The patent system in this country should be viewed as one that produces progressive competition. One patent alone is not going to help you. You have to build on it, and you have to sort of try to keep one step ahead of the other side and if someone comes up with something that is patentable and it has a big market, your competitors are going to design around, or invent around it, if they can, and this is this wonderful progressive competition that our system has produced.

This is one place where I would like to see, if we harmonize, a system like we have in the United States. But I think we can harmonize on information retrieval and classification. That is something that I think should be worked out.

You could have an office in the Hague or in Washington, but this is a tremendous task. I don't know if the people at IBM have been able to figure out if it can be done as yet, but certainly unless the money is there in the Patent Office to begin some of this complex classification and information retrieval, we are going to have some serious problems. That is another thing with this foreign use, sale, and knowledge, and so on, that creates a real problem, and that is, how are you going to classify uses and sales and things like that?

You get to looking at this thing in the broad view, and you see that this harmonization is like "somewhere over the rainbow." Mr. KASTENMEIER. Mr. Edwards.

Mr. EDWARDS. Thank you, Mr. Chairman.

We are certainly indebted to have our distinguished colleague from Connecticut, Mr. Giaimo, here today with an expert like Mr. DeLio. It is very helpful to have someone like Mr. DeLio who has had experience in both systems, the first-to-file and the first-to-invent. I am sure that I am expressing the general consensus of this subcommittee that we would not report any bill that we thought might work to the disadvantage of the small inventor and any bill that I would be in favor of would, on the contrary, be drafted to encourage the ingenuity and independence of the private inventor, the small guy, as opposed to large corporate entities.

I will point out that we had no testimony that the backlog is a substantive problem. Would you disagree with that, Mr. DeLio? Mr. DELIO. I don't quite get the question.

Mr. EDWARDS. We have had no testimony to the effect that the backlog, although its existence is admitted, is a substantive problem, a problem that causes difficulty to inventors and their lawyers. Does the backlog cause you in your business as a patent lawyer substantial problems?

Mr. DELIO. No, it doesn't, because I think that the Patent Office has changed its procedures, and if you want to take out your patent and move quickly, the Patent Office will accommodate you in this regard.

Mr. EDWARDS. Why do you think, Mr. DeLio, that the first-to-file system would actually work to the disadvantage of the small independent inventor?

Mr. DELIO. Because of the way in which he conducts his whole affair in this matter. He devises something. He works with it. He tries to get it down to a working level so that he is justified in investing his money, taking a mortgage on his house or what-have-you, forming a small corporation, getting his friends to invest and so on. Usually he comes in to the patent attorney at the 11th hour. Sometimes it is the 25th hour.

The first-to-file doesn't favor him at all. One thing about what we have, the grace period and the first-to-invent with documentation, is that he can work his invention out, he can be assured that he is spending money properly in seeking the patent, and so on and so forth. You take that away, and I think you are going to get a lot of rushed filings by the people who can least afford them. They don't like to go in and file a series of applications.

A large corporation says, "Well, it's not too good, do it over and refile. File another preliminary." They can do this ad infinitum. They have the staff people. I think the first-to-file is just going to eliminate the small corporate inventor and the individual inventor from the scene, and I think they are necessary.

If you see the major inventions taking place in this country today, all of these giant corporations with their research teams (they) bring in these individuals to solve problems. A lot of individuals working by themselves are able to see the forest for the trees, whereas some research teams have not been able to sort out the same problem.

I admit that there are some people who feel that the individual inventor is not making his contribution or that it is not worthwhile preserving his stakes in this thing. I disagree with that 100 percent from my own basic experiences.

Mr. EDWARDS. Would you briefly explain what you mean by the antipatent policy of the Federal courts?

Mr. DELIO. Well, I think that one need only look at the situation from a statistical standpoint. The Supreme Court, since about 1930 has declared very few patents valid and infringed. The percentages in the courts, the raw percentages of holdings of validity and infringement are running between 20 and 30 percent. It might be 28 percent. I haven't looked at the statistics in the last couple of years.

Before you get to the patent office, a lot goes on. Things are boiled down by the inventor. He casts things out, maybe 50 percent of them. His patent attorney boils them down maybe another 50 percent. The Patent Office boils them down another 50 percent, and you have this continual chopping. Only those cases get into court where there is a gray area so they are the controversial ones.

On a strong patent the people pay license fees. It the patent is obviously invalid, the man has wallpaper. So when you get into the courts, I think the percentages, since we have an examination system, ought to be a little better than they are. They ought to be pretty close to 50-50 from a statistical standpoint.

Instead we have a situation where it is relatively minuscule so far as the holdings in the Supreme Court, and I believe also in the third circuit, and in this area of litigation people shop for forums. Judge Holtzoff has mentioned that. People shop for forums, where to sue and be sued, and they will usually base it upon certain decisions of the Supreme Court.

Mr. EDWARDS. What you are saying is that a patent is not very much good in this country?

Mr. DELIO. Let's say that the patents that are marginal or in the gray area where there is controversy may not be too good. You have to remember that there are an awful lot of patents, close to 60 percent of of the patents are utilized during their lifetime. These figures come

from the George Washington University Patent, Trademark, and Copyright Foundation.

There are a lot of patents that are used and people pay licensing fees on them. So then you have those where you may have an overzealous plaintiff or an overzealous defendant, there is some controversy. It would seem though that in this sort of gray area that the percentages ought to be a little better. This is so when I read the decisions of the court in connection with this particular area.

Mr. EDWARDS. Thank you very much.

Mr. KASTEN MEIER. Mr. Poff?

Mr. POFF. Thank you.

I must say that I think you made a real contribution to our consideration, and I am grateful to you and our colleague, Mr. Giaimo.

Pursuing the line which my distinguished colleague opened, I suppose it is possible that the court can in a given case find validity and at the same time no infringement as a factual matter?

Mr. DELIO. This is correct.

Mr. POFF. Does that have any bearing upon the statistics you cited? Mr. DELIO. Yes, I talked about a situation where you had validity and infringement, the cases where there was clearcut holding for the patentee.

Mr. POFF. Yes, sir.

Another line of questioning opened by Mr. Edwards is this: I understood you to say earlier in your testimony that you felt that the abolition of the interference system would tend to prejudice the little inventor. Would you care to expand on that thought?

Mr. DELIO. Yes. The thing is, what do you do in the place of the interference practice. You resort to first-to-file. Or in the alternative, and I think that this may be some of the suggestions that might come forward for amending the administration bill, having some kind of system with personal rights. Then you are right back into the old problem again of deciding the interference question, but instead of doing it before an administrative agency, you are doing it in the courts. Where do you want your backlog?

This is another thing. I mean when you start going down this path, if you are going to have anything but first-to-file (whoever gets there first), then the consideration of who invented first must be determined, and if it is not done in the Patent Office, it has to be done in the courts. I would say that the courts are going to be a little hard-pressed in that area. I would think that I would rather have the Patent Office make that determination with all due respect to the courts. You need some technical background in connection with determinations of the scope of the claims and so on.

In fact, I would like to see a little more liberalization in our claim interpretation. I think that we could be less pedantic about the pursuit of precise language in the Patent Office if there was a greater liberalization in the interpretation of claims by the courts. Which comes first! It is difficult. But I think that this is one of the problems that you have in the examination system in the Patent Office. It is argued many times. The question sometimes comes down to how many angels can stand on the end of a pin, and this becomes a real problem. Certainly in the chemical area it is almost unbelievable, and I think that to have the courts determine the basic question of inventorship rather than the

Patent Office would be a mistake and throw a great burden on the court system.

Mr. POFF. You speak of the chemical industry and you include the pharmaceutical?

Mr. DELIO. Yes, that whole area of pharmaceuticals and chemistry because of the nature of the situation. When you realize that you may have a particular compound and that it might have 10, 20, or 30 homologues, related substances, you see the problem. If Mr. A comes up with homologue A and you come up with homologue B, and someone comes up with homologue C, who is entitled to the broad invention? I would say that it is difficult, but the system has been fair today and it has been fair to the little fellow as well as the large corporate entities.

Mr. POFF. With respect to the pharmaceutical industry, if you introduced a new element of a deferred examination, I am wondering how one competitor would keep track of progress by his other competitor and what he might have to do in requiring examination of competitors' filings in order to justify the investment necessary to perfect his own idea.

Mr. DELIO. This is true. I think what you are going to have with the administration bill is a longer pendency time. Keeping the present examiners, let's say the present corps of examiners, and the same amount of traffic through the office, when you put these procedures in, your backlog is going to go up and it's going to take longer to get a patent.

Mr. POFF. To put in fair perspective, the deferred examination proposal is one which might or might not be implemented at the discretion of the Patent Office and then originally perhaps on a trial basis and confined to a particular category the administration bill does not require the instant implementation of deferred examination?

Mr. DELIO. No, but I think that the subject should be broached headon. I think the Congress should decide whether they want deferred examination and not the Patent Office. I think this is such a serious innovation and tinkering with our own system that I think that the Congress ought to decide whether it should be in or out. This sort of half-limbo treatment of deferred examination I think is something that I am against. I think that the Congress ought to decide that.

Mr. POFF. You also spoke of the relative burdens on the small inventor and the corporate inventor with reference to the multitudinous filings of preliminary applications. How much do you assume the fee for the filing of the preliminary application would be?

Mr. DELIO. I would say this: We have discussed this in our office. We have been through it. When we file the preliminary application, the way this law is written (and it can't be written in any other way) you are going to have to spend the same amount of money. Just leave out the claims, and the numbered paragraphs at the end. It (preliminary application) is going to have to be drafted with as much care as any other application, and there is no question that this is something that the British practice has taught us in our office. The preliminary application in Great Britain has to be drawn with as much care as the complete application. The complete application may have much more information in it as you develop your invention and have more data, but it must be drawn with the same expertise.

If the so-called paper bag kind of disclosure in the preliminary application is used, the man might as well take it and not file anything. You know in drafting a preliminary application the practitioner is trying to get across a particular invention in a partícular context. Without claims, if you read these descriptions, it becomes very difficult to sort of jell your thinking, so that I think if you had to do the document and prepare it, you would prepare the document with claims. and, since you had the privilege of not having to commit yourself as to your breadth, you would leave them (claims) out, but you would have to have something definite in mind as to the numbered paragraphs that you are ultimately shooting for. So that the preliminary application doesn't buy you very much.

You say, "You can put in preliminary applications under first to file." I am worried about rushing in with five documents.

General Motors can do this. I hate to mention names, but I mean the giant corporations can do these things. They have staffs of attorneys. But the individual inventor can't fool with these preliminary applications. If you are going to file three preliminary applications, you are charging him three times what it would cost him to file only once under the present system.

Mr. POFF. In questioning previous witnesses, I have inquired about the meaning of the language in section 120 (a) (2) and your testimony just now seems to bear out my interpretation of that language; namely, that the inventor in order to get the advantage of the early date would have to file his preliminary application with the same particularity as he would later file his claim for complete application and that failure to do so would cause him to lose the early date.

Mr. DELIO. That is correct. I agree with that 100 percent.

Mr. POFF. I make the qualification that there would probably be more information and data included in the complete application, but the disclosure of every feature of the invention would have to be as complete in the preliminary application with respect to every claim as the complete application.

Mr. DELIO. This is correct. This is what that language states, 120 (a) (2), there is no question about that, and I think you have to assume that. You can't avoid it because then you would have a real problem in figuring out the metes and bounds of the finished document and this is the problem with the British practice which employs the preliminary application. What are you entitled to as far as the invention as of what date? There is another thing with this series of preliminary applications and this is cognating it into one complete application. That is going to open up great uncertainty in the area of what the patent covers and it will be a field day for the lawyers as to what is and what is not properly claimed, disclosed, et cetera. Mr. POFF. Am I correct in my understanding that a preliminary application might be filed today and a second preliminary application on the same invention with some refinement might be filed next week? Mr. DELIO. That is correct; yes, sir.

Mr. POFF. This might go on interminably until the filing of the complete application?

Mr. DELIO. This is correct, sir.

Then the examination of that final document with the claims in it is going to take an awfully long time by the Patent Office. Do