Published online by Cambridge University Press: 07 November 2014
Mr. Mackeigan has done me the honour of contributing, in the November issue of this Journal, full-length “Notes” in answer to my article on “Patents in Relation to Monopoly,” published in the August issue. If I now appear for the purpose of making the usual rejoinder it is not to be taken that I do so in any controversial spirit but only in an endeavour to answer his allegations and, if I can, to restore the patent system to the position it was in before it suffered the not inconsiderable knocking about which it has received at his hands. In doing so, I hope that I may make my points as temperately and as gracefully as has my learned friend, whose treatment of the subject from his point of view has been, if I may say so without impertinence, wholly admirable.
I must begin by taking sharp issue with Mr. MacKeigan on one point. I did not, as he says, extol the “theoretical adequacy of the Canadian Patent Act as an instrument to prevent abuses of patents.” I did and I do extol its practical adequacy for such purpose by reason of the provisions regarding compulsory licensing and revocation in case of abuse. And in this I interpose no mere ipse dixit. It would be a simple matter to append quotations from a multitude of sources which would build up an impressive body of opinion confirmatory of my statement. But I shall content myself with two extracts: The first of these is from an author in the United States who, in discussing cartels and the patent system, observes: “The most concrete and constructive suggestion for patent reform as a solution of the cartel problem calls for the compulsory licensing of patents when they have been used to foster international cartels, e.g. by the allocation of markets. … Compulsory licensing would be expected to remove the most serious obstacles which our patent laws at present interpose to the solution of the cartel problem.”
1 Whittlesey, Charles R., National Interest and International Cartels (New York, 1946), at p. 92.Google Scholar
2 In a foot-note, Whittlesey refers for authority to the Hearings on Scientific and Technical Mobilization of the Kilgore Committee, part I, pp. 92-3.
3 (1945) 323 U. S. at p. 416.
4 Sec. 65 (3). It is this emphasis upon manufacture in Canada which Mr. MacKeigari has apparently overlooked when he says: “It is doubtful whether a licence to import can be ordered” (“Notes on ‘Patents in Relation to Monopoly’,” Canadian Journal of Economics and Political Science, vol. XI, no. 4, 11, 1946, p. 473).Google Scholar The inference that a licence to import might be the answer to “under-use” (as well as “over-use”) disregards the stated purpose of the relevant provisions of the Patent Act.
5 See MacKeigan, , “Notes,” p. 478, n. 25.Google Scholar As a parenthetical observation it may not be amiss to point out that Mr. MacKeigan speaks of the “writers” of the report entitled Canada and International Cartels. That is news indeed! We did not know that there was plurality in its authorship. It was not published as the Report of the McGregor Commission which was appointed to consider the question of Canada and international cartels but was signed solely by one member of that Commission. We of the Bar (and also perhaps the economists) have wondered what happened to the distinguished economist, the experienced business man, and the learned lawyer, now a Chief Justice, who were also appointed to that Commission. Is the absence of their signatures on the Report to be taken as indicative of the fact that they also “dissent from most of its statements and all of its conclusions”? Or is such a question indiscreet?
6 (1945) 323 U.S. at p. 432.
7 (1898) 15 R.P.C. 113.
8 Gordon, J. W., Monopolies by Patents (London, 1897), p. 12.Google Scholar
9 London, 1913, p. 221.
10 Later Lord Justice Fletcher Moulton.
11 MacKeigan, , “Notes,” at p. 477.Google Scholar
12 My view on the efficacy of this section is epitomized in the title of an article which appeared under my name in the November issue of the Canadian Bar Review at p. 749, “Parturiunt Montes: Nascetur Ridiculus Mus.”
13 This feature of the decline of respect on the part of the citizen for the Board, and its failure to give adequate consideration to his deep-rooted convictions, his legal rights and his economic needs have been ably commented on by others. Cf. Chitty, R.M.W., K.C. in the Fortnightly Law Journal, Toronto, 10 15, 1946.Google Scholar
14 As stated in the British Record of Trade Committee, Report on Patents, pp. 5–6.Google Scholar
15 The “block” or “fence” mentioned by Mr. MacKeigan is somewhat difficult to understand. If these "blocking" patents are granted for valid inventions, that is what the Patent Act is designed to encourage. There can be no criticism because their life is related to the term of their own grant. They do not and cannot extend the period of patent protection afforded by the original patent. In the same manner, no “minor improvement” can extend the period of original patent protection. If the “minor improvement” seems to preserve for the patentee the market which he enjoyed under his original patent this can only be because what Mr. MacKeigan may have considered a minor improvement the public has considered a major one, or alternatively because the patentee has so advanced his technology that the would-be competitor finds it difficult to catch up.
16 Sec. 59.
17 Sec. 60 (1).
18 Sec. 60 (2).
19 Sec. 45.
20 Secs. 64-71.
21 The “blocking” or “fencing-in” of competitors by taking out patents which are not intended to be used is an old story of which no concrete evidence has yet been furnished. The practice exists only in the mind. See post n. 27.
22 (1941) 1 Fox Pat. C. at p. 202.
23 This situation is strikingly illustrated by the present position with regard to atomic energy. This is now entirely controlled in secrecy, and there is no pooling of the knowledge of technical progress by physicists as heretofore. It may be that for defence such secrecy is the only proper course but a contemplation of the inhibiting effects on human progress of the secreting of knowledge in this field will constitute ample proof to the open mind that much is to be said in favour of any system which offers a workable alternative to the retention of secret knowledge and the maintenance of secret processes.
24 See e.g., Bastiat, Frederic, Harmonies Economiques (Paris, 1851), p. 293 Google Scholar: “No term within the whole vocabulary of political economy has aroused such a fury of modern reformers as the word ‘competition’.” Even Marshall noted that “the term ‘competition’ has gathered about it evil savour, and has come to imply a certain selfishness and indifference to the wellbeing of others” ( Principles of Economics, London, 1920, p. 6 Google Scholar).
25 See e.g., Whaley-Eaton Foreign Letter, no. 1436, October 22, 1946, p. 2: “…the shocking unreliability of the economists and their projections.”
26 See e.g., John Morley, Life of Cobden, bk. XII: “Nothing can be got by fraternising with trade unions. They are founded upon principles of brutal tyranny and monopoly.” The man who penned these words is surely not to be described as a reactionary. See also Fawcett, Henry, Political Economy, 1863, vol. II, bk. IX, p. 248 Google Scholar: “A social terrorism, very analogous to that by which Trades-Unionists so frequently maintain their organizations.”
In the far-off days when the independence and enterprise of the individual earned respect, the trade unions were the object of honest criticism such as they should be receiving today.
27 Cf. remarks contained in the British Report, quoted in my previous article, at p. 338: “Rumours of this practice are frequent but, in spite of our endeavours to obtain it, no satisfactory evidence of particular examples has been forthcoming. Several persons who had made public statements about the suppression of inventions were invited to give evidence before us but did not accept the invitation.”
28 The McGregor Report is admittedly based largely on a number of investigations set forth on page V of the Report, followed by the curious statement on page vi that, “It has not been considered necessary in the present inquiry, nor would it have been possible, to attempt to test the accuracy of the information and the conclusions presented as a result of the investigations in the United States.”
Reference should also be made to the following selected examples of hearsay: P. 7 in the discussion of phosphorus: “While the details of these arrangements were not made public it is stated that. … It may be assumed that” …; p. 14 “The introduction of quantity differentials by Carboloy was made apparently to head off competition from the very large users”; p. 18 discussing ilmenite: “It was alleged during the hearings” …; p. 25 “In a complaint filed by the U.S. Department of Justice it is alleged that” … (italics supplied).
Examples of this type of statement could be repetitively multiplied. To me they are meaningless. As a lawyer I want evidence. Statements based upon sensationalism instead of evidence are becoming increasingly common. They are symptomatic of the disease that is permeating much of the present economic thinking. As a recent author on the subject put it: “One may safely assume that even if conclusive evidence should be rendered that cartels are not under all circumstances and in all forms specially undesirable, it would be extremely difficult to attain that emotional adjustment of public sentiment under which the taboo on the term cartel could be removed. Allowance for the demonic force of the term must be made before intelligent discussion is possible. Unfortunately, many people who attempt to deal with the subject do not make this allowance” ( Hexner, Ervin, International Cartels, Chapel Hill, 1945, p. 9).Google Scholar
The attitude in the United States is outlined in the Senate Committee Monograph entitled Economic and Political Aspects of International Cartels. The only purpose of that report was to condemn cartels. It made no attempt to appraise the real economic effect of cartel policy but because they are illegal under United States law cartels were automatically declared to operate against public interest. It was not shown how they operated against public interest nor was public interest adequately defined. The McGregor Report based its findings on such reports and proceeded to follow the same line of condemnation without making any effort to appraise the economic effects on the trade and industry of the country (cf. Report, p. 2: “Without attempting any analysis of the effects of particular practices, or the circumstances in which they are agreed upon or applied”).
On p. 23 the Report quotes, horribile dictu, the famous General Electric letter of 1932 concerning electric light bulbs. This is an old story and one which has been completely exploded. In the first place, the suggestion contained in the letter was quite proper, and technically correct from an engineering standpoint. In the second place the suggestion was never acted upon and never put into effect. Examples of this type contribute much to the emotionalism which tends to render dispassionate discussion of the problem difficult. By citing instances of the electric light bulb, and, as other official reports do, the alleged proposal to mix arsenic or some other adulterant with plastic glass for sale to airplane manufacturers and thus prevent its use for dental purposes (cf. Bone Committee, Hearings on Patents, part II, pp. 710 ffGoogle Scholar; Edwards, Report, pp. 13, 18–19 Google Scholar), and the addition of poisonous or irritant substances to pigments developed for use in paint in order to render them unsuitable for dyeing textiles (Edwards, Report, Economic and Political Aspects of International Cartels, Subcommittee on War Mobilization of the Committee on Military Affairs, U.S. Senate, 78th Congress, 2nd Session, Monograph no. 1, Washington, 1944, p. 37), the entire discussion is divorced from fact and wedded to emotion. There is no evidence that any of these suggestions were ever put into execution. The citation of extreme examples proves little, if anything, in the field of economic thinking. Whatever utility they possess lies in their emotional appeal, dictated either by political policy or missionary fervour.
29 Picard v. United Aircraft Corporation, (1942) 53 USPQ 563 at p. 573, per Frank J.
30 “By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.” Smith, Adam, Wealth of Nations (World's Classics edition, vol. II, p. 33).Google Scholar
