861.24/8–849

The Secretary of State to the Ambassador of the Soviet Union (Panyushkin)

Excellency: I have the honor to refer to this Government’s note of October 12, 1948 in which your Government was requested, in accordance with Article IV of the Lend-Lease Agreement of June 11, 1942, to compensate on or before January 1, 1949 five United States firms for the use of their patented processes in the oil refineries supplied to your Government under Lend-Lease and to conclude agreements on or before January 1, 1949 to compensate two other United States firms, such compensation to be made not later than March 1, 1950. Reference is also made to your note of December 9, 1948 in which you state that the Government Purchasing Commission of the Soviet Union in the United States of America has been carrying on for some time appropriate discussions with three of the seven United States patent holders and that the Soviet Government sees no reason to alter the procedure for settlement of this question.

The Government of the United States, in the “Outline of Main Points of Settlement Proposed by the U.S. Side” handed to representatives of your Government on June 25, 1947, set forth two possible procedures for action by your Government to fulfill its obligations under Article IV of the Agreement of June 11, 1942, namely the conclusion of satisfactory arrangements by your Government with the individual patent holders or the payment by your Government of a lump sum to the Government of the United States to cover the patent holders’ interests. In a note dated December 16, 1947 your Government expressed its preference for satisfying its obligations by conclusion of agreements directly with the United States patent holders. After many months had elapsed, however, without any indication of a constructive effort on the part of your Government to come to satisfactory agreements with the United States firms and without any substantial progress being indicated in reaching agreement between our two Governments as to other aspects of a comprehensive lend-lease settlement, this Government was obliged to exercise its rights under Article IV of the Agreement of June 11, 1942 by transmitting to your Government the specific request for action by your Government as set forth in this Government’s note of October 12, 1948. In spite of this request little progress has been made by your Government toward the necessary agreement with the patent holders. It is the understanding of this Government that the Government Purchasing Commission of the Soviet Union has insisted that any agreement with the patent holders should become effective only upon conclusion of an over-all settlement between our two governments and that the rates of compensation [Page 717]should be less than those charged for use of the processes: in this country by the Government of the United States.

The obligations of the Soviet Government to compensate United States patent holders, as set forth in Article IV of the Agreement of June 11, 1942, are clear and unequivocal. Article IV provides that the Soviet Government will take action or make the payments required to protect United States patent holders when requested to do so by the President of the United States. No other provisions of the Agreement modify these obligations in any respect. The request by the President was duly made known to your Government in this Government’s note of October 12, 1948 and the formula for determining the amounts of compensation, as included in Mr. Stettinius’1 letter of June 8, 19432 to Major General Belyaev,3 was affirmed therein.

In view of the above, the Government of the Union of Soviet Socialist Republics must be aware that, pending satisfactory compensation of the five United States firms and conclusion of satisfactory agreements with the other two firms as set forth in this Government’s note of October 12, 1948, it continues in default of its obligations under Article IV of the Agreement of June 11, 1942. The Government of the United States requests immediate notification of the intentions of the Soviet Government in this respect.

Accept [etc.]

For the Secretary of State:
James E. Webb
  1. Edward R. Stettinius, Jr., was at this time the Lend-Lease Administrator.
  2. Not printed, but see the extract from it in the memorandum of October 8, 1948, by Paul H. Nitze, the Deputy to the Assistant Secretary of State for Economic affairs, Willard L. Thorp, Foreign Relations, 1948, vol. iv, p. 1015.
  3. Maj. Gen. Alexander Ivanovich Belyayev was Chairman of the Government Purchasing Commission of the Soviet Union in the United States, February 1942 to November 1943.