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Number 1 is modification of patent examination proceedings to provide public adversary hearings. S. 1321 contains a number of provisions designed to provide public adversary hearings within the Patent Office. Section 122 provides that, prior to the first examination of an application for patent, the Commissioner shall index, make publicly available and publish the application. Under section 135(a), any person may then notify the Commissioner of any information which may have a bearing on the patentability of any claim of the application. Thereupon, such person may participate as a party, in an adverse role to that of the applicant, throughout the examination proceeding. Section 23 of S. 1321 affords the opposer, as

, a party, the right to discovery governed by the Federal Rules of Civil Procedure in any such proceeding. The Patent Office is given subpoena power to enforce discovery orders.

The administration is in full agreement that, before a patent issues, there should be an opportunity for interested members of the public to appear before the Patent Office in opposition to its issuance. The primary reason why such a proceeding is desirable is that it tends to assure that more relevant information concerning patentability will be considered by the Office prior to the time of issuance. Under the present system, a number of patents that the Office issues are later invalidated in court because the patentee's adversary in such subsequent litigation produces highly relevant information that was never considered by the Patent Office. It has been frequently asserted that in excess of 70 percent of the patents litigated in recent years have been held invalid. While this statistic can be misused, it is still alarming. A more recent study demonstrates that in more than three-fourths of these cases the Federal courts have relied largely on prior art or other information not cited to or considered by the Patent Office when rendering decisions as to invalidity. This strongly suggests that the primary goal of patent reform should be to get as much information concerning patentability from all sources —from the applicant himself, from the Office search files, and from members of the public-before the Office prior to issuance. The costs of failure to make such changes are immense, and should not be measured merely in terms of a high mortality rate for issued patents that are litigated in court.

As the Supreme Court has observed, patent litigation is particularly complex and expensive. As a result, many alleged infringers may of necessity prefer to take licenses under patents—even ones of dubious validity-than to pay the costs of litigating. The availability of an opposition proceeding prior to issuance, however, provides another meaningful and perhaps considerably more attractive alternative-presenting information concerning patentability to the Office. The Office would then be able to apply its expertise at the time when it can be most useful.

The opposition proceeding provided in the administration reform bill would take place after the Patent Office had fully reviewed the application, perhaps rejecting some of the original claims and narrowing others. At such time, a “notice of allowability" as to the application would issue to the applicant. Thereafter, the patent application and the Patent Office file concerning its prosecution

would be made publicly available, and the Office would publish this fact. From that time, a 3-month period will be provided during which any person who wishes to oppose issuance may request further examination of the published application on the basis of information he submits to the Office, without revealing his identity to the patent applicant. If the information submitted consists of patents, publications, or other documents or information in tangible form related to the state of the art, the Commissioner is then required to direct such further examination, by a primary examiner other than the one who originally examined the application.

If the opposing party so elects, however, he may identify himself and participate in a public opposition proceeding conducted by the Board of Examiners-in-Chief. The Board could refuse to conduct such a proceeding only if it found that the opposing party had offered no information which could form the basis for the Office to determine that a claim in the application is not allowable, a standard similar to that employed in ruling on summary judgment motions under the Federal Rules of Civil Procedure.

In an opposition proceeding before the Board of Examiners-inChief, the opposing party would be entitled to submit written briefs, present oral argument to the Board, take discovery in accordance with the Federal Rules of Civil Procedure, present oral testimony, and cross-examine witnesses. Two types of proceeding before the Board are contemplated—first, one involving the interpretation of only documentary evidence as to the state of the art, as would be disclosed, for example, in prior patents and magazine articles; second, all others, including proceedings involving fact questions as to conduct, prior public use or sale, prior inventorship, and the like, In the former type of proceeding, discovery, presentation of oral testimony, and cross-examination would all be somewhat more limited than in S. 1321, but these rights would be unconditionally available to opposing parties in the latter type of proceeding. Even in the former type of case, however, these rights would be available upon a showing of good cause to the Board.

The administration bill also provides that opposition proceedings before the Board of Examiners-in-Chief are open to the public. Finally, any party to such an opposition proceeding may take an appeal from the Board's decision pursuant to the provisions of the chapter of the administration's reform bill governing judicial review of Patent Office decisions.

The administration's proposal does not permit the public to participate in an adversary role throughout the examination process, as proposed in S. 1321. There are several reasons for this difference. The first is traditional. One of the rationales used to explain the patent system is the "contract theory”--the idea that the Government induces the inventor to disclose his inventive advance in science by promising him a limited monopoly in exchange for full disclosure thereof the public. Since the first patent statute, however, disclosure to the public has occurred only after the Government has issued a patent. Obviously, all proposals for opposition proceedings prior to issuance require a change in this practice, if they are to work. The question is how much of a change is necessary in order to secure from members of the public an adequate amount of information relevant to the question of whether any given patent should issue.

The administration bill seeks to strike a balance. Applications will continue to be examined by the Office, without public participation, primarily on the basis of information in the Office search files and information submitted by the applicant. Even under current examining procedures--and I will briefly describe some improvements in those procedures that the administration bill makes in a momentPatent Office statistics show that this winnowing process results in rejection of some 30 percent of the applications filed and a substantial narrowing of the scope of the claims contained in many others. It seems that there is no need for public participation to challenge claims that will never be allowed or that will be substantially narrowed by the Office. Thus, the administration believes that the optimum time to permit public participation is after the Office has determined-first, that it will issue a patent, and second, what the scope of that patent should be based on all of the information then available to the Office.

A second reason for limiting somewhat the direct participation of the public in the examining process is the concern that in some cases such rights may be abused, particularly by one or more financially powerful and entrenched firms to forestall the issuance to a newcomer of a patent which threatens an established market structure or position. Any opposition proceeding can be misused in this way, and antitrust enforcement officials will have to be particularly vigilant to see that such abuse, insofar as it can be curbed by the rules articulated in such cases as California Motor Transport and Otter Tail, does not occur. But the simple fact is that the longer a competitor has to oppose the application--in S. 1321 virtually from the date it is filed—the greater his opportunity for unjust harassment. Again, it seems to us that the best course is to strike a balance, and that is what the administration proposal for opposition proceedings seeks to do.

Having said all of this, I must recognize that unlike S. 1321, the administration bill would continue the secrecy of most examination proceedings before the Office. The ex parte nature of patent examination creates greater opportunity for abuse by an unscrupulous applicant, and has provoked some critical comment by courts and commentators. However, in addition to the opposition proceeding proposed by the administration, our reform bill would make a number of further changes in Office procedures that will substantially reduce the possibility of abuse of the ex parte nature of exami. nation proceedings. We propose, as does S. 1321, that there be a statutory duty of disclosure upon all persons appearing before the Office. This duty reflects existing law, and is more specific, and we believe more effective, than that articulated in S. 1321. The inventor would file an oath at or near the time of filing; the applicant, whether inventor or owner, would also have to file an appropriate statement, instead of an oath as provided in S. 1321, shortly after the notice of allowance of the patent. Unlike the statement by attorneys found in S. 1321, the administration bill would provide that the submission of papers to the Office by the responsible patent attorney would be deemed to be an affirmative representation to the Office that there has been compliance with the statutory duty of disclosure. The administration bill would also require submission by the applicant of a patentability memorandum or brief, which would be used by the Office during the examination process. Unlike S. 1321, however, the Commissioner would be given the option, after an appropriate report to Congress in five years, of determining whether or not to continue to require such a brief, or to modify the applicability of the requirements of the bill.

Also, the administration bill would organize examination proceedings more like regular adjudicatory proceedings and provide for the making of a full record of Office actions. The examiner would be specifically empowered to control the examination proceeding. The Administration Bill would further require that assertions of fact be reduced to writing, and that they be supported by empirical data, unless the applicant submits an appropriate showing that there is a reasonable basis on which to draw the conclusion stated. Moreover, if he considers it desirable the examiner would be empowered to request of the applicant further support of any assertions of fact or contentions of law. Many of these provisions are not found in S. 1321.

Although I will discuss this subject in more detail when I move on to the Office of the Public Counsel proposed in S. 1321 it is appropriate to note here that under the administration bill the primary examiner would also be able to request the assistance of an officer within the Office, who then would be able to participate as an adversary to the applicant in the examination proceeding.

Moreover, the administration bill provides that all decisions by the Office shall be in writing and follow the requirements of the Administrative Procedure Act that reasons be given that furnish an adequate basis for Office actions. And, whenever the patentability of a claim is to be decided by the Patent Office, the bill expressly states that the applicant has to meet the Administrative Procedure Act's rule that the proponent of an order has the burden of establishing that the claim is allowable. All final or nonfinal decisions by the Office involving the interpretation of title 35 or regulations promulgated thereunder would hereafter be made public, subject to appropriate safeguards.

We believe that the sum of these procedural changes will be to make Patent Office proceedings more like those of the familiar administrative agencies, to permit the Oflice to secure from applicants all information within their control which is needed to pass on patentability, and to assure preparation of a complete record of the proceeding. The latter consideration is especially important, since this improved record of Office proceedings will be available both to potential opposers after notice of allowability and to litigants in subsequent court cases concerning issued patents.

I now turn, Mr. Chairman, to the creation of the Office of Public Counsel. S. 1321 would create an Assistant Commissioner of the Patent Office, designated the Public Counsel, and section 3(d) gives this new official a number of responsibilities. He has the full rights

of any third party before the Office. He may intervene in any Office proceeding, or take an appeal therefrom. He is to defend or prosecute appeals from any final action of the Patent Office. He may conduct such investigations as are appropriate to carry out the purposes of title 35. He is specifically made independent of the Commissioner of Patents in the performance of these duties, and may not be removed from office by the Commissioner.

The administration bill does not provide for an independent Public Counsel with responsibilities of this scope. One of the concerns of the administration and the task force has been that the very breadth of the responsibilities conferred upon the Public Counsel by S. 1321 would be likely to impede the effective performance of any one of those functions, particularly when the workload of the Patent Office is presently running at about 115,000 applications filed each. year.

Thus, the administration bill would require the Commissioner to appoint an officer in such organizational structure as he and the Department of Commerce decide. The administration bill also attempts more specifically to define the officer's role, in the belief that such definition will maximize his effectiveness and usefulness. This officer would be empowered (but not obligated) to participate as an adversary in an examination or other proceeding upon the request of a primary examiner, or the Board of Examiners-in-Chief, would be obliged to defend (but could not initiate) appeals to the Board of Examiners-in-Chief and the courts, and would conduct investigations pursuant to authority similar to that proposed in section 24 of S. 1321. Unlike S. 1321, however, this officer would not have independent authority to intervene in examination proceedings, nor would he be able to appeal to the allowance of claims by the Office. He would not be appointed by the President, by and with the advice and consent of the Senate, as provided in S. 1321. However, the Department of Commerce could, and presumably would, make the officer's post one in career civil service.

We believe that two aspects of the oflicer's role as defined by the administration bill are especially significant. First is the officer's responsibility to defend the rejetion of claims by an examiner when the applicant appeals such rejection to the Board of Examiners-inChief. This is an improvement over existing practice, under which the examiners must defend their decisions before the Board--a practice which has generated criticism to the effect that it will bias examiners against rejection and in favor of allowance. Such practice also makes a patent examiner both a judge and, subsequently, an adversary litigant. Second is the provision that a request from a primary examiner serves as the trigger for the officer's participation in the examination proceeding. This should serve to make certain that significant proceedings involving important legal and factual issues occupy the officer's time, since the Office personnel closest to the application process—the examiners--will be free to request assistance from the officer through their primary examiners. Such assistance would, of course, include discovery if necessary.

Now let me turn to deferred examination. Chapter 18 of S. 1321 would create a system of deferred examination of patents. Unless an

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