operational requirements to which claims of one or more unexpired patents applied.

90. The foregoing information as to patents likely to be used for transmitters or receivers, plus the information as to patent agreements and licensing practices obtained through the directive-letters initiated in 1942, and through letter requests on particular subjects, plus the extensive information obtained through the investigation of the telephone industry over the years 1935-39 as to patents in use for equipment employed for communication carrier services to the public, was adequate for FCC's needs under sections 218, 303 (e), 303(g), 313, and 602 (d) of the Communications Act, until 1948. At this time additional information was needed because the TV and FM broadcast services had grown to a point that the patents to be employed for transmitters and receivers had been determined upon by the industry, while in the communication carrier fields the picture of the patents in use had entirely changed, because of patent expiration, and because of the new patents that had come into use.

91. As of 1948, experience had taught that knowledge of the patents in use was equally as essential for determining patent control, as was knowledge of the agreements and licensing practices respecting the patents in use; also that the same information was necessary for proofs of monopolistic patent practices, or patent misuses in the respective fields.

92. There were also objections to the effect that if the 1942 FCC directiveletters requiring semiannual patent reports from the Bell System companies, RCA, Western Union, and the I.T. & T. companies were to continue, there should be the same requirement made on all patent holders within FCC jurisdiction. There was also the fact that the directive-letters, if they were to continue, should be made into rules in order to comply with section 4 of the Administrative Procedure Act.

93. On October 13, 1948, the FCC patent staff member submitted for consideration rules calling for the information needed respecting patents in use, and related agreements and licensing practices, from all patent holders within FCC jurisdiction. The proposed rules required each patent holder to file annually a report listing all communication patents he owned or controlled, and indicating as to each patent whether in use, the service for which it was used, and its claims covering the system operations or equipment for which said patent was being used. In addition, the rules required each "person" reporting to state the reason for nonuse of any patent so listed; to list all the licensees of the patents reported, and to furnish copies of all agreements pertaining to the patents reported. Adoption of the rules would cancel the need of the 1942 letter-directives. (A copy of the October 13, 1948, memorandum was forwarded with other staff patent reports on April 6, 1949, to the chairman of the U.S. Senate Commerce Committee.)

94. The October 13, 1948, memorandum pointed out that the rule information would enable the FCC to carry out the following duties, and how such duties arose under sections 218, 303 (e), 303 (g), 313, and 602(d) of the Communications Act of 1934 as amended:

(a) Avoid, if possible, the promulgation or retention of technical standards for radiobroadcast stations which specify operations upon which claims of unexpired patents read;

(b) See that the benefits of new inventions and developments in both radio and wire communication fields are made available to the public; and (c) See that all persons who hold one or more patents and are rendering, or are connected directly or indirectly with persons rendering, one or more communication services to the public, in which said patents are being used, and over which the FCC has jurisdiction, do not engage in practices contrary to the antitrust laws through said patents.

95. On January 11, 1950, the FCC Chairman directed that the October 13, 1948, memorandum be withdrawn and that a further memorandum or report be prepared showing:

(a) The material which would result from the patent rules proposed; and

(b) The FCC working arrangements and personnel needed for processing said material.

96. On August 22, 1951, the staff report called for by FCC Chairman on January 11, 1950, was submitted. The report first summarized the objectives of the proposed patent rules agreed upon by the staff, and explanations thereof. This was followed by explanations of the particular filings that must be made by the

patent holders under the proposed rules, and the manner in which these filings would be processed; and finally, the patent personnel needed for making studies and reports to the FCC upon said filings. The objectives agreed upon were as follows:

(a) To make the FCC's requirements respecting patent information apply uniformly to all persons who own or control one or more U.S. patents and furnish one or more services authorized or regulated by the FCC.

(b) To bring about the use of inventions disclosed in unused unexpired patents owner or controlled by persons providing one or more services authorized or regulated by the FCC, if it is found that such use would be beneficial to one or more services, and that such use was being unreasonably delayed or suppressed.

(c) To make available to the FCC knowledge of the persons who, directly or indirectly provide one or more services authorized by the FCC, and who own or control one or more unexpired patents the use of which is necessary for equipment or operations called for by proposed transmission standards, or other equipment requirements, prior to the adoption or rejection of such standards or requirements.

(d) To make available to the FCC, and other Federal Agencies upon request, such information as necessary, for determining whether persons who furnish one or more services regulated by the FCC, and who own or control one or more U.S. patents, are engaged in patent licensing practices, or operating under agreements, which violate one or more provisions of the antitrust laws.

(e) To ascertain on a year-to-year basis whether the persons who furnish one or more services regulated or authorized by the FCC, and who hold or control one or more unexpired patents used for said services, are living within their stated patent licensing policies.

(f) To make available to the public (particularly the electrical communications industry) knowledge of all U.S. patents owned or controlled by persons furnishing one or more services authorized or regulated by the FCC, which are being used for said service or services, and also knowledge of the particular service or services for which such patents were being used. 97. Respecting objective (a) the August 22, 1951, report pointed out that the FCC had authority under section 4(i) to promulgate the proposed patent rules, because the information required annually was necessary for the execution of its functions, and that such rules should supplant the 1942 directive letters for the purpose of avoiding discrimination in obtaining such information from the patent holders concerned. The memorandum pointed out that objective (b) was based on sections 218 and 303 (g) of the Communications Act. More specifically, that the patent information required by the proposed rules was to keep the FCC informed as to technical developments and improvements in the wire and radio communication fields including broadcasting to the end that benefits of new inventions and developments could be made available to the public as called for by section 218, and also to obtain the patent information necessary for studying new uses for radio, and to generally encourage the larger and more effective use of radio in the public interest, as required under section 303 (g) of the Federal Communications Commission Act. The memorandum further pointed out that beginning early in 1949, the Bell System patent holding companies had adopted a new policy to make licenses available under all of its patents at reasonable royalties, and without restrictions as to use; that a staff survey showed that the other patent holders under FCC jurisdiction had similar patent licensing polices— but, that the information sought by the proposed rules was necessary to ascertain if these patent holders were carrying out their respective licensing policies.

98. Objective (c) above was also based on sections 218 and 303 (e) of the Communications Act. More specifically, the information as to patents was needed for making available to the FCC the unexpired patents used in the different services it regulated or authorized, and knowledge of the ownership or control of such patents. In other words, the patent infomation was necessary for the FCC to carry out its duties under section 218 and 303 (e) of the Communications Act, i.e., to keep itself informed as to technical developments and improvements in the wire and radio communication fields to the end that benefits of new inventions would be made available for public service; and secondly, to provide the FCC with patent information whereby in the promulgation of technical standards for radio services including broadcasting under section 303 (g) of the Communications Act, it would be in a position to utilize caution to the end

that its actions may not favor unnecessarily the patents of one person over those of another-the latter being the policy recommended by the FCC TV Committee (three Commissioners) in its report on technical standards for TV broadcasting dated May 22, 1939. This duty of the FCC as to technical standards and the matter of obtaining information to exercise said duty was consistent with the understanding of the chairman of the U.S. Senate Commerce Committee as of 1949, i.e., in his letter to the FCC dated March 9, 1949, he stated that it must have technicans on its staff familiar with the development of the television art; the licensing of patents; the purchase of patents from others for the purpose of licensing them, and the patent situation in general, so that a factual picture is developed and presented to the FCC.

99. In addition to the above reasons for the proposed patent rule, the August 22, 1951, report pointed out that the rule information was needed for the FCC to perform its duties under section 303(g) of the Communications Act, if it was to fulfill the statement in its report of September 30, 1950, adopting standards for color transmissions of TV broadcast stations, docket 8736, et al., i.e., that it recognized that if a monopolistic patent position existed in the radio field, it would tend to discourage fundamental research by other companies and would tend to foster concerted action on the part of the licensor and its licensees which could result in control of receivers sold to the public. Also, that if it was found that a monopolistic situation did exist, or such a situation should develop, appropriate proceedings could be instituted under the antitrust laws, or the FCC could seek from Congress legislation to prevent the building of monopolistic patent structures in the radio field, or it could do both.

100. Respecting objective (d), the August 22, 1951, memorandum pointed out that said objective was based on sections 311, 313, and 602 (d) of the Communications Act, i.e., the patent information called for by the proposed rules was necessary for the FCC to perform its duties under these sections of the act. more specifically, the act makes section 313 applicable to the manufacture and sale, and to trade in radio apparatus and devices, subject to all the antitrust laws, and gives the Federal courts the right to revoke radio licenses of persons found guilty of violating said laws; while section 311 gives the FCC the right to refuse licenses to "persons" whose licenses have been revoked under section 313, and patent information called for by the proposed rules was necessary for the FCC to determine the extent to which the practices of any of its licenses appeared to be in violation of one or more antitrust laws, and whether such practices interfered with its duties or functions under the Communications Act. Likewise, that the same patent information was necessary as to the communication carrier fields in order that the FCC could issue stop or cease proceedings under sections 2, 3, 7, and 8 of the Clayton Act in case the practices interfered with its duties or functions under the Communications Act.

101. Respecting objective (d), the August 22, 1951, memorandum further pointed out that section 7 of the Clayton Act, as amended by Public Law 899, was violated by RCA's practice of acquiring the right to sublicense patents owned by other corporations for the manufacture and sale of video TV broadcast receivers if such acquisitions took place after the amendment became effective on December 29, 1950. In addition, the memorandum called attention to the FCC's policy respecting radio licensees or applicants adopted February 25, 1949, namely, that if it should turn out that any one company or group of companies were in a position to acquire or exercise monopoly control in the radio industry, including broadcasting, as the result of patents held by them, it would refer the matter to Department of Justice for appropriate action under the antitrust laws, or if the manufacturer were a licensee or an applicant for a license, it would consider such facts in determining whether the manufacturer was qualified to operate a radio station in the public interest; or the FCC could take both steps.

102. The August 22, 1951, mmorandums further stressed the fact that since 1939 the FCC had furnished in 'ormation to the Department of Justice as to the factual situation of patent practices of its licensees which appeared to constitute violation of the antitrust laws; that based in part upon such information, the Department of Justice early in 1949 filed its then pending antitrust complaint against the A.T. & T. and the W. E. Co., Inc.; that the Department of Justice had requested the FCC staff patent reports resulting from the rulemaking proceedings in 1949-50 on technical standards for color transmissions of TV broadcast stations, docket 8736, et al., and that these latter incidents justified the need for obtaining patent information upon which antitrust studies could be made.

103. Respecting objective (e), the August 22, 1951, memorandum pointed out that the patent information required by the proposed rules was necessary for FCC duties or functions under sections 218 and 303(g) of the Communications Act. In this case it was stressed that it was of particular importance that the FCC ascertain continuously whether or not the patent holders who were also engaged in common carrier communication services, broadcast services, or safety and special services, were living within their stated patent licensing policies, and thus to maintain competition in the manufacture and sale of patented equipment necesary for establishing and maintaining the services authorized or regulated by the FCC.

104. Respecting objective (f), Revised Statute 4900, (35 U.S.C., 1946 Ed. 49) which requires the marking of patented equipment with the numbers of the patents used if the patent owner is to collect past damages, the memorandum pointed out that RCA and other large patent holders did not so mark the equipment they manufactured and sold but instead attached a notice to the effect that such numbers will be supplied upon request. Also, that investigations of the FCC patent staff showed that but few requests were ever made upon RCA for these patent numbers, and that upon demand of the FCC for the numbers, RCA was able to furnish but few. In addition, that it had been found that RCA, as well as the Bell System patent holding companies never kept records of the patents used. Thus, it appeared that with the mass of patents either RCA or the Bell System companies owned or controlled, that without knowledge of those that were in use, the industry would become intimidated and acquire licenses whether needed or not because, to ascertain the patents in use and whether or not they could be avoided without infringement was such a great expense that the taking of a license was far more preferable. Also, that it was obvious from these investigations that these practices of RCA, et al., respecting the marking of equipment, served to cloak or conceal the great mass of patents owned or controlled, and thus avoid monopoly charges. Moreover, that the proposed rules made the patents in use, available to the public, and this would encourage competitive research for the development of new and basic inventions in the communication fields.

105. After detailing the manner in which the processing of the filings under the proposed set of patent rules could be expedited for furnishing the necessary information to the FCC as to each of the objectives (a) to (f), both inclusive above, the August 22, 1951, memorandum concluded that based upon previous studies regarding the same matters the personnel assigned to patent work could provide a separate report upon said filings within 1 year from the date of receipt thereof. On November 23, 1951, the FCC approved a notice for a rulemaking proceeding on the set of rules proposed by the August 22, 1951 memorandum, which was released November 29, 1951, docket 10090 (see 16 F.R., p. 12438).

106. Chapter II.-On January 3, 1952, the FCC extended the time for filing comments to its notice of November 29, 1951, of patent rulemaking in Docket 10090; the time for filing comments was extended from January 5 to January 31, 1952. This extension of time was in response to 60 letters and telegrams requesting such an extension. Upon additional requests, the FCC on January 24, 1952, further extended the time for filing comments of February 21, 1952. There were but three persons who filed comments who were patent holders and engaged in rendering common carrier communication service to the public, namely, the A.T. & T., the Globe Wireless Ltd. and the I.T. & T. The broadcast licensees who owned patents and filed comments were Major Armstrong, Stromberg-Carlson Co., Philco Corp., and Du Mont Laboratories. The persons who held authorizations in the safety and special services and filed comments were two in number, namely the Fluor Corp. and the American Petroleum Institute in behalf of the Petroleum Radio Service Co.

107. The comments filed before the final date allowed above clearly indicated that the small patent holders did not understand the FCC's need of the patent information required by the proposed rules. Upon this premise, the FCC issued a supplementary notice explaining the purposes of the information and the FCC's authority under the Communications Act for promulgating the rules. In brief, this supplementary notice which issued January 16, 1952, explained the limited application of the rule, namely, that it applied only to patent holders who were rendering electrical communication services authorized or regulated by the FCC; that the authority for the rules stemmed from sections 218, 303 (e), 303 (g), 311, 313, and 602(d) of the Communications Act; that the information called for by the proposed rules would be used by the FCC for keeping abreast

of technical developments in the communications fields with reference to the technical developments in the communications fields with reference to the techni cal standards it promulgated; and finally, it would be used for determining whether persons subject to FCC jurisdiction were engaged in practices which might be in violation of one or more antitrust laws, and whether these practices should be considered in FCC's proceedings relating to qualifications of licensees, or whether the practices should be referred to other Federal agencies, for such action as they might deem appropriate.

108. After the issuance of the supplementary notice above, the small patent holders not engaged in communication services regulated or authorized by the FCC, made no further responses. The comments of larger patent holders objecting to the proposed rules were on the grounds that the FCC did not have authority to promulgate the same; that the rules were an invasion of the privacy of citizens and the privacy of contracts; that the rules were a burden upon the patent system and a burden upon the taxpayers; that the FCC had not shown the purposes for the information required under the rules; that if the rule was a fishing expedition as to antitrust violations the FCC had no authority, because the Department of Justice was the proper agency to make such a survey, and finally, that the information the FCC sought by rule was available at the U.S. Patent Office. It was also stressed that the rules should not apply to persons rendering safety or special services, principally on the ground that they were small patent holders, and that the FCC would derive no benefit from the information they would furnish under the proposed rules.

109. On May 9, 1952, the FCC patent staff member submitted a memorandum report for FCC consideration in which all of the comments filed respecting the proposed set of rules in Docket 10090 were considered. In addition, the memorandum reiterated the needs for the patent information called for by the rules which were set forth in the October 13, 1948, memorandum initially proposing the rulemaking proceeding. The memorandum report also recommended the action which the FCC should take in the proceeding, including amendments to the proposed rules.

110. More specifically, respecting the patents owned or controlled by the common carriers, the memorandum report above called attention to the patent misuses prescribed by the Bell System patent holding companies as revealed by the FCC's report to Congress on its investigation of the telephone industry (docket 1) pursuant to Public Resolution 8 (74th Cong.); that there was pending an antitrust complaint against the Bell System patent holding companies filed by the Government early in 1949, which was to a great extent based upon the patent misuses revealed by the FCC investigation of the telephone industry; that in its report to Congress on said investigation the FCC sought authority to compel licensing at reasonable royalties of all patents obtained by communication carriers in connection with their services, and that all the information sought as to communication carrier patents by the proposed rules was necessary for continuing the FCC's policies established under these previous actions and disclosures, particlularly until the antitrust complaint against the Bell System companies was terminated.

111. Respecting the need of the patent information as to the broadcast services, the May 9, 1952, memorandum report pointed out that due to adopted policies of the FCC for combating patent misuses, there existed a dire need for the patent information sought by the rules for the future support of said policies. These policies were the same as detailed in the October 13, 1948, memorandum in support of the rulemaking procedure. In addition, it was stressed that the patent misuses of the RCA in the FM and TV broadcast fields revealed by the FCC staff investigations and studies over the years 1948-50 made it a further definite need for securing the patent information annually called for by the proposed rules. In this connection the memorandum report pointed out RCA's practices for monopolizing the licensing of manufacturers to make and sell video receivers capable of accepting transmissions of TV monochrome stations operating pursuant to the FCC's technical standards for such stations had placed it in the position to:

(a) Perpetuate its video patent monopoly in the TV broadcast receiver licensing field, and through the same practices, it could monopolize the licensing of others to manufacture and sell in any radio or television field it may choose so to do;

(b) That it can perpetuate the same monopoly as to receivers for FM broadcast stations and the sound side of television receivers;