THE LORD CHANCELLORMy Lords, I have so often received the indulgence of your Lordships when bringing before you subjects which were technical and devoid of general interest, that I think I shall not be without your forbearance now when I ask your attention to a subject interesting in itself, which is exciting great interest out-of-doors, and regarding which any legislation which may now be determined upon cannot but be attended with important effects, for good or for evil, upon the manufacturing and inventive interests 242 of the country. My Lords, it may be asked, why it is that Her Majesty's Government at this time propose legislation on the Patent Laws. My Lords, the development of manufactures and commerce in this country of recent years has excited attention in an unusual degree to the state of the laws of this country which afford protection to inventors; and, my Lords, the result has been that there has arisen what I may call a twofold controversy—a controversy conducted, on the one hand, by those who think there ought to be no Patent Laws at all; a controversy, on the other hand, pressed forward by those who, while desiring to retain the protection of patents, seek a considerable alteration in the Patent Laws as they now exist. It is now, I think, 12 years since, in the other House of Parliament, I ventured to propose a Resolution, which was seconded by my noble Friend the Secretary of State for Foreign Affairs (the Earl of Derby), for a Royal Commission to inquire into the working of the Patent Laws. That Commission was issued, and there sat on it men whose names will, no doubt, carry confidence with your Lordships. Lord Hatherley, Lord Overstone, my noble Friend the Secretary for Foreign Affairs, Sir William Erle, Mr. Justice Grove, Mr. Forster, and Sir William Fairbairn were members of that Commission. It heard a great deal of evidence; it made a Report to which I shall have to refer, and it recommended certain changes in the laws regarding patents. My Lords, nothing was done in consequence of the Report of that Commission; but in the years 1871 and 1872 a Select Committee of the House of Commons was appointed to inquire into the same subject. It sat, and entered into an elaborate inquiry. And, my Lords, having read the evidence given before that Committee, I think I may assure your Lordships that if at any time you desire reading that will afford you both deep interest and much amusement you will find it in the report of that evidence. Some of the greatest inventors and of the most scientific men of the present day contributed to the knowledge collected by the Committee. There were among them Mr. Bessemer, Mr. Schneider, of the Creusot Ironworks, Sir William Armstrong, Mr. Nasmyth, Mr. Bramwell, and many others too numerous to mention; and 243 in addition the Committee had the ad vantage of hearing the opinions of Lord Selborne and Mr. Justice Grove, who stated their views, the result of their long experience as to the working of the Patent Laws. That Committee made its Report and recommended changes in the Patent Laws. Since that time—in 1873—the Universal Exhibition at Vienna was held, and on that occasion what was termed "The International Patent Congress" also assembled in that city. Persons from all parts of Europe who were interested in the Patent Laws met there and gave their opinions, and arrived at certain resolutions, to which I shall have to refer, as the basis on which, in their judgment, the Patent Laws of any country ought to be framed. In the Reports of the Commission and of the Select Committee and in those Resolutions come to at Vienna your Lordships have a large body of evidence on the subject: but you have also in them what appear to me the great landmarks as to the direction in which any alteration of the laws as to patents ought to proceed. Since the date of the Congress at Vienna I have been a witness myself—from the deputations that have come to me on the subject—of the loud and continuous demand from those persons who are engaged in manufactures, that some alterations should be made in order to give effect to those various recommendations which have been made from time to time. This, my Lords, is the reason why Her Majesty's Government have come to the conclusion that some effort should be made to respond to those demands and an attempt be made to improve those laws. I shall endeavour to shorten as much as I can the field over which I have to travel, and I may at once tell your Lordships that I do not intend to enter into any argument upon the abstract question whether patents should exist at all. I have never been an enthusiastic admirer of the Patent Laws in their present condition as suited to this country. I am aware that objections—very serious objections—may be urged against the existence of such laws at all. On the other hand, I know that there are arguments—strong arguments—in favour of the Patent Laws, and that there is now in this country a strong feeling that Patent Laws should be maintained. I 244 believe that between those two extreme propositions the truth lies. The Patent Laws we have may be so amended as to prove beneficial to the country; but, on the other hand, I am convinced that if these laws be not amended, and if objections now urged against patents are not removed, the days of patents are numbered, and an end must come to them altogether. Neither, my Lords, do I intend to occupy your Lordships' time with arguments as to the principle on which Patent Laws, if they are to exist, ought to proceed. I know that there are some persons who hold that inventions are property, and that the owners of inventions should be protected, just as the owners of lands or of other property are protected in their ownership. My Lords, I do not admit the proposition. I believe that if it held good, you must give the inventor protection not for 14 years or any other term, but protection without any limitation as to time. Not only is that so, but if an invention be property in the sense that everybody understands the word, you must admit the right of the inventor who declines to use his own invention to prevent its being used by anyone else. The assumption to which I have been referring seems to me to proceed on a palpable fallacy. A man's invention is his own, and he may proceed to use it; but it is wholly another thing when he seeks to prevent anybody else from using it. The question of allowing him to do this is not one of property or of abstract right, but one of expediency, respecting which the State is quite entitled to make a bargain, and the only consideration is on what terms an exclusive right of user should be allowed to him.
Now, my Lords, it often occurred to me that if you were to ask in this country by what authority is it that patents are granted, the first idea that would come into any one's mind would be that some Parliamentary enactment was the original authority. But that would be entirely a mistake. It is a somewhat singular thing that at this moment the granting of patents, exercising as it does a most important influence on the whole of the manufactures of this country, does not depend upon an Act of Parliament, but on the old prerogative of the Crown. Your Lordships will recollect a statute well-known as the "Statute of Monopolies;" 245 it was passed in the 21st year of the reign of James I., in consequence of promises made by Queen Elizabeth, but which had not been observed. The object of the statute was to put an end to a number of monopolies, some of which applied to food; but an exception was made in the Act by the preservation of an old prerogative of the Crown, and that was the origin of the Patent Laws which exist to this day. The 6th section of the Act declares that the abolition of monopolies does not
extend to any Letters Patent and grants of privilege for the term of 14 years or under, hereafter to be made, of the sole working or making of any manner of new manufactures within the realm to the true and first inventor and inventors of such manufactures.That was a reservation to the Crown of its old prerogative of granting monopolies—the reservation, as your Lordships see, being in the granting of patents of 14 years for what could be described as "new manufactures within the realm." That is the origin of the present system of Letters Patent.I will now ask your Lordships to pass from the history of these grants to the comparatively recent period of 25 years ago. In the year 1852 the whole sytem of granting patents came to be regulated by Act of Parliament, and three great changes were then effected. For the first time, it was provided that one patent should do for the whole of the United Kingdom. Up to that time three several patents were necessary for England, Ireland, and Scotland. Again, it was then determined that a patent for the United Kingdom should be granted at an expense very much lower than that which had been previously required. Up to that period patents for the Three Kingdoms cost between £300 and £400. Further, the Act of 1852 made another innovation as regards expenses, which has worked exceedingly well. It provided that on the first application for a patent the applicant should have to pay only £5; and that at certain stages, which would run over six months, he should have to make payments amounting in all to £25. He was to pay no more till the end of three years, at the expiration of which time, if he wished to keep his patent, he was to pay £50 more. At the end of seven years, if he wished his patent to run to 14 years, he was to pay £100 more, which, for a 246 patent of 14 years, would make a total payment of £175. The next alteration made by the Act was this—a provision was made that there might be what is called a "provisional protection"—that is to say, the applicant for a patent was to put on paper what is called a "provisional specification," containing the general outlines of his invention. This was to be deposited in the proper office, and during a period of six months he was to be at liberty to make experiments in the use of his invention, without the danger to which he might otherwise have been exposed if he delayed taking out a patent and his invention became known throughout the country. And now, my Lords, let me call your Lordships' attention to some of the results of the Act of 1852 by comparing the receipts in 1859 and in 1873. In 1859 the receipts from patents were £87,300, and the surplus, after all expenses connected with the granting of those patents, was £21,600. In 1873 the receipts had risen to £144,760, and the surplus to £90,000. Now, let me bring under your Lordships' notice the number of patents. I quoted to your Lordships the words in the Act of James, which states the reservation to be in favour of patents for "new manufactures within this realm." How many of these "new manufactures" do your Lordships suppose spring up within the course of a year in this country? No fewer than 4,300 a-year, or nearly 100 a-week, or something like 15 for every working day. If all these be for "new manufactures within this realm" it must be admitted that we have a most fertile inventive genius at work in this country. I will now state what becomes of these patents. I am taking my figures in round numbers, and by a comparison of several years, and I find that of the whole number of original applications for patents, one-third fall off before the time of sealing the patents, the inventions having been found to be not worth the expense of sealing. Of those which have been sealed, at the end of the third year seven-tenths or 70 per cent drop off, it having been found that the invention is not worth the payment of the £50: and two-tenths or 20 per cent of the remainder drop off at the end of seven years, it having been found not worth while to pay the other £100 to secure the patent for 14 years. So your Lord- 247 ships will see that only one-tenth of the entire number of cases in which patent rights are originally applied for remain to run the whole course of 14 years.
That being the state of things as to patents, will your Lordships allow me to point out the defects which I think it is generally agreed exist in the present system? Those who have not looked into these matters will be, perhaps, surprised to hear as an accurate statement that there is absolutely no examination in this country of an invention before a patent is granted for it. In point of form, there is the presumption of such an examination—and no doubt the Act of 1852 implies that there ought to be such an examination by enacting that the Law Officers of the Crown may call in experts to assist them in granting patents. But, in point of fact, that provision is not, nor cannot be, acted upon. I find that in 1872 only 62 applications, and in 1873 only 78 applications for patents were rejected by the Law Officers. I should say that they were rejected on regulations as to form, and not from any objections as to substance. From my own experience when I was one of the Law Officers of the Crown, I know that an examination of inventions by the Law Officers is found to be impossible, and your Lordships will not be surprised that with their other duties the Law Officers cannot make any real examination of inventions which pour in at the rate of about 100 a-week. The second defect in the system is this—The provisional specification of which I have told your Lordships, and which is the document which describes the character of the invention, is kept absolutely secret during the period of protection. I do not think it was intended in the Act of Parliament that this should be, but in practice it is so. An advertisement appears in the papers announcing that a patent has been applied for by a person of a particular name; but the allusion to the particular invention is as general as possible, and the provisional specification cannot be seen by the world until the patent is sealed. If any one have reason to suspect that his patent or his invention is being infringed on by the person applying for the patent, he is not in a position to take any very effective steps to ascertain whether his suspicions are well founded, inasmuch as he is not allowed to see the specification. A third 248 objection is this—The provisional specification is drawn up in the general way I have described; but when the patent comes to be sealed, it is sealed not in accordance with that specification, but in accordance with the complete and final specification, which is attached to the patent on its being completed. The applicant is permitted, between the time of his provisional and his complete specification to make any changes he pleases in his design, and there is no control over him to see that the complete specification does not depart from the provisional one. The consequence is this—You have granted in this country every year the enormous number of patents I have mentioned, taking one year as an instance of all. And what is the effect upon the industry of the country of a system which allows, without check and without examination, a number of patent rights to be created? My Lords, you will find it described by the Royal Commission which reported in 1865 in words much better than any which I could use. The Commissioners say—
From a paper drawn up at our request by the Superintendent of Specifications, it appears that upon examining into the first 100 applications for patents in each of the years 1855, 1858, 1862, the results were, in his opinion, that in 1855, 26 were manifestly had for want of novelty, and six more partly so; in 1858, 14 manifestly old and one partly so; in 1862, seven were old and one would probably turn out to be so. An instance, illustrating the mode in which these patents are used, is given in evidence, where royalties had been demanded, and in most cases obtained, by the patentee of a machine which turned out upon investigation to be identical with one which 19 years before had been well known and publicly used. Other instances will be found in the evidence of particular manufactures and branches of invention which are so blocked up by patents, that not only are inventors deterred from taking them up with a view to improvement, but the manufacturer in carrying on his regular course of trade is hampered by owners of worthless patents, whom it is generally more convenient to buy off than to resist. The evil also results in another practice having the same obstructive tendency—namely, that of combination among a number of persons of the same trade to buy up all the patents relating to it, and to pay the expense of attacking subsequent improvers out of a common fund. From a comparison of evidence, it cannot be doubted that this practice prevails to a considerable extent. We must also conclude that when the obstruction is not to be got rid of without the expense and annoyance of litigation, in a large majority of cases the manufacturer submits to an exaction rather than incur the alternative.The Committee of the House of Com- 249 mons gave an opinion in substance to the same effect; and they recommended—That protection for a limited period, and dating back to the time at which it is applied for, should only be granted for an invention on its nature, and particular points of novelty, being clearly described in a provisional specification, and upon the report of a competent authority that such invention, so far as can be ascertained by such authority, is new, and is a manufacture within the meaning of the law.The International Congress at Vienna arrived at the same conclusion—that patents ought not to be granted without a preliminary examination of some kind. In fact, if your Lordships only think of the matter for a moment you will see that something of the kind is absolutely necessary. I cannot imagine anything more serious to the manufactures of the country than that 4,300 drag-nets, more or less, should be annually spread, every one of them curtailing to some extent the area of those manufactures, and every one of them exposing manufacturers to litigation, or, perhaps, to the payment of black-mail if they would escape the irksome process of litigation for an alleged infringement of patent-right.Now, my Lords, let me explain what Her Majesty's Government propose in the way of amendment of the Patent Laws. The present Commissioners of Patents are the Lord Chancellor, the Master of the Rolls, and the Law Officers of the Crown. The Act of 1852, which created the Commission, contemplated that other persons might be nominated by the Crown to act as Commissioners, but, as it appears, no other persons have been nominated. Now, my Lords, we propose to enlarge the composition of the Commission, not by the addition of paid Commissioners, but by the addition of unpaid Commissioners, who are not to be charged with the examination of details—that is provided for in another way—but who are to superintend the general arrangements of the Patent Office and the Patent Museum, and to define the regulations under which patents are to be applied for and granted. We propose that five other members—three on the nomination of the Board of Trade and two on the nomination of the Lord Chancellor—should be added to the Commission. We expect that men of scientific and manufacturing eminence will be found willing, as a mark of distinction, to serve 250 on the Commission and perform the duties that will be imposed on them. These duties will involve no great sacrifice of time, but the advice and assistance of such persons, conversant with manufactures and the arts, will be of much advantage to the country. In fact, it would be utterly impossible to secure the services of such persons as paid members. There are some men who would be very useful on the Commission, but whom no payment that could be offered to them would induce to resign the occupations in which they are engaged. Well, my Lords, that being the composition of the Patent Commission—very considerable authority will be given to the Commissioners in respect of the conditions on which patents are to be granted. We also propose that there should be attached to the Patent Office officers to be called "Examiners of Patents." The Bill provides that they shall not be fewer than two nor more than four in number. We propose that these Examiners, who are to be gentlemen with competent legal, and scientific knowledge, should give their whole time to the business of their office, and that their duty shall be to acquaint themselves, in the first instance, with the contents of the Patent Office, and all the documents in use in that Office. Then, my Lords, we propose that every application for a patent shall be accompanied by a specification which must describe, not provisionally and in general terms as at present, but as fully as the inventor can describe it, the nature of the invention. We propose that this specification shall be referred to one of the Examiners in conjunction with one or more Referees. We propose that there shall be a panel of these Referees prepared by the Board of Trade, and consisting of men generally skilled in arts, science, and manufactures, who, without giving up the whole of their time to such duties, may be ready to express an opinion on any particular application for a patent. The points to which their opinions will be directed are these:—Whether the invention is a proper subject for a patent within the Statute of Monopolies; whether the specification is sufficient; whether the invention, as far as can be judged from an examination of former specifications and other documents in the Patent Office—they are not to go further than docu- 251 ments enable them to go in this direction—is a new one; whether the invention is wholly or mainly a combination of some known machinery, processes or substances; whether by reason of its frivolous character or for any other reason the invention is unworthy of a patent; whether, in consideration of such combination as I have just alluded to, or because the invention is not of considerable importance, it is expedient that the duration of the patent shall be limited to 7 instead of 14 years. The reason of this is that there are a number of inventions, which though they must be classed as inventions do not amount to more than a combination of some machinery, or process, or substance already in use, and are not worthy of being put on a footing with the great inventions of the country. The opinion of the Examiners in conjunction with the Referees, and the application itself is to come before the Law Officers—because we propose that with the Law Officers shall still rest the responsibility of passing a patent, though they are to have the assistance I have described. If on these materials the Law Officers are of opinion that the patent should be granted it will be granted as at present; but with this condition—that the patent will not be sealed for six months from the first application, and that in the meanwhile any person who may have objection to the granting of the patent may have the opportunity of making his objection, and there will be an appeal from the Law Officers to the Lord Chancellor or one of the officers of the High Court of Justice, to be named for hearing such appeals by the Lord Chancellor. If the Law Officers refuse the application for the patent the applicant will have the opportunity for appeal in the same way; and so also in reference to the question whether the patent shall be for 7 or 14 years in the first instance. There will be a third appeal—one in case the patent has been granted for only seven years; but we propose that in this case there should be no appeal in the first instance, and for this reason—because, whether the patent should be extended to 14 years may depend upon experience gained in the actual working of the invention. But at a certain time before the expiration of the seven years, application may be made with the light of that experi- 252 ence for an extension of the patent to 14 years. These are the proposals of the Bill with regard to the preliminary examination and granting of patents.
I have told your Lordships that in the first instance the inventor is to make his specification as full as possible; but there will be allowed a term for provisional, as distinguished from complete specifications. Your Lordships will readily understand that experiments made within six months may lead to a considerable expansion of the specification. We, therefore, propose that the applicant should have power to amend his specification before the time of the sealing of the instrument; but the amendment must be made under the control of the Law Officers, who will refuse to allow it if it be any improper extension of the invention, or material departure from the original specification. It is also proposed that even after the patent is sealed there shall be a right of amendment, in order that any technical difficulty may be obviated. There will also be in the Bill a provision for disclaimers. Then how do we deal with the question of prolongation? Your Lordships may be aware that under the present system the owner of a patent may apply to Her Majesty in Council for an extension of the patent beyond the term of 14 years, for 7 years, or even for another 14 years. It has been much debated whether that is a wise provision in the law. The Royal Commission which reported in 1865 stated that in the opinion of the Commissioners no such prolongation ought to be allowed. And, my Lords, it appears to me that the objections to a prolongation are very serious. In the first place, it is very difficult to lay down the principle on which a patent should be prolonged. The Judicial Committee of the Privy Council have endeavoured to define it, and I know it has been held by them that the patent should be a meritorious one, and that the case should be one in which the inventor had not been sufficiently rewarded. But who are to be the judges whether the invention is so meritorious as to deserve prolongation? One Judge, or one body of Judges, may think an invention very meritorious and deserving of prolongation, while another Judge or another body of Judges might be of the contrary opinion. Again, who is to tell whether the patent has sufficiently rewarded the 253 inventor or not? I am afraid that in practice the result of holding out the expectation that the patent will be prolonged if the patentee has not been sufficiently rewarded is that if the patentee has not made much during the first 10 years of his patent, he takes good care during the nest two or three years not to do anything which may alter that state of things—the doctrine acts as a premium on inertness during the last two or three years of a patent; and can your Lordships imagine anything more calculated to unsettle the trade of the country than this? Here is a patent which, perhaps, deeply interests many of the manufacturers of the country, because, as long as it exists, no one but the patentee can use the invention. The patent is about to terminate, and a number of manufacturers would erect buildings and extend their machinery in order to work the invention; but they are afraid to do so because there may be a prolongation of the patent, which would render all their additional buildings and their extended machinery useless. The consequence is that during the later years of a patent trade becomes paralyzed in respect of that particular article. There is another practical objection to prolongation, though not, perhaps, so formidable a one as that to which I have just alluded. It appears to me that this system of prolongation is a violation of the contract made between the inventor and the State. The granting of a patent is justifiable only on the ground of expediency. The State says to the inventor—"If you have applied your ingenuity to this particular invention, and will explain how it is to be carried into effect, we will give you a monopoly of it for 14 years." The inventor is willing to take the monopoly on those terms, and work his invention. If, after the 14 years have expired, you prolong the monopoly, you give the inventor what he never bargained for. On those grounds the Government are of opinion that the recommendation of the Royal Commission should be acted upon, and that there should be no prolongations of patents beyond the 14 years for which they are granted.
I now come to a question of deep interest, and one surrounded with difficulty—I mean the subject of licences. Those who are for maintaining the Patent Laws think, nevertheless, that something ought 254 to be done in regard to granting licences under patents; and those who are opposed to these laws think that if they are to be maintained, the granting of licences should be compulsory. I know there is an objection taken to this by those who say, with some show of plausibility—"What right have you to dictate to a man what he shall do with his own property?" But I think there is a fallacy in that. If you give a patent right to an inventor, unaccompanied by any condition, nothing can be more unjust than to annex a condition subsequently: but a patentee has no right to prevent any other person from using his invention, except that which the State confers on him; and the whole question is—On what terms should you confer that right on him? If the State thinks proper to make a stipulation at the time it confers that right, I do not see how any argument based on the violation of property can effect that stipulation; and I believe that a condition of this kind is by no means new, because in Letters Patent now granted the patentee and his executors and administrators are bound to supply, or cause to be supplied, for Her Majesty's service all such articles of the invention as they may be required to supply by the officers or commissioners administering the Department of the service for the use of which the same shall be required. We know that within the last few weeks the Judicial Committee of the Privy Council, in prolonging the patent of Mr. Henry for rifle barrels, annexed this condition to the prolongation, that these barrels or arms should be supplied to any person who might require them. Now, my Lords, let me ask your attention to what is thought of this question by those who are really the best competent to judge of the feeling of manufacturers upon the subject. The Royal Commissioners considered the matter, and stated the arguments on the one side and on the other, and took a great deal of evidence in reference to it; but the Commissioners did not arrive at a conclusion that they could recommend any compulsory system of licensing. The Select Committee of the House of Commons came to an opinion upon the point. The Committee was a strong one—and I observe that there were upon it many Members who were interested in manufactures, and one who was opposed to the granting of 255 patents. They came to the conclusion that all Letters Patent should have the following conditions inserted in them:—That the manufacture should be carried into operation within a reasonable time within the United Kingdom, so as to supply the demand for the article upon reasonable terms; that licences should be granted by the patentee on fair conditions, such conditions to be determined in the event of disagreement by the Commissioners, due regard being had to the exigencies of foreign competition. I find that the same subject was considered in a very interesting debate at the Vienna International Congress, and a Resolution to the same effect as that to which I have just referred in favour of licences was come to by a majority of 42 as against 17. Well, that being the state of things, I think your Lordships will not fail to observe that it shows that the desire for a provision of this kind comes from the very persons from whom you might have expected opposition, if opposition were to arise. If your Lordships consider the question of licences, I think you will arrive at the conclusion that there may be a considerable difference between one kind of invention and another as regards the subject of requiring licences to be granted. It may well be that the manufacturer of a particular patented article could manufacture that article to such an extent and in such quantities as to supply the whole community, and without any interruption of trade arising from any want of supply. But it is altogether different when the patented invention is part of a process. Let me illustrate what I mean by a reference to a patent of that kind. Your Lordships probably observed, as I did the other day, in one of the ordinary sources of information, mention made as to a discovery in the manufacture of glass. The discovery was said to have been made by a person who was not a glass manufacturer;—and I believe few of those discoveries are made by persons in the trade or art itself. A farmer found out that glass could be made much less brittle in the course of its manufacture by cooling it in oil in place of water, and the consequence, it is said, is that glass can be manufactured much more tough or less brittle than it was before. Now, assuming that to be so—I do not know whether it is or not—and a patent taken 256 out for an invention of that kind, what would be the consequences? It is an invention connected with a process in a particular trade carried on in all parts of the country. If such an invention were made and were found to be as valuable as is suggested, the consequence would be that practically no person would desire to have glass of any other manufacture, and yet no one manufacturer could possibly supply the whole country. Not only that, but if he were able to do so it would suspend the operations of the whole glass manufactories throughout the country—assuming that the patentee insisted on manufacturing himself, and refused to grant licences for the use of the process. That is a case in which a whole trade would be injured and crippled if licences to use the invention were not granted. These considerations, my Lords, have led us to the conclusion that the recommendation which has been made ought to be acceded to; and we propose that there should be a condition upon all patents granted after the commencement of the Act, in consequence of which they should be liable at any time after the expiration of two years from their date to be recalled upon either of two grounds—either that the patentee fails to use or put in practice, either by himself or his licencees in this country, the patented article to a reasonable extent—proof to the contrary lying on him—so that the patent may not lie dormant, unused, and unexercised, or be a patent which, having been taken out here, he puts in practice abroad; and, secondly, if it is made to appear to the Tribunal that in order to insure a proper supply of the article to the public, or proper means for using the invention by the public licences are necessary, and the patentee fails to grant licences on terms which the Tribunal under all the circumstances may think reasonable. I am aware that that provision casts upon the Tribunal a task of some difficulty—namely, the ascertaining of what are reasonable terms; but persons best competent to judge of that matter are of opinion that it is a difficulty which can be surmounted, and that if we provide a system of licences it will go far to remove one of the present objections to the granting of patents.
I pass now, my Lords, to a proposal which relates to the form in which patents can be revoked or recalled. At 257 present that can only be clone by a cumbrous process, and a worthless patent may be used for the purpose of extortion or embarrassment. We propose to substitute for the present dilatory and cumbrous proceeding by which alone it can be recalled, a petition to the Lord Chancellor upon any of the grounds on which petitions can at present be revoked—want of knowledge, want of utility, or upon the two special grounds I have referred to—which special grounds cannot, however, be alleged until the expiration of two years from the granting of the patent.
I now, my Lords, come to another subject, one of some difficulty and great interest. I mean the question of foreign inventions, and what is to be done with them in this country. The theory of the Statute of Monopolies and the construction put upon it was this:—There are to be no patents except for new manufactures within this realm. In the construction of that statute it has been held to be the law that any manufacture brought or introduced into this realm, if it was not used here before, was new within the realm, and that the person holding it was the inventor. So that if one of your Lordships in the course of foreign travel saw any machine or process which you had reason to believe was new, you might on your return to this country describe the nature of the invention, and would be entitled to receive a patent in respect of it. There is no doubt that in old times, when travel was not common and when intercourse between countries was not large, it was a very good thing to induce or bribe persons to discover what was being done in other countries and to bring home the result; but I think your Lordships will be of opinion that there is not much necessity for that kind of incentive to discovery in the present day—we know very well what is done in that way in other countries. The evil of the system is this:—There has arisen under the doctrine of law I have referred to this state of things—perhaps I ought not to say that it is actually done, for I might be called upon for distinct proofs, but I will, at all events, say it is supposed to be done and may be done. It may be that there are persons, agents of people in this country, who in foreign countries are on the watch for new inventions and discoveries for which patents are about 258 to be applied; they learn the nature of them, and by telegraph or post transmit the particulars to their principals here, who, to use a common expression, "snap" the patent here before the real inventor can come over here and obtain one for himself. And, again, there are persons on the watch for the publication of patents abroad, and if any person has taken out a patent in the United States, or France, or Germany, and has not taken the precaution at the same time to apply for a patent here, some of those agents transmit the account of the invention home as quickly as possible, and a patent is thus obtained for it in this country. The consequence is, I find, that in 1872 no less than 890 patents were granted in this country to persons who, on the face of their applications, profess that they were communications from abroad; and in the year 1873 there were 870 applications of this kind. Upon this subject we have an almost perfect unanimity of opinion. The Royal Commission express an unanimous opinion that these communications should not be made the subject of future patents. The Committee of the House of Commons express a similar opinion. The International Congress of Vienna were of the same opinion: and so far as I know every country that grants patents, except our own, declines to grant patents for foreign inventions, except to the foreign patentees. We have, indeed, a provision in our law that if a patent is taken out here for any invention which forms the subject of a patent in a foreign country that patent must fall as soon as the foreign patent expires. But we propose that no patent should be granted in future for a communicated invention, and that if a patent has been granted for a foreign invention it should not be granted here except to the inventor himself, and not to him unless he applies for it within a limited time in this country. This change will, I think, commend itself to your Lordships upon every ground of fairness and equity. There is a theory which has spread a little abroad, and has been brought before me by deputations—some persons are calling out for an "international" system of patent rights. I do not myself understand, and I am not sure that these persons understand, what is meant by that phrase. There appears to be some idea that, if a foreign country 259 should issue a particular patent, the title should be communicated and should be received by other countries, and that the patentee should then be entitled to an absolute monopoly in every other country. That, however, would be absolutely impossible. A patent must be granted in any country with regard to the novelty of its invention in that country. But suppose this country granted a patent, could we undertake to say that the invention was a novelty in Russia, in Germany, or in the United States? And if this country took upon itself to determine that the invention was a novelty in those countries, is there any chance that those countries would accept our decision? That is the view taken of patents in all other countries. If it were once held that a patent should pass through all other countries and become a monopoly in all those countries, there could be no more fatal gift to any inventor, because he would have to show before the patent would be granted that his invention was not only new in this country, but new in all other parts of the world—which it would be impossible for anyone to do. If, however, it is meant that all civilized countries are to be invited to grant patents on similar terms, and that the procedure is to be assimilated in all countries, that may be a practicable or possible thing, although it does not concern us much on what terms other countries may grant patents.
I now pass from the subject of foreign inventions. I regret to detain your Lordships at such length, yet the subject is of interest to so many persons that I do not like to omit anything essential. I now come to ask your Lordships to observe what we propose to do in a matter of considerable interest, and that is the position of the Crown in this country in regard to patent rights. The history of the position of the Crown on this subject is a very curious one. I was too much accustomed when at the Bar to deal with patent cases to have any doubt whether this was an open question. In every patent that is issued it is said that the patent shall be void unless the patentee agrees to supply all that might be wanted for the service of the Crown. "What is the meaning of that proviso if the Crown is free to use the subject of the invention without remonstrance on the part of the patentee? The Crown, however, found itself so hampered with the claims made 260 by inventors for inventions of very little merit, that they determined eight or nine years ago to try this question. The Court of Queen's Bench thereupon decided that the Crown was not bound by Letters Patent, and that the Crown was free to use any invention which was useful to any Department of the public service. That must be assumed to be good law: but the effect of such a decision is very serious. I will take inventions relating to ordnance, to great guns or ammunition. These are inventions in regard to which the only possible customer is the Crown—there is no one else in this country who wants such articles; and therefore it is merely a question whether the inventor shall apply to the Crown in this country or apply to foreign Governments. If you make it absolutely useless to take out patents here for inventions of that kind, you drive an inventor to conceal his invention in this country and to take it to a foreign country where he may get some reward for it. The policy of such a law may well be doubted. But, on the other hand, I am fully alive to the importance of the Crown being enabled to avail itself of any inventions necessary for the service of the country, free and untrammelled by delay arising from claims that may be unfounded. The obligation of the Crown to provide for the defence of the country is so paramount that if it were necessary that litigation should be settled before the invention were used, the State might be so hampered that serious injury might be done to the public service. Under these circumstances, what ought to be done?—because the state of the law is such that it can hardly be left in its present condition. The Royal Commission took evidence both as to the Army and Navy, and their recommendation was this—
That in all patents hereafter to he granted, a proviso shall be inserted to the effect that the Crown shall have the power to use any invention therein patented without previous licence or consent of the patentee, subject to the payment of a sum to he fixed by the Treasury.I observe that the Gentleman who represented the War Office before the Royal Commission gave it as his opinion that such compensation as the patentee might claim should be settled by the Treasury. We propose to adopt that course, and to provide that there shall be no general exception on the part of the Crown from 261 the obligations of patents; but that, on the other hand, any Department of the public service shall be at liberty to use an invention on terms which, if they cannot be arranged between the Department and the patentee, shall be settled by the Treasury.There is another subject of considerable importance—I mean the expense of obtaining patents. There has been a demand for lowering the fees on pa tents—which your Lordships will remember I stated to be £5 at first, £20 at the end of six months, £50 at the end of the third year, and £100 at the end of the seventh year. The testimony against reducing the fees appears to me to be overwhelming. The intervals afford opportunities to patentees to consider whether it is worth while to continue their patents or not. If a patent has run two or three years, and it is worth while to continue it, it is also worth while paying what is required. If a patent runs for seven years, no doubt it is worth even the larger fee required. The testimony against reducing the patent fees appears to me to be overwhelming. While the Royal Commissioners differed in their opinions on some points, they expressed a unanimous opinion on this, and they said they did not find the cost excessive, nor the method of payment inconvenient, but they recommended that patent fees should not be made to contribute to the general expenditure of the State until every reasonable requirement of the Patent Office has been satisfied. The Committee of the House of Commons must be taken to have been of the same opinion. There was a division in the Committee on a Motion made to this effect—that the cost of obtaining patents was needlessly high, and the division was 8 against and 3 for the Motion. It is customary with inventors and manufacturers in this country to refer to the example of the United States. I have been told that there the system is very much better than ours, and that we should endeavour if possible to conform ours to it; particularly in two features—it is said that the cost of obtaining patents is much less there than here, and that in the United States there is an efficient staff to conduct examinations previously to the granting of patents. I quite agree that the United States has a very remarkable staff in- 262 deed; and your Lordships may be interested to hear something about it. I have here the Act of Congress, by which it is enacted that the officers and employés of the Patent Office shall consist of one Commissioner of Patents, one Assistant Commissioner, and three Examiners-in-Chief, to be appointed by the President; 1 chief clerk, 1 Examiner in charge of interferences, 22 Principal Examiners, 22 first Assistant Examiners, 22 second Assistant Examiners, 1 Librarian, 1 machinist, 5 clerks of class four, 6 of class three, 50 of class two, 45 of class one, and 1 messenger and purchasing clerk; and besides these, the Secretary may appoint such additional clerks of classes two and one, copyists of drawings, female copyists, skilled labourers, labourers, and watchmen as may from time to time be required. I cannot at all aspire to a staff of that kind, and those who expect us to imitate the United States' Patent Office in this respect must be disappointed. Your Lordships will be surprised to hear the number of patents issued by the United States. I said that we must be an inventive people when we registered 4,300 patents yearly; but in the United States there are yearly 18,000 applications, and of these 13,000 are granted. The United States' tariff for patents seems to consist of many different items, so that it sometimes takes 15 or 16 American patents to cover an invention that would be covered by one English patent. Take, for instance, Mr. Saxby's interlocking signal; it is said that 14 American patents would be required for it:—so that we must not be led away by what appears to be the expense of granting only one patent in the United States. What is the result of the system in the United States? Is it so very excellent? Does the employment of such a large staff, and the adoption of such a prolific system of granting patents work advantageously? One of the Commissioners, in his last Report says, that each Examiner in charge of a class now works entirely without supervision, and the result is that very many applications are hastily and carelessly examined. In 1871, a patent was granted for packing ground hops in air-tight cases. Airtight eases are not a new invention; and the Commissioner says—"Why such a patent was granted is beyond my comprehension. A mere child could put anything in a bottle, and cover the cork 263 with sealing wax." Another patent was granted for making shovels of cast iron;—surely that is not new. The Commissioner says—"It is a matter of astonishment to me that such patents are ever granted, and of greater astonishment that extensions are favourably reported upon by the Examiner." These are examples of the kind of patents granted under this system, which is so much commended. And observe what occurs under the system. Your Lordships will have experienced the inconvenience of opening envelopes fastened with a seal; an ingenious American took out a patent for attaching a short string to the corner, by means of which the envelope may be torn open. I have seen cartridges made upon that plan before; still it is a device which it is thought worth while to patent in America. But invention did not stop there; another man, of whose ingenuity it is impossible to speak too highly, took out a patent for tying a knot at the end of the string hanging out of the envelope. As against the system of granting patents in America, and the consequences of it, I think the recommendations of the Royal Commission proceed upon the true ground. The fees which we have now are not too high. I hope Parliament will also be of opinion that they ought not to be made a source of revenue to the country, or that, at all events, they should, in the first instance, be appropriated to the maintenance of a proper Patent Office and Museum. The first demand upon the fees should be for a Museum of Patents. I am bound to say that from all I have heard of the Patent Museum at Washington, it furnishes an example we may well imitate. I believe that both the building and the arrangement of the contents are worthy of the highest praise, and I am sorry to think that at present we can have very little chance of competing with it. I would speak in the highest terms of the arrangement of the Patent Office in Southampton Buildings, and of the accommodation which is provided there in the way of indices, and a library and reading-room; but when I turn to the Patent Museum at South Kensington, I look with astonishment on our position. The last Report of the Royal Commission sets out a Memorial to the Treasury, presented in 1858, to which is attached my name as one of the Law Officers of 264 the Crown and one of the Commissioners of Patents. The Memorial enters largely into the necessity for proper accommodation for the Patent Museum; it sets forth that it is necessary to have a new building to house models of inventions which are lying scattered over the country, which have been constructed at great expense for legal and other purposes, for which the owners have no present use, and which they would gladly give to the nation if arrangements were made for placing them so that the public could have free and constant access to them. The Memorial further suggested the appropriation of a site at South Kensington. Your Lordships will agree it is important that a Patent Museum should be put upon the best possible footing. I believe nothing can be more conducive to the technical instruction of the people of this country than presenting them with a well-arranged museum of patent models to which they can have proper access, with proper explanations, so that they may be able to trace the progress of manufactures with reference both to patented inventions and to applications that were not granted. The Memorial of 1858 has not been acted upon to this day. What we call a Patent Museum is really a patent warehouse; there is a store in the South Kensington Museum, where there is no room, where there is no light, where there is no arrangement, and where no person can examine a model—and that is termed a Patent Museum. I am happy to be able to inform your Lordships that within the last few days arrangements have been made by the Treasury for obtaining adequate space in the building immediately behind the site on which the Natural History Museum is being erected, and here the models now in the possession of the Patent Commissioners may be arranged and exhibited in such a way that the public can have convenient access to them.
Your Lordships are aware how closely related is the subject of patents with the subject of the copyright of designs. The system of copyright of designs has hitherto been under the management of the Board of Trade. The arrangement now made is to transfer it to the Patent Commissioners. It will be more properly under their care, and considerable compression can then be made in the staff of the two Departments. In ad- 265 dition to that, there is a subject which has occupied the attention of Parliament—I moan the registration of trade marks. At different times, measures on that subject have been produced; but it has now become peculiarly pressing for a particular reason—one foreign country at least—Germany—I am told has declined to give protection in its Courts to English trade marks, unless those seeking protection can show that their trade marks have been registered in this country, and thus acquired a status and authority they can recognize. Manufacturers are much alarmed at this, and call loudly for a system of registration of trade marks. A Bill will be introduced by the Board of Trade in the other House for the registration of trade marks; and, if passed, the registration of trade marks will be placed under the Commissioners for the Registration of Patents. I will only add that if your Lordships approve the Bill which I now lay on the Table, and pass it into law, it will produce this further advantage—it sweeps away every other statute on the subject of patents, except that all-sacred clause in the Act of Monopolies, which no person would have the courage to interfere with; and, in the four corners of this measure will be contained the whole law on the subject of Patents. My Lords, I beg leave to move that the Bill be now read a first time.
Bill for consolidating with Amendments the Acts relating to Letters Patent for Inventions presented by the Lord Chancellor.
§ EARL GRANVILLEMy Lords, after the remarkable speech we have just heard, I wish to say one or two words. I think all your Lordships must feel grateful to the noble and learned Lord for having introduced so early a Bill concerning which no party feeling can exist, gone so thoroughly into the whole of this important subject, and given a description so singularly lucid of the state of the law, and particularly of past legislation on the matter. I must also acknowledge the moderation—I may say, the judicial character—of his summary of the opinions of different parties with regard to the principles and application of the Patent Law. The noble and learned Lord has given so clear a statement of the contents of the Bill that probably we shall not have much to learn from 266 reading it. So far as I apprehend, the chief points are these—the Bill provides that there shall be a sufficient examination of patents before being granted; and this will be done by the addition of five unpaid Commissioners, by the appointment of two, three, or four paid Examiners and a certain number of Referees—I do not think the noble and learned Lord stated the number, and whether they will be paid or not.
§ EARL GRANVILLEIt provides for complete and defined specifications, their being subject to the criticism of the public before the patent is valid. And it simplifies the appeal in either case of the grant or rejection of a patent. It also puts an end to the introduction of patents in this country for inventions already in operation in other places, and it prohibits the prolongation of patents beyond 14 years. It provides for a system of compulsory licenses. The provision also of a proper place and building as a Patent Museum is a most important object. I do not mean now to make any remarks on the Bill; but I take this opportunity of saying that it is a matter which I trust will be fully discussed in this House. The noble and learned Lord referred to two or three Blue Books on the subject;—I may mention the evidence taken before the Committee of your Lordships' House in 1851 as also worthy of reference; and I would take leave to suggest that the noble and learned Lord would consider before the second reading whether it would not be well to send the Bill to a Select Committee, not for the purpose of delay, but solely with a view to arrive at sound conclusions on the subject.
§ THE DUKE OF SOMERSETsaid, that at any rate the speech of the noble and learned Lord on the Woolsack had completely established one fact—that the present Patent Law ought not and could not be maintained. But while that was evident, it was by no means equally clear that the law on so difficult and complicated a subject could be easily settled and to the satisfaction of so many conflicting opinions. He would defer any general observations on the Bill till the second reading—lie would only say now, that if they were going to make a Patent Museum he did not see why, instead of 267 accumulating everything of the kind at South Kensington it should not be placed at Manchester or Birmingham, or some great inventive, industrial, and manufacturing centre where it would be readily accessible to those engaged in the arts and manufactures of the country. Their Lordships, he was sure, were grateful to the noble and learned Lord for all he had stated to them; but there were some points on which he might wish further explanation. A man thought he had an idea and he must take out a patent, not for anything he had made or done, but for an idea. When he was at the Admiralty an inventor claimed a patent, and his specification included the use of various materials, such as cork, india-rubber, in connection with iron for the construction of ships, but he had made nothing. It was only by the intervention of the Law Officers that that unreasonable claim was set aside. The person who invented those little perforations which separate postage-stamps went to the House of Commons, and a Committee gave him £2,000 instead of a patent. An ingenious gentleman soon afterwards came to him and suggested that instead of round perforations they should be made oval in form, which he thought would be much more convenient. He recommended him to go to the House of Commons, who would no doubt reward him for his ingenuity. The patent screw-pro-poller was at first square at the corner, but it occurred to an ingenious person that the corner might be cut off, and for that he obtained a patent. So it would be constantly. What he desired to press was that a patent should be granted not for anything that existed in idea only, but for something actually done and workable. He was afraid the noble and learned Lord's experts would not answer the purpose. The difficulty was to find men who could judge of a patent beforehand.
THE LORD CHANCELLOR, in reply, said, that to grant a patent for an idea would be quite absurd, and one of the duties of the Examiners would be to ascertain whether the invention for which the patent was sought came within the subject-matter of the Statute of Monopolies—which clearly an idea could not do. Besides, the patent might be repealed if it were not brought into use within a given number of years 268 after it was granted. The noble Duke (the Duke of Somerset) had said that the Referees would not be able to judge whether an invention would be useful to the world or not. That was one of the things which they would not have to judge. He had carefully excluded the question of utility, because nothing but experience could decide whether a thing would prove useful or not. With regard to the question of the experts, to which the noble Duke also referred, what he proposed was that there should be a list prepared with the assistance of the Board of Trade, and re-settled every two years; that this list should be divided into panels, consisting of persons versed in some branch of science—some in chemistry, some in physics, and some in mechanics—and that along with the Examiners to whom the question of the patent was referred should be associated pro hâc vice one or two out of those panels who should be paid, not by salaries, but for the particular service on which they were engaged. The manner in which they would be selected would be determined by rules.
Bill read 1a; to be printed; and to be read 2a on Friday the 26th instant. (No. 15.)