File No. 763.72113/447

The Secretary of State to the Swiss Minister ( Sulzer)

No. 129

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With regard to your memorandum of October 31 last,3 transmitting the inquiry of the German Government concerning patents, I have [Page 328] the honor to enclose for your information copy of a statement received from the Chairman of the Federal Trade Commission on November 2, with reference to the application of the Trading with the Enemy Act to the use by American citizens and corporations of patents and copyrights owned or controlled by enemies or allies of enemy.

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Accept [etc.]

Robert Lansing

Statement by the Chairman of the Federal Trade Commission ( Harris)

The [Trading with the Enemy] Act provides for the issuance by the Federal Trade Commission of licenses under enemy-owned or controlled patents and copyrights. The provisions requiring reports by the licensee of the use and enjoyment of the license, and the deposit with the Alien Property Custodian of an amount not to exceed 5 per cent of the gross sums realized from the sale of the licensed subject matter, or a sum not to exceed 5 per cent of the value of its use as determined by the Federal Trade Commission, amply protect the patentee, or copyright proprietor, whose patent or copyright is licensed.

The amount so deposited becomes a trust fund for the benefit of the licensee and the foreign patentee or copyright proprietor, to be accounted for after the war.

The act further provides that the foreign plaintiff is not limited to the amount so deposited, but may recover whatever may be decreed to be just and reasonable.

The evident purpose of the statute is, therefore, not to abrogate any patents or copyrights or to permit raids upon such property. The war has prevented the exercise and importation by enemies of many useful inventions with the consequence of depriving our citizens of needed articles. This is peculiarly the case with respect to many German-owned patents covering valuable medicines and drugs. Examples such as arseno, benzene, certain hypnotics and the non-toxic substitutes for cocaine used in surgery to produce local anesthesia, will occur to anyone.

The statute secures to our people on equitable terms the use of articles of which, owing to the war, they are now deprived. Its enforcement does not involve confiscation, destruction or sequestration of property. The act merely follows the well-recognized economic [Page 329] theory behind all patent and copyright legislation established in times of peace, that it is proper to attach to the grant of patents and copyrights the condition that, for the benefit of the public, the market be supplied at reasonable prices with the patented article or the copyrighted thing. The present statute recognizes this condition and does no more than this. It authorizes the use by American citizens and corporations under Government supervision, for the benefit of our own people, of patents and copyrights created by our own statutes which the enemy owners are now incapable of exercising, to the end that the American public may be supplied with merchandise and articles which our Government by the grant of the patent or copyright upon them has declared to be new and recognized to be useful. The statute at the same time makes provision for the compensation of the foreign patentee at the end of the war.

Very respectfully,

Federal Trade Commission
Wm. J. Harris
, Chairman
  1. Printed in full, ante, p. 285.
  2. Ante, p. 266.
  3. Filed separately under File No. 763.72112/5371.