Research and Patents
EFFECT ON RESEARCH OF DRASTIC WEAKENING OF OUR PATENT SYSTEM
For an authoritive and considered statement as to the rela
tion of patents to research, one would logically go to the Na
tional Research Council. In their December, 1940, report to the National Resources Planning Board they have said:
It is generally recognized, however, that patents play an im
portant part in the motivation of research, and no changes in the patent system should be made without most careful considera
tion of possible effects on the welfare of industrial research.
Emasculation of our patent system is bound to discourage much industrial research which has grown so amazingly in re
cent years until it employed about 70,000 research workers in 1940. However, the effect on the amount of research done will vary greatly with the industry and particularly with the size of the company, and in a direction which would seem to be socially undesirable as it would in the long run weaken the competitive position of the smaller companies. Let us consider the relative effect on companies of various sizes.
► Little Effect on Large Companies. A drastic weakening of our patent system will least affect the research policies of the large companies. Such companies can readily afford to carry on research programs covering their principal fields of activity solely for the purpose of maintaining their competitive position and keeping down their manufacturing costs. They regard royalties mainly as incidental by-products of their re
search, and their main interest in patents is to help them secure maximum operating freedom by virtue of exchanges of licenses. Obviously, if they find it expedient not to depend on patents, such companies will not stop their research but will tend to keep their “ know how” largely to themselves.
► Major Effect on Medium and Small Companies. The effect of emasculation of our patent system on the re
search activities of medium and small companies will be much more severe. Such companies must have some re
search organization if they are to keep anywhere near abreast of competition, but their laboratories cannot possibly do original research in all their fields of activity. In general they concentrate mainly on operating problems and the application of various patented processes to their own needs.
In either type of work they frequently run across some new
F ra ction atin g E q u ip m e n t in a C a ta lytic Cracking U nit
184 I N D U S T R I A L A N D E N G I N E E R I N G C H E M I S T R Y Vol. 35, No. 2
idea which seems to have merit; and even though their own activities would not justify the cost of a thorough investiga
tion, as long as they have the prospect of patent protection and substantial royalty income, they can and do exploit such ideas, at least through the phase of laboratory development.
Many small laboratories have more than financed all their re
search activities by one or two important inventions. Also, when they come to the point of needing to undertake large-scale development, which in our industry frequently costs several hundred thousand or even a few million dollars, such companies can usually, by virtue of patent protection, interest other companies in joining with them and sharing such development costs. Several small com
panies in our industry have attained a position of pre
eminence in certain fields by just such methods, but without the incentive and protection of a sound patent system the ideas would probably never have been de
veloped. As Patent Commissioner Coe has said: “ Specula
tive capital will not back new inventions without patent protection.”
Another factor which would tend to reduce research in such companies would be that, without our patent and licensing system, the companies which develop major new processes would not be giving out information and trying to sell licenses, and hence the smaller companies would not be able to study promptly the application of these new processes to their own needs, so the whole process of development in industry would be retarded.
► Elimination of Research and Licensing Companies. In addition to the research conducted by operating companies, in many industries one or more nonoperating companies have maintained research and development programs which have resulted in important processes. Outstanding among these in the petroleum industry is the Universal Oil Prod
ucts Company which first developed the Dubbs cracking process. This company has for over twenty years main
tained a large research staff and has made many other outstanding contributions to the refining of petroleum and to the chemical field as well. In the past twenty years it has spent approximately $25,000,000 for research and process development, more recently at the rate of about
$2,000,000 annually. The income of this company is derived entirely from the licensing of its patented processes, and the major portion of its royalty income has been used for continuing research and development. The income derived from royalties on thermal cracking was largely used to study and develop some of the present catalytic proc
esses which are so vital in the war effort, including catalytic cracking, alkylation, isomerization and dehydrogenation for aviation gasoline, and other processes for the produc
tion of components of synthetic rubber, etc. Universal Oil Products also maintains a group of skilled technicians who for years have advised and assisted its smaller refiner licensees to maintain operations on the most efficient basis.
The weakening of our patent system will automatically result in the disappearance of these research, development, and licensing companies which have proved so important’
particularly to the smaller operating companies.
► Effect on University and Foundation Laboratories. A generation ago most research workers in the medical field and many of those in our universities felt that it was not quite ethical to patent their discoveries, particularly in matters relating to public health. During the past twenty years, however, there has been a growing recognition of three facts: (1) Failure to patent is more likely to delay than to encourage the development and marketing of new products, especially if any substantial investment or
advertising is required to get them started. (2) Failure to patent leaves new remedies open to widespread abuse by unethical manufacturers and promoters, whereas pat
enting permits a control of quality and marketing prac sound and socially desirable method of financing research work which would be lost if the value of patents were to be greatly reduced.
► Back to Dark Ages of Secret Processes. Probably the most serious effect that emasculation of our patent system would have on the future of research would be to encourage the use of secret processes. This would be highly unfortunate, since one of the principal factors in the rapid advance of sci
ence and technology in the past thirty years has been the prac
tical elimination of the secret process in favor of full dis
closure and patenting as the preferable method of protect
ing one’s rights and interests in his invention. If we take away a large part of the reward for disclosure, the tendency to revert to the dark ages of secret processes will be inescapable. The loss to our country would not be merely that due to the absence of competitive use of new processes, but even more in the slowing down of the ex
change of basic information and new ideas. Intercompany research conferences and reports on new lines of develop
ment would practically cease, and early publication of industrial research work would seldom be permitted.
Industrial espionage would rear its ugly head, and efforts to prevent it would force the elimination of the open-door policy of most of our industrial laboratories. As Kettering has said, “ when you lock the research laboratory door you always lock out a great deal more than you lock in” , but serious weakening of our patent system would inevitably result in just such a situation. Modern industry based on applied science is a great cooperative affair which cannot thrive in a world ruled by secrecy.
Another unfortunate result of secret processes would be that a small company would no longer be able, as a pro
Even the workers in pure science who might discover some new principle would probably hesitate to publish it until they cou d work out some of the practical applications for sale on a secret process basis, because once a new discovery was pub
lished it would largely lose its value. Even though the at
tempt at secrecy might usually fail within a few years, the cumu a ue effect of the loss of time between successive im
provements would tremendously retard our progress. Un- er present conditions new discoveries are frequently pub
lished long before the patent is actually issued, and the effect n e whole tempo of industrial progress is very large be
cause so i tie time elapses between the discovery and the general availability of the information to stimulate other
re-February, 1943 I N D U S T R I A L A N D E N G I N E E R I N G C H E M I S T R Y 185 abroad. Foreign manufacturing conditions are usually better adapted to protecting the secrecy of processes than those in this country, and it is only the liberality of our patent system and the existence of a real market for worth while patents that have led most foreign patentees to make early application for a patent in this country. No country has, or can expect to have, anything like a monop
oly on brains, and anything which will discourage our receiving prompt information regarding new foreign de
velopments will be another serious bar to industrial and scientific progress. Even though some foreign inventors might still apply for patents in their own countries so that some information would eventually become available, it would not be possible for us to secure the detailed plans, specifications, and know-how which can usually be ob
tained when it is possible to negotiate for a patent or a license. This know-how is particularly necessary on foreign patents because their background of language and industrial technique is frequently not well understood in this country.
To indicate a little of the extent to which our ability to meet war demands has arisen out of information obtained from our principal enemy, Germany, thanks to the enterprise of American companies and the existence of our patent sys country under the stress of war needs. The important thing is that we obtained early information which permitted pre
war industrial development of the processes and products which have proved so important to the war effort. Lang- ner’s list is as follows:
Tetracene, a percussion explosive. Information obtained from Germany by Remington Arms Company, a subsidiary of the Du Pont Company.
Optical glass and instruments. Information obtained from Germany by Bausch & Lomb Company.
Plexiglas, a plastic glass used for airplanes. Information obtained from Germany by Rohm & Haas Company.
Carboloy, a tungsten steel alloy important for cutting tools.
Information obtained from Germany by General Electric Company.
Buna rubber. Information obtained from Germany by Standard Oil Company of New Jersey.
Magnesium. Information about new processes obtained from Germany by Aluminum Company of America and others.
Atabrine, a vitally needed substitute for quinine. Informa
tion obtained from Germany by Winthrop Chemical Company.
100-octane aviation gasoline. Information on which the principal American process is based obtained from Germany by Standard Oil Company of New Jersey.
Synthetic toluene for TNT. Information on which the prin
cipal American process is based obtained from Germany by Standard Oil Company of New Jersey.
This impressive list of American weapons forged from German research certainly belies frequent loose statements that our leading industrialists were serving as blind tools for Hitler when they acquired their patent licenses.
CONCLUSION alternative of secrecy would tremendously retard the prog
ress of both science and industry in this country. Under these circumstances it is surely incumbent upon every scientist to take his share of the job of educating the public and our leg
islators as to the truth about our patent system.
In many ways the most encouraging aspect of the Wash
ington outlook was the appointment by the President of a Patents Planning Commission under the chairmanship of Charles F. Kettering. This committee has been expressly directed by the President to conduct a comprehensive survey and study of the American patent system and to make sug
gestions for its permanent improvement. Rather than being stampeded into making drastic patchwork changes as urged by some of our theorists and nonresearch industrialists, we should certainly await with confidence the completion of the studies of this committee. I think we can reasonably an
mit impractical theorists and faddists to distort the facts and hypnotize our nation into this act of h a r a - k ir i all of us will suffer and yet no adequate punishment can be meted out to those really responsible. Let us not by our inaction have any share in such a terrible responsibility.