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DEPARTMENT OF COMMERCE,

BUREAU OF THE CENSUS,

Washington, November 26, 1929. Memorandum for the Secretary regarding a bill authorizing the collection annually of statistics concerning public institutions (S. 1812).

The act approved March 6, 1902, authorized the collection decennially of statistics relating to the defective, dependent, and delinquent classes; to crime, including judicial statistics pertaining thereto.' Following the decennial census of these classes, which under that act was taken in the year 1923, the Secretary authorized the Director of the Census to collect annually statistics concerning inmates of penal institutions and of institutions for the care of the mentally diseased and of feeble-minded and epileptics. Under this authorization, statistics have been collected for 1926, 1927, and 1928.

This bill (S. 1812) is intended to place this work on a permanent basis. Such legislation is deemed necessary because the authorization granted by the Secretary was more or less provisional and limited in scope. The bill, it is believed, should be broad enough to cover the annual collection of the statistics which, under the act of 1902, were to be collected only once in 10 years. It is therefore recommended that it be changed as follows: Omit the words “inmates of institutions for" on line 5 and insert in place thereof the words “crime and the" and that the title of the bill be changed by striking out the words “certain public institutions” and inserting in place thereof the words to “crime and to the defective, dependent, and delinquent classes," so that the bill will read as follows: "A BILL To authorize the collection of annual statistics relating to crime and to the defective, dependent,

and delinquent classes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Director of the Census be, and hereby is, authorized to compile and publish annually statistics relating to crime and to the defective, dependent, and delinquent classes.'

W. M. STEUART, Director.

BUREAU OF THE BUDGET,

Washington, December 6, 1929. MY DEAR MR. SECRETARY: I have the department's letter of the 29th ultimo concerning S. 1812, a bill to authorize the collection of annual statistics relating to certain institutions.

You are advised that the expenditure contemplated by this proposed legislation would not be in conflict with the financial program of the President.

The inclosures accompanying your letter of the 29th ultimo are returned herewith. Sincerely yours,

J. Clawson Roop, Director. The SECRETARY OF COMMERCE.

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Mr. DILL, from the Committee on Patents, submitted the following

REPORT

(To accompany S. 4442]

Your committee, to which was referred S. 4442, held full hearings on the bill and considered it carefully and desires to report it favorably without amendment. This bill is identical with S. 2783 of the Seventieth Congress, second session, reported favorably by the Senate Committee on Patents, with the exception that section 3 of this bill is new. This section provides that when any of the defenses set forth in sections 1 and 2 are pleaded by a defendant in a patent infringement suit, the issues thus raised shall be tried separately from and previous to the hearing of other issues raised by other defenses.

Your committee believes this is a valuable addition to the former bill, since it makes clear the procedure in cases of this kind.

This bill does not provide for forfeiture of patent rights because of violation of laws against restraint of trade and antitrust laws, but simply suspends the right of a patentee to enforce actions for infringement so long as the violation of the laws referred to continues. This suspension would continue just as long as the owner continued to violate the antitrust laws.

This bill places the burden of proof upon the person charged with the infringement of the patent. This means that if the combination is found to be guilty of violating the law by the use or control of its patents or the patents of others in a line of business closely connected, its patent is suspended until it has so reorganized its business that it is no longer guilty of that offense. That is to say, the bill simply compels the patentee who sues for infringement to come into court with clean hands and thus is a natural and proper use of the police powers of the Government.

This statute is intended to protect not only independent competitors of patent combinations that are illegal, but also those who are independert inventors in the arts. At the present time independent inventors often find it almost impossible to secure a market for their inventions. They must either sell their patents to an existing monopoly on whatever terms it decides to fix, or they must find capital that will not be intimidated by the fear of having to fight a firmly entrenched monopoly, and to carry on defensive litigation to prevent that monopoly from destroying the new invention.

The very fact that the Government has issued a patent to an inventor, an exclusive privilege, a monopoly, granting him the right, for 17 years, to exclude anyone else from manufacturing, using, or selling his invention should put upon such a patentee the burden of a scrupulous observance of the laws of the United States. It is particularly iniquitous if the holder of such a privilege should use it to violate the antitrust statutes or any other laws.

When the patent laws were written, inventors exploited their own discoveries, usually alone. Now inventions are developed almost exclusively by corporations and we find that bankers and lawyers, instead of inventors, are the real beneficiaries of the patent laws. One of the results of this revolution in our industrial system has been a multiplicity of patents often covering trival inventions—all with the purpose of blanketing an art and of making competition difficult, if not impossible.

Worse than this has been the effort to combine groups of patents, both important and trivial, to a point at which the very multiplicity of patents has made competition impossible. The very threat of patent-infringement suits has often been sufficient to prevent the entry of new capital in industry or even to keep out inventions which might contribute greatly to the progress of an art.

This bill is aimed to prevent such an abuse of the patent system. It has been charged that legislation of this character threatens to break down the patent system upon which our industrial progress has been largely founded. This is not true. The destruction of the benefits of that patent system will be inevitable if those who abuse it to create illegal monopolies are permitted to continue to protect their infractions of the law under pretense of patent rights.

The Clayton law was written largely because the Supreme Court held that the prohibitions of the Sherman Act did not prohibit contracts containing tying or restrictive clauses based on manufacture, sale, or use of patented articles. It was to cure that defect that Congress wrote the Clayton Act and forbade such agreements, whether based on patented or unpatented devices.

Just as the Sherman law was at that time not sufficient to protect the freedom of competition from combinations in American business and industry, we now find that the Clayton law seems not to be broad enough to cover the newest forms of patent abuses.

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SENATE

71st CONGRESS

2d Session

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REPORT No. 758

PRESCRIBING COURT PROCEDURE IN APPEALS FROM DECISIONS OF THE PUBLIC UTILITIES COMMISSION OF THE DISTRICT OF COLUMBIA

May 29, 1930.-Ordered to be printed

Mr. Glass, from the Committee on the District of Columbia, sub

mitted the following

REPORT

(To accompany S. 35581

The Committee on the District of Columbia, to whom was recommitted the bill (S. 3558) to amend section 8 of the act making appropriations for the expenses of the government of the District of Columbia for the fiscal year ending June 30, 1914, and for other purposes, approved March 4, 1913, having given further consideration to the same, reports favorably thereon with the recommendation that the bill do pass with the following amendment:

On page 2, line 15, before the word "evidence”, insert the word “the”.

This amendment is necessary to insure the people and the publicutility corporations in their right to a review by the local courts of findings by the Public Utilities Commission

The bill seeks to amend the public utilities law of the District which was contained in the appropriation bill cited in the title of this proposed legislation. It is intended to amend specifically those provisions of the law relating to appeals to the District Supreme Court from decisions by the Utilities Commission.

Probably the most important feature of the bill, from a public standpoint, is the exclusion of commission orders fixing valuations from the class of orders or decisions subject to appeal to the local courts.

POWERS OF THE COURT

The Supreme Court of the United States has held that the District courts have certain extraordinary powers in the review of decisions by the utilities commission, notably in the fixing of valuations.

This bill does, however, provide for review by the District courts of other orders or decisions by the commission.

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“In any such action or proceeding,” the bill states, “the findings of the commission as to the facts upon which such order or decision is based shall be conclusive, if such findings are supported by the evidence and if such order or decision is not confiscatory."

This provision does not unduly restrict the courts in reviewing appeals, nor, on the other hand, does it grant the utilities commission any unlimited or unsupervised authority. It does, however, liberalize the present law to make the decisions of the commission, particularly those affecting valuations, more effective than as at present.

The bill provides that the hearing of such appeals shall have precedence over civil causes of different nature, and allows for appeals to the District Court of Appeals and thence, by writ or certiorari, to the Supreme Court of the United States.

SUSPENSION OF DECISIONS

The proposed legislation permits the commission to suspend the contested order for a reasonable time, but specifically states that no appeal shall operate to stay any such order unless the court or the commission shall so direct.

Upon reviewing an appeal, the bill provides, the court may modify reverse, or affirm the commission's decision. The bill provides, in detail, a method of procedure by the court in acting on such cases

The bill also stipulates that every action or proceeding to modify or reverse an order or decision of the commission shall be commenced within 60 days after the entry of the order.

The committee feels that the bill will operate to prevent delays in the effectiveness of the commission's decisions and to provide a method of court procedure more equitable and reasonable than is now provided

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