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Nationalization of Enemy Patents

Published online by Cambridge University Press:  12 April 2017

Edwin Borchard
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Type
Editorial Comment
Information
American Journal of International Law , Volume 37 , Issue 1 , January 1943 , pp. 92 - 97
Copyright
Copyright, 1943, by the American Society of International Law

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References

1 John MacCormac in New York Times, Dec. 20, 1942, p. 20. They are said to number approximately 50,000. This number includes patents owned by nationals of Axis–occupied countries. Where pre-war exclusive and non-exclusive use licenses of actual enemy patents are already in existence, the royalties involved will be collected by the Custodian, but the licensee will have the option of canceling his exclusive contract and taking instead a standard, non-exclusive, royalty-free license. Licensees pay a basic $50 fee. White House press release Dec. 8, attaching Report of Custodian Dec. 7, 1942.

2 Oral Argument of Harlan F. Stone; Brief on behalf of Appellant, United States of America, C.C.A. 3rd circ., March 1924, pp. 499.

3 272 U. S. 1 (1926).

4 Cf. Gathings, James A., International Law and American Treatment of Alien Enemy Property, Washington, D. C., 1940, and literature there cited, p. 131 et seq.

5 The Strange Case of Sterling Products, by Walton Hamilton, Harper’s for January, 1943, p. 123.

6 The Custodian announces that the “use [of the patents] in the furtherance of any monopoly or any similar exploitation contrary to the public interest” is to be prevented.

7 This was the purpose of S. 2491, 77th Cong., 2d Sess., introduced by Senators O’Mahoney, Bone and La Follette, April 28, 1942. Hearings before Senate Committee on Patents, 77th Cong., 2d Sess., 8 parts.

8 See, e.g., Secretary of State Hughes’ address at Philadelphia, Nov. 23, 1923, in referring to Mexican confiscations: “A confiscatory policy strikes not only at the interest of particular individuals but at the foundations of international intercourse, for it is only on the basis of the security of property, validly possessed under the laws existing at the time of its acquisition, that the conduct of activities in helpful cooperation, is possible…. Rights acquired under its laws by citizens of another State, [a State] is under an international obligation appropriately to recognize. It is the policy of the United States to support these fundamental principles.” This Journal, Vol. 18 (1924), p. 523, at p. 531.

9 See Works of Alexander Hamilton (Lodge’s edition), Vol. V, p. 412 et seq. See the extended quotations from Hamilton and the references to the treaties concluded by the United States in Moore, Bassett, John, International Law and Some Current Illusions (New York, Macmillan, 1924), p. 14 et seq Google Scholar. See also editorial in this Journal, Vol. 18 (1924), p. 523, at 528, 529 (July 1924).

10 Secretary Hull to Senator Capper, May 27, 1935, this Journal, Vol. 31 (1937), p. 680.

11 See, in this connection, Recommendation No. VII of the Inter-American Conference on Systems of Economic and Financial Control, Washington, June 30–July 10, 1942, in which the countries of this continent are advised to “eliminate from the commercial, agricultural, industrial and financial life of the American Republics… the business, properties and rights of any real or juridical person… whatever their nationality,” who are “acting against the political and economic independence and security of such Republica.” The meaning of the last clause is unclear. The far-reaching character of this recommendation, which possibly includes all persons and firms on the blacklists, warrants consideration by international lawyers. The extent to which it has been followed by legislation or administrative action it has not been possible to establish.

12 Brown v. United States (1814), 8 Cranch 110. It is not believed that confiscation is authorized by the admittedly broad terms of Sec. 301 of the First War Powers Act (55 Stat. 840): “… upon such terms and conditions as the President may prescribe such interest or property [of all aliens] shall be held, used, administered, liquidated, sold, or otherwise dealt with in the interest of and for the benefit of the United States,…” Executive Order 9095, establishing the Office of Alien Property Custodian, gives him ambiguous authority to “vest” any foreign property.

13 “Lack of determination to abandon the policies and practices of economic warfare will be the greatest danger that can confront us after the war.” Pasvolsky, , Leo, , “The Problem of Economic Peace After the War,” Dept. of State Publication 1720 (March 4, 1942), p. 18 Google Scholar. See also his address before the American Economic Assoc., Dec. 30, 1940, “Some Aspects of Our Foreign Economic Policy,” Publication 1595 (Jan. 11, 1941).

14 S. 2491, supra. Report of the American Patent Association on the McFarlane bill of 1938, H. R. 2959, on compulsory licensing. Darby, Samuel E., Jr., The Alleged Abuses of the American Patent System (Boston, 1941); Kenyon, W. Houston, Jr., Sore Spots in the Patent System (New York, 1942). Same author, Abuse of Patent Licensing Privileges, Manuscript (New York, 1942). Woodward, W. R., “A Reconsideration of the Patent System as a Problem of Administrative Law” (April, 1942), 55 Harv. L. Rev. 950; Hamilton, Walton, Patents and Free Enterprise, T.N.E.C. Monograph No. 31, 179 p. On Dec. 12, 1941, the President created by Executive Order the “National Patent Planning Commission,” to make recommendations for the amendment of the patent laws.

15 See Act of June 25, 1910, as amended July 1, 1918 (U. S. Code, Title 35, Sec. 68). Cf. the following bills introduced in the 77th Congress: (1) The Knutson bill, H. R. 6828, which proposes to include patent rights with other property rights subject to seizure under PubUc 274 of Oct. 16, 1941; (2) The Kramer bill, H. R. 6852, to require the granting of licenses under patents in time of war; and (3) The Kefauver bill, H. R. 6878, which proposes to add to the First War Powers Act, 1941, a provision authorizing the President to permit the unlicensed use of inventions in time of war; (4) Under S. 2303, not enacted, any patent was to be seizable upon mere notice. No provision was made for the return of the patent to the owner at the end of the war or for limiting the term of licenses. The Government was permitted to grant licenses under “reasonable royalty,” to be fixed by the President without right of the courts to increase it.

16 Term used by Chief Justice Marshall in Brown v. United States, supra.