FOREWORD This study was prepared by Prof. Seymour Melman for the Subcommittee on Patents, Trademarks, and Copyrights as part of its study of the United States patent system, conducted pursuant to Senate Resolutions 55 and 236 of the 85th Congress. It is one of several being prepared under the supervision of John C. Stedman, associate counsel for the subcommittee. Earlier reports on the work of this subcommittee have noted the great changes in our economic and industrial system since our patent laws came into being. As we put it in January 1956, "the industrial and technological economy of today bears little resemblance to that of yesterday * * *. The garret, garage, or basement inventor to a marked extent has given way to the laboratory technician who is both scientifically trained and versed in the latest techniques of experimentation and invention. The independent 'lone wolf' inventor has given way to the coordinated group activity of the research laboratory." What do these changes augur for the patent system? How shall the patent system respond, the better to discharge its constitutional purposes? Professor Melman addresses himself to these issues, taking for his subject of inquiry the highly important, highly organized, extensively staffed research laboratories that operate today at both industrial and university levels. In this milieu, he concludes that the patent system, whatever its past contributions and its value and virtues in other respects, contributes little to the progress of science and useful arts. This conclusion, without doubt, will be greeted with skepticism by some and with vigorous disagreement by others. Nevertheless, Professor Melman has posed a serious issue and subjected it to thoughtful and competent inquiry. I hope, and expect, that those who challenge his views and there will be such, I am sure-will approach the subject and his handling of it with the same measure of competence and thoughtfulness that he has shown. The subject is too important and complex to warrant anything less. Professor Melman is well fitted to speak on the matter at hand. As a member of the department of industrial engineering, Columbia University, he has a longstanding, active and down-to-earth interest and experience in the subject of industrial productivity and research. He has carried out varied industrial studies while on the faculty of Columbia University. He is the author, among other publications, of Dynamic Factors in Productivity, a book which has received wide attention in this country, Europe, and Japan since its publication in 1956, and which is the product of 5 years of research and extensive consultant work with various industrial concerns. In publishing this study, it is important to state clearly its relation to the policies and views of the subcommittee. The views expressed by the author are entirely his own. The subcommittee welcomes the report for consideration and study, but its publication in no way signifies or implies acceptance or approval by the subcommittee or its members of the facts, opinions, or recommendations contained in it. Such publication does, however, testify to the subcommittee's belief that the study represents a valuable contribution to the literature concerning the patent system and its operation, and that the public interest will be served by its publication, distribution, and consideration. JOSEPH C. O'MAHONEY, Chairman, Subcommittee on Patents, Trademarks and Copyrights, Committee on the Judiciary, United States Senate. MAY 16, 1958. IV CONTENTS Page I. Introduction: The problem defined... B. Scope of the study... C. Characteristics of the data....... 1. Fields of research represented.. 2. Types of laboratories represented. PART I. CONDITIONS APPLICABLE TO THE PRODUCTION OF TECHNICAL II. The nature of research activity: The production of new technology Summary. III. Division of labor and interdependence in the production of technical knowledge. 8 A. Industrial research laboratories.. 9 2. To determine experimentally the temperature dis- 12 3. The development of an ultramicrotome.-- 12 4. Automatic regulation of blood pressure.. 12 222 tors.. Summary.. B. Patent activity and salary levels. 5. Oil-well drilling.. 6. Tritium in water. 7. Hot-atom chemistry.. 9. Flocculating agents. 10. Thyroid gland.... D. The meaning of "invention”. E. The problem formulators, the initiators, and the investiga IV. Producers of technical knowledge and their payment. A. Salary policy. C. Payments to consultants___ D. Payments in universities, foundations, and other nonprofit E. Patents as a source of income for scientists.. V. The cost of producing technical knowledge. VI. Determinants of the production of technical knowledge. A. Research by nonprofit institutions__ B. Research by industrial firms.. 1. Research on products.. 2. Research on production methods.. 3. Variation in research activity among countries. 13 14 15 15 15 16 19 technology 6. Research facilities as assets. Summary. 20 20 21 21 23 23 24 24 25 25 26 10 02 22222222222 222 16 17 18 18 18 PART II. THE USE OF TECHNICAL KNOWLEDGE AS PROPERTY VII. Implications for business.. A. Patent activity and business-sponsored research. 1. Patents as a guide to areas of investment__ 2. Patents as markers of research fields____ 3. Patents for trading and income purposes. C. Technical knowledge withheld from patenting, and its sig- D. Business criteria applied to the production of technical E. Control of technical knowledge as a factor operating to the F. Patent policies and success in business competition___ VIII. Implications for the universities. A. Some case studies___ Case 1. Profit-oriented research through collaboration Case 2. Patent-oriented research among faculty and Case 3. Individual patent emphasis by faculty and B. Emphasis upon patenting weakens the universities as scien tific centers... 1. Extra-science criteria_ 2. Managerial decision making. 3. Restrictions on publication 4. Effects on students.__ C. Emphasis on patenting is only one example of pressures upon Summary IX. Implications for the progress of science and technology A. Who decides on research? ___. B. Criteria for decisions on research projects.. C. Publication policy---- D. Proportion of scientists employed in industrial laboratories. X. What would happen if there were no patents?_ A. Effect on science, technology, and research in nonindustrial B. Effect on the scope of industrial research.. 1. A test case_ C. Effect on areas of industrial research. D. Effect on interfirm competition in industrial research___ 56 PART III. THE INTERRELATION BETWEEN THE PRODUCTION OF XI. Conclusions based upon the relationship between part I and part II.. 57 1. From solo inventor to cooperating investigator.. B. The role of the patent system under modern conditions.. 2. Promotion of science by private and Government 3. Patents as instruments of interfirm competition__- XI. Conclusions based upon the relationship between part I and part C. Requirements for the promotion of science and the useful Page 60 1. Support for the production of knowledge as an end in 2. Industrial research with and without patents.. Summary. LIST OF TABLES Table 1. The number of patents granted for inventions in relation to the growth of research scientists and engineers_-_ Table 2. The number of patents granted for inventions in relation to the growth of engineers and scientists.-- Table 3. Firm A-Patenting, and employment of scientists and engineers... Table 4. Firm B-Patenting, and employment of scientists and engineers in research and development-- 28 29 30 30 30 Table 6. Firm D-Patenting, and employment in research and development_ 31 FIGURES Table 5. Firm C-Patenting, and employment of scientists and engineers in research.. Figure 1. Firm E-Patents granted and research expense, 1941-54------ PATENT STUDIES No. 1. Bush, Proposals for Improving the Patent System (1956). 32 No. 3. Patent Office, Distribution of Patents Issued to Corporations, 1939-55 (1956). No. 7. LRS (Edwards), Efforts to Establish a Statutory Standard of Invention (1958). No. 8. Whinery, The Role of the Court Expert in Patent Litigation (1958). No. 9. LRS (Daniels & Edwards), Recordation of Patent Agreements-A Legislative History (1958). No. 10. Cardozo, Exchange of Patent Rights and Technical Information under Mutual Aid Programs (1958). No. 11. Melman, The Impact of the Patent System on Research (1958). OTHER PUBLICATIONS Hearings, American Patent System, October 10, 11, and 12, 1955. Hearings, Inventors' Awards, June 7, 1956. Hearings, Patent Extension, May 4 and June 13, 1956. Hearings, Wonder Drugs, July 5 and 6, 1956. Report, Review of the American Patent System (S. Rept. No. 1464, 84th Cong., 2d sess., 1956). Report, Patents, Trademarks, and Copyrights (S. Rept. No. 72, 85th Cong., 1st sess., 1957). Report, Patents, Trademarks, and Copyrights (S. Rept. No. 1430, 85th Cong., 2d sess., 1958). |