How the patent system might serve to further America's international goals.

Lastly, how mechanically, technologically, to prepare the Patent Office for the technological explosion which is all around us, especially if we view it from its projected status, say, a decade or 15 years hence. Now at the early seatings of this Commission we subdivided ourselves into a number of subcommittees in order to examine each of these several areas of concern. But we soon discovered that these questions that I have listed, which can be verbalized separately, cannot be treated as separate and discreet. They are all interpenetrated with each other and only an interrelated and a coherent program rather than a series of separate prescriptions can achieve the result of bringing about a substantial improvement.

We adopted another generalization early in our deliberations. From many quarters we had, of course, received as I described, complaints indicating that the patent shoe pinched either here or there. The one decision which I think is germane to almost every recommendation we have made is that we were going to eschew the use of foot powder and instead try to design a roomier shoe for American research and development. The reasons are quite evident. The first of these is that the current program of research and development is demanding a larger amount absolutely, and a larger percentage relatively, of the Nation's resources than ever before in our history. Government, institutions of learning, and private industry are contributing to this enterprise. It requires, therefore, more concentrated attention than it has received in the past.

Secondly, the world accumulation of technological literature is growing so fast that it is outpacing the capacity of conventional means of storage and retrieval, and indeed of human minds to entertain it. Third, we already have a blacklog of about 200,000 patent applications pending in the Patent Office. The rate of filing these applications is growing and the complexity and the sophistication of each of the applications or a great number of them is increasing at a geometric pace. We asked ourselves, how can we possibly expect the patent examiner, unaided by the most up-to-date tools and acting ex parte, that is, on the one-sided statement of the facts, how can he possibly cope with the situation? And it became pretty plain to us that a system which in essential aspects dates back to that which was contrived back in 1836 is not likely, no matter how much tinkering we apply to it, to be responsive to the need of 1967. That takes me to the first item that I mentioned; namely, quality.

It has been commonplace to point to the gap between what the courts do and what the Patent Office does with respect to patents. And out of that has developed an acceptance of the quip that a patent was no more than a license to sue. I should confess to you that I don't understand why anyone should be surprised that the gap exists or why anybody should comment at all on it, as the Supreme Court did. Let us assume, gentlemen, that all controversies that enter our courts were handled on an ex parte basis; the plaintiff comes in alone and gives his statement of the facts and his notions of the law; in the absence of his adversary, these are submitted to the judge for decision. You would hardly be surprised if he persuaded the judge that he was right. Thereafter, after you get an ex parte judgment, the defendant

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comes into challenge it, then for the first time does the defendant have a chance to be heard. Surely it would not be surprising if a great many of the ex parte judgments would not survive the second-stage attack upon them. That is what has happened in the Patent Office. The applicant has submitted his application, he speaks to the patent examiner alone and out of the presence of anybody to challenge what he says, and he gets, so to speak, a judgment in the form of a patent. Then somebody discovers that it challenges or trespasses upon what he wants to do and for the first time you get a two-sided exploration of the problem. Indeed, I am surprised that the patents do as well as they do in the courts, rather than the reverse.

The quality of the judgments that would be obtained in this ex parte method, no matter on what scale you might measure them, would not be high. They would be of modest or low quality; and I think, necessarily, that must be true of ex parte patents. But there are in addition a number of factors which contribute to the low esteem in which the patent is held.

First is the practice that prevailed at the Patent Office until very recently-I am told that it has since been changed-whereby the examiner was instructed that if he was in doubt as to whether the patent applicant was entitled to a patent, he was to resolve the doubt in favor of the applicant. Try to apply this in any other area of the law and you are immediately appalled. It cannot be entertained as a logical proposition. But in the patent field the practice has been that you ask for a Government monopoly and though you have not quite persuaded the examiner that you are entitled to it, nevertheless he must issue it to you. I realize that a great many people think that is a good idea. I heard one very distinguished commentator on the subject say that we ought not cry about that. He reminds us that a great many very successful little businesses were started on patents which were subsequently declared invalid. It reminds me of the famous story about the counterfeit $10 bill, which as long as nobody knows it is counterfeit, performs the function of money, passes from hand to hand, pays bills, discharges obligations; indeed until somebody finds out it is no good, it does quite well; but then in the end somebody gets stuck. It is the last fellow that gets it in the neck. During the early thirties, during the so-called depression, many people said that we ought not to have a gold standard law. If nobody knew that the gold stock in Fort Knox was swallowed by an earthquake, everything would nontheless move along just as though it were there. That is true. You can operate on a myth and some myths perform very well for society and for mankind. But I don't recommend such a course for modern society. That is not what the Constitution had in mind.

Another administrative practice which I would take the liberty to criticize I don't know that it is still in operation; it was in operation when our Commission was functioning-is the quota system. Under the quota system, each examiner has to turn out a certain number of granted patents per period, per month, per week. If he fails, he is subject to criticism. It adversely affects his chance of promotion. I don't think that is the way you lift quality.

Lastly, of course, is the strange judicial arrangement whereby a person who is denied a patent can travel by two different roadways in order to have the action of the Patent Office reviewed. He can either

go to the district court and have a trial or he can go to the Court of Patent Appeals and get a review on the record made below in the Patent Office. From the district court an appeal lies to the Court of Appeals for the District of Columbia, which is a general appellate court. No such appeal lies from the Court of Patent Appeals. It has been suggested to me by members of the patent bar, and I am in no position to speak on that with authority, that this system of twin routes generated a degree of uncertainty. The applicant naturally selected the tribunal which he regarded as favorable to his cause. That, too, did not contribute to quality.

A great many of the recommendations made by the Commission, and a great many of the proposals which are set forth in this bill which is before you deal with and contribute to the elevation of quality. The first of these that I want to mention is recommendation No. 10, which is reflected in section 137 of the bill. And simply stated it reads "The applicant shall have the burden of persuading the Patent Office that a claim is patentable." Indeed, unless you were familiar with the practice of the Patent Office heretofore, you would assume that had been the rule. There is no other administrative agency in the Federal system wherein a different rule applies. This is a rule which ought to govern whether the citizens should receive a reward for a contribution. Logic would suggest that he should not get the reward unless he has persuaded the appropriate authority that he has made the contribution. Indeed, unless he has made a contribution, the Constitution would not authorize giving him this reward. The reward is in the form of a monopoly. A monopoly under the American system of law is something to be looked upon with suspicion. It should be granted only in exceptional circumstances. A patent is one of a number of monopolies that the law tolerates; but the grant of each one is surrounded by high boundaries and conditioned on important considerations. It would seem to me that unless we do operate under the proper rule we are not entitled to say that once a patent is issued a court should give it the presumption of validity, which is what the statute says today. I don't see how you can bootstrap a doubt into a presumption. To me that is a logical impossibility.

The next recommendation is No. 11, which is restated in section 136 of the bill. This permits the public after the publication of the tentative allowance, to come in and bring to the attention of the Patent Office references which would justify the denial of the application. I have talked about the present system being an ex parte system. By the very nature of it an ex parte system cannot reach the utmost in quality. This proposal is a small contribution toward making the patent application go through somewhat of a contest; it is not quite an adversary system, but it is a little whiff of an adversary system. It ought to be of considerable help in winnowing out the worthless patents less expensively than if they had to wait for the very cumbersome process of a judicial declaration that the patent is invalid. Under the proposed procedure one can call to the attention of the patent examiner to prior art that his quick search had not turned up. This is desirable for the applicant who is spared the waste of time and money and, of course, for the public. Indeed there is a great advantage here for the little inventor. It is the little inventor and the little businessman who needs all the help he can get. He does not have the resources for extensive

search and does not have large numbers of lawyers who can assist him. If the public comes in and calls attention to some prior art which reads on a tentatively granted application he can revise and narrow his claim so as to escape from the reference and get the benefit of a more limited patent. Under the present system he gets a worthless patent. On the first contest it dies. All he enjoys is the opportunity to spend money in defending it.

Next is No. 13. No. 13 is reflected in section 148 of our bill. Thirteen confers upon the Patent Office a presumption of correctness in the refusal of an application. Perhaps I should explain. In almost all other administrative agencies that I am familiar with, whether it is the Securities and Exchange Commission, the Federal Trade Commission and so forth, it is recognized by the courts that Congress has confided a particular problem to a body enjoying, as a result of its experience a special expertise in its field, that its judgments and its findings of fact in particular should be treated with respect. That has not been true with respect to rejections by the Patent Office. In conjunction with the recommendation we make later on about upgrading or professionalizing the staff at the Patent Office, we here recommend that the Patent Office should be treated as an equal in this group of administrative agencies. That does not mean that the courts are going to abdicate their responsibility in the construction of the law administered by the Patent Office. The law has always been reserved for the courts, whether it is in reviewing decisions of the FCC or the ICC or any other agencies. But the facts to which the law is applied, the courts have generally left to the administrative agencies if there is some reasonable rational basis for it. The statutory formula differs from agency to agency.

In determining the facts, it ought to be recognized that this agency has been endowed by Congress with responsibility in this area, that it has developed experience and intuition and knowledge in this field, and that its findings ought not be brushed aside unless there is good reason for doing so.

Another suggestion for the elevation of quality is No. 14 which is reflected in section 147. That deals with the appellate route. A few moments ago I referred to the fact that one who is disappointed in the action of the Patent Office has two ladders on which he might climb out of his misfortune. He might go to the District Court of the District of Columbia and get a trial or he can go to the Court of Patent Appeals and try to have the Patent Office reversed. From the Court of Patent Appeals the disappointed applicant can apply to the U.S. Supreme Court. The Supreme Court's calendar, of course, is so crowded that it must operate largely by the certiorari system. As you all know it has accepted patent cases only once in a long while. This last year it accepted a few patent cases for the first time after many, many years and it is not to be expected that it can frequently accept for adjudication other patent

cases.

There has been some criticism that by authorizing the Court of Appeals for the District of Columbia to review decisions of the Court of Patent Appeals we have downgraded the Court of Patent Appeals. I do not see it that way. We call it the Court of Patent Appeals which is a perfectly appropriate title but actually it is the first judicial body which reviews rejections by the Patent Office. It deals with them at the

same level as the U.S. District Court for the District of Columbia. Therefore it seems to me not at all out of order that reviews of that body should go to the Court of Appeals for the District of Columbia. The advantage is obvious. It will create a single court which will avoid the collisions that now occasionally occur between the Court of Patent Appeals and the district courts. Thus the Patent Office will have a single set of instructions to be guided by. The Court of Patent Appeals would, obviously, be able to handle many more such cases than the Supreme Court could possibly handle.

There is one other aspect to this and that is private to myself. And I would like to distinguish my private views from those that I have expressed on behalf of the commission. I have a great aversion to specialized courts.

In my view, when you are dealing with a matter that concerns the general welfare of the United States, it is not wise to create a small group of men who become, like the Egyptian priests, the sole custodians of a body of knowledge and who sooner or later begin to talk a language that nobody else understands but which is common only to them and the practitioners that appear before them and who drift away from those general principles of equity, morality, which pervade the entire judicial system. It is my view, on the basis of some experience in the courts, 10 on the bench and 30-odd more at the bar, that to the extent that you have courts which are exposed to a wide variety of doctrine, who are the beneficiaries of all kinds of discussions, who are capable of reasoning by analogy from one field of the law to the other, and who are therefore in touch with the generality of the population, to that extent you have a judicial system which is more alive and more responsive to the community it is designed to serve; and therefore, I prefer to see the decisions of importance made by a court which is the beneficiary of that kind of variety rather than by a court which is perhaps more expert in its own field but less open to this general flow of knowledge and opinion. I know that there are many men who disagree with me and men for whose opinion I have the highest respect. But that is my view and it is not a new view. I have heretofore expressed it in writing.

Recommendation No. XII is not reflected in this bill because it is an internal, administrative matter. It suggests a system maintaining internal quality control. I must confess that this is an area with respect to which I am not able to speak with any confidence. I don't know how one sets up quality control in an establishment; but a number of the gentlemen who were on this Commission whose responsibility this is, that is to maintain quality in research organizations or development organizations say that it is within the capacity of an industrial organization. It is possible, they say, to establish internal quality controls which would tend to lift the standard of quality.

If I am exceeding my time I wish you would tell me.

Chairman KASTENMEIER. The witness may take as much time as he requires.

Mr. RIFKIND. Thank you very much.

There is in the bill section 15 which creates a statutory, advisory council which also has responsibilities assigned to it with respect to the maintenance of quality control. It is to be maintained by a continuing watch over the operation of the patent system in relation to the changing technology in which we live.