We appreciate this opportunity to testify before the subcommittee and to discuss proposals which have been made to revise the patent laws of the United States.

The chamber supports many provisions of the bills before this subcommittee to revise U.S. patent laws and modernize patent practice. We favor such coordinated changes as will demonstrably raise the quality and reliability of patents, hasten the disclosure of new technology, and reduce the time and expense of obtaining and enforcing patents.

We agree that some modification of the present system is desirable. Our position, in general, however, is that the administration bill (H.R. 5924) is too drastic and will not necessarily bring about change for the better.

Another comprehensive bill (H.R. 13951), while preserving many features of the present patent law, includes worthwhile changes which would enable the patent system to better meet the challenge of an expanding technological era.

I shall take up these bills in detail later in our testimony, but first I would like to tell the subcommittee why the chamber is concerned with a viable patent system and how our position on patent revision was developed.

We have followed closely the work of the President's Commission on the patent system, and our advisory panel studied its resulting report which was released in December of 1966.

We have considered the views of numerous organizations and individuals and have noted their comments on the Commission's recommendations to the President.

We have studied H.R. 5924 which was introduced on request of the administration and other bills, especially H.R. 13951 with certain proposed amendments.

Recommendations of our patent advisory panel as to applicable principles were approved by the chamber's board of directors on June 30, 1967. This statement is based on the positions thus determined on specific features of the legislation.

While supporting the objectives stated by the President's Commission, the panel agreed that these objectives had not been fully met, either in the specific recommendations of the Commission or in the administration bill.

The chamber appreciates, as many responsible organizations and individuals also do, that some proposals go too far-are too much of a departure from present law-and that disadvantages may well outweigh advantages. It is evident that persons who are close to the implementation of patent law, both in obtaining and in protecting patents, feel unwilling to support the administration proposal unless major objections are removed.

Considerable concern has been expressed that action may be taken by the Congress without sufficient study and understanding of the consequences. We believe that detailed analysis is vitally needed, and that expert testimony must be brought to bear on major provisions of the bills.

We would point for comparison to copyright law revision, legislation for which has been subject to patient and careful study by this subcommittee.

As a basic approach, we would suggest that no change be adopted until its cost, both in dollars and in the impairment of valuable property rights, has been most carefully weighed.

Although a major objective of the legislation is said to be to bring the U.S. patent system more closely into harmony with those of other nations, hasty action might easily produce more discord than harmony. The Congress would want to be certain, for example, whether some foreign practices are, as alleged, better than our present practices and that adoption would be a definite advantage to U.S. inventors and manufacturers.

With these preliminary observations on the record, we now turn to a consideration of specific provisions of the pending bills.

First-to-file

The fundamental approach of the Commission's recommendations and of H.R. 5924 is a shift from a so-called first-to-invent to a first-tofile system for determining the award of a patent between contesting inventors. Proponents have asserted that this basic change is essential to the attainment of the several interrelated objectives identified by the Commission.

While there is no question that we do live in a period of exploding technology, the underlying assumption of the Commission that the Patent Office faces an insoluble crisis and can no longer function in any meaningful way without a complete reform of the existing patent law does not appear supported by the facts.

Testimony thus far offered and the public statements of Department of Commerce and Patent Office officials on the whole suggest that the backlog problem, which is the basis for most attacks leveled against the existing patent system, is internal to the Patent Office and can be, and is being, solved by approaches available within existing law.

Further, one may question whether the proposed shift to a new first-to-file system really attacks this backlog problem, since it is reported that all of the world's major patent offices, many of which do use the first-to-file system, are suffering from increasing backlogs which are in many cases more serious than those of the U.S. Patent Office.

We note that the rules governing interferences have been modified recently by the Patent Office with the objective of limiting the number of interferences declared. Such changes emphasize the fact that existing law normally results in the award of the patent to the first inventor to file subject to the important right of the actual first inventor to contest priority in a specified set of circumstances.

H.R. 13951 provides for issuance of the patent to the first-to-file and preserves the opportunity for the first inventor to prove priority. We feel strongly that such a limited interference proceeding should be retained in order to avoid a race to the Patent Office, the filing of illprepared applications on untested inventions, and the installation of a system which favors the opportunist over the careful researcher.

It seems reasonable to us that this limited interference proceeding should be such that the burden of determining that a contest as to inventorship exists and of establishing a case for initiation of the proceeding should be on the second party to file, rather than on the Patent Office.

In order to reduce the period of uncertainty as to the validity of issued patents, opportunity for such a proceeding should be restricted to those second to file parties whose applications were filed within a year following the filing date of the first-to-file party and were copending prior to the publication of the application of the first party.

Some provision should be made to protect the first party to file against the inadvertent issuance by the Patent Office of a patent to a later filing party.

This could occur by reason of the fact that, as proposed in H.R. 5924, the Patent Office would not have the obligation to make interference searches. There is the further possibility that applications would not in every case be examined in the order of filing dates. In such circumstances, consideration should be given as to whether the senior applicant should be freed of the restrictions as to copendency and filing data.

To encourage inventors to take prompt action in bringing their inventions to the public, it may be desirable to limit in some way the dates of invention which an inventor may establish in order to prevail in the interference.

For example, in determining whether a party may have the benefit of a proved completion of his invention, it may be presumed that if he completed his invention more than 1 year prior to his effective U.S. filing date, he has so tarried in bringing the benefit of the invention to the public that he should not have the benefit of a date earlier than 1 year from his filing date.

Such presumption, however, should be rebuttable by a showing of activity, which is reasonable considering the surrounding circumstances, moving toward using or disclosing the invention for the benefit of the public.

Typical qualifying activity might include development for commercial use, publication of the details of the invention, offering the invention for sale, or taking action toward the filing of a patent application.

Effect of prior invention

We recognize the attractiveness of a system in which the factual situation that would permit a junior applicant to prevail in an interference should be equally effective both to defeat a charge of patent infringement brought by one who was not the true first inventor or to defeat the grant of a patent if brought forth during the citation period provided by either of the bills under comment. However, we find practical difficulties in this approach.

Defense of prior invention

We do feel that prior invention should be an absolute defense, available to anyone charged with infringement. Although such a defense would be of use primarily to the first inventor, who for some reason decided not to seek patent protection, we favor its applicability on behalf of other defendants because of the basic belief that the public should not be forced to pay tribute to one who is not the first inventor but has, nevertheless, obtained a patent.

Citation of art

On the other hand, citation during a citation period of prior invention, not evidenced by publication, public use or sale appears undesir

able, because the nature of proof would be such as to hinder the operation of the Patent Office in the prompt issue of patents. While it is relatively easy to evaluate proof in the form of documents or publicly recorded acts, private prior invention would require ex parte determinations by the Patent Office, which should more properly be made by a court in full inter parte procedures.

Citation of art, in our view, should thus be limited to patents, publications, and instances of documented public use or public sale which would be of interest in connection with the issue of the patentability of the claims in published applications. As now is the case, the applicant against whom such material is cited should have the opportunity of carrying the date of his invention back under a procedure such as that of rule 131 to avoid the effect of any such citation which does not constitute a statutory bar.

Grace period

The grace period of 1 year after publication, public use or sale, now available to inventors who wish to evaluate or perfect their inventions prior to entering the Patent Office, is abolished by H.R. 5924 as inconsistent with the institution of a first-to-file system.

No other reason is advanced for abolition of this concept. In view of our position regarding the preservation of limited interferences, we strongly favor retention of the grace period.

Preliminary application

The Commission, and presumably the drafters of H.R. 5924, have recognized the shortcomings of a first-to-file system without the equivalent of the modifications just enumerated. They have provided for a system of preliminary applications which would serve to establish, hopefully, at little expense to the inventor, the facts of inventorship in such a way as to permit early publication of inventions and the elimination of the extensive recordkeeping and uncertainties now charged against current interference practice under the present law.

Examination of section 120 of H.R. 5924, however, indicates that the preliminary application fails in every respect to meet these requirements.

A preliminary application, as defined, differs from the complete application under the present law in only two respects.

First, it need not make ritual reference to a description of the drawings, and, second, it need not include any claim defining the invention sought to be protected.

It offers protection to its author, however, only to the extent that it clearly discloses the invention sought to be claimed in the later filing which perfects and completes the application.

In view of the fact that the Patent Office routinely accepts complete applications under the present practice, even though various formal requirements are not met and even though only a single claim not meeting all the formal requirements is presented, there would be little or no saving in the filing of a new kind of preliminary application.

We see no need for a preliminary application as proposed. Informal applications which meet the present requirements of section 112 of the law would not necessarily require correction or perfection until the case is reached for examination.

Then the applicant could decide whether to draft a full set of claims and formal drawings.

Such a procedure could be advantageous to the "small" inventor. It could be instituted without the necessary result of the proposal of H.R. 5924 that examination of all applications be automatically deferred for 1 year.

Elimination of uncertainty

We would like to comment on three interrelated features of the administration bill which are directed to the goal of eliminating uncertainty as to the validity of issued patents.

These are the broadened definitions of prior art, the automatic publication of pending applications, and the provision of an opportunity for the public to assist by the citation of art and in revocation proceedings to block the grant of patents with invalid claims.

Prior art

Prior art would be defined to include public knowledge, use and sale in foreign countries. While this would make more art potentially available, it introduces great uncertainty, since there are no means for readily establishing the existence of such art.

Greater expense and greater uncertainty inevitably follow, when acts in foreign countries not reported by publication must be relied upon.

In any legislation, prior art should be limited to those things considered under present law, rather than to the definition in section 102 of H.R. 5924.

Publication

The automatic publication of applications as proposed in H.R. 5924, instead of increasing the speed of dissemination of new technology, can only cause proliferation of untested ideas which can be inserted in the literature without the benefit of review or editing by anyone.

For example, even published papers are always reviewed by a technical editorial committee. We think some review should be made.

The Patent Office should not become a publishing house for unevaluated speculations. At the same time, the existence of the threat of unexamined applications, as outlined for possible future infringement suits, appears greatly to increase the uncertainty facing one who would commercialize new technology.

It is recognized that the automatic publication of pending applications is required if third parties are to assist the Patent Office by citing art during the prosecution process; and such citation of art may be useful. It is recommended, therefore, that the advantages of citation of art be retained without the disadvantages of unverified publication of patent applications.

This can be done by requiring publication only after examination and allowance. Publication at request of an applicant, if included, should be accompanied by a fee sufficiently high to discourage use of the Patent Office as a publishing house.

Standby institution of deferred examination

The authority proposed to be given under sections 191 to 194 of H.R. 5924 should not be enacted at this time.

We understand that the Patent Office does not desire this authority to institute a deferred examination procedure and, in fact, has stated it would not use it even if authorized.

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