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litigation. All we can do is to propose a system which, in our opinion, is directed toward less expensive, more equitable, and more rapid solutions to these problems.

Mr. Roth. If this latter could be achieved—more expeditious and efficient methods of litigating the bill—would this eliminate much of your objections to the present system?

Mr. CAPPELLO. Yes, it would, except that we still believe that interference procedures, for example, are going to be expensive, they are going to be time consuming. Our estimate of the average litigation, whether it is in connection with intereferences or infringement suits, is about $50,000 per litigation. This is an impossible burden for those of us who are in small businesses. And I think Mr. Perry can elaborate a little bit on some of his current litigation.

Mr. Roth. Well I appreciate the problem of the cost of litigation but the main thing I was interested in is whether or not one approach may be that the appeals system and interference litigation could be sufficiently simplified.

Mr. CAPPELLO. We think this element of first to invent, as opposed to first to file, does lead toward a tremendous amount of litigation just because of the fact which I discussed, that numerous people can come up with the same idea about the same time.

Mr. POFF. In reference to your last statement, does not the accommodation of the personal grace period concept with the first-to-file concept lead you back in the direction at least of the first-to-invent concept?

Mr. CAPPELLO. To an extent it does. This was what I was referring to when I said we are going to have some type of litigation inevitably associated with the question who has the prior rights to an invention. I believe though that the personal grace period with the first-to-file concept will still eliminate the bulk of the interference litigation which is concerned with who conceived an invention first.

Chairman KASTENMEIER. Just one final question, in the event you had your choice between the present system and the bill before us, which would you choose ?

Mr. CAPPELLO. The bill before us unvarnished? I think we would choose the present system.

Mr. KASTENMEIER. You would choose the present system?
Mr. CAPPELLO. Yes I would.

Chairman KASTENMEIER. Thank you very much for your appearance this morning gentlemen. We shall hear now from Mr. J. Rabinow, president of Rabinow engineering division; Control Data Corp.


DIVISION, CONTROL DATA CORP. Mr. Rabinow. I have no prepared statement to read. I will speak from my notes. I thank you very much for the opportunity to be here. It is nice to know that at least one inventor gets a chance to discuss such a basic change in the system. If you forgive me for bragging, I vould like to give you my qualifications for speaking. I have two degrees in electrical engineering. For 16 years I worked in the Government services at the Bureau of Standards. For 10 years I ran my own small company, and for 3 years I have been with the Control Data

Corp. I have 176 U.S. patents as of last Tuesday. I have some 25 applications pending and I have a very large number in foreign countries, but I don't really know how many. I am a member of the advisory committee for the Commissioner of Patents and I have some considerable number of honors for my inventions from the National Defense Committee, from the War Department, and Navy. I have a Certificate of Merit from President Truman for some work I did for the Government. I have the Exceptional Service Award from the Department of Commerce and I have a medal from the Franklin Institute. And now I would like to talk about the present bill.

In the first place, the present U.S. patent system is very good. I do not agree with Mr. Cappello, for example, about the fact that it is running down, that an inventor doesn't get his rights, that the small businessman is hurt. I think these cries of anguish are completely unfounded. I think it is the best patent system in the world. Next, perhaps is the German system but it has certain bad aspects of "opposition” which we do not have. I think the Patent Office has a complete record of honesty and fairness. I don't think there is any question about this.

I haven't heard any cries from patent attorneys or from inventors that something should be done, but apparently some people feel that we should change things and I think once in a while it pays to look into a system and to change it just a little. I think what is wrong now is that the world is getting smaller and the number of nations is getting larger in number. The number of patent systems is rising and since people do business all over the world we should do something about getting together with the rest of the world. No company, large or small, or a private inventor as I am occasionally, files only in the United States. We all file abroad. And the costs of filing are very high. I think we should get together with the rest of the world and get our laws into line. I think this is, perhaps, the basic reason why Mr. Holloman of the Department of Commerce, and why the Patent Office are pushing for a revision of the laws. They want us to get together with the rest of the world.

I believe the proposed legislation is basically anti-inventor. I am a little amazed that the Commission composed as it is of very excellent people, has elected, whenever the problems were difficult, to reduce the inventor's rights in order to simplify the problems. I think there are ways of simplifying laws without hurting the inventor so much. I think that when the preamble of the report speaks of making the laws stronger, they should not always accomplish this by reducing the inventor's rights in one way or another. I think the proposed bill is partly intended to help the Patent Office but I am not sure it will. I think the amount of paper would be actually worse and I think some of the office decisions that would have to be made would be much more difficult to make than today.

Gentlemen, I favor the first-to-file system. I don't think there is anything basic about the rights of an inventor. After all, the patent is not the reward for cleverness, but for getting the thing into use and the first to file may help this. I think that we now, in fact, live under the first-to-file system. As you probably know, the number of interferences, about which so much was said today, is very, very small. The figures are as follows:

In 1964 there were some 88,000 applications of which only 900 or so went into interference. In 1965 there were 89,000 applications, only 651 went into interference, less than 1 percent in both cases. In 1966 there were 93,000 applications with 473 interferences, or less than one-half of 1 percent.

We can see this isn't very many. But if we decide to use the firstto-file system, where the first man in the Patent Office wins the patent, less than one-half of 1 percent would be affected by this decision. In those cases interferences are set up, the senior party wins 75 to 80 percent of the time, which means that less than a quarter of 1 percent would be hurt or where an injustice would ever happen. This business of big costs of interference is mostly nonsense. I have 176 patents and only three were in interference. Not one went to court. They were settled by the respective lawyers sending each other letters. They found that in some cases I was the first inventor and some cases the other man was the first inventor and this is how it is usually settled and sometimes we give each other cross licenses. Based on my experience and based on my talks with many attorneys doing this work, I am convinced that court costs are very rare under our system, so this business of changing the laws to eliminate interference is mostly hogwash. For the last 15 years, I don't remember the figures, there were close to a million patent applications and something less than 1 percent were in interference and then only a small fraction of those were awarded to the junior party. Today, the man who files first gets the patent.

I support the idea of the first to file not because there is anything wrong with the present system but because it makes it possible to have an international patent. All of the countries of the world with the exception of the United States and Canada have this system, and if we are going to have an international patent we have to have a system that would have the same inventor here as the inventor, say, in France. If we do it the other way, we can have one inventor in the United States and another inventor for the same invention in Europe.

This setting up of an international patent system is very much worth doing. It is the single best thing you can do for any inventor, large or small. Today I have a venetian blind patent pending in six countries and they will cost me some $6,000. I have protected my magnetic particle clutch invention in 22 countries with 44 patents and this cost my brother, since he had money and I didn't, $37,000. This was not litigation, gentlemen, this was just bare cost of translations, filings, and that sort of thing. This is a terrible expense. And international filing is getting more popular, not less popular, because today when you have an invention you like to sell it all over the world. The world is getting very much smaller. And so, for this reason, I support the first to file, not because of any injustice in our system today.

Incidentally the proposed law as now written is very ambiguous. Section 102 will permit the second to file to get a patent. The proposed bill does not mention the first to file. It says (p. 11 of the bill) that a person shall not be entitled to a patent if: *** (b) the application has been published or a patent on it has been issued. But if the second to file is copending with the first to file it may very well occur that

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the second to file would come out first. Nothing in the bill prevents the second to file from getting the patent. If the first-to-file application has not yet been published it cannot be cited as prior art. This can later be corrected in court but I think the law should certainly be clear about what the authors meant it to do. My attorney went over this section very carefully and there is nothing to prevent two people from getting patents essentially on the same thing, with the second to file getting the first patent issued. You will notice that section (b) says the subject matter has to be disclosed and published in U.S. applications. Suppose it has not yet been published, and the first man's patent has not been issued. The second man has nothing against him, he gets the patent issued. I think this can be cleared up.

The first-to-file system has the very basic fault in that it would lead to more secrecy. Because now, when we get an invention either from me or from one of the other engineers, we discuss it quite freely and know we run no risk. But if I am afraid that somebody overhearing us can get to the Patent Office quickly, we shall certainly be more careful as to how we speak. I think this would certainly lead to more secrecy.

I think that the business of injustice about the first to invent but not the first to file goes like this: I go to the Patent Office first, but you thought of it a year before me, so you would, therefore, be barred from using your own invention. The U.S. system does not give a patent to the first to invent, but to the first diligent inventor, which is quite another story. You are the first to invent but you didn't actually work on a day-to-day basis and you would probably lose the interference anyway. But you may be the first to invent diligently and there is some injustice about not being barred from using your invention. I could argue that you should have gone to the Patent Office also, as I did. You should have protected yourself. There are many things one could do in connection with the first to invent. I would object to a provision that the first inventor gets certain shop rights, as is done in some 20 countries. I think this could lead to more secrecy. Look at the technique that I could use in a computer invention. In a case like this I would like to be protected. I keep my mouth shut. I will use it, I'll say nothing, nobody will know about it. Somebody else files for a patent. That's wonderful. I don't really give a darn because I have my "first use.” Nobody knew about it, I didn't tell the people of the world, and I am protected just by the fact that I used it. I think this is unfair. My daughter who sits behind me today listening to me (she had a wonderful excuse to stay out of school) suggests a way out. She has a patent pending, so she has a right to speak as an inventor.

She says that the way to get around this would be to arrange matters so that you should have “shop rights" only if you also file, and file within a year or perhaps 2 years. Then the first-to-file inventor would still get the patent, the international agreement would still hold, but the man who files second but invented first would be protected as to his invention for his own use. He would have essentially a free license. This means that you would force him to file also, and thus discourage secrecy. If he filed, say 3 or 6 months after the first filee, he would at least have shop rights. But you cannot permit him to have free license and encourage secrecy. I think this suggestion is a possible solution to the first-to-invent versus the first-to-file

question. It is fair and would reduce those terrible pressures that people speak of to rush to the Patent Office.

I don't believe in this nonsense about pressures to get to the Patent Office. This is not the way attorneys work. It does take time to prepare an application. We do rush to the Patent Office as soon as we can, with a very hot invention. I asked Dr. Bardeen, who is a member of the Patent Advisory Commission who wrote this bill, “How soon did you file on the invention of the transistor ?” He said, “Within 3 months it was in the Patent Office because when we get something that is hot, we know it.” Every inventor knows when he has something good, when he has something medium, and when something is not quite so good. When it is a good basic invention, we work very hard at it. The attorneys get on the ball. They file quickly because it is important to be the first, even with the present laws. You want to be the senior party; you want to get in there and protect yourself. And so I think, as far as the matter of the first to file is concerned, he is usually the first inventor in 9912 percent of the cases anyway.

Now I mentioned the matter of interferences. They are not serious, they don't cost very much, and while I would like to eliminate them, if possible, some kind of interference would have to be provided for, because there would still be the question as to who owns which claim. You filed in January; I filed in February. In the middle of the year the Patent Office has to decide who is the first inventor of what; who is entitled to each claim. There would have to be some kind of interference proceedings set up by the Patent Office so that when you say "I am entitled to your claims" and I say "No; you are not,” and there should be some open argument, which doesn't require a court case, but does require some opposition procedure between the two inventors as to who invented exactly what. This is obviously necessary.

I was very interested in the fact that the antitrust recommendations of the Commission did not get into your bill. My scuttlebutt in Washington—I have been here 30 years—tells me that the Justice Department doesn't feel that it could trust you with such an important matter and that is why it was stricken from the bill. When the bill was drafted, the Commission very mildly pointed out that there is a conflict between the antitrust laws and a patent monopoly. There is, undoubtedly, a conflict. Perhaps Congress should have something to say about this. When it came to the bill, that part of the recommendations, recommendation XXII, was left out. I don't want to tell you your business, but I politely suggest that there is a conflict. I know that the Justice Department is afraid of patents because they are monopolies that can lead to abuses. As one inventor who likes to license others once in a while, I'd like to know what are my rights and if you don't tell me, nobody else can. I think it is your business whether the Justice Department likes it or not. I think you people have to clarify this matter. Either we do have an absolute monopoly, or we have a limited monopoly. Can I license different fields of industry with the same patent? The Justice Department can say I cannot. In other words, I think I would like to see this subject matter back in the bill, or to see a separate bill which clarifies this antitrust business with respect to what rights do I, in fact, have. I have asked good lawyers and they don't seem to know.

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