German Dye Patents

The Government, through the Department of Justice, is suing the Chemical Foundation, Inc. (a Delaware Corporation) for German patents confiscated during the War and sold to that Company. The suit, being held before Federal Judge Hugh M. Morris at Wilmington, Del., involves many technical details--4,000 pages of typewritten testimony were taken in ten days.

Some 4,800 seized German patents were sold by the U. S. to the Chemical Foundation, Inc., for approximately $250,000 ($50 apiece), in the Spring of 1919.

Lieutenant Colonel Henry W. Anderson, Special Assistant Attorney General, contends that the patents then bought by the Chemical Foundation should be returned to the Government: 1) because Under Secretary of State Frank L. Polk in signing the authorization for sale for President Wilson (who was then ill) was misled, 2) because the price paid was ridiculously low, 3) because the President did not have authority to make the sale, 4) because the sale was a conspiracy (Francis P. Garvan who became Alien Property Custodian about that time later became President of the Chemical Foundation), 5) because the sale was fraudulent, several American owned patents being seized and sold with the German.

The Government's case has had several setbacks. The first came when Mr. Polk on the stand vigorously denied that he was misled or poorly informed in signing the order for the sale of the patents.

On its second point the Government brought out that another company offered considerably more for certain of the patents than was paid by the Foundation. Judge Morris admitted the evidence but questioned its applicability. The President was empowered to make the sale, he said, but not necessarily to the highest bidder. Considerations of the public interest might outweigh the dollar return and the Judge doubted the authority of the Court to review the exercise of Executive discretion. The defense brought out that 426 American companies were now using the patents as opposed to four American companies doing so before the sale. A Government accountant testified that the Foundation had received $675,000 in royalties from the patents.

It was also established that one of the patents sold to the Foundation, originally issued to a German in 1908, was sold in 1911 to an American, who had difficulty in recovering the patent from the Foundation.

The efforts of the defense were chiefly confined to arguing that the Foundation's actions were entirely patriotic and that it had acted in the best interests of American Chemical industries. Judge Morris several times expressed skepticism of the validity of the Government's arguments.