The American Bar Association is completely in accord with those objectives but is of the firm conviction that they will not be accomplished by elimination of the grace period, and by the first-to-file system, as proposed by H.R. 5924. On the contrary, it is our firm. conviction that those features of the bill will strongly adversely affect desirable features of our present patent system.

Philosophy of the American patent system: Under the Constitution, Congress is empowered to promote the progress of useful arts by suitably rewarding inventors. Congress has done this by creation of a patent system which awards a limited monopoly to the first inventor to exclude others from using his invention for a limited time.

From its very beginning in 1790, the U.S. patent law has been firmly committed to the philosophy of rewarding the first to invent, rather than merely the first to file a patent application on the invention.

Incidentally, I have noted Congressman Hutchinson's query to Mr. Francis Browne concerning the origin of the first-to-invent system. That system was not new with the 1836 act because even under the registration system of the 1793 act, priority between several applicants was decided by arbitration.

Though the 1836 act did institute the first full-fledged examination system in the world, and it did provide for determination of priority by the Commissioner, it did not introduce the first-to-invent principle to our law.

In the last 130 years, we have seen the United States change from a frontier economy to become the most industrially advanced nation in the world. In fact, a recent publication of the Commerce Department ("Technical Innovation: Its Environment and Management") indicates that the balance of payments for technical knowhow, patent royalties and the like is almost ten-to-one in favor of the United States.

Mr. Braderman's testimony concerning balance of payments should be interpreted in the light of that fact. The part played by the U.S. patent system in that growth was clearly stated by President Johnson in his letter transmitting the Patent Reform Act to Congress, as follows:

From the earliest days of our Republic, the patent system has played an indispensable role in stimulating the Nation's progress and prosperity. It has spurred the creative work of inventors and scientists. It has fostered the most far-reaching technological advances in the history of civilization.

It seems quite likely that features that distinguish our patent system from those of countries which have not experienced our remarkable rate of growth, are themselves (at least in part) responsible for that rate of growth.

Surely the most significant of those features is our system of rewarding the first to invent, as opposed to the European system of rewarding the first to file, irrespective of whether he was the first to invent.

A desirable corollary of a first to invent system is a grace period whereby the first inventor is accorded a reasonable time after publication or public use, whether by him or others, to file a patent application, before he is deemed to have abandoned his rights to a patent. From 1839 to 1939 this grace period was 2 years. Since 1939 it has been 1 year.

During this year, an inventor may develop his invention by building and testing it, determine its workability and salability, ascertain its patentability by searching the Patent Office records and carefully prepare his patent application with a complete disclosure of the invention as finally developed in this perfecting process.

As we all know, a large part of this 1-year grace period is often up in first arranging financing to permit developing and patenting

the invention.

While a grace period is not as unique a feature of our system as first to invent (the more recently adopted German and Japanese systems have a 6 months' personal grace period), the unlimited aspects of our grace period, make it quite different from that of countries not as advanced technologically as ours.

The significance of that difference in part resides in the difficulty in proving derivation of a publication from the first inventor, which of course would be necessary under a personal grace system.

It also involves the possibility of a competitor cutting off the inventor's rights by publishing or filing a preliminary application on everything the competitor has thought of, merely because the competitor has word of the general area in which the first inventor is operating, though not of the details of the invention.

American Bar Association favors retention of the American firstto-invent philosophy.

The basic American philosophy of giving the patent to the first to make the invention and giving him a year in which to perfect and protect his invention is we believe a far better way to promote the progress of the useful arts than is the European system of issuing the patent to the first to file.

It is for this reason that the American Bar Association opposes sections 102(a) and 102(b) of H.R. 5924, which repudiate our present philosophy of first to invent and propose to substitute therefor the European philosophy of first to file, sometimes referred to as the "race to the Patent Office" system.

This repudiation and rejection of our eminently successful American system is offered to us under the guise of "modernizing" our patent system. But modernizing presupposes something new, not merely a change from one old system to another old system.

As President Johnson has said, "modernization of the patent system is overdue," but we fail to see any modernization in adoption of the basic features of the patent systems of countries which have advanced industrially under their patent systems far more slowly than we have. In our opinion, it is a step backward and would be a serious detriment to our leadership in technology and our economy.

Objectives of the President's Commission: According to the President's letter of transmittal H.R. 5924 was shaped from recommendations of the Commission on the Patent System. In the introduction to its report, the Commission enumerated the following as its objectives:

1. To raise the quality and reliability of the U.S. patent.

2. To shorten the period of pendency of a patent application from filing to final disposition by the Patent Office.

3. To accelerate the public disclosure of technological advances.

4. To reduce the expense of obtaining and litigating a patent.

5. To make U.S. patent practice more compatible with that of other major countries, wherever consistent with the objectives of the U.S. patent system.

6. To prepare the patent system to cope with the exploding technology foreseeable in the decades ahead.

Informed persons who have appraised H.R. 5924 in the light of these objectives generally agree that the objectives cannot be achieved by section 102 of this proposed legislation.

Section 102 of H.R. 5924 will not improve quality of patents.

Whether a patent is issued to the person who claims to be the first inventor or to the person who first files a patent application can have no effect on the quality and reliability of the U.S. patent.

However, if the person who first files a patent application is stampeded into a race to the Patent Office, to describe his only partially developed idea, his application and its information value to the art cannot compare favorably in quality or reliability with that of the inventor who has opportunity to develop his invention from a mere idea to its practical fulfillment and submits to the Patent Office a document describing his invention to the best of his ability.

Any patent issuing on a carefully prepared application will certainly be better and more valuable to the public than one issuing on a hastily prepared application.

If section 102 of H.R. 5924 is enacted, all applicants must first submit hastily prepared applications to the Patent Office for fear that a competitor will beat them to it.

The administration suggestion that only the relatively few applications which get into interference would be affected by change to the first-to-file system, ignores this point, as well as the fact that a very substantial number of applicants are now able to show their prior invention of subject matter not claimed by persons who file earlier, without ever getting into interferences.

Provision for the piecemeal preparation of numerous preliminary applications will compound the problems and contravene objectives of the President's Commission as will appear below.

Section 102 of H.R. 5924 will not substantially shorten pendency of patent applications.

If the Patent Office maintains its same standard of proficiency, the period of pendency of all but approximately 1 percent of pending patent applications from filing to final disposition by the Patent Office will remain the same, whether the patent is issued to the first applicant to file an application or to the person who first made the invention. Much emphasis is placed upon the assertion that H.R. 5924 will eliminate interferences. Under the present statute, only about 2,400 of all pending applications are involved in interferences and constructive proposals which we hope to make will reduce that number to about one-half of 1 percent, of the present 200,000 applications.

Certainly, an efficient administrative agency can find some way of expeditiously disposing of the one-half of 1 percent of applications in which the priority of inventorship may be contested. The proposed 20-year term from the filing date surely will provide the applicant with incentive to assist toward that end.

Section 102 of H.R. 5924 will delay public disclosure.

While section 102 pretends to accelerate the public disclosure of technological advances by providing for automatic publication 18 to 24 months after filing-actually it is not section 102 that does that

but, another section of the bill-in fact, public disclosure of worthwhile technical advances will be delayed beyond present practices, as has been pointed out by Professor Bardeen and Mr. Malloy.

Indeed, Professor Bardeen has suggested that the freer exchange of scientific information, which is possible under our first-to-invent system, may be an important contributing factor to the technology gap between our system and the much more secretive European countries, which operate under the first-to-file rule.

Certainly no one will dare make a public disclosure of any technological advance before a patent application is filed. Even if an inventor is given a personal right to publish his own work, he could not safely do so because he would run the risk of someone copying it and beating him to the Patent Office with a hastily prepared patent application.

While he could, und H.R. 5924, incur the expense of resisting the issuance of a pater.. Che person who discovered his publication, he could not obtain a patent for himself.

Section 102 affords larger organizations with the advantage of personnel and equipment the opportunity to outmaneuver the inventor in the smaller organization and the independent inventor.

Where an inventor publicly discloses his invention and relies upon the present patent laws to protect him, industrial espionage fails. Should section 102 of H.R. 5924 be enacted, industrial espionage could well become the order of the day in order to thwart the individual or organization who is making the greatest contribution. Rather than accelerate the public disclosure of technological advances, elimination of the 1-year grace period and issuance of a patent to the winner of the race to the Patent Office will compel inventors to shelter their ideas and inventions until a patent application has been filed.

Section 102 of H.R. 5924 will increase expense of obtaining and litigating patents.

To measure the expense of obtaining and litigating a patent under H.R. 5924, let us consider the situation of a continuing development where it is estimated that at least three preliminary applications will be filed where only one application is filed today.

Preparation of the preliminary applications is an expense which the inventor today need not incur. As pointed out in earlier testimony, particularly by Mr. Cappello and Mr. Malloy, the requirements for a preliminary application are such that it can safely be prepared only by a skilled attorney, if the application is to be of value to carry the applicant's filing date back of his complete application.

Of greater consequence, may be the argument with the patent examiner as to the effective filing date of the final application. Actually, the effective filing date cannot be determined until the final claims are evolved and the final claims cannot be examined until the effective filing date is known.

Patent examiners will be faced with a situation of which came first. A reference may be effective against one claim, but not effective against another.

Normal proceedings in the Patent Office on this issue alone could well exceed the cost of prosecuting a patent application today. Even after the patent has issued, the question of the effective filing date of

each claim may still be questioned in litigation and this is a matter which ordinarily is not involved in patent litigation today.

Thus, issuance of a patent to the one who first filed a preliminary application supporting the invention can increase the cost of obtaining the patent and the cost of litigating a patent. Such added expense would likely occur in many more cases than are involved in înterferences under the present law.

Section 102 of H.R. 5924 sacrifices U.S. patent system for sake of international uniformity.

A strong argument is made that most other countries issue a patent to the first to file a patent application. But let us examine the motives in those other countries. In the first place, in most foreign countries 30 percent or less of all applications are filed by nationals of those countries. Compared to that, of all applications filed in the United States, 70 to 80 percent are filed by U.S. citizens. One major objective of foreigners filing in their own countries is to obtain a date which will give them the best opportunity to obtain a patent in the United States. Under U.S. law, the best a foreigner can do is to file an application promptly in his own country. Hence, the filing date system in most other countries is motivated to a large extent to enhance the applicant's opportunity to obtain a patent in the United States. Making the U.S. system compatible with other countries does not have a parallel objective.

Moreover, as confirmed by Mr. Braderman's testimony, by far the majority of U.S. inventors do not file abroad, so that "compatibility" is of no interest to them. It is an odd argument that states it to be advantageous to such persons to cut off their right to file here by reason of disclosure of their inventions before their filing date, in order to be sure they can have an unwanted right to file abroad.

Section 102 of H.R. 5924 does nothing to prepare U.S. patent system for exploding technology.

While no one can argue that it is desirable to prepare our patent system to cope with the exploding technology, what does the date accorded an inventor or the filing of his application have to do with such preparation and what does a grace period have to do with such preparation? No one will dispute that a worldwide library of all scientific and technological information will some day be available, with highspeed retrieval systems placing such information within reach of anyone who wishes to inquire.

But now is not the time to enact a patent law to take advantage of such a library, when it is beyond the existing competence of the art; at such time as the universal library is available, the Congress will certainly take whatever steps may be necessary to take full advantage of it.

To enact a patent law today which would destroy the equitable principles of the American system of rewarding the first inventor and require absolute novelty on a worldwide basis is to ignore the practicality of providing an incentive system in the world in which we live today.

Summary: The American Bar Association favors retention of the 1-year grace period provided in 35 U.S.C. 102(b) because it gives the inventor sufficient time to perfect his invention before filing a patent application, even though it may be necessary for him to place his invention on sale or in public use in order to do so.