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toward a more harmonious body of international patent laws. We support the implementing provision.

First, to discuss the issue of first to file.

The central feature of the proposed new Patent Act is the institution of a "first to file" system. This is the first recommendation in the report of the President's Commission on the Patent System. Under the firstto-file system, when two or more persons separately apply for patents, on the same invention, the patent is granted to the person who is first to file his application. Under the present system, when there are two applicants, the first one of them to file is, with certain exceptions, granted the patent, and an interference procedure is available to determine which one is the first inventor. The party who is last to file may prevail if he succeeds in proving that he conceived the invention first and diligently sought to reduce it to practice continuously until he was successful, when such diligence was commenced at a point in time before the other party conceived the invention.

you know, the administrative proceeding in which relative priority between applicants is determined is called an interference. The law applicable to interference proceedings has become so complex and the procedures so complicated that the elimination provided for in the bill seems desirable. The procedure lends itself to collusion and fraud, as this committee's past hearings have indicated. The social benefits to be derived from our present interference system seem so minimal that they do not warrant, in our view, the high cost of maintaining the system.

The President's Commission found, and we believe, that a first-to-file system encourages prompt disclosure of newly discovered technology, and at the same time substitutes for the delay and expense of the complicated proceedings now necessary, a fair and inexpensive means by which an inventor can establish his priority.

The Commission stated that it believed, and we believe with it, that it is as equitable to grant the patent to the first to file as to the one who wins an interference. Moreover, it is more in keeping with the constitutional purpose of the patent system-"to promote the progress of the useful arts"-to reward with the patent the person who first makes available to the public the technological innovation in question.

Now, it may be thought that the bill, if enacted, would deprive inventors of the opportunity to develop their ideas more fully or test their commercial potentialities, before making patent applications. Under existing law, an inventor has a "grace period" of a year for public use, and he may conduct experimentation under secret or confidential conditions. The new law would not affect the latter type of experimentation, but it would make the former type a bar against the inventor's securing a patent. It has been suggested that inventors should be allowed some personal "grade period" such as 3 months or 6 months. The bill adopts the administratively simpler solution of doing away with the grace period.

Another suggestion is that an inventor who claims priority over the first to file should be able to assert it as a personal defense. In other words, he would not be entitled to a patent on this basis, but would in effect obtain a "shop right" to practice the invention. These suggestions may merit consideration by the committee.

This does not mean, however, that inventors will be unable to protect themselves during the period of time in which they perfect their inventions. The bill provides for preliminary applications, which inventors may use to secure a filing date for all the features of their invention which they disclose in it; later, they can file a conventional, complete application and secure a patent, after they have completed their marketing or technological studies. It is to be hoped that the Patent Office will develop short forms for inventors to use in filing preliminary applications, so that inventors will be able to secure the benefits of an early filing date without undue inconvenience. The Patent Office has indicated to us that they believe they can develop such procedures. We believe these measures will protect the interests of small inventors, who are particularly disadvantaged by the burdens and costs of the present interference system.

I turn now to the question of prior art.

Closely related to the first-to-file system is the Commission's recommendation, again part of the first one of its recommendations, that prior art shall comprise any information known to the public, or disclosed to the public, prior to the filing date of the application. Under present law, it is possible for an applicant to avoid the impact of prior art by filing an affidavit "swearing back" of the prior art. That is, the applicant asserts that he made the invention before the publication or public use that preceded his filing. It is believed that this procedure is highly conducive to the commission of fraud on the Patent Office. The problem is very similar to that involved in the fraudulent settlement of patent interferences, which the Supreme Court recently dealt with in the Singer Manufacturing Co. case, an antitrust prosecution brought by the Department of Justice. Moreover, the present system involves time-consuming consideration of affidavits, requires applicants to maintain extensive records to corroborate their affidavits, and generally creates uncertainty both in the Patent Office and among patent applicants as to their position.

I turn now to the question of upgrading quality.

The second major feature of the bill is the institution of a system that will make it possible for members of the public (1) to draw prior art to the attention of the Patent Office, in order to prevent the issuance of a patent which should not be issued, or (2) to secure the revocation of an already issued patent that never should have been granted in the first place.

To the first end, section 136 permits any person to notify the Patent Office about patents or publications having a bearing on the patentability of pending, published applications. The same section permits any person to notify the Patent Office if the invention claimed in the application was actually in public use or on sale before the effective filing date of the application, or that the inventor claimed to have made the invention did not really originate it. This procedure should go a long way to assist the Patent Office in sifting out applications for patents which would not meet the constitutional standard.

Section 257 permits any person, or any Federal agency, to petition. the Patent Office to institute an administrative proceeding to revoke an invalid patent-provided action is taken within 3 years from the issuance of the patent. If the Patent Office finds that the patent should not have been allowed, then the owner of the patent is given an oppor

tunity to present his position. The patent can then be modified by the Patent Office to the extent appropriate. I strongly support this portion of the bill, which implements recommendation No. 15 of the President's Commission. Under present law, there is no way for the Patent Office administratively to cancel any part of a patent once it is issued, even where the claim appears to be clearly invalid in the light of subsequently discovered evidence or prior art. Under present law, only the courts may do this.

As the President's Commission pointed out, the result of this is that the patent owner may often continue to assert his claims because no one is willing or able to expend the resources necessary to obtain a court decision. I am sure that the members of the committee are all familiar with the Federal Trade Commission's case involving the allegedly fraudulent or improper procurement of a patent in the tetracycline field. Under the new law, if such a fraud were discovered within 3 years from the grant of the patent, the FTC or the Department of Justice could move before the Patent Office and endeavor to have the patent set aside.

This section of the bill also contains a provision to prevent vexatious harassment of a patentee. Any person who persuades the Patent Office to institute a revocation proceeding against a patentee may be compelled to pay costs to the patentee, up to $1,000, if it turns out that the claim made against the patent was unfair and improper. Thus, section 257 (d) provides that "in appropriate cases" the Office may require a petitioner to pay to the patent owner the reasonable cost of defending the claim, including attorney's fees, not to exceed a total of $1,000. On the other hand, the section is so worded to prevent costs from being assessed against a bona fide, even though wrong, charge of invalidity. Now, let's take up the question of judicial review.

Chapter 13 of the patent reform bill, sections 141 through 148, contains housekeeping changes and also implements recommendations of the President's Commission in respect to the judicial review of Patent Office decisions.

One of the principal changes here is the addition of a new section, section 148, which attaches a presumption of correctness to decisions of the Patent Office. The Court of Appeals for the District of Columbia and the C.C.P.A. (Court of Customs and Patent Appeals) have differed in their standard of review. We believe the standard in section 148 of the proposed bill is the proper one, for it contributes to one of the chief objectives of this bill-improving the quality and reliability of U.S. patents.

A closely related provision of the bill is section 137, which requires applicants for patents to bear the burden of persuading the Patent Office that a patent should issue. This is the rule followed in the Court of Appeals for the District of Columbia. The Court of Customs and Patent Appeals follows a contrary rule. It is appropriate to resolve this question, and improve the quality of patents by prescribing the proper test in the code. We believe section 137 incorporates the proper test, and, accordingly, strongly support this provision of the bill.

Another related matter is covered in section 147 of the bill. The section implements recommendations No. 14 of the President's Commission, that decisions of the Court of Customs and Patent Appeals

be made reviewable in the Court of Appeals in the District of Columbia Circuit. As the Commission points out, an applicant may presently seek review of a Patent Office decision by two alternative routes. He may appeal either to the Court of Customs and Patent Appeals on the record made before the Patent Office, or else he may bring a new action in the U.S. District Court for the District of Columbia, where he may present new evidence. The decision of the district court may be appealed to the U.S. Court of Appeals for the District of Columbia. The decision of that court, like that of the Court of Customs and Patent Appeals, may be taken further only to the Supreme Court, by petition for writ of certiorari.

When the court of appeals and the C.C.P.A. render conflicting decisions, as frequently happens, then the Patent Office must choose which of the two decisions to follow, for the sake of uniformity within the Office. Usually the Office will be under pressure to adopt the rule most favorable to the applicant, since the applicant is the one who chooses what court he will go to, in seeking review of the Patent Office's adverse decision.

Although the Supreme Court may eventually settle conflicts between the two tribunals, the heavy press of certiorari petitions involving a multitude of other important issues necessarily results in a reluctance of that Court to take up many patent issues as soon as they arise. Thus, it seems quite appropriate to eliminate conflicts by providing a place for review short of the Supreme Court.

Another major change in the bill, designed to bring about a greater degree of uniformity in law, is the provision for an estoppel in section 294. The estoppel implements recommendation No. 23 of the Presidential Commission, that a final Federal determination declaring a patent claim invalid should apply to subsequent litigation. Under present law, the patentee may relitigate the validity of his patent in every circuit in the United States. It has happened, often, that after patents are held invalid in one case, the patentee continues to sue alleged infringers in other jurisdictions. The uncertainty which this creates for business is a serious obstacle to enterprise and innovation. Section 294 provides that in any action in a Federal court in which the issue of validity or scope of a patent is involved, the court's decision adverse to the patent becomes effective in any subsequent action, so long as procedural notice requirements were complied with which gave the patentee a fair chance to present his position.

We agree with the Presidential Commission in the view that a patentee, having been afforded the opportunity to litigate his case once, had had his day in court. He should not be allowed to harass others in other circuits on the basis of an invalid claim. By the same token, there is no reason to permit crowded court dockets to be cluttered with costly and unnecessary litigation of this type. It should be noted that section 294 makes the judgment an estoppel in any subsequent Federal action, and also an estoppel in any pending Federal proceeding where the judge-in the latter case-determines that this is appropriate. This provision was added to prevent a patentee from negating the effect of the estoppel principle by racing to file a flood of actions prior to the entry of a final judgment in a case which it appeared that the patentee would lose.

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Along the line of technical changes we have one technical change to recommend. We believe it would be important to point out that section 5(f) of the bill, which refers to the effective date of the Patent Reform Act of 1967, should be clarified in a minor particular. As it presently reads, it is said that the act does not affect any existing rights or liabilities. It should be made clear that the act does not affect any existing "substantive" rights or liabilities, although it does affect certain procedural rights or liabilities. Thus, it was the intention of the draftsmen that the estoppel provision should become effective immediately, and not have to wait for 17 or 20 years before it became fully effective. In order to make it clear that the estoppel provision, or other procedural provisions, are to be applicable to preexisting patents, it should be made explicit that the rights or liabilities referred to in subsection (f) are only "substantive" rights, and I would suggest that the word "substantive" be inserted before the word "rights." Finally, some comment on the question of civil commissioners.

Subsection 3 of the bill seeks to create "civil commissioners" for patent cases. Th Department of Justice suggests that the committee may wish to study whether it is appropriate to single out patent cases for this type of provision. It may be preferable to deal with the matter of civil commissioners for patent cases at the same time that civil commissioners for all other types of cases is dealt with by Congress. We understand that the Judiciary Committee of the Senate will be considering legislation of general applicability to all civil cases. I believe that the Judicial Conference has also been considering this matter for some time. The committee may wish to refer the question to the Judicial Conference for its views on the subject.

To sum up our position, the Department of Justice supports this legislation. Let me refer again to the most important points.

We believe that the first-to-file system and the new definition of prior art, coupled with the new preliminary application procedure, will help to eliminate the backlog of the Patent Office, shorten the time it takes to obtain a patent, and adequately protect the interests of inventors. Moreover, the new prior art citation period and revocation proceeding should help upgrade the quality and reliability of issued patents. We believe the judicial review measures offer a practicable solution to a problem plaguing the Patent Office at this time. We strongly support, finally, the new estoppel provision, which will an end to a troublesome and unnecessary type of litigation, that has unfairly harassed businessmen and unnecessarily burdened the courts. Thank you, Mr. Chairman. I would be quite happy to answer questions.

Chairman KASTEN MEIER. Thank you, Mr. Turner.

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I note that recommendation 22 of the report of the President's Commission proposes to write into law the so-called rule of reason, for the consideration of patent antitrust problems. Is that correct?

Mr. TURNER. That is right.

Chairman KASTENMEIER. Before asking you to describe the rule of reason or evaluate the Commission formulation of it, let me ask you this: The recommendation didn't find its way into the bill, did it? Mr. TURNER. That is correct.

Chairman KASTEN MEIER. To your knowledge, was this issue discussed by the committee appointed by the President to advise him con

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