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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 legislativa 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 insti. tute 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 dras. tically affecting the entire patent system. The grant of such authority should be clearly spelled out and any decision to adopt deferred eraminations 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 etfort 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 cireuit 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, å 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

ment agencies administering these areas of the law are all closely interrelated, and need to be strengthened in the interest of smail business. Whenever remedial legislation appears, nominally directed against big business, small business almost inevitably bears the brunt of its effects. The application of antitrust concepts to the “patent monopoly” is, in our opinion, one of the classic examples of this rule. Attempts to remedy abuses of improper use of patents have generally resulted in the long run in cutting down the rights of the individual and small business but with no noticeable impact upon big business. For this reason we have some fears that even the changes and reforms of the patent system now being proposed may lead eventually to corrosion of the rights of the smalls.

Improper use of patents through patent pools and cross-licensing, in concert with raw economic power, has placed out of bounds many areas of business where small business properly should be competing. The best hope for creative small business is that their rights be strengthened under the patent laws and that the antitrust laws be rigidly enforced.

Recommendations contained in the report of the Attorney General's National Committee To Study the Antitrust Laws (1955) with respect to compulsory licensing of interchanged and pooled patents have never been implemented either by legislation or enforcement policy. These pooled patents, together with large defensive patent portfolios and the threat of litigation, cause much concern to creative small businessmen. I might add parenthetically that, under the first-to-file system, companies seeking merely to establish their right to use an invention will be encouraged to publish rather than patent the invention. This should serve to reduce the defensive patent portfolios of big businesses.

We concur in the analysis of the antitrust patent situation in recommendation XXII of the President's Commission Report. We recommend that implementing language be incorporated in H.R. 5924.

Government infringement of private patents. It is most disappointing that the President's Commission failed to study or to make recommendations regarding small business' No. 1 patent problem, government infringement of privately developed patents. This has been a matter of concern to the Congress and the procuring agencies since the Comptroller General's decision in 1957. This decision required infringement of private patents (under 28 U.S.C. 1498) in cases of advertised procurements for patented articles awarded to unlicensed sources. Vany attempts have been made to obtain concurrence between procurement agencies regarding an appropriate mechanism to resolve the problem of infringement. We believe an acceptable compromise has been achieved which is now before Congress-H.R. 2898-introduced by Congressman Morris of New Mexico. We recommend that this bill be incorporated into the patent reform bill H.R. 5924. It is our understanding that H.R. 2898 was developed in cooperation with the Bureau of the Budget and is acceptable to the executive branch. Since the provisions of H.R. 2898 relate to general patent administration, it is appropriate to include them in H.R. 5924.

Improving the quality of patents.—Provisions of the legislation directed to improvement of the quality of issued patents include section 137, which would place on the applicant the burden of persuading the

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Patent Office that a claim is allowable, and section 148, which would provide a presumption of correctness on claims refused by both the patent examiner and a three-member panel of the Patent Office Board of Appeals. These burdens on the applicant, properly administered, will tend to improve the quality of issued patents.

The availability of appeal from these decisions should be limited, in our opinion, to the Court of Customs and Patent Appeals. We see no real purpose to be served by the present alternative appeal by civil action in the U.S. District Court for the District of Columbia. We believe that an appropriate appeals procedure for all administrative determinations should be limited to: (1) An ex parte presentation of evidence to the examiner (rulemaker); (2) an adversary procedure before an administrative appeals board; (3) a judicial review on the record, with remand available for taking of additional evidence where the evidence is incomplete or unsatisfactory; and (4) a final appeal to the U.S. Supreme Court.

We believe these enumerated limitations represent the optimum procedure for review of technical admnistrative decisions and would provide the best quality of decision with minimum expense to the Government and the individual parties litigant.

One of the greatest costs in prosecuting patent claims before the Court of Customs and Patent Appeals has been the requirement for printing of a voluminous record including cited references such as prior patents. The court, in line with current practice in many courts of appeal, should be required to accept typewritten copies of the record, copies of the printed patents cited, and files of the Patent Office or copies thereof.

Computer programs.-We disagree with the recommendation of the President's Commission that computer programs should not be patentable. The line of demarcation between computer hardware and software is becoming increasingly difficult to define. A body of ad hoc determinations should be developed by the Patent Office which, on an evolutonary basis, will provide criteria for patenting those aspects of computer programing traditionally associated with patentable inventions. Comparable expertise has been developed by the Patent Office in other new areas of technology.

Protection for individual inventors.-We urge that study be given to the recommendation of the American Society of Inventors that some form of general insurance protection be made available by the Government for nonassigned patents, to cover attorney's fees, and other costs incident to litigation involving validity or infringement of the patent. It is estimated that the cost of $100,000 of insurance would be about $50 per year per patent or $500 for the life of the patent. We are advised that the average cost for litigating a patent is about $50,000. Perhaps a worthwhile social and economic purpose would be achieved if the patentee were required to bear the first $500 of such expense plus 10 percent of the balance, if he does not prevail in the litigation.

Another recommendation by the society worthy of study is that captive inventors be protected by discouraging outright assignment of their inventions. It is suggested by the society that the patent laws be amended to require all inventions to be licensed, rather than assigned, at minimum royalties of one-half of 1 percent for captive inventors and 3 percent for independent inventors. Of course, the economic value

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