be some disagreement about the precise meaning of that, is to permit a re-evaluation of the requirement at a particular point in time and permit, to a certain degree, some redesignation by regulation-perhaps even as to classes of cases where the brief would be required. The requirement is mandatory at the outset of the bill. But the provision I have been discussing would create some flexibility for the Commissioner, as well.

Senator HART. I asked this in part because twice the Patent Office tried to require this patentability brief by rulemaking, and it was included in the bill of 1971.

I am not sure that either of us will have a better understanding at the end of these next several questions as to where we should be on how many years, but let me try anyway.

You recommended a 20-year patent term. That is 3 years
Mr. KAUPER. From the date of filing.

Senator HART [continuing]. From the date of filing, a 3-year increase over the present.

Mr. KAUPER. Well, the extent to which it is an increase, of course, depends on when you begin the term.

Senator HART. Your bill and ours start the term from the date of filing rather than the date of issuance?

Mr. KAUPER. That is right.

Senator HART. The Patent Office expects to get to its goal of an 18-month pendency period. Assuming that happens, we would calculate the new patent term at 1812 years.

Mr. KAUPER. I understand your arithmetic. A 20-year term, of course, is the term that was in the committee print earlier.

Senator HART. What I am really leading up to, without arguing 18 months, good or bad-does the Department have or know of any economic study that suggests 20 years?

Mr. KAUPER. I think the answer to that is no.

Senator HART. On the business of the potential anticompetitive effect in this business of deferred examination, it is your judgment that it could or would be anticompetitive because competitors would not know which claims might be allowed and hence would be disadvantaged.

Let's assume that to be correct could you not argue that that would be better than the issuance of a large number of low quality patents?

Mr. KAUPER. Yes; I think that is true, Senator. I think if one assumes that there is going to be a large number of low quality patents issued, then, weighing all various competitive factors, obviously that becomes fairly important.

I think, however, discussing deferred examination, that there are a vareity of choices that are present here. One way is to proceed along the deferred examination route. Another is to say, the best way to improve the quality of issued patents is to get the most effective examination as rapidly as possible from the outset. This provides more certainty. It may assure quality from the outset.

And I think what we are saying is that we believe, in essence, that that is the preferable course, rather than starting down the path of a deferred examination system.

Now, obviously, one's views depend on how successful one thinks the process will be.

Senator HART. Thank you very much.

Mr. KAUPER. Thank you, sir.

Senator HART. There being a vote occurring now, I would suggest a recess until 2 o'clock.

[Whereupon, at 12 p.m., the subcommittee was recessed to reconvene at 2 p.m., the same day.]

AFTERNOON SESSION

Senator HART. The subcommittee will be in order.

Mr. BRENNAN. Mr. Chairman, the first witness this afternoon is Mr. Dunne of the Patent Office Society.

STATEMENT OF MR. JERRY DUNNE, CHAIRMAN, LEGISLATION COMMITTEE, PATENT OFFICE SOCIETY

Mr. DUNNE. Mr. Chairman, members of the committee, my name is Jerry Dunne. I am the chairman of the Legislative Committee of the Patent Office Society.

I wish to state for the record that I am appearing here today on annual leave, and that I am an employee of the Patent Office.

The Patent Office Society is an organization devoted to the furtherance of the patent and trademark systems and the professional development of its members. The society numbers among its members over 1,100 Examiners and other professions of the Patent Office. This represents over 90 percent of the total number of professional employees in the Patent Office. Although many of its members are employees of the Patent Office, the society conducts its affairs independently of the Patent Office, thus this report does not reflect and should not be construed to be the views of the Patent Office administration.

ESTABLISHMENT OF THE PATENT OFFICE AS AN INDEPENDENT AGENCY

Section 2 of S. 1321 provides for the establishment of the Patent Office as an independent agency. The Patent Office Society favors in principle such an administrative restructuring.

The Patent Office, in fulfilling its duties in administering the patent system, affects three separate sectors of the national community. The decisions and policies of the Office affect the business community, the scientific community, and the consuming public. Presently, decisions of policy effecting the patent system are influenced by the Secretary of Commerce, who is charged with furthering American business interests, the Assistant Secretary for Science and Technology, charged with furthering the interests of the scientific community, and the Patent Office administrative personnel. The divergent and possibly competing interests of these various sectors provides for at best, a decisionmaking process responsive to the interests of the various sectors and at a minimum, competing policy

interests that frustrate attempts at positive and effective manage

ment.

S. 1321 provides an administrative restructuring that would retain. the positive aspects while diminishing the negative influences in the present administrative feedback between the Commerce Department and the Patent Office. Section 10 of the proposed bill, providing for the Advisory Council on the Patent System, insures the necessary input to the decisionmaking process from those sectors of the citizenry affected by the policy decisions of the Patent Office. Section 2 of S. 1321, establishing the Patent Office as an independent agency, frees the Office from the possibility of its programs and policy decisions being affected by interests and influences not in the best interests of the general public nor the patent system.

I would like to move on to the creation of the Office of Public Counsel. Section 3 (d) of S. 1321, creates the Office of Public Counsel. The Patent Office Society favors in principal the creation of such a position within the Office.

The creation of the Office of Public Counsel will place additional burdens upon some patent applicants of time and expense. Whenever the Public Counsel intervenes in any proceeding, the applicant will incur additional legal expenses and possibly a delay in issuance of his patent. However, by the very nature of the Public Counsel's mission, that is, to intervene in the public interest, the Public Counsel will participate in patent applications they will have a perpensity to be of significant economic influence and thus of great value to the applicant. Under such conditions, the additional expense that may attach to the applicant will not defer him from filing nor unduly prejudice his right to the patent monopoly, which offers him such potential benefits. When the Public Counsel intervenes in the proceedings before the Office on applications of substantial economic interest to the nation, the additional expense to the applicant and the government is justified to insure such patent applications receive the best possible consideration in the Office, to protect not only the interests of the public, but also the rights of the applicant.

The specific statutory language of section 3(d) of S. 1321 is objected to, as can be noted in appendix A. It is the position of the society that certain safeguards, to insure proper qualifications of the public counsel and adequate staff, be provided. Further the language requiring review of all Office proceedings places an undue burden on the public counsel. To monitor all proceedings would require a staff approaching in size that of the examining corps. It is urged that such a large allocation of manpower would better be used elsewhere within the Office with more dramatic results in improving the patent system. Further it is suggested that the specific delineations of when it is necessary or appropriate for the public counsel to intervene or participate in Office proceedings are too restrictive and should be deleted, enabling the public counsel to take action whenever appropriate and not be limited by specific statutory language defining his authorization. Attention is directed to appendix A, which contains the society recommendations on specific statutory language of section 3(d).

[The information referred to follows:]

STATEMENT OF THE PATENT OFFICE SOCIETY

APPENDIX A

The following are the changes and reasons for same. Material to be deleted has been bracketed ([ ]), material to be added has been underlined. Section 3.-Commissioner's and other officers

(a) There shall be a chief administrative officer of the Patent Office, the Commissioner of Patents, referred to in this title as the 'Commissioner'. The Commissioner shall be appointed by the President, by and with the advice and consent of the Senate, and he shall be compensated at the rate now or hereafter provided for level IV of the Executive Schedule pay rates (5 U.S.C. 5315). The Commissioner shall superintend or perform all duties required by law respecting the granting and issuing of patents and the registration of trademarks, and he shall have charge of property belonging to the Patent Office. The Commissioner is authorized to promulgate rules and regulations governing proceedings before the Patent Office and to prescribe such further rules and regulations which may be necessary for administration of the Patent Office, not inconsistent with law. [; to define any and all terms used in this title in connection therewith; and otherwise to prescribe such further rules and regulations as may be necessary or proper for purposes of administration of the Patent Office.] (1)

(b) There shall be a Deputy Commissioner of the Patent Office, who shall be appointed by the President, by and with the advice and consent of the Senate, and who shall be compensated at the rate of now or hereafter provided for level V of the Executive Schedule pay rates (5 U.S.C. 5316). The Deputy Commissioner shall perform such functions as the Commissioner may assign or delegate and he shall act as Commissioner during the absence or disability of the Commissioner or in the event of a vacancy in the Office of Commissioner.

(c) There shall be no more than three Assistant Commissioners of the Patent Office, who shall be appointed by the Commissioner and who shall be compensated at a per annum rate of basic compensation fixed by him not in excess of the maximum scheduled rate provided for positions in grade 18 of the General Schedule (5 U.S.C. 5104). Such Assistant Commissioners shall perform such functions as the Commissioner may from time to time assign or delegate. In the event of vacancies in the Offices of Commissioner and Deputy Commissioner, or their absence or disability, the Assistant Commissioner senior in date of appointment shall fill the Office of Commissioner until said vacancies, absences or disabilities terminate.

(d) There shall be in addition an Associate [Assistant] (2) Commissioner of the Patent Office for Appeals, Litigation, and Public Counsel referred to in this title as the 'Public Counsel', who shall be appointed by the President, by and with the advice and consent of the Senate. The Public Counsel shall be a person competent legal knowledge in the intellectual property field and possessed of scientific ability. [The position of Public Counsel shall be in the competitive service, and the](3) The per annum rate of basic compensation therefor shall not exceed the maximum scheduled rate provided for positions in grade 18 of the General Schedule (5 U.S.C. 5104). The Public Counsel shall assure as an advocate, and through the adversary process, that high quality patents which meet the statutory and constitutional criteria therefor issue Public Counsel's approval, an adequate and competent staff for the Public from the Patent Office. To that end the Commissioner shall provide, subject to Counsel so that (4) he may (5) [shall] consider and review all application proceedings before (6) [in] the Patent Office, and he or his delegates:

(1) may intervene and participate at any time in the above mentioned (6) [any] Patent Office proceedings, or appeal therefrom, when, in his discretion, it is necessary or appropriate to do so [:] ; and

[(A) in the public interest to assure the integrity, strength, and reliability of a high quality patent system; or

(B) in circumstances which indicate the public need toanalyze or defend an important, new, or developing theory of law; or

(C) in the case of important, new, or developing areas of technology; and] (7)

(2) shall prosecute or defend appeals from any final action of the Patent Office; and

(3) shall have all other rights and powers afforded parties under this title; and

(4) shall take such other action, participate in such other proceedings, and conduct such other investigations or inquiries, as may be necessary or appropriate to carry out the purposes of this title.

The Commissioner may also assign or delegate other duties to the Public Counsel, to the extent such assignment or delegation does not interfere with the responsibilities of the Public Counsel provided by this subsection. In all other respects, the Public Counsel shall be independent of the Commissioner in carrying out his responsibilities hereunder.

(e) The Commissioner shall, subject to other requirements of law, appoint other officers and employees of the Patent Office, assign or delegate to them the functions of the Office, and fix per annum rate of basic compensation therefor.

Section 4.-Restrictions on officers and employees as to interest in patents

Officers and employees of the Patent Office shall be incapable, during the period of their appointments and for one year (8) [three years] thereafter, of applying for a patent or, during such period and for one year (8) [three years] thereafter, being named as an inventor in an application for patent for an invention made during such period or for one year (8) [three years] thereafter and of acquiring, directly, or indirectly except by inheritance or bequest, any patent or any right or interest in any patent, issued or to be issued by the Office. Such applications for patent thereafter shall not be entitled to any priority due earlier than one year (8) [three years] after the termination of the appointment of such officers and employees.

Section 5.-Board of appeals

(a) There shall be in the Office not to exceed twenty-four examiners-in-chief, who shall be persons of competent legal and scientific knowledge in the intellectual property field (9) appointed under the competitive service, in the manner prescribed for Administrative Law Judges (5 U.S.C. 3105; 5362, 7521). The per annum rate of basic compensation of each examiner-in-chief shall be fixed at not in excess of the maximum schedule rate provided for positions in grade 17 of the General Schedule (5 U.S.C. 5104).

(b) The examiners-in-chief shall constitute a Board of Appeals in the Patent Office. [The examiners-in-chief shall be persoons of competent legal knowledge and scientific ability, who will perform and exercise the judicial functions of the Office.]

(c) The Board of Appeals shall review all final orders (as that term is defined in (5 U.S.C. 551) of primary examiners and may review orders issued pursuant to Section 23 of this title, except with respect to such matters relating to Office procedure which the Commissioner has by general rule or regulation assigned for determination by a single member of the Board of Appeals, who shall from time to time be designated by the examiner-in-chief senior in date of appointment. Except as otherwise provided in this title, the Board of Appeals shall exercise all judicial functions, including all agency review of [or] appeals, under this title. The order of the Board of Appeals shall constitute final agency action (as that term is defined in 5 U. S.C. 551) in all matters considered by it, as shall the order of a single member in matters assigned for determination by him.

(d) Each appeal or other action shall be heard or considered by a panel of at least three members of the Board of Appeals, except as otherwise provided in subsection (c) of this section. Said panel shall be designed for each case by the examiner-in-chief senior in date of appointment, consistent with the provision of section 3105, of title 5, United States Code. The Board of Appeals has sole power to grant rehearings and/or reconsideration. (10)

(e) Whenever the Commissioner considers it necessary to maintain the work of the Board of Appeals current, he may designate any patent examiner of the primary examiner grade or higher having the requisite ability, to serve as