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examiner-in-chief for periods not exceeding six months each. An examiner so designated shall be qualified to act as a member of the Board of Appeals. Not more than one acting examiner-in-chief shall be a member of the panel of the Board of Appeals hearing any appeal or considering any case. The Commissioner is authorized to fix the per annum rate of basic compensation of each designated examiner-in-chief in the Patent Office at not in excess of the minimum scheduled rate provided for positions in grade 16 of the General Schedule (5 U.S.C. 5104). The per annum rate of basic compensation of each designated examiner-in-chief shall be adjusted, at the close of the period for which he was designated to act as examiner-in-chief, to the per annum rate of basic compensation which he would have been receiving at the close of such period of such designation had not been made.

Notes

(1) It is the Committee's opinion that the deleted phrasology is unnecessarily redundant and confusing. No reason to accent the power to define terms. Such power is an inherent power of an administrative law agency and such power should not be accented to the dereogation of other powers commensurate with the head of such an agency. Such phrasology may be interpreted as a grant of power above that intended.

(2) This position is independent of the Commissioner and thus it is felt the term 'associate' more aptly describes the position. Further, paragraph (c) above, limits the Office to three Assistant Commissioners and thus the use of ‘Assistant' in paragraph (d) is considered ambiguous, as the question arises, is this position in addition or one of the three referred to in paragraph (c).

(3) The language is inconsistent, requiring the Public Counsel to be appointed by the President from the civil service. It is the Committee's position that the Office of Public Counsel should be filled by the most competent person available and the civil service requirement unduly restricts the perogatives of the President to obtain the person most qualified for the position. To insure a high quality Public Counsel, the qualifications were broadly defined.

(4) The staff requirement reflects the need of the Public Counsel to be properly supported by the various administrative offices of the Patent Office in the performance of his duties, especially in the procurement of staff personnel.

(5) It is felt that the Public Counsel should have some discretion in reviewing Office proceedings. To review all proceedings would require a staff approaching that of the Office. Such a large expenditure of manpower and other resources would have a more pronounced effect on the Patent system if applied to examination. Further, the Public Counsel must be free to allocate his resources to areas of most critical and pressing need without being hampered by the statutory requirement to review all proceedings.

(6) The language has been made more specific to ensure the Public Counsel will not become involved in purely administrative matters as employee griev. ances and employee organization contract interpretation and negotiation.

(7) These lines considered overly restrictive in defining the scope of the Public Counsel's activities.

Circumstances may vary, and the Public Counsel must be free to allocate his resources wherever it is “necessary and appropriate to do so" without having to justify his motives and intentions in specific statutory language that may become obsolete with the changing nature of the law and the national interest in the intellectual property field.

(8) It is felt that in the age of compact prosecution, where applications are to issue within 18 months, the three year requirement imposes an unreasonable restraint on the right of former employees of the Office to own property. Further, as this title allows for publication of applications, the staff of the Office has only a limited knowledge (of what is significant) over that which is public. No need seen to expand over present law.

(9) The phrase "judicial functions" is objected to as unduly broad and uncertain. As the re-examination procedure requires the primary examiner to perform many of the functions of a hearing examiner and thus, in effect, the primary examiner performs quasi-judicial functions, the substituted language is preferred. as more exact. Further the Board does not review certain peti. tionable matters and thus the substituted language is preferred. (Petitions to make 'special', revive abandoned applications, etc.).

(10) Added to be more in line with Board of Appeal practice.

ADVERSARY PROCEEDINGS AS PART OF THE EXAMINATION PROCESS

Sections 122 and 135 of S. 1321 provide for publication of pending patent applications enabling adversary proceedings before the Office. The Patent Office Society favors in principle the publication of patent applications leading to an adversary proceeding.

To encourage inventors to disclose their invention to the public, the patent system provides the disclosing inventor with the exclusive rights to his discovery. This traditional quid pro quo has provided us with a patent system that has been effective in encouraging inventors to file patent applications, the Patent Office to issue patents and disseminate the information provided therein and thus through incentive and information dissemination, promote the progress of the useful arts. By publication during the examination process, this quid pro quo has been altered to: Inventor's disclosure to the public in return for a chance on an exclusive right to make, use or sell. The effect of this change on the incentive to file patent applications as opposed to seeking trade secret protection must be analyzed with care if we are to foster progress of the useful arts.

Competing with this legitimate concern, is the greater reliability that can be placed on the examination process and the resulting presumption of validity by an adversary proceeding. If the presumption of validity is weakened by the courts to a sham, the incentives to file will also be reduced as inventors realize that the patent they obtained can only be licensed or utilized with any degree of certainty after a lengthy and expensive court test. Patent owners, licensees or investors will be unwilling to tool up or incur other production costs without some degree of reasonable certainty of the protection afforded by the patent grant. Under such conditions the benefits the general public has experienced because of an expanding and marketed technology will wain. To provide for an adversary proceeding necessitates publication of the patent application. For this reason, the Patent Office Society suggests that the benefits to be reaped from adversary proceedings outweigh the disadvantage of disclosure of patent applications.

However, to minimize the disadvantages of publication with ensuing adversary proceedings, an additional provision may be added to S. 1321. In section 122, a provision may be inserted that upon payment of additional fee, an applicant may have the right to have his application kept in confidence until the Patent Office has indicated the claims allowable, provided the examination had not been deferred under section 191(a) of S. 1321. The effect of such a proposal would possibly be two examinations. The examiner would examine the application as is presently done, and after a finding of allowability, the case would become subject to an adversary proceeding. The Office would set the additional fee to provide compensation for the dual examination. This would enable applicants to maintain the quid pro quo of disclosure for exclusionary rights, and still enhance the presumption of validity by an adversary proceeding.

A possible undesirable consequence of adversary proceedings may be the ability of such to be used as a harrassment device. The danger is particularly apparent when one considers the effect a large corporate opposer could have on the individual applicant. To minimize such harassment possibilities, it is suggested that section 135(a) of S. 1321 be changed by striking: "until notice of allowance of a patent thereon" and substitute: "within such time as the Commissioner shall be regulation prescribe, but not less than 3 months.” This would provide a specific time period within which all opposers must enter the proceedings. This would prevent a series of opposers from exhausting the applicant. Additionally, it is recommended that section 134(c) be canceled. The judicial review of the primary examiner's decision is most appropriate if made on the record. To provide otherwise would allow any party to institute the examination process of the board of appeals, thus unduly burdening the board, excluding the input of the examiner trained in the field, and providing an opportunity to frustrate the examination process by undue harassment. Finally, it is suggested that in section 134 (d), requiring a transcript of the hearing be kept be stricken as unnecessary in a review upon the record and that the following be added :

The Board of Appeals shall have the right to assess cost of appeal to the losing parties as they deem appropriate.

This would discourage frivolous appeals solely for harassment purposes. With the above safe guards against harassment, the adversary proceeding may increase the presumption of validity, without unduly prejudicing those applicants with minimal resources.

To further protect the rights of applicants whose applications have been disclosed under section 122 of S. 1321, it is recommended that section 273 be changed to reflect the existence of a limited property right subject to divestment in the disclosed invention and thus provide an additional incentive for inventors to file and disclose to the public. In section 273(b) it is suggested that event two be changed to “unless otherwise so done, call the case up for examination under section 192 of S. 1321.” This would accomplish two desirable results. The unauthorized practitioner would be encouraged to enter the proceedings as an opposer before the Office has gone through the examination process and indicated a claim allowable and second the applicant would not be prejudiced by a delay in indicating a claim allowable due to prolonged adversary proceedings. The right to damages is subject to the patent and relied upon claim, therefore it is considered proper to allow the rights to vest before allowance, thus affording the applicant possible protection from the time of disclosure to the public, thus conforming to the traditional quid pro quo of disclosure for exclusive rights.

MOVING ON TO DEFERRED EXAMINATION

Sections 191–193 of S. 1321 provide for deferred examination. The Patent Office Society favors in principle the establishment of a system of deferred examination.

Under the current conditions of examination of patent applications, the Patent Office disposes of over 100,000 applications yearly. The average examiner must dispose of an application in less than 15 hours in order to maintain the Office-wide production goals. An

obvious method of increasing the quality of the examination process is to provide for more manhours per patent application. Further, new procedures will be required by S. 1321, e.g., the adversary hearings, subpena power, et cetera, which will necessitate additional manhours to be applied to each application. Deferred examination appears to be an acceptable method of reducing the examination workload thus enabling the Office to allocate more manhours per application.

The reduction of the number of applications going through the examination process will be caused by several factors under a deferred examination system. Currently, many applications and patents issuing thereon, are filed for defensive purposes. A corporation may not wish to exercise its exclusionary right as it merely wishes to obtain a patent to minimize the hazards of an infringement action by a subsequent inventor. Such applications need not obtain a full examination, as publication under section 122 of S. 1321 will provide the desired protection. Thus, that percentage of applications filed for defensive purposes only will not undergo the examination process. Further, many patent applications are filed with an uncertain economic value. Presently, these inventions may not be filed until the market conditions indicate the invention has reached its time. A deferred examination system will allow these inventions to be filed, disclosed to the public and deferred until market conditions are favorable. Such will produce earlier filing and disclosure and, if the market fails to materialize, the application can be abandoned thus reducing the examination workload. Deferred examination appears to be a viable method to increase the examining manhours without the necessity of the alternative, massive staff increases.

ON MAINTENANCE FEES

Section 41 of S. 1321 provides for the establishment of maintenance fees. The Patent Office Society opposes the use of maintenance fees as a revenue collection means.

Proponents of a maintenance fee system argue that maintenance fees are a valid revenue collection means as they place the burden on those who have successfully utilized a patent and thus benefited the most therefrom. The patentee who is financially successful in exploiting his invention will be in a much better position to pay the cost of the system than a patent applicant, who is yet unrewarded. Additionally, maintenance fees enable filing fees to be lower and thus encourage filing. Such advantages are not seen to outweigh the dangers of a maintenance fee system.

Maintenance fees are proposed as a means of collecting revenue for the operation of the Patent Office. The concept of requiring those who successfully utilize their patent to pay the costs of Patent Office operation infers that the patent system functions for the benefit of patent owners only. However, it must be recognized that the general public receives benefits from a system that offers limited protection of inventions in return for disclosure. By requiring maintenance fees, the quid pro quo of disclosure for protection has been altered by a condition subsequent, i.e. payment of fees. Such merely

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becomes a penalty on success, requiring a successful patentee to undertake a large share of the burden of Patent Office operating expenses. Operating expenses that have no relation to his successful use of his patent, and which are inflated by examination costs of frivolous and unpatentable inventions. A proposal for the collection of revenue must have as its basis an apportionment of costs in accordance with certain equitable concepts. Maintenance fees, by taxing success independent of costs incurred by the Patent Office that preceded such success, does not share the cost burden equitably.

Mr. Chairman, thank you for this opportunity for the Patent Office Society to testify before this committee.

Senator Hart. We appreciate the opportunity to hear from you as a spokesman for the men and women who are really on the front line operation of this whole business.

We attempted to develop for the record some understanding as to how the American Patent Law Association and the ABA, developed a position with respect to the issues before this committee. I should ask you those same questions.

You say you represent about 1,100 of the personnel in the Patent Office.

Mr. DUNNE. Yes, sir.
Senator Hart. You are presenting a position.
Who decided it?

Mr. DUNNE. The Patent Office Society is composed of four officers, plus their executive committee, which is the advisory and policymaking organization of the society. We also have various standing committees, one of which is the legislative committee that I am chairman of. All matters dealing with legislation are referred by the executive committee for study to the legislative committee. The legislative committee, by our constitution, must have at least five members. Currently, it has 11.

We study in committee work the various proposals and various pieces of legislation and report these proposals back to the executive committee. The executive committee then would disapprove, approve, alter, or modify our recommendations. Normally our recommendations go through extensive review by the executive committee. It is not a rubber stamp process. These positions come through the legislative committee and the executive committee.

Senator IIart. The members, in the case of both committees, being employees of the Patent Office?

Mr. DuxE. Yes, sir. The Patent Office Society-let me make it clear here-is an organization whose membership is not limited to Patent Office personnel. Our membership is open to members of the patent bar, patent agents, Federal judges.

What we have done in the society is organizing people. People are doing the work of the society. Voting members are Patent Office employees; so are all the members of the executive committee. All of the ollicers and all of the members of my legislative committee are Patent Office employees. Some are in trademarks, and some in patents.

Senator HART. I raise this without being at all sure of the answers.

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