The patent law and its administration as aids to monopoly; a frank criticism of the methods and practices of our federal courts, and their deadening influence upon the spirit of independent and progressive invention

Front matter

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Foreword

C I. '^HIS pamphlet has been prepared primarily for / the purpose of setting before the public and its representatives in Congress the facts concerning the great numbers of independent inventors who are not in the employ of the large manufacturing concerns ^ which make it impossible for them, in the present state of the patent law and its administration in the federal courts, to protect their inventions from appropriation; and in the hope that, these facts being known, such modifications in the law and its administration may be brought about as will enable those inventors to protect their inventions and secure the rewards to which their labors entitle them, and of which the law should afford them assurance.

While the pamphlet has been copyrighted, this has not been done with any view to pro jit from its publication. Permission is therefore given to editors of newspapers and magazines to quote such portions of its contents as they may desire in commenting upon the situation disclosed therein, and they are requested to cooperate in such manner and to such extent as they may feel disposed in giving the facts publicity and in advocating desired reforms in the law, to the end that they may thus aid in securing protection and justice for those independent inventors in whose behalf the pamphlet has been written; and they will^ at the same time assist in placing those inventors in position and giving them the necessary encouragement to enable them to render the public far greater benefits than heretofore possible through the increasing numbers of their inventions.

To a possible objection on the part of some readers that the writer has not in all instances given the names of the cases, the courts and the judges referred to, a reminder of the power of federal courts and judges to summarily deal with those who criticize their conduct or attempt to expose their wrong-doing, by the infliction of penalties as for contempts or by disbarment, as set forth in the pamphlet, must be a sufficient answer.

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HE Constitution of the United States provides (Art. i, Sec. 8) that Congress shall have 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."

In accordance with this authority, Congress has from time to time, beginning in 1789, passed various laws setting forth the necessary steps to be taken by inventors to secure protection for their inventions, and the restraint of and damages for the infringement of their rights. The formal document which the government issues to an inventor for the protection of his invention is called ''Letters-Patent," or, by common speech, a "Patent."

For several decades after the patent system was established patents for inventions were issued through the office of the Secretary of State, but in 1836 Congress passed the act creating the Patent Office and placed in charge thereof a Commissioner of Patents and a corps of expert assistants who carefully examine all applications for patents and issue the same when the applicants are found to be entitled thereto, all patents running for the period of 17 years from the dates of their issue.

As soon as an inventor brings his invention to such state of perfection that he feels warranted in having the same patented, he may file an application for a patent thereof in the Patent Office, in which he must explain the invention in detail and illustrate the same by drawings if that be practicable. While he may do this work himself, it is far better to have it done by an attorney who has had experience both in the preparation and prosecution of applications for patents, and also in patent litigations in the courts. The application is referred to one of the forty odd classified divisions of the Patent Office, according to the subject-matter of the invention, where the examiner in charge of that division and his assistants, who have become experts by years of special study of the particular art to which the invention relates, carefully examine the application and compare the alleged invention described therein with all portions of the prior art that ar€ disclosed in other patents and publications, and if they find- nothing to warrant a rejection of the application, because the alleged invention is not new, or to require amendments and a narrowing of the claims of invention, approve the application as filed, and allow the patent to issue without amendment. Where the inventor's counsel differs with the examiner in charge as to the justice either of rejecting the application or of requiring amendments, appeals may be taken and the questions determined ultimately by the Court of Appeals of the District of Columbia. If it be found that the invention described in a given application is substantially the same as that described in a pending application of another inventor, or that described in a recently issued patent, a proceeding known as an "Interference" may be instituted between the applications, or between the application and the patent, to determine who first made the invention, and who shall be entitled to a patent therefor, and of these proceedings we shall speak further.

Under the patent law a patent may be issued to one who has discovered any new and useful art, machine, manufacture or composition of matter, or any new and useful improvement thereof. Most patents are issued for improvements in mechanical apparatus of various kinds. The invention may be a wholly novel construction or device, which is rarely the case, or it may be any novel and useful improvement upon some existing device. Patents on mechanical devices are almost invariably for what is known as new combinations of mechanical elements. If an inventor devises a new mechanical apparatus, or if he can add some mechanical device or attachment to cooperate with an existing apparatus and thereby produce or effect a new and useful result which the old apparatus could not produce, he has made a new combination and may obtain a patent therefor, although his new apparatus may infringe a patent on the earlier apparatus of which his is an improvement. Or if he can take an existing combination of mechanical parts or elements and rearrange those elements into a new combination that will give a better result or some new and additional result that could not be effected by the old combination, he may have a patent for his new combination. Again, if he can take an old combination of mechanical elements or parts, consisting, for instance, of elements A, B, C, D, and E, and by eliminating one or more of the elements or parts, such as E, or D and E, so rearrange the remaining elements as to effect all the results of which the more complicated structure was capable (and possibly additional results), he may receive a patent for this new combination which simplifies and cheapens the apparatus.

Since our patent system was established in 1789 it has experienced a growth and development of consecutively increasing importance, resembling somewhat a geometrical progression. During the first half century of its existence (1789-1839) approximately 11,421 patents were issued; during the next half century (1839-1889) approximately 417,201 were issued; and during the last 20 years approximately one and one-half times as many patents have been issued as were issued during the preceding 104 years since the system was established, bringing the total number of issued patents to considerably above 1,000,000.

The relation of patents to manufacturing is both intimate and important, and this intimacy and importance have likewise increased with the growth of the patent system. Many of the most important manufacturing establishments were originally organized for the purpose of developing and marketing new inventions, which could not have been organized unless the inventions had been patented, nor unless the organizers had believed that the patents were sufficient to insure them the monopoly intended to be secured during the lifetime of the patents. After a concern gets fairly established in the manufacture of a given line of apparatus, especially if that apparatus be more or less complicated and involves delicate adjustment and operation, it is necessary for its managers to be constantly on the lookout for all improvements upon that apparatus that may be devised and to secure control of and patents upon as many of such improvements as possible, lest rivals having a superior apparatus appear in the field. It is the usual custom for large manufacturing companies to require their employees to turn over to them all inventions and improvements relating to their manufactures that are made by the employees during their employment; and in such cases all expenses of procuring the patents for such inventions and maintaining the rights secured thereby are borne by the employing companies. But a different situation arises when the invention is that of an independent inventor who is not connected with any established concern and who strives to obtain a patent for his invention, to maintain his independence and protect the rights secured by his patent. It is of the systematic and organized efforts of the wealthy and powerful manufacturing corporations to appropriate the inventions of these independent inventors and of their utter inability to prevent such spoliation of their prop^ erty, owing to the cumbrous and expensive proceedings in the federal courts, which they must invoke, and to the usual incompetency, and sometimes indifference and unfairness or favoritism, of the judges who preside in some of those courts, that we desire here to speak.

In order that the reader may have a clear understanding of these matters, we shall describe the actual experiences and difficulties which an independent inventor encounters who, having made a meritorious invention, proceeds to patent the same and then strives to maintain his rights under his patent and prevent the appropriation of his invention either before or after the patent is issued; and, while all of the experiences which we shall relate have not necessarily befallen any one inventor, everything which we describe has befallen some independent inventor and has come within the writer's personal observation or experience during his 20 years of intimate connection with the issue of patents through the Patent Office and patent litigation in the federal courts, or is set forth in the reported decisions of those courts.

APPROPRIATING AN INVENTION— BEFORE THE PATENT THEREFOR IS ISSUED

IF the inventor is careful to keep his invention a secret, he can usually obtain his patent without great trouble or expense. Where the invention is one of great importance and one of the large manufacturing combinations engaged in the line of manufacture to which the invention relates obtains a knowledge of it before the patent is is^ed, the attempts to appropriate the invention often proceed at once without waiting for the patent to issue. Practically all of the large manufacturing corporations have a corps of skilled mechanics, engineers and attorneys in their employ who are constantly on the lookout for opportunities to secure control of inventions made by inventors outside of their employ, and it frequently happens that, if a new and valuable idea is brought to their attention before it has been patented,' some of them will file an application for a patent, or amend an application already on file, and secure the declaration of an ''interference" in the Patent Ofiice with the application of the independent inventor, if not with any hope of winning that contest and securing a patent for his employers, at least with the purpose of giving his employers that powerful weapon to assist them in securing the invention and patent at their own price, because these interference contests keep the independent inventor under the doubt and anxiety of a possible defeat, postpone at best the issue of his patent for months and sometimes for years, and cause an expense which it is often impossible for him to meet.

In one such instance a large railroad sup^.!/ corporation obtained knowledge of an invention of independent parties which they were preparing to offer upon the market and its counsel filed amendments to one of its pending applications for the purpose of making the claims of the patent when issued cover the independent invention. As soon as the patent thus broadened was issued, suit was brought thereon by the corporation against its rivals, alleging that the independent invention infringed the patent. The trial judge, a man of great ability in patent cases and free from all suspicion of undue influence, denounced this conduct as a transparent attempt to appropriate the property of others, but on appeal to the Circuit Court of Appeals, while- his decision was affirmed by two of the three judges, the third judge, who, it may be incidentally remarked, owed his appointment to the influence of large corporation interests and their political allies, was in favor of permitting what the trial judge denouHced as an attempted appropriation.

On another occasion an independent inventor consulted one of the large electrical corporations with a view of having his invention introduced by it and was referred by the company's vice-president to its engineers. Before the inventor got his application for a patent filed, these engineers filed in the Patent Ofiice an application for a patent in their own names, claiming the invention as their own. An interference was declared and the patent was finally issued to the independent inventor, but only after an expensive contest of several years' duration in the Patent Office and the Court of Appeals of the District of Columbia.

In another case an inventor, A, took an improvement in typewriters to one x)i the big typewriter companies and was referred to its superintendent, who reported adversely upon the invention. Shortly thereafter the typewriter company proceeded to make the invention with a view of placing it upon the market independently of A. Meanwhile, another inventor, B, made the same invention, though he was later than A, and he promptly filed his application for a patent in the Patent Office. The first inventor. A, because of the discouragement which he had received from the typewriter company, neglected to follow up the adapting and perfecting of his invention and the filing of an application for a patent therefor, but after some delay he constructed one of his devices and filed his application for a patent. The typewriter company, discovering that B was likely to control the invention to its detriment, thereupon tried to assist A to get his patent and defeat B. An interference was declared in the Patent Office between the applications of A and B, but the officials decided that the building of A's device by the typewriter company without his knowledge could not inure to his benefit as a reduction to practice of the invention, and that, as A had not been diligent, B was entitled to the patent.

APPROPRIATING THE INVENTION— AFTER THE PATENT IS ISSUED

AS soon as the patent is issued, the fullest knowledge of the invention, including a detailed description of its construction and mode of use, is open to the public, since these matters are, as required by law, carefully set forth in detail in the patent. The Official Gazette (of the Patent Office) is issued on Tuesday of each week and contains a brief notice of each patent and of its subject-matter which is included in that week's issue. The attorneys and experts of the large manufacturing concerns are accustomed to scan each number of the Patent Office Gazette, note the numbers of all patents having relation to their lines of manufacture, and promptly secure copies of such patents as they feel may affect their business or be of interest to them. It is at this point that most of the attempts at appropriation of inventions begin.

If the patent of the independent inventor discloses a mere improvement of no great importance upon an existing apparatus it is not vital as to who owns it. But if it discloses an invention of real and substantial merit and superior to anything theretofore made, the systematic work of appropriating the invention is usually begun by one or more of the corporations already in that line of business and whose profits will be materially affected if this new and superior apparatus is placed upon the market.

The corporation desires to accomplish this appropriation with as little expense as possible, but its managers are prepared to meet any expense that may be necessary. In this work counsel, experts and managers cooperate, and the methods which they employ are usually as follows: i. They try to induce the inventor to sell his invention and patent lo The Patent Law and Its Administration

to the corporation at their price, frequently offering him a salary to go into its employ and agree to turn over to it all his future inventions relating to its manufactures. 2. This failing, they try to frighten or force him into accepting their offers by assertions that his new apparatus is an infringement of some old patent^ already owned by the corporation, and by threats of, or actually bringing, infringement suits against him. 3. If they fail in both these, they attempt to "get around" or "beat" the patent by making some changes in or additions to his invention, and proceed to manufacture and sell the same in defiance of his rights, at the same time offering to intending purchasers of their apparatus a guaranty against damages for infringement and threatening them with suits for damages if they use that of the independent inventor.

In most cases these proceedings on the part of the big corporation are sufficient to enable it to secure possession of the inventor's invention and patent, since they frighten those who would otherwise purchase the new invention from doing so, they frighten the inventor's backers fTom giving him the financial aid necessary to enable him to manufacture and market his invention, and they necessitate the expenditure of large amounts of time and money by the inventor in defense of his legal rights, which he can do with difficulty, or usually not at all. And experienced counsel will advise him frankly of the almost hopeless task of attempting to maintain his rights under his patent in the federal courts against the power and influence of a wealthy corporation, exerted through channels and in ways known only to the managers of such concerns, guided and aided by shrewd and cunning counsel.

As may be imagined, there are few inventors who have the courage or who can secure the financial assistance necessary to carry through the long contests in the courts for the maintenance of their rights, and this is primarily because the patent law and its administration in the federal courts are such and patent suits are attended with such great delays and expenses that the poor man has no kind of equal chance against the power and influence of the

As Aids to Monopoly ii

wealthy corporation. There are instances, however, where the independent inventor declines to be frightened or coaxed mto selling out his invention and patent on the terms proposed by the big corporation and insists on attempting to maintain his rights with such ability and means as he can command, and it is more particularly with these independent inventors and with the almost insuperable obstacles which they must overcome that we are here more particularly concerned.

A suit for infringement of a patent may be either an action at law to recover damages, wherein all issues of fact are tried before a jury, or it may be (usually is) a suit in equity to recover damages and profits and also to restrain further infringements, in which case all issues of fact (and of law) are determined by the court without a jury. Ordinarily the details of legal proceedings are uninteresting" to the general reader, but it is absolutely necessary to pay attention to such proceedings in specific cases in order to understand how wrong and injustice result in our courts to poor litigants.

While we shall follow the proceedings through the courts as they have been conducted practically since our government was established, we are aware that the Supreme Court has recently promulgated a new set of rules to govern the conduct of equity suits, and that the committee on patents of the House of Representatives has lately rendered a report and introduced a bill with a view of amending the patent law and its administration ; but we shall point out near the close of this article that neither the new rules nor the proposed new law will afford independent inventors any substantial assistance, but will in some respects increase the handicaps under which they now labor.

A CASE IN POINT

I N a given instance an independent inventor who had per * fected his invention by several years' labor and study of the art to which it related filed his application, procured his patent and made extensive preparations to place the invention upon the market before he allowed any of the big corporations engaged in that line of business to obtain knowledge of the invention. When the plan and purpose of the invention was first made known it was universally recognized as a radical departure from and improvement upon the art to which it related, provided it was new. There was nowhere to be found, either in prior patents or in the literature of that art, or in the catalogues or circulars of the concerns engaged in that line of business, or in any drawing or in printed or written paper, any reference to, or hint of, the purpose or results for which the invention was devised. The examiner who examined and passed the application in the Patent Office had declared that the whole theory and purpose of the invention showed such a wide departure from the prior art and was so fundamentally new that claims as broad as the inventor desired would be (and were) allowed. As soon, however, as one of the big corporations obtained knowledge of the invention it began the work of appropriation, and we shall follow the efforts of the inventor to maintain his rights and note the actual (not merely possible) results which followed as the facts were developed by the litigation.

Immediately after the issue of the patent copies thereof were obtained and carefully studied by the attorneys and engineers of the corporation. One of the mechanisms made in accordance with the patent was also obtained by them at the earliest practicable time, and after being examined and operated it was taken apart and a full set of drawings of the apparatus was made. The managers of the corporation at first proposed to the inventor through third parties that he and his associates sell his invention and patent to their company for a sum considerably less than the actual cash which had been expended in perfecting the invention and preparing for its manufacture and sale, and also proposed that the inventor go into the employ of the corporation at a salary. These propositions being rejected, they then spread reports among the purchasers, actual and prospective, of the inventor's apparatus that their corporation would shortly be prepared to furnish new apparatus which would effect all the results of the inventor's apparatus. In order to subject the inventor to annoyance and expense and frighten his financial backers and customers, they next had their attorneys commence suits against the inventor, which were prosecuted no further, alleging that his apparatus infringed some old patents owned by the corporation, and caused knowledge of said suits to be spread among the inventor's customers, at the same time threatening them with suits for damages if they used his apparatus and offering to guarantee them against all claims if they patronized only the corporation. Meanwhile, the engineers and experts of the corporation, with all the knowledge of the inventor's apparatus which they had obtained from a study of his patent and one of his mechanisms, were busily engaged in devising an apparatus with a view of obtaining all the beneficial results of the invention under such a disguise that they could induce the court in case of suit to allow them to escape the charge of infringement, or, in other words, they were determined if possible to appropriate the substance of the invention while leaving the inventor the empty husks of a worthless patent. In the case referred to this new apparatus was, in fact, and was finally admitted to be, substantially the apparatus of the inventor's patent with some devices added thereto. As soon as its new apparatus was ready and even before it was made so as to operate satisfactorily, the corporation began to advertise the same extensively in pamphlets, circulars and trade journals, and to supply the demands therefor.

SEEKING PROTECTION IN THE COURTS

SEEING the entire substance of his invention thus appropriated and finding his efforts to procure necessary financial aid and to market his invention completely blocked, the inventor commenced a suit in equity against the corporation in the federal court of the proper district to restrain infringement of his patent, after which pleadings i were served, proofs were taken by both parties and- the case made ready for a hearing.

There was little use for the patentee to ask for an immediate injunction preliminary to the taking of the proofs or depositions of witnesses, because a motion for such injunction can only be made on affidavits supporting the charge of infringement. The federal judges in practically all cases frankly confess their inability, and will not undertake, to understand a patent, although it is a document issued by the government under its seal, except as it is explained to them by the affidavits or testimony of so-called "experts/' and they will not grant such injunction at the commencement of the suit if any doubt is raised in their minds on any question in issue. The wealthy corporation rarely has any difficulty in raising such doubt, because, with its unlimited resources, for every affidavit which the independent inventor can procure supporting the charge of infringement, the defendant corporation can furnish ten or an hundred contradicting every allegation of the plaintiff's affidavits. For these reasons a "rich corporation can, under, our system of patent law and its administration, by the expenditure of a few hundred, or at most a few thousand, dollars for counsel fees and affidavits cunningly drawn by counsel and signed by hired "experts," create such doubts in the minds of the judges that it will be permitted to infringe any patent that is issued affecting its business for from three to five years while the patentee is prosecuting a suit for infringement against that corporation through the federal courts to final judgment.

EXPENSES OF PATENT SUITS

AT this point let us say a word about the proceedings and expenses of suits in equity to restrain infringement of a patent. In preparing the case for a hearing the patentee or complainant introduces the patent or a copy thereof and the depositions of one or more so-called experts, who must explain the invention described in the patent and the apparatus which is alleged to infringe the patent and show how it is related to that of the patent and give the reasons for holding it to be an infringement. The corporation or defendant then introduces such documents, including prior patents, as its counsel desires, and the depositions of other experts disputing the complainant's contentions, and attacking the validity of the patent, or denying infringement. Thereafter the complainant introduces documents and testimony to rebut the defendant's evidence, and the case is then ready for the hearing.

The taking and printing of the testimony in a patent suit are very expensive and wasteful and give the rich litigant enormous advantage over the poor litigant. The rules of the courts usually require the testimony to be taken before a stated examiner of the court, generally some friend of the judges, whose charge is about seventy-five cents per typewritten legal cap page, which is twice what it would cost if the counsel were permitted to have their own copyists typewrite the testimony before any notary public on whom they could agree. (We shall refer near the close of this article to the new Supreme Court rules, by which a district judge may order the parties to file affidavits, instead of depositions, of experts, and the witnesses must then be produced for cross-examination before the court upon the trial, or have their affidavits thrown out.) The printing of the testimony costs from fifty-five cents to a dollar or more per page. These expenses must be paid ultimately by the party against whom decision is rendered. Necessity compels the poor man to patronize the cheaper printer, while the rich corporation often patronizes the dearer, and the courts hold that in case the poor man finally wins, he can only collect fifty-five cents per page, because that is all he has paid, whereas if the other party wins, he can collect one dollar per page, because that is held to be a reasonable price.

The great bulk of this testimony consists of the depositions (affidavits) of so-called experts, which are made necessary because, although patents are formal documents prepared and issued under the seal of the government by a wmsm i6 corps of skilled and competent experts, all questions of their validity and infringement must be decided by federal judges who are unskilled and inexperienced in the subject-matter of patents and cannot understand them without the aid of experts. These experts are simply hired partisans of the party calling them, and before one is allowed to give testimony he is thoroughly instructed by counsel as to all points in issue and as to just what views he must hold and maintain in his affidavit upon each point. They receive compensation ranging from $io to $ioo per day, and are found in every commercial and manufacturing center where there is patent litigation. They include laboratory chiefs, engineers, lawyers, and college professors, the latter being particularly desirable if much talked about, as they are supposed to carry more weight with judges. Frequently they advertise their vocation in newspapers : "Expert testimony furnished." In practically every case the opposing experts directly contradict each other, and the judges then say that, since "the experts are in flat contradiction," they must decide the case relying on their own common sense and such knowledge as they possess. In addition to the foregoing, the inventor must pay the daily charges of his experts and those of his attorney for his attendance while taking the testimony both of his own experts and of the opposing experts ; and then there are the usual costs of the courts, including those for certifying the cumbrous records on appeal.