and another, unless it is absolutely necessary. In all the legislation upon this subject — I may call it "judicial legisla- tion" — this distinction, I think, exists to a certain extent between patent property and other property, that whereas the other property owners throughout the length and breadth of the United States are subject to a certain set of rules, which are the same in all important respects, the- law in regard to patents has an entirely separate set of rules. Of course, to a certain extent, this is unavoidable, but the mischief has not stopped there. Separate and different rules obtain in all the provisions of the patent law. No better illustration of this can be found than this statute of limitations. You all know that in relation to all other species of property than pat- ent property in every State of the Union we have what is known as the statute of limitations, and though the tendency some years ago was to regard the i>lea of these statutes as savoring of meanness, that has gone by. We look upon these statutes as statutes of repose, made just as much for the benefit of the creditor as for the debtor. It is per- fectly fair here to apply the well-known maxim that " short credits make long friendships." By some strange fatality until the year 1870- no statute of limitations was passed by the American Congress. Whether the State statutes of limitations have any application to pat- ent statutes may be questioned; but whether they apply or not, it is manifest that it is far better for all concerned that there should be but one statute common throughout the length and breadth of the land. SEC. 8: PEEPETUATING TESTIMONY. 361 PERPETUATING TESTIMONY. The length of these statutes of limitations varies iu different States from six years, as the longest period, to one year. This bill provides for the general allowance of four year's, and it not only thereby puts the patent owner on the same plane with the owners of other property, but I think it is equally an advantage to the patentee as well as to the so- called "dishonest" infringer. It has been suggested that this amendment itself might well be amended, and that is my view of this matter. I say nothing as to the body of the section which provides for four years' statute of limitations, but the proviso at the end of it, which provides that " rights of action existing at the passage of this act may be enforced by suits brought within four years thereafter, if not previously barred by laws already existing," partakes a little of the character of the special legislation that I have been speaking about, and gives to the owner of patent prop- erty a period in which to bring his suits which is wholly unknown to the law in former times. Thirty days has been, in many cases, considered amply sufficient to enable the property owner to bring his suit after an act becomes a law. Here it is four years. I suggest to yon the pro- priety of shortening the four years and bringing it within much more reasonable limits. The next point to which I call your attention is that in regard to per- petuating testimony. It has been suggested in regart to that, first, that there is no need of it, because the general law on that subject al- ready existing is sufficient; and, secondly, because it would work a pre- judice to the patentee. I have given considerable time and study to this matter, and I will say with the utmost confidence, that there is no existing statute on this, subject which is at all able to meet the case. There are two defects in the general law — I mean the sections of the Eevised Statutes now in force providing generally for the perpetuation of testimony. In the first place, under that act only one petitioner or one party interested can bring suit. If there are eighty or one hundred different parties all equally interested in the matter, they must go to the enormous expense of filing eighty or an hundred different petitions. This bill provides that all parties interested may join in one petition. This is equally ad- vantageous to the petitioners and to the adverse party. I represent a large number of railroads; every one of whom, with but two exceptions,, I think. Is interested in resisting a pending claim. The claim is an old one ; it took its origin in 1852. The lives of our witnesses are continu- ally dropping out. If, under the existing law, I should file a petition for the sake of perpetuating testimony of the few witnesses who survive, the expense of that alone would probably restrain me. In the second place, the act does not apply at all to any case of this character. The law on that subject is well laid down in Daniels on Chancery Pleadings and Practice. It is well shown that the party must be able to swear that his title or interest in the property in question is in the nature of a revision, not to take effect for years. It does not apply to property of this description, and there is no court in the country that will hold that it does so apply. I don't know how it is in other States, but in Illinois the statute is simply a declaration of the common law ; it does not make it any broader, so that it has been precisely as if the common-law doctrine was the only law in force applicable to this subject. The principal objection made to this statute is that it enables the giving to the patentee what has been here called the " black eye." 362 MB. GEO. PAYSON. Probably it does do that, but it enables tlie patentee to f arnisli the plas- ter. The same provision which enables the petitioner to come into court and establish proof of priority of invention, or to offer evidence going to show that the patentee was not the first inventor, also enables the patentee to come into court and remove that stigma and put in evidence that which he may be equally desirous of preserving — the showing of the date of the invention. I have, therefore, thought that there is no force in either of these objections, and, though I admit that in all prob- ability this section will not be frequently used, yet the very fact of its being upon the statute-book will render it less necessary, and will com- pel patentees to bring their suits to a speedy issue. This latest [Senate] copy of the bill is open to one objection, in the nature of a reply to what I have just stated, in that it provides, in an unfortunate use of phraseology, that the patentee may put in evidence for the purpose of " contradicting or impeaching " the witnesses of the petitioner. I suggest that it would be far better to recall the original word, and to allow the patentee to " rebut," which has a well-settled meaning, and a much broader meaning than the words " to contradict or impeach." I think with that changed back again, the revision of the section would be an improvement ; and with the right to offer evidence by way of rebuttal, such a law would be equally advantageous to both parties, because the patentee as well as the infringer, and the witnesses upon which the rights of each depend, are liable to sudden death. REISSUES. The nest section I notice is that concerning reissues. It is an old saying that " if you scratch a Russian you will find a Tartar." Scratch a reissue and you will find a fraud. In nine cases out of ten you will .find a fraud upon the law, and in every instance a fraud in fact. It becomes necessary for me to call you attention to what I must re- gard as the most extraordinary instance of judicial legislation wMch has ever come under my notice. The terms of the act are perfectly clear and unambiguous — the act in regard to reissues. The act provides that whenever a patent shall be found inoperative and invalid by reason of a defective specification, or by reason of the patentee claiming as his own that of which he was not the original inventor, if the error has arisen by accident or mistake, the Commissioner shall grant a, reissue. It would be impossible for us to devise words more free from ambiguity; yet, gentlemen, with two solitary exceptions — the decision of Chief-Jus- tice Taney in 1840 and of Judge Grier — the courts have from the be- ginning considered the words as if they meant " too little." And what 38 the consequence? Why, so often as one patent is surrendered and reissued for claiming too much, seventy patents are surrendered and re- issued for claiming too little. There is no warranty for it in the law ; there is no justification for it in the statute ; and yet the courts, either by accident or from their constant leaning in favor of the patentee, have put upon it this marvelous construction. I never yet have seen, so far as my memory serves me, a single reissued patent according to the pro- visions of the act of Congress. A Member of the Committee. Do you mean that the reissues gen- erally contain more than the original! Mr.PATSON. I mean just that. It ne%'er contains less. And yet the act of Congress says that it may be surrendered only because it con- tains too much. That is never done. I don't mean that there never ■was a single instance, but it is proper for me to say that it is never SEC. 6: EEI'SSUES. 363 done. The abject of obtaining a reissue is to expand the claim. Judge Taney in i840 decided in strict compliance with the provision of Con- gress, that there were but two cases where the reissue may be obtained lawfully: 1. Where there was a defective description, where the pat- entee had failed so to describe his invention that the patent could stand in the courts; and 2. Where he was unfortunate enough to claim that of which he was not the inventor. But the other courts (except Judge Grier), from that day to this, have always proceeded on the other theory, as if ignorant of the terms of the statute, or on account of their favor toward the patentee. That is the history of nine reissues out of ten. This, in importance, is probably the second mischief arising out of the way the patent law has been administered. You notice it does not grow out of the law, but it grows out of the interpretation put upon that law by the courts. Take an example : A has got out a patent. He has described in that patent precisely what he has invented. In describing what he has in- vented it must unavoidably happen that either in the drawings, or spe- cifications, or model, some incidental device will present itself he has never thought of, or, if he had, only in a dream. To say he has in- vented it would be an abuse of language. B, some years later, makes an invention of this incidental device. Ee, of course, examines the records of the Patent Office. He finds A's patent, and finds that A has not claimed the invention B has made. He finds more than that. He finds that in law A has in fact disclaimed it, because the construction of law put upon that species of patent is that what is shown but not described is disclaimed. Relying upon that equitable doctrine, and taking for granted that A had not patented the invention, B builds ex- pensive buildings, fills them with costly machines, puts into the invest- ment the property of himself and others, and goes on for years manu- facturing under his own patent in entire good faith. Finally A finds it out. '* Here," says he, " this will never do in the world ; my whole property is here injured. What right has this man to come here and get out this independent invention, and crowd me out into the cold?" He goes to a patent lawyer; be says to him : " Mr. 0, just look at this. Here is my patent rendered entirely worthless. I muse have it reissued. I want you to try to reissue it, and if you succeed I will give you five, ten, or seventy thousand dollars." The lawyer (I suppose with good conscience) says : " Yery well ; you may leave the papers with me, and I will attend to it." He gets out the reissue. He is aided therein by the remarkable elasticity of the English language; he is able by the cunning words so to expand that claim that it will cover the whole horizon. B then finds himself involved in a suit, or, it may be, a thou- sand suits, for this infringement committed, as is alleged, in fraud of the rights of thi.s prior patentee. He is called in the courts a "thief" for having so manufactured ; he is dragged through all this merciless liti- gation at an expense, it may be, so great that long before he reaches the end of it he has reached the end of his purse. He is, perhaps, un- successful ; he is defeated ; his buildings are rendered worthless ; all the property which he has invested is taken from him ; or, he is com- pelled to come down on his knees to the subsequent inventor (though prior in ijoint of time) and yield to whatever terms he may demand. The Supreme Court, though they were the first to get us into this difficulty, have again and again expressed their disapprobation of this practice. They have exhausted all the artillery of argument, rebuke, and sarcasm, and have been compelled to acknowledge that " though we may rebuke this practice, it is not in our power to prevent it." Con- 364 MK. GEO. PAYSON. gress can prevent it, however, if the courts cannot. The suggestion in this bill does a great deal to remedy that evil. The amendment does not go as far as I wish, but I have found out that we cannot have all we would like in this world, and I am here to lend my free and happy support to this bill. It does put a final stop to this practice of reis- suing patents for the purpose of getting in contribution subsequent and maturer inventors, and it does that in a way all ought to be thank- ful for. A Member op the Committee. How does it cover the case you have suggested ? . Mr. Payson. It covers it in this way : it provides that when a patent is reissued nothing that was previously made, nothing that was then in existence, shall be considered an infringement so far as the specified machine is concerned. That is the sixth section. If I have built this manufactory and filled it full of this machinery, and the manufacture is subsequently patented, I cannot start out on a fresh infringement, but I am not compelled to withdraw from the work already started. Let us take an actual fact; it came to my knowledge yesterday. In 1866 a man got oat a patent for a " continuous brake." In describing his brake, as he had to do in his specifications and drawings, he showed, of course, the brake-beam. It is a bar of wood which goes across the front of the wheels to which the brake-blocks which check the motion of the car are attached. That brake-beam has been, for a great many years, hung up by a loop in the form of an oblong ring. The upper part of this loop is attached to the upper part of the truck, and the brake-beam hangs down a foot or two below it. A patent says, " P is the loop." It is shown in the drawings. Of course, that is mere accident. It is not claimed in the patent, and at the date of the original issue undoubtedly formed no part, in the in- ventor's mind, of his invention. That patent was obtained in 1866. Now, there is not a railroad in the United States that does not use a brake-beam supported by this loop. Somebody happened to look at this patent in 1866, and noticed there this loop-hanger. Perhaps the patentee found it out. The patentee goes to the Patent-Office and gets a reissue, by which he claims this loop-hanger, and commences suit upon it against several of our leading railroads. The i)robability is that these suits will be thick as leaves in an autumn forest, l^he de- vice, which the man never dreamed of patenting, and which he put in as a simple necessary adjunct to this continuous brake, without any idea of claiming it, at a day subsequent, forms the basis a patent claim. A Member of the Committee. How does the reissue affect that ? Mr. Payson. The only injury in this instance is that some timid rail- road will p^y, because they are very much afraid of the courts. Mr. Storrow. The time of invention relates back to the original patent, and not to the date of the reissue ? Mr. Payson. And I will supplement that by saying that it dates back farther than the original patent. It may date back many years, and that we can never find out until we get into court. This patent was granted in 1866, but this reissue will not simply relate back to the date of the original patent in 1866. It will go back to the date of the invention of the continuous brake, and we don't know anything about the date of the invention until we come into court, and then, it may be that the inventor will be able to carry back the date of his invention to a date long anterior to the period when the patent was granted. It would not make any difference at all if another party had come be- tween and patented that loop. It would not prevent the original pat- SEC. 5 : REISSUES. 36ft eutee from going back and obtaining his patent for the loop, and if he proved to be the first inventor he would prevail, notwithstanding the second party may have gotten out a patent for the identical thing. A Member op the Committee. Would not he be infringing upon the second patent ? Mr. Patson. No, sir ; there cannot be two patents for the same thing, and the rule is, the first in time of invention shall prevail. The second patent is entirely invalid. If the device was shown in the first patent, that is proof that the first patentee invented it ; it shows that he had it there, and as the law stands, there is nothing to prevent his getting a reissue covering it. Mr. Payson. Yes, sir ; an infringer from the date of the reissue, and bis own patent would be only waste paper. This amendment will not prevent the retroactive effect of the reissue. It enables parties, however, who were manufacturing the device at the date of the reissue to keep on. The Patent Office will make the same sort of a search when an appli- cation for a reissue comes up as in an original application ; and if they find that this loop was already in existence they will not allow a reissue, but in nine cases out of ten they have no means of ascertaining the fact. As I have shown, this 1866 patent was the first to show the loop, but it may have been in use, as I am told it was in use, for many years before the date of the patent. I may. know that this loop-hanger was used by the Baltimore and Ohio Eailroad many years prior to the date of the original patent of 1866, but I have got to prove it, and prove it in the only way known to the law, by living witnesses or by a printed publica- tion. If there is a printed publication that is old enough I am all right. Bat the lives of men are limited, and if the only witness who has within his breast a knowledge of the prior use should be taken from me by death or accident, I am helpless. As the mere fact the thing was used before no longer avails me, and the man may come on and add fraud to fraud, he may have his reissue for what he may know was used long before his invention, and will lay every railroad in the country under contribution ; and though under the proposed amendment, the railroads may go on using the identical brakes they cannot add to thein. If they build a new car and put this brake upon it they must pay for it, unless they are able to prove a want of novelty at the date of the original in- vention, which defeats a reissue in the same way it defeats an original patent. If the reissue contains matter not in the original patent (I mean that which is not claimed and not shown in the drawings or specifications) the reissue is void upon its face. But the evil is not that. The thing introduced in the reissue is what is shown in -the original patent, but is not claimed at the time. In this patent that I have been speaking about, all that the patentee claimed was the continuous brake, that is, the means of braking from one end of the train to the other. In the body of his specification he says, " P is the loop-hanger to hold up the break- beam " ; but that is all. He declares in efiect, '' This is my invention (the continuous brake), but this loop-hanger is not a part of my inven- tion"; and though saying that the courts have held this void as a dis- claimer. He in effect says, " I don't invent this loop-hanger, but what I have claimed — the continuous brake." If the courts had held to the first construction, and said to the man when he wished a reissue, "That disclaimer shall still hold good," that would have been all right ; but they do not; they have from the beginning allowed a patentee to in- corporate in his reissue, and, too, in his claims, anything indicated or 366 MB. GEO. PAYSON. siggested m his origLnal specifications or drawings, though he didn't claim it at the' time of the original patent. A Member of the Oommittee. Please state how far the decision of the Commissioner would be conclusive, or whether it would be conclu- sive at all upon the court. Mr. Payson. The decision of the Commissioner is conclusive upon the court and the jury with regard to every question save one. The courts finding the difficulty into which they had been unwittingly led, sought the best way out of it which they could devise, and, though it is not a very good way, still it does answer the purpose. The courts have arrived at this conclusion ; that though the decision of the Commis- sioner shall be conclusive upon every other question, the courts shall be at liberty to look into this question, namely : Is the reissue for the same invention as the original? and in determining whether the reissue is for the same invention as the original, they have decided that they can look at all the papers in the case, that is to say, they can compare the original specifications, and drawings, and model with- the reissue, and if they find that what is now claimed for the first time in the reissue, is shown, or described, or indicated, or suggested (whatever that word may mean), either in the original specifications, drawings, or model, they uphold the reissue. If they cannot find it in the original specifi- cations, drawings, or model, they decide that the Commissioner has ex- ceeded his jurisdiction, and, therefore, it is competent for them to reverse his decision ; and in that case only have they found a reissue void, though I say they have again and again signified their utter disappro- bation of the modern system of expanding the reissue of patents ; and Judge Greer says " it is our duty always to rebuke it, but, unfortunately, we cannot prevent it." I come now, gentlemen, unless there is some other question I have not made clear, because it is impossible for me to see all the difficulties attending this — A Mbmbbe of the Committee. What is your opinion about the necessity or proprietjf of retaining models so as to prevent an improper reissuing? Mr. Payson. The model, so far from preventing a reissue, is often made the most available means for obtaining it; and I will state to you here a case (on the favorite theory of mine, that an actual case is better than a mile of abstract reasoning): A mau obtained a patent some years ago — no matter when or what for. He assigned that patent to another party. The assignee goes to the Commissioner and he obtains a reissue, claiming something shown in the model; and he make the necessary oath that the inventor invented that thing, but through inadvertence, accident, or mistake, he bad left it out of his original patent. Now, the fact was that the original inventor had never invented it ; the fact was it had been left out by express instruction to his solicitor, because he had not invented it. The assignee knew it, and the attorney who acted for the assignee knew that fact. Yet that attorney drew those papers, went before the Commissioner of Patents with a lie in his mouth, and because this device happened to be in the original model, and because his conscience was as elastic as the words in which the original speci- fications happened to be written, he did obtain from the Commissioner of Patents (who of course knew nothing about the facts) a reissued patent covering the device which the original patentee was too honest to demand. How often that may occur is known only to God ! Oftener, I am afraid, a great many times than we have any idea of. A. H. Walkbk. How did he get that reissue without the oath of the SEC. 2 : DAMAGES AND PROFITS. 367 inventor? I understand that an assignee cannot make the oath of ac- tual invention. Mr. Patson. Not under the present law, and it is sought in the pres- ent bill to get rid of the oath of the original inventor in an application by his assignee for a reissue. It is thought to be a hardship on the assignee that he should be compelled to get the oath of the original in- ventor. It is said that this oath is nothing but a form ; " Why should not I take that oath as well as the inventor," says the assignee. Why should he not take it a great deal better than the original inventor, in the case I have suggested ! ! A Gentleman. Explain what is the difference between the oath of an assignee and the oath of an executor or administrator. Mr, Payson. If I understand the question, when a man dies, that is the end of him; there are no commissioners known to us in either of the places to which he may have gone who can take his oath, and the executor or administrator has to make it. But, in the case of the as- signee, the patentee, if he is still living, is within our reach and should take the oath, for he alone is the man who can know in his heart whether he really invented the device or not. The evil cannot be prevented if the patentee be dead. There are a great many evils in this world which we can only complain about. If the inventor be living it is another case. Same Mbmbek. Why should a patent ever be reissued to an assignee? Mr. Payson. You Lave got me now, sir. You must go to a wiser man than I. SECTION TWO. I come now to what I deem the very heart and soul of this bill. It is, undoubtedly, its most important part, and, as might be expected, is subjected to the most amount of obloquy and reproach. It is the sec- ond section. I will defy any gentleman, present or absent, to find for me a single instance whef'e a rule of recovery for damages, for any species of injury, has ever been adopted in any court in any country in Christendom, civilized or uncivilized, that begins for enormity, for ab- surdity, for injustice, for tyranny, to furnish a parallel to the rule of recovery which has for many years prevailed in the courts of the United States in patent cases. I can find no words strong enough to express my utter abhorrence and detestation of this sort of judicial legislation. But I must add to that, that I do not conceive the courts are in any wise to blame. They went in at a door that promised fairly ; they walked along a path that was smooth and even. No living soul could tell them the dangers and pitfalls that lurked in the path along which they were traveling so smoothly. It was the inexorable logic of events which showed the fatal errors the courts have committed ; and which they are in one sense powerless to prevent, because it is the rule of courts to take no steps backward. The rule in law gives to the patentee the price which he has put upon his invention. I want you to notice these words : it is the price which he himself has put upon his own invention. Of course there must be two to make a bargain, and he confers with, those whom he finds dis- posed to use his invention. I have been a party to making these agree- ments myself, and no blow or the first hard word has ever passed be- tween us. The roads I have represented and the patentees have never had the slightest difiQculty in making up their minds what is the proper 368 ME. GEO. PAYSON. recompense to the inventor for the thing he is to sell. That is the rule in law where there is a license fee. The rule in equity is that the defendant shall pay to the plaintiff the profits which he, the defendant, has made by the unlawful use of "the invention. The argument by which that is supported or attempted to be supported is, that the infringer shall not profit by his wrOng, and that the patentee shall not suffer by the infringer's wrong. I imagine you asking: " How can anything more equitable than that be devised ? Why should this dishonest infringer, this thief, complain ? Why should he complain because he is called upon to pay to the patentee the profits which he has derived from the unlawful use of the innocent patentee's in- vention?" Of course the patentee ought to have it, and the defendant ought to pay it. What is this rule which we are so ready to commend ? Thecourts havetakenitin hand. They found itmisshaped, meaningnoth- ing or everything ; and after working upon it for a long time they finally arrived at this conclusion, namely : These profits which the defendant has made, and which he has got to pay over to the patentee, are repre- sented by the savings which he has made, and these savings are to be got at by estimating the difference between how much it has cost the infringer to do what he has done by using the infringing device, and wbat it would have cost him to do it by any means free and open to the public at the time of the infringement. If by means of the patentee's device it cost the infringer a dollar, we will say, to make this box [ex- hibiting box], it being made by the patentee's machine, and if it had cost him before that to make it by hand five dollars, the amount which he has saved by making this box by the patentee's device is four dollars, and that is the profit which he has made, and which he has got to pay over to the plaintiff. This is the rule which the Supreme Court, after long deliberation, arrived at in the famous case of Mowry vs. Whitney (14 Wallace). Up to the present time the value of this rule has not been very manifest. It has so happened that the cases that have been settled with that rule have fitted to it pretty well. When the rule has not fitted them the amounts in controversy have been so small that nobody was very much hurt. . This rule which the Supreme Court has laid down is what I referred to iu saying that a harsher, a more anomalous rule never found its way into a court of justice or on the statute-books of a free and enlightened country. First, the law is wholly anomalous. There is no law whatever in re- gard to any other property similar to it. I mean to say that there is not a single form of injury to any species of property, owner or person known to mankind where the courts have ruled that the converter of it shall pay the profit which he has made by its use over and above the use of some other device then open and free to the public. In the great fire which devastated Chicago, a gentleman friend, by the help of a horse and cart belonging to somebody else, carried away $1,700,000 in government bonds and greenbacks. He had converted this horse and cart, and all that he could have carried on his body would have been but a small proportion of the amount; by this unlawful use of the plaintiff's horse and cart he is enabled to save the whole of the amount. What would you think of a rule of law which, when the owner of the horse and cart had brought his action of trover (it would be the same thing that is being done to-day in these patent cases in equity), if the court should say, "Here, Mr. Defendant, you have saved $1,700,000 by the use of this man's property; this property you have converted; SEC. 2: DAMAGES AND PROFITS. 369 you thief, you have saved $1,700,000 by the unlawful use of this plaint- iff's property, and the law declares that you should pay him the whole amount." That is the law to-day in equity, in patent causes, and that is the rule at law where there is no license fee. This is what I refer to when I say that the courts have given to this particular species of property this wonderful, extraordinary character. They have hedged it about by remedies and definitions unknown to the law, in every other branch of our jurisprudence. The law then is anomalous. But, in the next place, it is in every way unjust. The objection is made here that when the plaintiff whose patent has been infringed comes into equity, we seek by this bill to give to him the price which he himself has fixed upon his invention. Now, I ask again, is that a hard- ship? If he has been satisfied to deal in that way with the public, is there any hardship in putting upon the patent the price thus made ? Why should he complain? The courts say, " We must not do it; we must not allow this poor, misguided patentee to be so limited ; he is an Indian, he is a spoiled child, he doesn't understand his own interests;" and they will give to him an amount so much in excess of the amount he himself has fixed, that when I state it to you I hardly expect to be believed. There is a patent case now pending in the Supreme Court of the United States, the invention of which cost in labor a few weeks, and a few hun- dred dollars of expense. If the alleged inventors were to be paid the price which they expected, they would receive from $300,000 to $700,000. Now I ask yon, is not that enough? Do you know of any citizen who ever came to bless this country, whose services would not be repaid by either of those amounts 1 Do we need to give to the patentee more than $300,000 for the patent, and for the good he has done to the public? Do we need to offer greater prizes than that ? Judge Drummond, under this same patent, entered a decree, finding himself in the grasp of the law — which he could not escape — a decree which, if applied to all rail- roads in this country, would give to the owner of the patent, in equity, from fifty to a hundred millions of dollars. A. H. Walker. Is that the Tanner brake patent ? Mr. Patson. It is the Tanner brakepatent of which you have all heard so much. Lest I should be thought to be mistaken about it, I think it is perfectly proper for me to say that the owner of the patent has him- self stated to me when I put the amount at sixty millions, that he thought I had underestimated the effect of the decree. I don't know what the Supreme Court is going to do. That is what Judge Drummond has done He has reviewed it two or three times. The first decree was for more than that. After learning what it meant, he took off thirty per cent, or so. But suppose they reduce it. Are we to pay them $5,000,000 ? Is any one here willing to vote that the public should, by law, in advance agree to pay for any patent $5,000,000 ? This is an extended patent. It was issued in 1852, and it expired 21 years thereafter, in 1S73. A. H. Walker. Isn't it afact that the owner of the patent has offered to settle ? Mr. Patson. The patentee some years ago went into a hotel in New York, and he said to a friend of mine, " You needn't trouble yourself any more about this matter, for I have about settled with the railroads for twenty millions of dollars. They are to give me twenty millions, but 1 am to allow them twenty-five per cent, for the trouble of collecting it. I am to have fifteen millions of dollars, and passesP S. Mis, 50 24 370 MR, GEO. PAYSON. A. H. Walkeb. That's all very well for a joke ; bab isa'b it within your knowledge Mr. Payson. How much of it is a joke and in earnest when we come into the courts 1 Is it any joke to pay thirty or forty millions of dollars ? [A fuller explanation of this case, in reply to a q,uestion by Mr. A. H. Walker, followed, which, not being specially pertinent to the pending bill, is, by request, omitted from this record.] Mr. Patson. If the law had been what we want to make it, namely, that the patentee shall have his license fee, this matter should have ended years ago. The roads would have paid the five or ten dollars a mile which the owners of this patent had declared to be a sufBcient recom- pense, and there would have been peace ; but in the mean time there came this chimera of the courts by which they are betrayed to their ruin. A Member of the Committee. How does the proposed law remedy the matter ? Mr. Patson. The remedy is that the measure of the plaintiff's recov- ery shall be a license fee — the price which he himself has put upon his commodity. In this very case, if that were the rule, the owner would recover from $350,000 to $700,000. The proposed statute (section 2) may be divided into two or three separate clauses. The first clause obtains where the patentee has al- ready established a license fee, and the second obtains where he ought . to do so — where it is for his interest to do so. In two cases reported in the 2d of Fisher, Judge Grier, some years ago, declared in express terms that in a case such as here provided for, thait is, where it was manifestly for the interest of the patentee that every- body should use his invention, he has no right to come into equity ; he has no need of an injunction ; and where it is for his interest that every- body should use his invention, the whole damage he has sustained is the non-payment of a license fee. A Member of the Committee. This second part provides that where there is no established license fee, but where it would be for the interest of the patentee that other persons generally should use his patent, the court or jury shall determine the measure of damages. How Is the court to determine what the measure of damages is 1 Mr. Payson. The court and the jury are to determine that question precisely as they determine analogous questions at the present time. If A brings a suit for conversion of personal property, for slander or libel, or fraud, or. injuries sustained in a collision, the court and jury are called upon to do precisely this same thiug, and I cannot see any wrong in subjecting the owner of patent property to the same rule to which all the other owners of real or personal property are subjected. The dan- ger is not that the court and jury will give too little, but that they will give too much. In the bill which I drew, and which passed the House of the last Congress, it was provided that the court and jury should take into consideration the time, labor, ingenuity, and experience in- volved in making the invention in assessing the damages in cases where there was no license fee. But I surrendered the point in draughting, with other gentlemen, the present bill, and left it in the form in which it now is, as the other gentlemen were afraid to hamper the court and jury, A Member. Did I understand you to say that Judge Grier had said that in cases where it was for the advantage of the patentee that his Datent should go into general use, there was no necessity for an injunc- tion ? SEC. 2: DAMAGES AND PROFITS 371 Mr. Payson. Yes, sir ; that was tbe point before him. He said ex- pressly that where it is for the interest of the patentee that his patent should go into general use, the patentee has no reason to go into equity, and has no need of the extraordinary aid of au injunction. The only remedy is in damages, and the only injury to the patentee is the non- payment of the license fee. And, I add, if he is not satisfied with the price which he himself has put upon his invention, or not satisfied with the price the court and jury are disposed to put upon his invention, let him come into equity, and by this extraordinary remedy of injunction he can put a stop to the use of his device at a price he and the user can- not agree upon. The next objection to the present rule in equity, and, in the absence of a license fee, in law, is that it is wholly impracticable. Here, gen- tlemen, is a whip [exhibiting it] that two or three years ago, in the ex- position of Chicago, I saw being manufactured by a patented machine, and I bought it. The machine turned out these whips at a most rapid rate and at a very trifling expense. It is made out of cane or rubber, and is woven all over with fine strips of leather, and there is a piece of lead at the top of it. The manufacturers told me they made a profit of five cents. They sold them for 25 cents, and they cost 20 cents. Now, suppose the infringers of that machine were sued, having sold a hun- dred thousand of them. It would cost, say, fifty cents to make that whip by hand, consequently the infringer has saved 30 cents, and has got to pay 30 cents, although the gross amount of the sales was only 25 cents a whip. In other words, he has got to pay not only the miser- able amount of profits he had made ($.05xl00,000=$5,000) but pay 30 cents, or $30,000, when lie received as the gross earnings from all his business 25 cents each, or $25,000. This is strictly in accordance with the rule of equity in the United States at the present time. This is one of the very numerous class of cases which I have found. Although the manufacturer had sold his wares at a loss, he still would be compelled,^ under that rule, to pay the difference between the cost of manufacturing them by the patent i^rocess and what it wcJuld have cost him under a process open to him at the time of the infringement. You may look at almost any article of furniture in this room — the legs of this table, the arms of that chair ; they can be made by machinery at a cost infinitely less than by handf and if the infringer of the machine by which they were made were called upon to pay according to the present rule, he would have to pay many times the amount of the price he had received for the whole chair or table. Gentlemen, I will close what I have to say, aud the committee will please bear in mind this one closing suggestion : That this patent law was framed when the population of this country was probably not more than one-tenth what it is at this day. You must remember that the evils in regard to patent property have gone on increasing from that time to the present, not simplyin proportion to the increase of population, but far in excess thereof. You will please to remember that the license fee, which forty or fifty years ago might have been a very inadequate reward to the inventor, will today enable him to live like a prince. Let me remind you that you are hero legislating for posterity. That as the population of the United States has gone on increasing in the last fifty years, it will, in like proportion, go on increasing in the years to come. And I beg you to consider the importance, when this country shall contain a population of one or two hundred millions, of a patent which it is for the interest of the patentee that the public should generally use. Every year adds to the number of the population, and every year we live adds 372 ME. GEO. PAYSON. to the value of each patent. What to-day is possibly an inadequate reward to the patentee is sure, in the slow growth of years, to exceed one's wildest anticipations. I am not here, Mr. Chairman, to advocate the repeal of the patent law. I could not if 1 would, and I would not if I could. At the same time, I am very far from sharing in the opinion of others, that the pat- ent law is the principal element of our national prosperity. The most valuable inventions were made before the patent law was heard of, and they would continue to be made though the last vestige of the patent law were blotted off the statute-book. The patent law does not bring the invention out of the inventor. It is in his nature, and, though pov- erty and ruin and disgrace were staring him in the face, the genuine inventor would still goon, as Milton sang his song, not for the present time, or for the ten pounds paid him, but because he could not help it. It is a very great wrong to suppose that this class of the community are actuated by love of filthy lucre. They don't invent, Mr. Chairman, for money, but because God makes them invent. But still there is a larger class of so-called inventors that do need this petty stimulant. If I had the power, I would not repeal the patent law ; I would amend it, and if I could not remedy the defects, I would repeal it altogether. Judge Drummond says the patent law ought to be radically amended or totally abolished. The history of the world is but a history of inventions, made, many of them, before, as I say, a patent law ever was heard of A Gentleman. But will the inventor develop and introduce his in- vention without the stimulus of the patent law ? Mr. Patson. You may as well ask me " will a mother forget her suckling child," as to ask whether an inventor will neglect or abandon the product of his brain. He loves it, cherishes it, and while life and being last he will follow it, although he sees his wife in rags and his children without bread to eat. I am happy to say that we are acting in entire unison and concert with inventors all over the United States. I am happy to say that the most earnest advocates of the amendment which we are here seeking to have passed are those inventors that know, more than I know, the necessity of the law ; and the only fault they find with this bill is that it does not go far enough. There are others, the representatives of in- ventors, and still others who are making their living by the manufac- ture of patent machines, who are heartily with us. And I wish to repel, with the utmost earnestness of which I am capable, the stigma sought to be cast upon us, that this is an attempt upon the part of a few infringers, men who have no interest in patent law, to get rid of the effects of their infringements. We are aiming at the greatest good to the greatest number. I be- lieve sincerely that what I have been doing here is as much for the inter- est of the patentee as it is for the interest of those who use his device. I do not understand this cry, "Great is Diana of the Ephesians." It is the same old cry that the world has heard for a thousaud years, which, however, I confidently trust will have no manner of weight with this committee ; but the rather that the manifold considerations already pre- sented will commend at least these more important sections of this bill, which I have hurriedly discussed, to your hearty approval and cordial indorsement. GEOKGE PAYSON. SEC. 5: REISSUES. 373 AEGUMENTOF MR. WHITMA5T. [February 22, 1878.] Mr. Whitman, of Washington, addressed the committee. Before calling your attention, gentlemen of the committee, to the sec- tions of the bill before you, I want to take the liberty of answering a question put by the honorable chairman of this Committee. During the discussion, in which I have taken a great deal of interest, the statement was made that more patents were taken out, according to the population, in certain Western States than in all theNewEnglandStates. I was somewhat surprised at the time to hear such a statement, but I find upon examination that it is so. The honorable chairman of the com- mittee inquired, "How was it with the South f I have taken occasion, for I felt a deep interest in the matter, to examine the report of the Commissioner of Patents for the last year (1877) upon that point, and I find that in the adjoining State of Maryland, during the year 1877, one person in every 4,067 took out a patent; in New Hampshire, one person in every 4,080 took out a patent; in Maine, one in every 4,749; in Ver- mont, one in every 5,733; in Texas, one in every 7,117; and in Louis- iana, one in every 9,073. It would appear from this statement that the State of Maryland has already left in her wake no less than three of the New England States, and that the remote State of Texas is only a little behind the State of Vermont. Mr. Eldbedgb. That would not show precisely how many patents were taken out in the respective States. Mr. Whitman. No, sir ; it was not that ; it was the estimate of the number of patents according to the population. I will read the state- ment again. The experience of every lawyer practicing before the Patent Oflflce, in patent cases, is, that the number of patents taken out in the Southern country is wonderfully increasing. The gentleman has mistaken my statement, and I read to him again: "In Maryland, dur- ing the year 1877, one person in every 4,067 took out a patent" Mr. Eldeedge. My question is this: Supposing one person to have taken out twenty patents ? Mr. Whitman. The estimate was not based upon the number of pat- ents that any one particular person had taken out, of course. The Chairman. Did I understand you to say that the ratio in Mary- land was one in every 4,000 ? Mr. Whitman. One in every 4,007. It would appear, then, gentlemen, that the Southern State of Maryland — that is, looking at the Southern States as those south of Mason and Dixon's line — has already left not less than three of the New Englaiid States in her wake, and that. the re- mote State of Texas is only a little behind the New England States. I know that it has been a fashion among the members of Congress from the West and South — perhaps not of the South, but certainly of the West — it has been the fashion among members of Congress represent- ing particularly agricultural constituencies in the West, to speak of patents as a New England institution. They look upon patents very much as they look upon codfish, or baked beans, or wooden nutmegs, as the gentleman suggests, as purely a Yankee institution; whereas, in the adjoining State of Maryland, they took out more, patents, according to^ the population, last year, thau they did in several of the New England States. But, Mr. Chairman, I will direct your attention to the bill pending before the committee. I have had time to consider only a few sections 374 MK. WHITMAN. of this bill, and I shall therefore call your attentiou only to those sec- tions that I have found time to examine. Of these, the section relating to reissues seems to be the most impor- tant of those to which your attention has been directed. Now, iu order to understand this matter of reissues, it is necessary, in the first place, to follow up the procedure of taking out a patent; for it is impossible to understand the theory of reissuing a patent without following up the steps incidental to taking one out in the first place. The first thing that the inventor does,when he has made an invention, is to embody it iu some form. Sometimes he makes a machine which not only embodies the invention as the model would embody it, but shows an article ca- pable of actual practice and actual results. Now, at the very instant that he has completed that machine he has an inchoate right of property es- tablished, for it is not the taking out of a patent that first vests in him rights recognized by law. That property-right was partially established as soon as he made the invention. He can assign it, he can sell it, and it is valuable to him. The very instant he has made that invention, un- der the laws, he may put an assignment on record, and perhaps obtain thousands of dollars for the child of his brain, although his rights be- come more distinctly defined when the invention is reduced to practice, or, in other words, when he has made the machine capable of actual and successful use. A great deal of talk has been made before the committee about fraud- ulent reissues. Well, Mr. Chairman, it seems almost impossible to de- signate any instrumentality known to the law that may not, in the hands of bad men, be made the vehicle of fraud. Take the matter of convey- ances. It is a matter of daily practice, as you who are lawyers well know, to file a bill in equity against a party who has taken property under a fraudulent conveyance ; and we know that after taking out an execution, it is frequently necessary to file a creditor's bill, in order to follow the property of the judgment-debtor into the hands of fraudulent vendees. Now, how thoroughly absurd would it be to stand here and condemn the whole system of conveyancing throughout the country, and brand it as a fraud, because there are, now and then, fraudulent conveyances? And I venture to assert that where there is one fraudu- lent patent taken out there are hundreds of fraudulent conveyances made. The main argument against reissues seems to be that the model may show what is not described in the original patent. In this connection, I am free to state that while I do not oppose the amendment that has been suggested by the Commissioner of Patents, to strike out the word " model " from this section, I think it would be well for you to investi- gate both sides of the question before ma'king this important change. The argument against relying on the model in reissuing seems to be, that a man may deposit a model in the Patent Office, and leave it there for three or four or more years ; that meanwhile devices which are shown in that model, but not in the patent, are introduced into use in the workshops of the country ; and that therefore the parties who use the devices shown in the model had no opportunity of knowing that they were, or would be, patented after four or five years— say the objectors ; the party comes back to the Patent Office; picks up his old model ; pre- pares drawings to correspond with his model; writes a specification, 'describing what is shown in the drawings; claims certain features that are shown in the specification; and he goes before the public with the patent, claiming not what was described in his original patent, but what was shown in this model at the Patent Office. Supposing, what is not SEC. 5: REISSUES ON MODELS. 375 probable, that a reissue of this kind would be sustained by the courts, there is no doubt but that it would operate as a hardship, which would be remedied by the amendment. But there is another point, which should be considered, that the gen- tlemen who have discussed this matter have not called your attention to. Now, in the case cited, instead of depositing a model in the Patent Office at the time the application was tiled, suppose the inventor had quietly put the model away upon his shelf; suppose he made an oper- ative machine, and did as Whitney, the inventor of the cotton-gin, who locked up his invention in his stable. Five years afterward he goes to the stable where this machine has been hidden from the public, trans- ports it to the Patent Office, and takes out a patent, claiming broadly everything shown therein. Now, not one of these gentlemen who have argued against this use of a model in reis.sue cases would attempt for a moment to say that the party had not the right to take out a patent on the old machine that was hidden away, unless he had abandoned it to the public, or it had been for two years in public use. Now, what difference would it make to a defendant whether a suit was brought upon the reissue founded on the model at the Patent Office, or on an original patent based on the secreted machine ? So, after all, this matter of reissuing a patent upon the model is not so decided a hardship as the gentlemen would have us understand. At the same time, I can say that I am opposed myself to the word " model " in the law, and I am willing that it should be stricken out, though it has been the law in this country since the foundation of the patent system. Here is another point : It seems to have been supposed by some of the gentlemen who have addressed the committee that the right .to re- issues comes by statute — by the act of 1832, in which reissues were first mentioned ; that it is a boon or favor received from the Congress of that time. Now, as a matter of fact, the United States has been in the habit of correcting its own grants from the date of its foundation. As long ago as 1828, before this law of 1832 was passed, Henry Clay being then Secretary of State, some inventor came to him to take out a reissued patent. There was no authority under the law for doing it; there was no section providing for it; but that reissue was taken out and litigated, and carried to the Supreme Court of the United States. It was the case of Grant v. Raymond, that has been referred to by my brother Storrow. Upon the coming up of the case to the Supreme Court of the United States, most able counsel were engaged on both sides ; the Hon. Daniel Webster, then in the Senate, representing the defendant. That gentleman took the ground that Henry Clay had no right to reissue that patent; that he had no authority by law; and that, in order to reissue that patent, he should have had some authority given directly from the statute. But Chief Justice Marshall, (and who shall question his de- cision ?) then upon the bench, decided that he had such a right, and that it was right under the patent system. Therefore you are not repealing a boon that has been granted by Congress to the people of the United States, but, in denying the right to reissue a patent upon a model, you are taking away from the citizen a right which he has had since the foundation of the government; a right which was given to him, irre- spective of the statute as It existed at that time, by such a man as Henry Clay ; and a right that was declared to be valid by such a jurist as Marshall, after a most thorough argument at the bar by such an in- terpreter of the Constitution and laws as Daniel Webster. Mr. Htjbbell. Is not a model deposited at the Patent Office open to 376 ME. WHITMAN. the public inspection, and evidence to all the world that what it con- tains is the substance of the patent ? Mr. Whitman. If it is deposited there, and the Commissioner puts it in the model cases. Mr. HuBBELL. Are they not all arranged so the public can see them — cannot any one go there and see them ? Mr. Whitman. He cannot, perhaps, find a model that represents some particular invention, unless it happened to be in the model case. It might be in the examiner's room ; there is very considerable trouble in keeping models in the cases all the time, because the examiners are al- ways engaged in examining new applications and require the models; and they are sent to their rooms, where they are frequently kept for days and weeks. If I am wrong in this, here is an examiner of the Patent Office, who will correct me. Mr. HuBBBLL. Cannot any one go in there and call for that model, and be either taken to it or it brought to him ? Mr. Whitman. Yes, sir; he can. But I would also say, as the law now stands, a model is not required[to be produced when the application for letters patent is filed. The Chairman. That is only a rule of practice at the Patent Office. Mr. Whitman. That is only a rule of practice at the Patent Office. It is not necessary for the Commissioner to demand a model in any case without he chooses to do so. Mr. Elbeedge. And the model is not made notice by law to anybody. Mr, Whitman. No, sir ; not by the statute. It does not properly constitute a part of the record, as the statute now stands. Under the old law, as it existed prior to 1870, 1 think the model did constitute a part of the record. I see an ex-Commissioner of Patents present, and if I am incorrect he will inform me. Mr. FooTE. It is not part of the record; still, it was always referred to, Mr. Ward. Is the model in any sense such notice to the world as the patent itself — legal notice to anybody ? Mr. Stoerow. It is nothing that a man is bound to take notice of. Mr. Eldeedge. The records are made notice. Mr. Stoerow. The public records are made notice. Mr. Elbredge. I am not aware that the model is notice. Mr. Whitman. I should not suppose that in the present condition of things it is. The Commissioner is not required by law to call for a model, but he is required to call for drawings, specification, and oath of inventor. Mr. TowNSHBNB. There is another thing in regard to models in this bill. Mr. Whitman. There is a section making models evidence in courts. Mr. Storrow. Making certified copies as good as originals are. Mr. Whitman. That is what it amounts to. Heretofore there seems to have been some doubt on the subject. Models have always been good in the courts as testimony, but some question on the point has been raised. Mr. HuBBBLL. Is it not the practice in courts to make models from those in the Patent Office; and have them certified and admitted in evi- dence in a case ? Mr. Whitman. That is the practice. Mr. Htjbbbll. Does not the law require, also, the Commissioner to demand a model, where the nature of the case admits of a model ? EXlMINATION IN PATENT OFFICE. 377 Mr. Whitman. It does not require, but allows him to do so ; how- ever, I shall be obliged to pass over this ground very rapidly. As I said before, in order to understand this matter of reissue, it is necessary to follow up an application for a patent. Now, in the first place, when the inventor has made an invention, he generally goes to the model-maker and employs him to make a model ; but sometimes he makes it himself. That is what the inventor sees himself, and also what he makes himself. Certainly there can be no better evidence of what the man really does invent than that model. He makes it with his own hands, or it is made under his own eyes. He sends that model on to Washington, or puts it in the hands of some local practitioner to prepare an application for the Patent OfiQce. The next step is to prepare a drawing from that model. As a matter of fact, the inventor very frequently never sees that drawing, as the law now allows the drawing to be signed by the attorney. The model comes on here to Washington ; the attorney prepares the drawing from the model, and signs it himself, as he has a right to do, by the express words of the statute. After the drawing is made, a specification is written, descriptive of the drawing. It is then sent back to the inventor, who reads it, and makes the oath of invention. It is not considered necessary for him, under the law and practice of the Patent OfQce, to see the drawing. Then the application is filed at the Patent OfiSce for action. The different inventions filed at the Patent Oflce are divided into some twenty-two diiferent classes, each being in charge of some one examiner. Suppose I file an application for an im- provement in a sewing-machine. The application is referred to the ex- aminer having charge of that particular class. The duty of the exam- iner, upon having an application referred to him, is to carry out the words of the statute, and make a thorough examination as to its nov- elty. In the first place, he makes an examination of all American pat- ents which have been heretofore granted, which he can do with facility, because the drawings are arranged in the port-folios of the Patent Office, so that they can be easily reached. Having made a thorough examination of all the American patents, it is then his duty to examine foreign patents, and this examination is not so thorough, perhaps, as it might be or as it ought to be, which is occasioned from the fact that we do not receive at our Patent Office copies of all foreign patents ; and to make a thorough examination, they should all be searched. However, there are very complete collections of French and English patents, through which the examination can be extended. Having made that search, he then goes to the encyclopedias, reference-books, digests, &o. If he finds anything in the way, as in nine cases out of ten he does, he writes and informs the inventor his application has been rejected, or informs him it will be necessary to modify his specification ; that there are other inventions before him; and usually reference is given to a number of prior inven,tions. This is particularly true in cases of sewing- machines, harvesters, plows, stoves, «&o., classes of inventions in which there have been many patents granted. Then it is necessary for the inventor to modify his application accord- ing to these references that are given. And here a point is made that I want to refer to. The objection has been made that specifications should not be corrected by an amendment filed at the Patent Ofiice. Under the theory of the objector, it seems to be perfectly right that the inventor should go back to the original specification and correct his patent by that, but he should not correct it by any other amendment filed in the Patent Office. Now, you will observe from what I have 378 ME. WHITMAN. stated, iQ nine cases out of ten — I do not know that it would be an ex- aggeration to say ninety-nine out of one hundred — the case is first re- jected, and it is necessary for the inventor to rewrite it. Now, that re- written specification is the specification that goes out with the patent. It is the amended specification, not the original specification. After the specification is amended, it is printed by the Patent Ofiice, and the inventor has no right to see it while it is in progress of being printed. It is sent to the Government Printer for that purpose, and the Govern- ment Printer may perhaps make mistakes, or the proof-reader make mistakes. I have known cases where whole paragraphs have been left out, and this all without the fault of the inventor. The inventor then takes out the patent with the specifications and drawing, and upon ex- amination he finds that the Government Printer may have left out por- tions of the specifications. Mr. Stoeeow. I had a case last week in which the Government proof-reader changed the meaning of the sentence by altering the punc- tuation. Mr. Whitman. He finds that error, for which there is no remedy ex- cept the right of reissue. He comes back to the Patent Ofiice for a re- issued patent, which is the only way in which the correction can be made, and the ofiice, of course, corrects it for him. That shows how valuable this right of reissue is. The Chaieman. What is your opinion about the limit of that right? Mr. Whitman. I should say, in regard to the right to limit reissues to three years, that, I believe, is the time which has beeu recom- mended Mr. Eaymond. I think a long term- Mr. Whitman. I will try to answer the question of the honorable chair- man by citing a case {Morey against Lockwood) that went to the Su- preme Court of the United States. One of the parties went to the Patent OfiSce and applied for a patent. A party goes to the Patent OfiQce (the party in this case) and makes application for a patent. His claims were rejected by the Commissioner of Patents — some of them. It was after- wards decided by the court that he had a right to those claims. Now, a man may not know that his patent is invalid till it goes into the courts, for if be takes it to the patent lawyers, there may be a dispute about it ; one will tell him it is good and need not be reissued, and an- other that it is bad, and ought to be reissued. He may not actually find out this error until the case is litigated in the courts, and we all know what litigation is in courts. Why, I know a case, now on the docket of the court in the other end of this building in which I am one of the counsel, which has been there for over two years since the appeal was docketed. Now, follow up patent litigation ; the man may be four or five or six or seven or eight years before his case reaches the'Supreme Court of the United States, before he finds that his patent ought to be reissued. He makes the attempt, and finds a three years' limitation is on the statute-book. Now, there is no justice in' that, I think. If the patentee has the right to the reissue of the grant at all, he should have the right during the whole term of the patent. As I stated before, the government has always exercised the right to correct its own grant, and this correction often benefits the public more than it does the patentee. Now, here is my idea of a patent : The gov- ernment says to me if I have made an invention (and I have made one or two, I think), " You have an invention and you have a right to keep it locked within your own breast ; it may be valuable — it is valuable — and we want the right to use it. Now, the Constitution of the United SEC. 5: REISSUES. 379 States and the acts of Congress authorize us to make a contract with yoii. You tile au application at the Paleut Office and give us a thor- ough description of your invention in such a manner as it may be un- derstood by those skilled in the arts, and we will give you a patent." I comply with the agreement. I go to the great pains and expense of preparing specifications and drawings, and file them at' the Patent Office. Now, the consideration that the government receives for the grant of the patent is that written description ; for that written description, after the expiration of the patent, enables the public to make and use the invention forever. Take the case of Whitney, the cotton-gin inventor. Why, gentlemen, less than a century ago seven or eight bales of cotton were seized on the English docks, on the ground that so much cotton could not be produced in the United States market. Now our export of this most valuable staple is millions. It is scarcely necessary to go to history to find out the reason. In the old time it took a negro woman a day to gin a pound of green- seed cotton. Now look at what the cotton-gin is doing. It built up that staple for the Southern country, it built up the great plantations of the planters of the Carolinas, and it has been of most inestimable ben- efit to our people. Take that case as an illustration. Whitney, the Georgia school-master, might have quietly locked that cotton-gin in the stable where he first put it, and kept it there. He might have quietly ginned the cotton for himself, and made a fortune in ginning cotton for the neighboring planters. But the government says : " You have made a great invention ; we want a right to use it. You shall have a patent if you will permit the plainters to use it upon reasonable terms, and after the patent has expired allow the invention to become the property of the public. We therefore ask you to tell us all about it." The invent- or assents to the arrangement, and writes a descri|)tion and files it at the Patent Office. But suppose the description is defective; suppose he files there a defective drawing or specification and goes on secretly manu- facturing his cotton, and at or before the end of the patent term dies or transfers the right to manufacture to another. The public has not re- ceived its consideration for the contract; it has not had the clear de- scription of the invention to which it is entitled. In that case it would be necessary for the inventor to reissue the patent for the benefit of the public ; and it is not only so in that case, but more particularly is it the case in chemical manufactures and patents for processes and compounds, where a correct description is the only means of using the invention. Therefore, we must well understand before we abolish or limit the right, or attempt to do so, that we are using a sword that cuts in both direc- tions. I have not time, however, to go into this reissue matter at any length. It seems to me, however, that the present amendment of the law obvi- ates all difficulties that arise now in reissues. The only objection, and the objection universally urged, is, that something may be introduced into the reissued patent which is not shown in the original patent, and thereby the public may suffer. Some gentlemen who have addressed the committee have spoken quite pathetically of the sufferings of our large manufacturers in this connection. I must say I have never known of such cases as some of those cited ; but I have known of inventors who, under bad advice, took out expanded reissues, litigated them at an enormous cost, and lost all their money for their pains. The taking out of these expanded reissues injures the person who procures them, in nineteen cases out of twenty, more than it injures anybody else. Take one of the cases that has been cited, as an illustration. Here a 380 ME. WHITMAN. man, at a great expense, takes out a reissued patent. He may have been advised to do so by some incompetent attorney, and goes through the courts to the Supreme Court of the United States. He spends thousands of dollars. The Supreme Court declares, as they should do, that the reissue is invalid ; and who has been injured ? It strikes me that the party who has taken out the reissue is the sufferer; and that judicial investigation, which our fifth section requires, is the best safe- guard against improper reissues. Mr. Raymond. How many cases do you know of, that have gone to the Supreme Court, where the accidental or fraudulent defect has been found out by litigation more than five years after the date of the patent"? Could not all the instances that are in the books, of that kind, be count- ed on your fingers ? Mr. Whitman. I think if you will take the trouble to look up the re- ports, you won't find that many cases reach the Supreme Court within five years after the patent was issued. Mr. Mason. In a case pending before this committee, for an exten- sion, it is alleged that there were eight years lost, and the illustration that Mr. Whitman made recalls it. In that case the specification was filed, and the Commissioner granted a patent for only the portion of the claim which he thought was not covered by prior invention, and reject- ed the other portion of his claim. It went along five years, and it went into court, and they found that the specifications to the patent that had actually been granted to him were an infringement. An attorney was appointed and investigated the original patent, and went back long enough and convinced the Commissioner that all the authority that had been cited for throwing out a portion of the specification was wrongly construed, and they granted a reissue on the original specifications. That was more than eight years after the thing had happened. That is one of the grounds that they claim an extension on ; they claim that it was an error on the part of the Commissioner, and the Patent Office itself, in granting the original patent, and therefore they lost eight years of their time. This question of reissue practically comes up in some cases. Mr. Whitman. Mr. Mason very justly observes that if any limitation is made it should be after the time that the mistake is discovered. It strikes me that a limitation of that kind would not be objectionable. For instance, a man takes ont a pateht covering a combination of five different elements, or four, and he sues a man who uses a machine hav- ing three of these elements; it goes to the courts, and on appeal to the Supreme Court of the United States, which learned tribunal is in the habit of deciding a patented combination covering four co-operating parts is not infringed by a combination covering three. If, in this case, the court construed the claim to be for a combination of four parts, of course the only remedy is to go back and take out a patent covering the combination of three parts. Now, if the limitation could be made to run from the date of the decision of the Supreme Court, or the period the knowledge has been brought home to him that his patent is invalid, I do not know that the limitation would be altogether objectionable. Mr. HX7BBELL. Where is the legal or equitable right for any limita- tion at all, if he has the right to a reissue ? Mr. Whitman. I do not propose to defend any limitation whatever ; neither do I stand here to advocate one. Mr. Stoerow. There is no practical necessity for compelling a man to take it out as soon as he needs it ; they are quick enough to take out SEC. 7: JOINT INVENTIONS. 381 a reissue if the original patent has been found bad. Our sixth section gives a suflQcient motive. Mr. Whitman. Then comes the following section, seven (7), and that seems to be a necessary amendment of the law, although I have not heard it alluded to at all before this committee. It provides as follows : Sec. 7. Whenever a patent has been issued to one person for an invention actually made by him jointly with another, or others, or a patent has been issued to several persons for an invention made by only one or more of them, and such error has arisen through inadvert- ence, accident, or mistake, the Commissioner, upon the application and oath of the true in- ventor, or inventors, and with the written consent of all the owners of said patent, entered of record, may correct the mistake as a clerical error. No new patent shall be issued in such case, but the correction shall be entered upon the old patent, or the record thereof, or both, and said patent shall thereafter, for all purposes, be regarded as having been properly issued, in its corrected form, at the date of its original issue. Upon such correction, a fee of twenty dollars shall bo paid, under such regulations as the Commissioner of Patents may from time to time prescribe. The law now seems to be obviously defective on that point. For in- stance, suppose two men, A and B, mistakenly make application to the Patent Office as joint inventors. Afterward it turns out that they are not joint inventors, but the invention, instead of having been made by A and B, was in fact made by B. This may be a very common mistake, because persons taking out patents in different parts of the country are not skilled in the patent law; they do not know whether they are sev- eral or joint inventors, and they may honestly fall into that error. They come on to the Patent OfiSce, four or five years afterward, for a reissue of the patent, and the Commissioner informs them that there is no au- thority in law for the reissue of the patent. I am somewhat doubtful upon the legal ground that has been taken by the Secretary of the Inte- rior and the Commissioner of Patents upon that question, but I do not propose to question, at this time, such distinguished authority. The inventor is informed by the Commissioner of Patents that he has no right to take out a reissue. There is only one remedy in that case, and that is a rather expensive one, if there is any. The patent law provides for interferences. Therefore, in a case where two parties make applica- tion for a patent for the same invention, an interference is declared be- tween them, and one of the parties has the right to prove that he was the prior inventor to the other party. Well, now, in this case the only remedy would be for one of these parties, who was in fact a several inventor, to file an application of his own. An interference would then be declared between the several ap- plication and the joint application, and if he could prove that he was the original and first inventor, priority would legally be awarded for his invention. Then, however, the public would be burdened with two pat- ents for the same thing, and it would probably be necessary for one of the parties to go into a court of equity and file a bill to have the other patent declared void. Well, now, this section of the law obviates all that trouble and difficulty by merely allowing the Commissioner to cor- rect as a clerical error that mistake. Section 8 1 have not had time to consider, and section 9 has been pretty thoroughly discussed, I believe. I will pass oyer the other sec- tions till we come to 13. Some statements were made in regard to this section by some of the gentlemen who argued the case before the Senate committee, which seem to me ought to be answered. The ground seems to have been taken that one of two joint owners of a patent has no right to assign or license other parties in such a way that an action could not be main- tained against them for an account by the other joint owner. Now, the 382 ME. WHITMAUr. courts have decided that point within the last tea years, and this sec- tion of the law merely legalizes or re-enacts the decision. Mr. Payson. It has not been decided by the Supreme Court. Mr. Whitman (to Mr. Payson). These cases to which I would call your attention are those of Vose v. Singer, by the supreme court of Mas- sachusetts, and a decision of Mr. Justice Druramond, of your own circuit. Mr. Payson. The Supreme Court never have decided it. That case in which Judge Drummond did decide it, I know all about ; and I know there is a great deal of doubt about the correctness of that decision. Mr. Whitman. That certainly is a railroad case, and one with which you are undoubtedly familiar. I think that Judge Drummond clearly decided that where a patent had been issued to two parties, or where the parties were tenants in common Mr. Payson. He did decide that precise question ; but what the Su- preme Court would do, we do not know. Mr. Whitman. That precise question has been decided in that way by the circuit court of the United States, and after long and thorough argument by the supreme court of Massachusetts, in the case of Vose«. Singer. We may go back of the decisions of the court, and go to common sense upon the question. There is a doctrine, based on the English statutes that have come down to us, that one of two tenants in common of real estate may compel the other to account for the profits, although at common law there was no such right for an account. It depends upon the statute of Anne, I think. Mr. HuBBELL. I think my remark, made before the Senate commit- tee, covers that point — that a man cannot sell what he did not own, and that Congress cannot give a man a right to sell what he did not own. Mr. Whitman. A patent right bears no analogy to the ownership of real estate; it is not the same thing, by any means. Suppose I am one of the joint owners of a valuable patent for a sewing-machine. Now, if the other joint or part owner sells, say, one of these machines in every county seat in the country, he enhances the value of that patent by simplysellingthatnumberof machines, andhe makes my rightas a tenant in common more valuable than it was before. Another analogy that might be drawn would be between the right of way over a piece of real estate and the right to use an invention. Suppose three or four parties pos- sess the right of way over real estate, what lawyer here, or anywhere, would think of compelling the joint tenants who use a right of way to account to the one who did not use it ? The courts have never held — at least, I have yet to see a recognized authority where they have held — that one or more tenants in common or joint owners of a |)atent could be com- pelled to account to the other for using the invention. Each one is an owner; eaoh, as tenant in common, has a right to enjoy; and, by the statute, enjoyment of a patent consists in making, using, or vending, and In licensing others to do this; and each tenant may so enjoy it, because, from the nature of the right, it cannot be otherwise enjoyed. This section simply re-enact what has been decided by the courts. More- over, it makes the law uniform all over the United States, and takes- away from the State courts the power of establishiug conflicting rules concerning property in invention. I will omit several sections to which I had proposed to call the atten- tion of the committee. Section 19, in regard to the taking out of patents in foreign countries,, and the taking out of patents in the United States, reads as follows : Sec. J9. Ssction forty-eight hundred aud eighty-sevea of the Eeyised Statutes shall be^' SEC. 19: EFFECT OP FOREIGN PATENTS. 383 and hereby is, amended so as to read as follows : No person shall be debarred from receiving a patent for his invention or discovery, nor shall any patent issued subsequent to March 2d, be declared invalid, by reason of its having been first patented in a foreign country upon the invention of the same person, unless the same has been introduced into public use in the United States for more than two years prior to the application ; but all applications here- after to be made for patents for inventions which shall have been patented in a foreign coun- try upon the invention of the same person shall be made within two years after the date of such foreign patent. As the law now stands, if an invention or patent is taken out in a for- eign country, the statutes limit the American patent to the term of the foreign patent, or to the one having the shortest term. That is to say, if I take out a patent in England, where patents are granted for fourteen years, and afterward come here and take out a patent, the law of the United States would limit me to a term of fourteen years from the grant of the English patent. On the other hand, if 1 should take out my pat- ent here first, that patent is published by the United States Patent Offtce all over the world, and all over Europe, If I go to Chancery Lane, in London, to the British Patent Office, you can look at any Amer- ican patent that you call for. It is publicly filed there a few weeks after it is issued from our office. That is a publication under the British law that renders a subsequently-issued patent void. If I take out a patent in the United States first, it is impossible for me to take out a valid pat- ent abroad, in England, for instance, because it will be published there before I can file an application, after receiving my patent here. Hon. Mr. Vance. Could you file a caveat 1 Mr. Whitman. Under the British law, a caveat cannot be filed. If, under these circumstances, I filed an application in England, it is probable that the patent would be granted, because they grant all appli- cations unless an opposition is filed. They do not make any prelim- inary examination, but grant you a patent and leave yon to vindicate yourself in the courts afterward. So that the patent would be granted ; but if I went into the English courts with that patent, I would be met by the unanswerable argument that the invention described and claimed had been published in England before I took out the patent, and there- fore that my British patent was not worth the paper upon which it was written. Which horn of the dilemma is the inventor to take? If he takes out the invention in the United States, he is at the mercy of any pirate in Great Britain ; for in Great Britain it is not necessary that the inventor should take out the patent — any party may take it out. If I take my patent out in the United States first, it is only necessary for some British sharper to go to the United States Patent Office and pick up the patent there, or pick up a copy of the American specifications, and take out a British patent as an importer — a man who had no right to the invention whatever; and he thus gets a valid patent — a patent recoi;nized by the British laws and the courts of Westminster Hall. Af- terwards, if i go to England and take out a patent, I am met with two defenses : first, that my invention was published abroad ; and, secondly, if it had been patented by the English importer, that he is prior in point of time to me. Now, there seems to be no sense in that provision whatever. As the law now stands, if I do not take out a foreign patent at all, but take out my patent first in the United States, Uncle Sam gives me a seventeen years' patent without question. That is, if I say to the whole civilized world, "Take my sewing-machine," or "Take that invention and use it the world over," but take out no foreign patent, I can come to the United States and take out the patent, and they give me without question a term of seventeen years. On the other hand, if I go abroad and take 384 MR. WHITMAN. out foreign patents, and say to the foreigners that they shall not use my invention, Uncle Sam limits me to a patent the term of which is short- ened, and which must correspond to that foreign patent. In other words, Uncle Sam says : "Let all foreign countries compete with the American manufacturers who use that invention in the markets of the world, and you may have a seventeen years' patent; or take out your foreign patent, and thus prevent them from having an advantage in com- petition, and your term of patent shall be shortened — if you prevent them from competing with us in the markets of the world, we will limit your right in the invention." Mr. Mason. The United States would say, if you patent in Austria, you shall not have a patent of the United States but for five j-ears. Mr. Whitman. What sense is there in that ? But not only are American inventors affected in this way; the for- eigners are also affected. In nine cases out of ten, foreign inventions introduced in this country are worked by American capital. A man takes oat a British patent, and he corresponds with the people of the United States, but as the law now stands the American capitalist would hesitate or decline to invest in that foreign patent; for he may be met, after he has taken out his American patent for seventeen years, with the assertion that the patent has expired in some foreign country, and it is not worth the paper upon which it is written. How is anybody to know but that that patent has been taken out abroad ? I defy the best patent lawyer to make an examination in this case which would satisfy the capitalist ; he might say that the patent on its face was valid, but there may be a patent in Austria, Prussia, or Italy, which we know nothing about. Mr. Mason. Or in Spain, where they do not publish them 1 Mr. Whitman. Therefore we cannot give you an opinion as to the clearness of your title ; in consequence, there is a cloud on every for- eign patent, and it prevents American capital from being invested in foreign patents, and prevents thousands of operatives, now out of em- ployment, from earning their bread. That seems to be a good argu- ment, if there is one, for the repeal of that senseless proviso. Hon. Mr. Beiggs. If the United States Government issues a patent for seventeen years, and that is published abroad, and there is no effort made by the patentee to protect himself abroad, has a party in a foreign country the right to manufacture that article without asking for a patent from that government? Mr. Whitman. He has, sir. As a matter of practice, British manu- facturers to-day have their agents in the British Patent OflSce hunting up American patents. Hon. Mr. Bbiggs. Can he send that production back here without infringement? Mr. Whitman. Ko, sir ; not if it was a patented machine. He might if it was the product of a patented machine, or a manufactured article which would pass into the bands of commerce and become undistin- guishable from the patented article. If it was a patented machine that could be recognized — for- instance, a sewing-machine — it could not be sold in this country without infringement. This agent will find some new invention, for instance, in sewing-ma- chines, and the English manufacturer will seize upon that description and go right to work and manufacture the machine; but if he sends that machine back to the United States for use, he will be met, of course, with the answer that he had no right to use the invention in the United States, for the right to patent covers the right " to make, SEC. 19: EFFECT OF FOREIGN PATENTS. 385 vend, and use the invention." The right to make and vend may have been exercised in a foreign country, but the right to use in this country would remain in the patentee. Mr. Mason. If you used the sewing-machine in making fabrics, and sent those fabrics to this country, it would be different. He could make the machines, but he could not send them to this country ; but he could send the work done on them here. There are no means of protecting the patented machines, and the manufacturer can make as many ma- chines as he pleases, without being charged with infringement, and use them in England or any other country. Mr. Ward. This publication in Chancery Lane is notice ? Mr. Whitman. Yes, sir; that has been decided. Mr. Mason. It has been so decided. Mr. Whitman. They have made decisions in analogous cases ; for in- stance, where publications had been forwarded to the city of London, and proved to have been put on sale on three different occasions in that city. That was considered in a case decided by the lord chancellor. Mr. Wabd. That would be a protection, to be aflforded by the court upon an application by the American patentee, that would prevent the Englishman from using the patent. Mr. Whitman. It would prevent him from patenting the machine at all. This publication of patents, for instance, in Chancery Lane is sufft- cient to prevent any one from taking out a patent in England — any foreigner or any American. It would be a publication that would for- ever invalidate a patent. Mr. Stobrow. After the copy of the American patent had been pub- lished there, no man can come afterward and take out a patent. Mr. Whitman. It becomes public property, and no one can after- ward patent it. Mr. Mason. It has been decided, within the last year, that when our Patent Office sent a copy of our patent, as they always do, to the Eng- lish Patent Office, after that no patent could issue for that invention in England that was valid. Mr. Whitman. The objection to operating the invention would be that the English manufacturer could get his agent to watch the issue of patents as they come out, and as soon as a patent is issued these specifi- cations are published all over the world. It is only necessary for this agent to take the printed specifications and drawings and send them to England,' where, if he gets them before the publication — before the Patent Office sends its copy — he can take out a patent as an importer. Mr. . Is that patent invalid ? Mr. Whitman. ISTo, sir. Mr. . Why cannot the American patentee do the same thing ? Mr. Whitman. The American patentee can do it; but the trouble is that his American patent would be limited to fourteen years as the stat- ute now stands. Mr. Mason. We punish an American inventor for attempt ng to re- strict the use of his invention, by curtailing the terra of his American patent. If he allows all the world to use it, he may have a valid patent here for seventeen years ; but if he takes a foreign patent, then he is curtailed of his term here. If ever there was a senseless provision, it is that ; and no one has been able to see how this ever got into the law. Hon. Mr. Brig&s. The sewing-machine has been of great public good, not only to the manufacturer, but to the entire public who use fabrics made from these machines. Now, suppose a patent taken out here, and an English manufacturer steals it, and they go into the manufacture and S. Mis. 50 25 86 MR., WHITMAN. the sale and the use of the patetited articles in Great Britain under n» restrictions. Now, has it not been the fact, in the history of sewing- machines, that while people of this country have been paying $50, $60, or $70, you could go to England and buy a machine of the same quality for $20 or $25 ? Mr. Whitman. Tes, sir ; that was the very evil occasioned by not taking out a patent abroad, which it is the object of this amendment to remedy. Hon. Mr. Beiggs. Does not that give the English manufacturer so much the advantage in the manufacture of these articles 1 Mr. Whitman. If I take out that patent, and do not patent it any where else, they give me seventeen years. If I do take out a foreign patent on it, they only give me fourteen years under the American pat- ent law. Mr. WiLLiTS. Might not the explanation why this provision is in the law be, that in 1861 they were making a raid on the patent law ? Now, they might say, we want to pay this patentee what the patent is really Worth to him, and if he has patented it in England he gets some com- pensation thereby. There are two strings to the bow. Mr. Whitman. Nine times out of ten it is a dead loss to him to patent in a foreign country. Mr. WiLtiTS. Now he has got the two countries, and we will reduce it from seventeen to fourteen years if he sees fit to take his patent out in a foreign country. Mr. Storeow. Those two changes in the law came nine years apart, one in 1861 and one in 1870. Mr. Mason. And it was in view of this mischief that is here suggest- ed, that after the expiration of an American patent, or if a thing was not patented abroad, there would be an unfair competition as against our manufacturers, and it was attempted to remedy it by this legisla- tion, which only aggravates the evil. Mr. Willits. Now, how does this provision of the bill help f Mr. Whitman. The present section declares that all patents issued since March 2, 1861, shall have a term of seventeen years, and it pro- vides further, in regard to future patents, that if they shall be taken out in this country within two years from the time they are patented abroad, they shall run for the full times The party, therefore, would be obliged to make application within two years from the time of patenting the invention abroad. There was still another objection, which strikes me now. It is that a law which it is impossible to put in force — a dead letter on the statute- book — ought to be repealed, if for no other reasou. Now, I will attempt to prove why it is impossible to put the law in force. The foreign sys- tems are entirely dilierent from ours. The British system is entirely different from ours. In England, a man could take out a patent two or three years ago for two things — say a steam-engine and a hammer; oj, to make a wider diff<^renee, he might take out a patent on an agricultu- ral machine and a chemical compound in the same patent. The theory was, that the patent came directly from the Grown, and could cover everything that was incorporated in it. Now, suppose he takes out such a patent abroad, and comes here to obtain an American patent. If we are going to limit the term of his American patent, it would seem that we must make his American patent identical with his English pat- ent; and how are we going to do it? • His English patent may cover a dozen different devices, and under our law it may be necessary for him to take out each one of these in a different patent. Again, under th© SEC 1 : LIMITATIONS. 387 English system they do not file caveats. They take out one patent after another, upon inchoate inventions, upon mere speculative draw- ings. An idea strikes a man, and he gets up a drawing and flies an application, and without any examination, a patent is granted him. In the course of years he may take out fifteen or twenty mere descriptions of inchoate, incomplete inventions. At last he embodies them all in one operative machine which is really valuable, and takes out a patent for that operative machine in this country; but he is met with the answer from the Commissioner of Patents that the machine is shown in some fifteen or sixteen English patents, and that the law requires the American patent to be limited according to the foreign patent, conse- quently, in order to answer the requirements of our laws, it would be necessary to issue one patent for a half-dozen different terms, a part of it running for five years, and another part for six, and still another for seven. It is impossible to execute such a law properly, and the Com- missioner has found it impossible, and therefore he himself has recom- mended a repeal of this proviso. I would have liked, also, to have spoken on several other subjects which had suggested themselves to me, but I have already occupied more time than was assigned me, and will not further trespass on the committee. Mr. Stoeeow. The two years' clause at the end of the section is for the following purpose: Suppose an American manufacturer finds an invention patented abroad and not here, and he wants to use it, he can- not; for, after he has built his machinery, the foreigner can come over here and patent it and stop his machines. Under our proposed law, if it has been patented two years abroad he knows he can use it. After some discussion, the committee adjourned until twelve o'clock, February 23. AEGUMENT OF ME. WALKEE. [Febexjaet 23, 1878.] Mr. Albet H. Walkee, of Chicago, addressed the committee as follows : Me. Chaieman and Gentlemen op the Committee : I understand that you, together with your brethren of the House of Eepresentatives, are sent by your constituents to this Capitol for the pur- pose of enacting such laws "as, in your wisdom, seem to be fit and proper; but that it frequently happens that those laws take hold on subjects with which the members of the committees and of Congress have no special familiarity. I apprehend that it was on account of such considerations as these that patent lawyers, who make it their profession to master this branch of our jurisprudence, have been invited to appear here and ex- plain, as well as they may be able, what they have learned about the philosophy of the patent system, about the laws as they now exist, and about the hardships arising thereunder ; and what provisions, if any, are necessary to remedy such hardships as seem to call for removal. In following out such duty, I suppose it is the purpose and desire of those gentlemen who appear here to be frank, honest, and candid, and not to attempt to mislead the minds of the gentlemen of the committee who are so kindly listening to them. 388 MK. ALBERT H. WALKEE. Now, I presume it would not be a very difficult thing for me to quote authorities and statutes in such a way as to wrest them from their true meaning ; and, unless the committee were to have before them all the books, to test the truth of my citations, they might obtain an erroneous opinion, and base some action upon it. I should, however consider it entirely improper in me to attempt to do anything to thus mislead you, with reference to the law as it now is, or with reference to its applica- tion to the facts, or in any other way. In the course of my remarks, I am sorry to say, it will be necessary for me to correct some of the statements of some of those who have pre- ceded me, which, if allowed to go uncontradicted, might tend to mis- lead the committee in reference to the laws and facts upon which you are called upon to act. With this short preface, I will address myself to the bill ; and I will begin by reading the first section, in order that we may be sure that our minds are refreshed as to the provisions : fS That from and after the passage of this act no profits or damages in any suit at law or in equity for the infringement of a patent shall be recovered which shall have accrued more than four years next preceding the commencement of such suit : Provided, That where a party, in order to preserve his right of recovery, finds it necessary to institute a number of suits involving the same issues, and he is proceding with good faith and with reasonable diligence to bring one of them to final judgment, any court in which any of them are pend- ing may, in its discretion, grant a stay of proceedings from time to time in any such other cases pending before it : Provided, also. That rights of action existing at the passage of this act may be enforced by suits brought within four years thereafter, if not previously barred by laws already existing ; but nothing in this section contained shall revive any right of ac- tion already barred, nor prolong the right to sue on any cause of action already existing. That is a statute of limitation, with such provisos as sometimes are jcf Cached to such statutes, but which are frequently omitted, although It omitted they are generally construed by the courts as being within the intent of the framers of the statute. This is a four years' statute of limitation, and in discussing the question of statutes of limitation, and the necessity for enacting such a statute at the present time, the most light can be thrown on the law by a review of its history. Congress had never felt called upon to enact such a statute pertain- ing to patents until the year 1870, when it passed an act that all actions under patents " shall be brought during the term for which the letters patent shall be granted or extended, or within six years after the expi- ration thereof." In 1874 that provision was, as I understand, accident- ally omitted from the Eevised Statutes. At any rate, it was omitted ; and it was provided that all provisions that were in former statutes and omitted from the rev sion were thereby repealed ; but there was a sav- ing clause annexed to this repealing provision, which provides that rights of action then already existing may be enforced within the same length of time as though the repeal had not been made. Up to the present time, nobody has ever been able to understand ex- actly what Congress meant by this repealing clause, taken in connec- tion with the saving clause, and two views are held by lawyers who have given the matter attention. One view is, that the repeal of the statute wiped it wholly out of existence, as if it had never been. The other is, that it wiped it wholly out with reference only to rights of ac- tion accruing after the date of passage of the repealing act in July, 1874 ; and that with reference to rights then in existence, whether under patents that had expired or otherwise, it remained in full force,Jand does so remain up to this day. Mr Eaymond. Is the latter your position ? SEC. 1 : LIMITATIONS. 389 Mr. Walker. No ; it is not. I said that Congress never felt called upon to enact a statute of limitations on the subject of patents until tlie year 1870 ; and the occasion for so doing never seems to have been brought to the attention of that body. But actions were brought from 1812 do"wn to 1870; and, curiously enough, during that time, although there was generally in the laws of the States a statute which provided that rights of action arising from torts must be vindicated by suits brought within five years of the commission of the tort, no such statute was invoked until forty years after patent suits began to be brought. I think it was in 1 853 that a State statute of limitation was first invoked for the purpose ; and up to the present time they have been invoked in seven suits only, as far as the reports of the cases in the circuit courts reveal, though possibly they have also been invoked in cases where no reports have been made. Indeed, I know they have been unsuccess- fully set up against suits recently brought by me in four different cir- cuits ; but, as I have said, itom 1812 to 1877 State statutes of limitation have, in the reported cases, been set up as a bar to patent suits but seven times. In three of these seven cases the courts held that they did apply, and in the other four that they did not apply, to actions under patents. Judge Leavitt, the district judge in Ohio, Judge McLean, who held the circuit court in Ohio, and Judge Hall, of the northern district of New York, decided that they did apply ; while those who decided that they did not apply to rights of action arising under patent laws were McDonald of Indiana, Grier in Pennsylvania, Swayne in Ohio, and Shepley in Massachusetts. Now, the argument I deduce from this is not an argument with refer- ence to whether one of these classes of judges or the other was right, but it is this, that the necessity for any statute of limitations is not very pressing, in view of the fact that for sixty-five years, the presumably applicable State statutes were invoked only seven times, and iu nearly half of these cases were invoked successfully. Therefore, I conclude that the world will continue to revolve on its axis in the absence of this statute of limitations. It is not one of the most overwhelming of neces- sities; although, while expressing this opinion, I am in favor of a clear and just statute of limitations, and think such a one should be enacted, because at the present time no one can say what is the exact status of the statute of 1870, and nobody can say what the Supreme Court will decide as to whether or not the State statutes of limitation apply. Everybody, however, agrees that if Congress should enact a statute of this kind, then the State laws could have no further effect ; therefore, I say we ought to have a statute of limitations, in order that the obscu- rity should be cleared away, although there may not be any particular necessity for one in itself. Mr. Stokbow. Yet we have now got one or two hundred cases in my district where the statutes of limitation, of four or ten years, would be invoked if there was any such statute to resort to. I have no doubt there are very many cases where parties would be glad to have such a statute. , „ . ^, i .X . i u Mr. Walker. My only point, thus far, is, that it is not such an over- whelming, pressing necessity as some suppose. Mr. Briggs. Is it not the fact that there is no statute of limitations — is not that the reason ? , t^. t. Mr. Walker. The contrary has been generally supposed. It has been the opinion of a large majority of the lawyers throughout the country, that the State statute of limitations did apply to patent cases. Mr. HUBBELL. Is that not held only in the case of contracts}? 390 ME. ALBERT H. WALKER. Mr. Walker. Oh, no; not at all. The leading opinion on that sub- ject was Judge Leavitt's, and it has been the opinion of a large major- ity of the lawyers throughout the country; and the fact that the Supreme Court has never passed upon the point shows that nobody has cared enough about it to carry it up. Grranting, therefore, that there ought to be a statute of limitations, I wish to remark upon the length of this period. Four years is a very unusually short one. Eights of action arising under contracts through- out the United States are usually not barred under five to six or seven years ; and with reference to torts, the almost universal rule is five years in which a party is permitted to bring his action. Mr. Pollard. The right of action in Missouri upon a written con- tract is limited to ten years. Mr. Brig&s. In 'New Hampshire it is two years, for torts. Mr. WiLLiTS. In Michigan it is two years. Mr. Walker. BTot with reference to torts, I think. I have takea pains to loot through a large number, and have not found one in refer- ence to torts of less than five years. Mr. BRiaas. There are different kinds of torts, on which the limita- tion is six in some eases, and two years in others. Mr. Walker. That may be ; but it is entirely apart from the argu- ment I am about to make. Eights of action under patents are peculiar things ; and I will submit some reasons why I think the limitation should be more than under an ordinary tott. In the first place, the infringe- ments out of which they arise are spread over a great length of time, instead of being committed at any one period. Another reason is, that there are often a multitude of cases under the same patent. There are cases where patents are infringed continually for twenty years, and it would be a great hardship for the patentee to comply with the provisions of the act under such circumstances, because if the four years' statute of limitations is enforced, he has got to bring five different suits in order to comply with its provisions, thus making a multiplicity of actions, and charging himself with great expense, and the defendants also. If he finally fails he has spent a great deal of money, and put the defendants at great cost in defending flv« suits; whereas, if it had not been for the statute of limitations, he never would have brought but one. Mr, Storrow. Why should he bring five suits ? In such a case as you have cited he recovers up to the date of the accounting, and not merely up to the date of bringing the suit. Mr. Walker. Even that is the case only in equity. At law, he can recover for no infringement committed after the declaration is filed. Notice, also, the language of the bill, with regard to another state of facts : " That from and after the passage of this act no profits or dam- ages, in any suit at law, &c., shall be recovered which shall have ac- crued more than four years next preceding the commencement of such suit." Mr. Eaymond. Then read the proviso in that connection. Mr. Walker. The proviso is immaterial in connection with the point I am about to make. Let me proceed in my own way, and I shall prob- ably succeed in conveying my idea more clearly. It happens frequently that the patentee is injured by a hundred different infringements continuously for a period of twenty years ; and very frequently, as I have known, for ten years. It is improper prac- tice, however, even if it were possible, for the patentee to sue all these hundred infringers while he is engaged in a fight to sustain the validity SEC. 1 : LIMITATIONS. 391 of the patent. The practice has been, under such circumstances, to make a test case, that shall not annoy and perplex all the infringers, where there are a large number. Take the Tanner brake case, which is about to come before the Supreme Court for argument. This case was begun in Illinois, in 1861. Now, I understand, if that patent is valid, and if Judge Drummond has ren-