Prof. John Jewkes and others showed that out of 61 important inventions and innovations of the 20th century that were selected for analysis, over half stemmed from independent inventors or small firms.

Prof. Daniel Hamberg of the University of Maryland studied major inventions made during the decade 1946-55 and found that over twothirds of them resulted from the work of independent inventors and small companies.

Prof. Merton Peck of Harvard studied 149 inventions in aluminum welding, fabricating techniques and aluminum finishing. Major producers account for only one of seven important inventions.

Prof. Hamberg also studied 13 major innovations in the American steel industry. Four came from inventions in European companies, seven from independent inventors, and none from inventions by the American steel companies.

Prof. John Enos of the Massachusetts Institute of Technology studied seven major inventions in the refining and cracking of petroleum. All seven were made by independent inventors. The contributions of large companies were largely in the area of improvement inventions.

Despite general recognition of the contributions of the independent inventor and small businessman, the patent system as constituted and operated today provides very little incentive or protection for them. Their difficulties stem primarily from (1) issuance of patents of questionable value when measured against their ultimate validity or enforceability; (2) excessive costs and delays in obtaining the patents; and (3) the expense of litigation. The small businessman's problems are compounded further by competitive disadvantages implicit in defensive use of patents by big business, and predatory infringement by the Government and Government contractors.

Another factor contributing to the patent problems of the individual inventor and small businessman is the behavior pattern of other interested groups and officials including the patent bar, Department of Commerce, and the Patent Office, and the Antitrust Division of the Department of Justice. All give lip service to the interests of small business, but we suspect that their objectivity is often unintentionally clouded plus the fact that it is always easy to sacrifice the little guy. We do not disparage the contributions of these groups; we suggest, however, that some of their recommendations with respect to H.R. 5924 may not be entirely objective.

The proposed legislation deals with many concepts that are new to U.S. patent law but which have been successfully employed in foreign countries or are in the experimental stage in foreign countries. The conclusions which can be drawn from foreign experience need to be carefully scrutinized because some may be completely inapplicable to U.S. requirements and our overall patent environment.

The interest of the inventors and small businessmen, as the prime innovators in this country, should be, in our opinion, a primary consideration in any revisions of the patent system which are undertaken. Except for the areas which we will discuss, we have no objection to the report of the President's Commission and implementing legislation, H.R. 5924.

Our comments are directed to the major changes proposed in H.R. 5924 and we will submit, prior to the conclusion of these hearings, suggested statutory language for specific perfecting amendments to implement our recommendations.

The first-to-file concept. This proposed change has considerable merit for the reasons stated by the Commission. In taking a position in support of the first-to-file concept, we disagree with the contention that such a system discriminates against small business. In our view, the present system with its costly and time-consuming interferences and the requirements for witnessed and corroborative records, in many instances give large companies an unwarranted advantage over smaller concerns. While supporting the general principle of first to file, however, we feel that certain safeguards need to be included if this procedure is to serve the needs of small business. In our experience, it is not unusual for a considerable period of time to elapse between initial reduction to practice of an invention, and its refinement to the point that a complete set of claims can be drafted. In the case of the last invention patented by my company involving what appeared to be a simple aerological device, it took approximately 20 months for the inventor to analyze his invention sufficiently to realize it was a useful patentable invention, even though he had worked with it in private practically every day. The description and the working model supplied were sufficient for the patent attorney to draft seven claims (all of which were allowed), but in the period between drafting of the claims and issuance of the patent, a period consuming 2 years, it became obvious that some of the principles of operation had been misunderstood and that some auxiliary improvements could be made to improve the performance of the product and provide additional claims. As a result, a continuation in part was filed. About a month after this, the patent was issued. Subsequent to issue, it was discovered that our company still did not completely understand how or why the device works, and that at least two errors had been made innocently in the original claims. A reissue patent was then applied for. This history of one patent shows clearly that an individual inventor or small company with limited resources needs time to perfect new concepts so that complete and accurate claims can be filed.

We believe that a personal grace period of not less than 6 months, and preferably a year, must be provided for inventors. Furthermore, current practice encompassing continuations, continuations in part, and reissue should be retained in the law.

The concept of a preliminary application is sound only if such preliminary application serves to provide an effective means for the inventor to disclose his invention with some assurance that a reasonable disclosure will satisfy the requirements for the complete application. The language of the proposed legislation, section 120(a) (2), requires, in our opinion, that the preliminary application relating to the invention sought to be patented include "every feature recited in the claims therefor." This is an impossible burden for anyone other than a patent attorney to meet. However, if a personal grace period of 1 year were provided, this would eliminate the necessity for filing of preliminary applications, with all of the difficulties associated therewith. A complete application could be filed within the personal-grace period. This would mean only one trip to the patent lawyer with considerable savings in legal fees.

Some critics of the proposed legislation have suggested that the firstto-file system would induce pirating of inventions and other chicanery to deprive the true inventors of their rights. Our opinion is that section

115 and section 136 of the bill, if properly implemented, would serve to defeat fraudulent filings. However, there is concern as to the manner in which these sections would be implemented. The inference is that an action for fraud and deceit, and/or perjury, would be brought in the U.S. district courts and, under the broad equity powers of the court, a judgment against the fraudulent patentee would then result in a decree requiring the transfer of the patentee's rights to the true inventorwith damages and with fine and imprisonment as additive remedies. The proposed legislation is not clear in this respect. At the very least, the legislative history of the bill should indicate the nature of the remedies intended to be provided.

Early publication is a desirable goal of the patent system. However, there are several useful alternatives to the basic proposal of H.R. 5924 calling for publication in every case within 18 to 24 months of the preliminary application. Some measure of discretion should be permitted the applicant as to the time when publication is made. The applicant should have the right at any time prior to publication to (1) abandon the application and retain the invention in a nondisclosed status; (2) abandon the application and dedicate the nonexamined application to the public; or (3) upon payment of a substantial fee and a showing of good cause, delay publication (but not examination) until the examination is completed and claims are allowed; but in such case, no infringement claim or royalties should be allowed as a result of manufacture of the invention prior to the issuance of the patent, or for any subsequent sale or use of items manufactured prior to issuance of the patent.

The proposed $10 filing fee for preliminary applications is too low. All fees should be set at a level that both encourages legitimate filings and also discourages superfluous or ill-considered filings.

Deferred examination.-We note from Commissioner Brenner's statement to the committee that there is no immediate intent to institute a system of deferred examination, and that the Patent Office, by including provisions authorizing a system of deferred examinations, is merely seeking standby authority. We have no way of judging what the probable effects of such a system might be. Certainly the experience of Holland provides little guidance for the United States. The proposal by Commissioner Brenner to institute such a system with respect to only a few classes of patentable matter at some time in the future, when deemed desirable, seems to be a sound approach. Practical effects of such a system could then be demonstrated without drastically affecting the entire patent system. The grant of such authority should be clearly spelled out and any decision to adopt deferred examinations for general use in the Patent Office should be validated by Congress through the mechanism of a joint resolution or general legislation.

Fees. We are strongly opposed to any proposal that would permit the Patent Office to determine fee schedules for patent filings. This prerogative of Congress should not be delegated. In our opinion, the holders of large portfolios of patents are reaping the greatest monetary benefits from patents and should, therefore, bear a large proportion of the total fees paid to the Patent Office. We recommend that a graduated structure of fees related to the total number of patents held or filings made, per annum, be incorporated into the fee structure.

Partial payments of issue fees over the life of the patent also are desirable, and these should be graduated to reflect the size of the patent portfolio maintained. This would have a salutary effect in encouraging the dedication to the public of many patents either of small economic value or being maintained for defensive purposes.

Judicial procedures.-The element of high cost of litigation in relation to validity and infringement of patents, both offensive and defensive, is one of the primary problems facing the small manufacturer or small patentee. Present procedures are too cumbersome, too inefficient, and too slow to produce the results needed by the small business community. It is most disappointing that the Commission's report recommended so little to streamline judicial and administrative procedures.

There are now too many forums and too many levels of appeal in the present system. The present system of patent litigation in the U.S. district courts is grossly deficient. The great majority of judges in this court are disinterested in patent law and possess little or no expertise in scientific and technical matters. Considerable time and effort must be spent by the litigants to educate the judges. It often has been said that if a judge understands the technical details of an invention, he will find the patent invalid for obviousness; and, conversely, if he does not understand it, he will find the patent valid. Thwarting of justice by exploiting defects of technical pleading under the common law spurred the adoption of the Federal Rules of Civil Procedure. An equally effective overhauling of judicial procedures affecting the patent system is necessary if we are to have sound decisions based on the merits.

Extended discussions with members of the patent bar and other interested attorneys have demonstrated a reluctance on their part to consider any change looking toward development of a court of patent experts to try patent litigation. They fear this would destroy the adversary system and result in judges who would substitute their technical judgment for the arguments developed by counsel for plaintiff and defendant. We feel that this is a mistaken attitude.

The adversary system can be preserved in a separate specialized patent trial court and better, faster, and less costly decisions can be achieved for the litigants. We recommend establishment of such a court to adjudicate all patent litigation between patentee and infringer with appeal to the Court of Customs and Patent Appeals and the U.S. Supreme Court on certiorari. If there is need for a compromise on this proposition, the same purpose could be achieved within the U.S. district court framework by establishing a patent panel of three district court judges, experienced in patent matters, who would ride circuit in all of the districts to handle a separate patent docket and calendar in each circuit. The use of the proposed Commissioner system would complement this system and reduce tremendously the actual amount of courtroom time spent on patent litigation. In the matter of patent appeals, whether from administrative adjudications in the Patent Office or in civil litigation in the U.S. district courts, we strongly urge that these be heard at the first appellate level by a single patent appeals court, preferably the Court of Customs and Patent Appeals, and that the second level of appeal be the U.S. Supreme Court.

Permitting the prevailing party, in appropriate circumstances, to recover costs of litigation including lawyer's fees is a remedial feature which we support. The legislative history of this provision should reflect fully that its purpose is to permit the courts to award such fees when it is determined that the litigation was undertaken by either party without reasonable grounds or for the purpose of harassment. We believe that no dollar limitation on the amount of recovery of costs and attorney's fees should be provided-$1,000 is obviously too low-and we recommend that section 257 (d) be amended by striking the words, "not to exceed a total of $1,000." We further recommend that section 285 of the bill be amended by deleting the words "in exceptional cases," and adding, "where the court determines that the bringing or defense of the suit was undertaken not in good faith or without probable cause."

Delays in marketing due to Government regulation.-Section 154(c) of H.R. 5924 provides for an increase in the term of a patent when its issuance is delayed for national security reasons. However, there are other Government activities which affect the patentee's ability to derive reasonable profits from marketing of patentable inventions. In particular, regulatory activities of agencies such as the Food and Drug Administration, Federal Aviation Agency, the U.S. Coast Guard, and a wide variety of other Federal, State, and local bodies cause many products to be banned from public sale or use until a license or other approval is obtained. We recommend that in such cases the patentee should have a minimum period of 10 years' patent protection from the first grant of such license or approval by any Government agency and that appropriate changes to the language of section 154 be adopted.

Harmonizing U.S. patent system with proposed international patent system. Although we support the concept of a universal or multination patent system, top priority should be given to building maximum strength into the U.S. patent system, upgrading it to its full potential, without regard to the requirements or procedures of any foreign country. From the standpoint of costs to small business, a sound, enforceable universal patent is very desirable; but, since our larger interests are concerned with the marketing of products in the United States, the effectiveness and value of patents in our domestic economy is of considerably more importance. Instead of an international system, we suggest as a practical approach to the problem, that a multilateral system of agreements between countries having common political, economic, and social institutions should first be established. No recommendation of the President's Commission should be adopted merely because it would further the concept of an international patent system and any justification for legislation based on this premise should be discarded by the Congress.

Antitrust implications.-While real invention is still by and large the province of individual inventors and small business, these inventions have less and less opportunity to come to fruition in the hands of small business.

U.S. Government patent policy needs to be more positively oriented toward encouraging the success and proliferation of small and medium business in the consumer goods fields. Fiscal, tax, antitrust, and patent policies as well as the enforcement attitudes of the Govern