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reexamination so as to get all the advantages but yet save substantial amounts of manpower and printing costs.

Second administrative point—when the bill was introduced we proposed-and I think this was in S. 643—that the Commissioner would have the administrative flexibility to establish precisely the details of reexamination. So through experience it would be possible to arrive at the optimum arrangement. Therefore, it would seem to me that it would be best not to require the Commissioner to use the primary examiner that may have handled the original case, because there has been strong feeling in certain quarters that it might be better to have a different examiner or different set of examiners to take a fresh look at it, because the original primary examiner might subconsciously have some feeling that because he allowed the case the first time, that maybe it might not be the thing to do.

I do not think there would be anything intentional here, but nevertheless, the idea was to provide the possibility of a fresh look by a fresh group of examiners.

Moving on to the matter of the Office of Public Counsel, my experience would tend for me to conclude that I would be opposed to the establishment of the Office of Public Counsel. In any event, if this were to be considered in any future legislation, I would strongly recommend that a more detailed establishment of what would be involved in this should be presented, because I hear all kinds of different versions. I don't know whether anybody really knows precisely what we are talking about. But my experience would indicate that there could be many administrative problems. I am not sure that the end result would accomplish the intended purpose.

And furthermore, I think for X millions of dollars that would be involved here, I feel that there are other ways that this money could be spent to improve the validity of issuing patents. I'm wholly sympathetic with the objectives, but I think there are better ways to proceed.

For example, the question of whether a patent should be granted or not, I think, could be much better handled by the present primary examiners in the Patent Office who have the education, the experience. They are specialists in their particular field. I think it gets down to the real judgment that has to be made in the Patent Office: that is, is this invention new, useful and particularly unobvious to a man skilled in the art? The primary examiners by their training are inherently better able to make this very important judgment.

I would point out that in my judgment the key to improving the quality of the output of the U.S. Patent Office is to provide means, new means for bringing more information to the attention of the examiners, and there are steps under way here, for example, to improve the examiners' search files for foreign patents and unpatented publications to provide, among other things, English language extracts of these important pieces of prior art.

Also, it seems likely that some sort of reexamination procedure will result from the present hearings, and will be enacted into law, and this will provide greater information to the Patent Office with which to enhance the validity of the issuing of patents.

Also, I would strongly recommend that concentrated effort be made to study and evaluate just what do we mean by quality. When I was Commissioner we started a very extensive program to really get to the nuts and bolts of what are we really talking about. For example, it seemed to me very clear that there is a matter of human judgment involved here where reasonable men can differ. I do not think that you should ascribe any negative aspects to the Patent Office in situations like this.

For example, if the Supreme Court comes down to a ruling of 5 to 4 in favor of a particular view, does that mean that the other four judges do not have a reasonable basis for their position? This is really what goes on in the Patent Office. There are some applications on inventions that are clearly unpatentable, and they are rejected, and there are applications on inventions, I think everybody would agree, are clearly patentable and the patents are granted on these. But out of about 100,000 applications filed each year, in the middle there are some very, very close questions where I think people of reasonable judgment can disagree. I think factors like this need to be evaluated to really come to grips with what kind of quality problem do we have, what is its nature, what steps do you take to improve.

Moving on to deferred examination, this was another one of the major subjects that was carefully considered by the Presidential Commission which came to the general conclusion that they were in favor of a high quality examination system, basically, and that this could be accomplished. They were in favor of it, and only if this were not possible would they recommend any possibility of deferred examination.

When I was Commissioner of Patents in the middle of the 1960's. of course, this subject was a very hot item because the Dutch and the Germans were considering adopting it. We took a careful look at it in the United States, and we came to the conclusion that as far as the U.S. Patent Office was concerned from a budget standpoint, we could save a little bit on examining manpower but in other areas we would have to use more manpower, we would have more printing, and the net effect would be it was not really going to help the U.S. Patent Office from a budget standpoint, and that deferred examination was only really justified in case the Patent Office could not keep up with its workload.

I might say from my personal experience in the private sector, I feel that although there would be savings in certain aspects of patent work under a deferred examination system, I think that this would be completely offset by other costs, and it would really not be a good step for the United States to take.

I would like to make this point very strongly. I think that people should recognize the great contribution that the U.S. Patent Office makes to the matter of certainty of the operation of the U.S. patent system. It is not perfect, but if one were to live without an examination system, I think they would recognize a great deal of the problems that are involved. In fact, the French had a nonexamination system and they concluded that this was not working in the best interests of their country, and they subsequently revised their patent system.

But what the Patent Office does, it eliminates, say, about 30 percent of the patent applications because the inventions are not patentable. In most cases, in the remaining 70 percent, the claims are trimmed down to a more reasonable scope. In my judgment, these are great contributions to the certainty of the patent system, and without this, such as in the case of deferred examination system, we would find and experience a number of undesirable results.

I would point out that the European countries that are now developing European patents, are planning on having basically a full examination system, and I know from personal discussions with people such as Dr. Haertel, head of the German Patent Office and the EEC study group, that they feel that the best system is the full examination system.

Moving on to the matter of patent fees and maintenance fees, I would point out that I came in as Commissioner of Patents at the time, just about the time the last fee bill came into effect, and I remember the discussion. There were some groups that said that the patent applicant should not pay any fees. Other groups said that the applicant should pay fees to recover 100 percent of the cost of running the Patent Office, and finally legislation was passed say 65 to 75 percent. But I think everyone recognized that this was sort of a compromise between the different views, sort of picking up a number out of the hat.

So I thought that probably in another 5 years or so, the subject would come up again, and I thought that we ought to try to approach it more logically. So a study was started while I was Commissioner to try to analyze the different operations that we conducted to try to find out who should really pay for these, and it came out that there were certain operations which really a patent applicant should pay for. There were others that were sort of mixed, that the patent applicant and the public should share these. Then there were certain operations clearly for the benefit of the public, and that these should not be paid for by the applicant.

The overall result of the study indicated that about that time fees should recover about one-half of the total costs of operating the Patent Office. Somehow I think that probably the results of that study would still apply to today's situation and the Patent Office fees should probably recover about half of the total cost.

I guess that recovery is now down to about 40 percent, so that on the basis of this study, I would say that it was maybe time to consider a somewhat modest increase in Patent Office fees.

However, if we talk in terms of substantial increases such as have been mentioned in the proposed legislation, the fees could increase 50 to 100 percent, and if this became necessary, I think that the fees, the filing fees, the issue fees, would be getting rather burdensome, particularly on small companies and independent printers.

I have attached to my statement a graph which was printed in the February Issue of Action, the journal of our association, and to me, the interpretation of these figures indicates that the percentage of patents issued to independent inventors was leveling off in the early 1960s for mainly about 4 years ago, and that when the fee bill came in, suddenly there was quite a significant dropoff.


So, my interpretation would lead me to conclude that several thousand applications by independent inventors were not filed because of this fee increase, and I think any big increase in the future would have the same result, and I think that is undesirable. But if we have to have a significant fee increase, I think the concept of S. 1321, of keeping the initial fees down in the range of $100 is not a bad idea. I think it's aimed at trying not to discourage people from coming into the patent system, and I would be in favor of deferring part of the fees, to be paid, not on an annual basis, but perhaps every third, fourth, or preferably every fifth year. I am not in favor of the tremendous fees provided in S. 1321, but I think if, say, the fees are to be increased in the range of 50 to 75 percent of the cost of operating the Patent Office, I think that we could have a situation where you would keep your fees-initial fee relatively low—and yet not have very high maintenance fees.

Moving on to the last of the five subjects, the administrative restructuring of the Patent Office, I might point out that for many years I have been proposing the establishment of a new position of Assistant Secretary of Commerce for Invention and Intellectual Property.

Initially I did not have much support for this, but I think that from many different quarters there is increasing support for elevating the voice of the patent system in the executive branch of Government to say to the Assistant Secretary level.

All things considered, I believe that at this particular point in time, it would be desirable to elevate the position of the Commissioner of Patents in the Department of Commerce such that it would no longer be required to report to the Assistant Secretary of Commerce for Science and Technology, so that the position of the Commissioner of Patents should be elevated to the Assistant Secretary level or preferably the under-secretary level. There are certainly precedents for this in the Department of Commerce because when I was Commissioner of Patents one of the sister bureaus was the Weather Bureau, which has subsequently been raised, I understand, to the level of Under Secretary of Commerce, who reports directly to the Secretary of Commerce. I believe that such a change in the case of the Patent Office would be highly desirable, and would improve the operation of the office, and improve its contribution to the operation of the U.S. patent system.

So, Mr. Chairman, that concludes an overview of the highlight of my prepared statement.

Senator Hart. Thank you, commissioner, for the summary, and for the statement.

On this business of fees, you made your position clear both in your summary and in your prepared statement. In your prepared statement on page 11, you put it this way: "In my opinion the present Patent Ollice filing issue fee should definitely not be increased; in fact, it should probably be reduced.” And you referred us to the graph attached to your statement which reinforces your concern about the declining number of patents issued to individuals.

I think all of us share that concern. Now, that is the reason for proposing keeping the initial fees to a minimum and getting back

the Patent Office costs through maintenance fees for the life of the patent, and presumably after the invention has been marketed.

Now, the schedule of the maintenance fee provided for in S. 1321, often has been criticized as being too high, and burdensome both to the Patent Office and to the patent holders because it is on an annual basis.

You have reacted to that, suggesting perhaps 3, 4 or even 5 years as the period between fee payments.

Could you elaborate just a little? Let me ask it this way.

Why would it be more burdensome on an annual basis than on a 5-year basis? Is there any significant burden that is avoided by spreading it out?

Mr. BRENNER. I think there is part of this is administrative or clerical, involving having to send out notices and send in fees. Second, there is a professional judgment that has to be made, and if you have to get a committee of people who are experts in different aspects of the company's business, if you have it every year it consumes more professional time than if you had to do this every 5 years.

So I think those are the factors which for anybody who has had experience with the foreign systems of doing this every year, it gets to be quite a task. So the idea here was, I think, that enough money could be raised on a 5-, 12-, 15-year basis or something like that to provide the income, and yet, avoid some of these administrative problems.

The first fee I think is quite important. I think you recognize that in the bill, S. 1321, by giving a patentee enough breathing room timewise to see if he could not generate some interest, and I think that is particularly the most important part of this.

And also I think the system, particularly for independent inventors, should not be too burdensome; because if a person has to pay a fee, he may drop his application. I know of inventors who have done this. This is in foreign countries. They have dropped their patents only to find out that, by golly, somebody had generated some interest, and they could have licensed their patents for a royalty if only they had the patent. Because they did not have the patent, the prospective licensee did not feel justified in commercializing it, and nobody gained from it.

So if we have to have a system of deferred fees, I think it should provide the least disincentive in trying to make the patent system work the way it is supposed to; that is, for the public.

Senator Hart. You mentioned the foreign experience. What, to the extent that you understand it, has been the experience abroad with maintenance fees?

How do they keep track of them?
Do you have any ideas about that or any knowledge ?

Mr. BRENNER. As I understand it, it is up to the individual or the patent agents to keep track of when these fees are due and to send notices around and to then make these judgments as to when these fees should be paid. These are done either annually-some organizations have computerized systems of doing this. It does involve a lot of shuffling of a lot of paper.

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