Potts v. Coe

¶5ARNOLD, Associate Justice.

¶6This is a motion to vacate our decision in the case of Louis M. Potts and Teletype Corporation v. Conway P. Coe, Commissioner of Patents,1 and to withdraw the opinion filed in support of that decision. The moving parties had appealed from a judgment dismissing their complaint brought under Section 4915, R.S., 35 U.S.C.A. § 63, to require the Patent Office to grant patents on certain claims relating to an automatic stock quotation board capable of giving nationwide service. Our decision affirmed the order of the court below dismissing the complaint. The *28ground for the present motion to vacate is that in affirming the District Court we raised and decided a question not presented by the record and based our opinion on facts found in investigations authorized by Congress.

¶7The record shows that the discovery was made by an employee of a corporation which was financing technical research in the communications field. The real party in interest is the Teletype Corporation, a wholly owned subsidiary of the Bell System which dominates research and manufacture in the communications field by means of thousands of patents and rights in patent applications.2 The alleged inventor, who is only a nominal party here, was a research engineer for the affiliated Western Electric Company and the Bell Telephone laboratories from 1920 to 1928. From 1928 to date he has been employed as a research or development engineer by the Teletype Corporation for the purpose of developing new methods and apparatus in connection with printing telegraph systems.

¶8We will restate the principle on which our decision rests and which appellants claim was improperly injected into the case. Where a corporation, as assignee of one of its employees, seeks a patent on a discovery made in the course of its organized technical research it must assume a different burden of proof from that imposed where the discovery is the product of independent inventive genius. The corporation, which in substance is seeking the patent, must show that (1) the employee is the real inventor, and (2) the discovery is above the level of the art current in its own corporate laboratory and other corporate laboratories with which it has connections and affiliations. Such a burden is not met merely by showing that the discovery is an advance over the art shown in technical literature outside the laboratory or in previous patent application by others.

¶9We believe this result is compelled if we apply the fundamental principles of the patent law to the actual facts of the complex modern technology of corporate research laboratories. These principles are • (1) that a discovery which is the result of step-by-step experimentation does not rise to the level of invention; (2) that invention must rise above the level of accomplishment of the ordinary skilled technicians engaged in the art; (3) that the patent law must be so administered as to promote science and the useful arts. These three somewhat overlapping principles are questioned by no one.-

¶10Our opinion holds that in applying these principles to discoveries which arise out of the experimentation of modern organized corporate research we must take judicial notice of the character of that land of enterprise. Unless we do so the patent law may become a cloak under which a corporate group may prevent the independent use of modern technical information by obtaining patents on the step-by-step progress of scientific knowledge. The methods employed by successful corporate research are well known. It has become a device by which a corporation may get a patent on what has been called “know how”, which means the technical skill which large groups of men acquire through extensively financed experimentation and cooperation.3 By taking an assignment in advance from each employee *29the corporation appears to satisfy the requirement that there be an individual inventor.4 But the corporation is the real applicant, and the man whose name appears on the patent is only a nominal party. Furthermore, though the discovery may appear to be a startling innovation, actually it is frequently the product of years of research by many men who come and go,5 who consult each other and the employees of other corporations with which their own employer has affiliations and agreements. The result is a gradual advance in scientific knowledge made possible because large funds have been spent on research — not an invention.6 The use of this accumulating body of technical information is denied to the public and to new enterprise whenever a patent is granted on this kind of “discovery”. Corporate patenting of this character gives the first private group that trains its employees in a modern industrial technique the right to prevent others from using the same knowledge which they may obtain by similar methods.7 For that reason acquisition of control over technical education acquired by years of routine experimentation has become a major patent policy of domestic and international cartels.

¶11We do not deny that patentable invention may exist in a case where a corporation seeks a patent on the work of one of its employees who has been engaged in organized research. But the essential nature of corporate research makes such a situation unusual for two reasons. In the first place, the incentive to invent supplied by the patent law will not work in organized research because it destroys *30team work and cooperation.8 If one man or even a small group is competing with the others to be prior in invention, joint experimentation on a large scale becomes impossible. This has been pointed out over and ■ over by men familiar with successful research. It might be said that only in a very poorly organized research laboratory is individual invention at all likely.9 In the second place, the research laboratory has gradually raised the level of industrial art until discoveries by ordinary skilled men, which would - have seemed miraculous in the last century, are definitely predictable if money is available for organized research. The laboratory level of the art has become the level which the discovery' must surpass in order to rise to the dignity of invention. The level outside the laboratory is years behind the .times. The level of the laboratory art is not disclosed in current literature, or in previous patent application for the .simple reason that it is not to the interest of the corporate research organization to make it public. For that reason patent-ability of a corporate research product cannot be determined by reference to literature. The employed technicians of organized research dominate the scientific societies and write the technical literature. But they cannot be expected to disclose facts adverse to the patent position of their employer. On the contrary, the temptation is always present to describe the art in such a way as to improve their employer’s patent position by self-serving10 and sometimes even fraudulent literature.11 To permit a corporation to obtain a patent on the work of its employee without further investigation than by references to literature and practices outside the laboratory is to disregard completely the vital public interest in the administration of the patent law12

¶12Today, when the strangling effects on industrial progress and the promotion of patent cartels, through the growth of *31the fiction under which corporate patenting has been inadvertently approved, are written large in the investigations authorized by Congress, appellants argue that we have no right to consider such public hearings in applying the principles of the patent law to corporate research. This argument is not worthy of serious consideration. The purpose of economic investigations by Congress is not only to promote sensible legislation; it is also to aid in the intelligent interpretation and administration of the law. Facts brought out by such investigations are particularly important in construing the patent law since it must effectuate the broad economic purpose defined in the Constitution as the promotion of science and the useful arts.13 Furthermore, we have used Congressional investigations only to illustrate characteristics of organized research that are obvious without their support. The patent law is designed to encourage competition among inventors by giving a patent to the ingenious individual who wins in a race for discovery. The modern corporate research laboratory is a negation of this principle because it is compelled to suppress competition between individuals. Instead, the race is between the financial interests that organize the laboratories. The result is that a corporation, by successfully eliminating competition for prior discovery between individuals, receives the statutory reward offered to encourage the individual effort which it has suppressed. A court which grants patents on an assumption contrary io these facts 14 is guilty of affirmatively promoting a fiction which inevitably leads to the monopoly grants to corporations on the technical education of our time.

¶13We suspect that the underlying reason for appellants’ objection to our opinion is not that it is based on judicial notice of the facts of industrial research. It is rather that it lays down a principle of law which is not acceptable to appellants. *32Leaders in corporate research have argued that corporate patenting of technical information is in the public interest. Their contention is that corporate research is so expensive that the financing of research would stop if corporations were not offered a monopoly on the information for which they spend their funds. Independent innovators like Henry Kaiser and Edsel Ford repudiate this notion.15 The argument justifying corporate control of. technical information is simply a variation of the larger argument justifying the protection of the investments and dominating position of cartels to insure orderly production and full employment. To those who believe in the economics of free enterprise this position is both unso.und and dangerous. But a debate on these opposing economic philosophies is not relevant here because our legislative policy is clearly committed to the proposition that public interest can only be protected through freedom of competitive enterprise to use the technology of our time. It is sufficient, therefore, to say that the policy of the patent law gives no support whatever to monopolies on step-by-step experimentation however expensive that process may be.

¶14The other ground for appellants’ motion is that in our opinion it is mistakenly stated that the nominal applicant in this case was employed by a subsidiary of the Bell System in 1928 at the time the application was filed. It appears from the record that he was a research engineer for the Bell System from 1920 to 1928, that he was employed by the Teletype Corporation from 1928 to date. Appellants point out that the Bell System did not acquire stock ownership in Teletype Corporation until 1930. At the time the application was filed Teletype’s relationship with Bell consisted in an arrangement for the exchange of licenses which with certain exceptions gave each company the right to use the other’s patents.16 We are glad to make this correction but it affects in no way either the reasoning or the conclusion of our opinion which is intended to apply generally to corporate applications for patents on thé discoveries of their research employees.

¶15Since our first decision in this case we have decided the case of Monsanto Chemical Co. v. Coe.17 Even if we were inclined to reconsider our decision we would have to apply the principle laid down in the opinion in that case. The claims before us are eleven out of more than one hundred and seventy made in connection with this machine. Many of the claims were allowed, so that it is not correct to say that appellants have been denied a patent on their discovery. The only question before us is whether the claims allowed by the Patent Office give the applicant protection of sufficient scope. The record does not disclose the claims that have been allowed nor indicate in what respect they do not adequately protect the alleged invention. We have no information as to the amount of control which the applicant can reasonably expect to exercise over the future invention in communication of stock quotations to enable us to determine whether it is so great as to stifle other invention in the same field. Such information is particularly important where the real applicant for the patent is a subsidiary of a corporate system which in the year 1935 owned about 9,000 patents in the communications field and had pending about 1,500 applications for additional patents. The appellant, therefore, has not met the necessary burden of showing that he is entitled to more scope than the Patent Office gave him and the opinion in the Monsanto case would require affirmance.

¶16The motion is denied.