can not afford to give adequate support to that Office. An added concern in my mind is the fact that the very inclusion of a provision of this sort may strengthen the tendency to keep the Patent Office budget inadequate. We have heard testimony that what is needed is a really well-operating and well-supported Patent Office. The way to get that is to provide it with the money and then see that it uses that money in a wise fashion.

Finally, here again, there is a long-standing European experience with respect to maintenance fees and it would seem wise to examine carefully the experience in these countries in order to avoid any shortcomings that they may have experienced.

Independent agency. We come now to the fifth item before the committee, namely the matter of the Patent Office as an independent agency. One consideration that makes this desirable is that the Patent Office has the job of administering a law and of granting rights or not granting rights according to the law. Typically, in our system, we have not left that job to executive departments. We have left it either to the courts or to administrative agencies of the type that Mr.Browne was talking about yesterday. The other consideration, of course, is whether separation of the Patent Office from the Department of Commerce would result in better and more efficient operations. Would it carry out its job better than it can under the present structure? I have no particular knowledge on this and I simply pass over the question with the observation that anything I might say at this point following Commissioner Gottschalk's testimony would be gilding the lily.

So much for the matters before the committee. I have included in my prepared statement comment on a number of additional items, some of which struck me as good, some of which struck me as not so good. Regarding most of these, I will simply refer you to my prepared statement.

There are two items, however, that I would like to mention briefly. One is the proposal to get on with the business of mechanized searching. This has been a difficult problem and one on which little progress apparently has been made insofar as the Patent Office is concerned. The traditional methods of searching that Commissioner Gottschalk referred to are obviously essential until one can find some substitute. At the same time, however, that we continue to preserve adequate searches through traditional methods, at the same time that we make efforts to improve the classification system, it would seem clear that every effort should be made to explore and move as fast as we can into more highly mechanized procedures, provided this can be done without interfering with carrying on the day-to-day work.

The other provision that I wish to mention is the vision in section 104(a) which would limit the date of invention that any applicant could show to 1 year prior to his date of application. This has always struck me as a desirable compromise between the proposal to take the date of application as the date of invention and the other extreme, to which we go in this country, in which it is possible to go back for an indefinite and often undeterminable period of time in establishing one's date of invention.

This concludes my testimony. I would simply say in summation that I find myself favorably disposed to S. 1321. It has shortcomings, I know. It has problems and it has bugs in it. But it represents in my own opinion a courageous step and an imaginative effort really to come to grips with the kinds of problems our patent system has been faced with. It represents the kind of an approach that is necessary if we are going to restore the patent system to what it really should be. Consequently I strongly urge careful consideration of the proposals contained in it.

The task now is one of refinements, the selective retention of those features that are meritorious and the rejection of those that are bad, the revision of those features that are sound in principle but need fixing up in details, and the further study and exploration of those that may well have merit and warrant ultimate inclusion but for which an adequate foundation has not yet been laid.

I would end up with one more observation and that is to point out that on the whole the proposals that have been suggested here in the hearings today are things that are worth trying, things that can be tried and then can be scrapped with no serious or lasting damage to the patent system if it turns out they are not going to accomplish what it is hoped they will accomplish.

Senator HART. In your comment on the deferred examination system, you suggested the initial screening, preliminary review kind of approach. Others have indicated the desirability of that approach which tends, of course, to avoid some of the problems that the administration and other witnesses have cautioned of could constitute abuse if you had a deferred system. If the law was modified or if this bill was modified to include that preliminary procedure, do you have any way of estimating how much of a saving would be made from that kind of deferred system? Is there anything in your experience to guide us on that?

Mr. STEDMAN. I have no way of making a guess on that at all. I would think the real experts on that would be the patent examiners. They should be able to give you some idea of how much time is spent in the initial screening that they customarily go through and how much is spent in fighting over refinements and details and so forth and so on.

Senator HART. I was asking the staff what we have been told in connection with that by Mr. Dunn of the Patent Office and apparently we may get an estimate. Any questions?

Mr. BRENNAN. No questions.

Mr. NASH. No questions.

Senator HART. Thank you very much.

[The statement of John C. Stedman in full follows.]

STATEMENT ON S. 1321, BY JOHN C. STEDMAN

My name is John Stedman and I am Professor of Law at the University of Wisconsin Law School. One of my main teaching subjects for over thirty years has been Patent Law and related aspects of the Intellectual Property field. In this connection, I have concerned myself with both the virtues and shortcomings of the patent system and with possible means of improving its operation. We have had a patent system in this country for almost 200 years, virtually from the beginning of our nation, and its roots in Europe go back even fur

ther. It is a system that has served us less than perfectly, but it is nevertheless a system that has served us well. Consequently, it behooves us to ask, not whether it should be thrown out and not whether it should be taken as the be-all and end-all of ultimate wisdom, but whether it can be revised and shored up to the end that it may better perform its function in the light of modern conditions. It is with these concerns in mind that I approach S. 1321. One hears frequently the comment from both the proponents and the opponents of the patent system that the conditions and methods of invention have changed greatly since the patent system was created; that the emphasis on the individual inventor has given way to the cooperative research of the industrial and governmental laboratory; that the complete self-containing invention of the "snapshot" type, springing full armed from the head of Jove, so to speak, has given way to the continuing process of development in which each individual step is comparable to a single frame in a movie film strip; and that primary reliance upon the stimulus of private competitive gain-to which the patent system is inextricably keyed-has given way to Government support and subsidy. This Subcommittee expressed it well in 1956 when it said (Sen. Rept. No. 1464, 84th Cong., p. 15):

"... the industrial and technological economy of today bears little resemblance to that of yesterday. The relatively simple, easily understood and inexpensive inventions have given way to highly complex inventions that require extensive scientific training to understand and substantial experimentation and capital to develop and perfect. The garret, garage, or basement inventor to a marked extent has given way to the laboratory technician who is both scientifically trained and versed in the latest techniques of experimentation and invention. The independent 'lone wolf' inventor has given way to the coordinated group activity of the research laboratory."

Granted the truth of these observations, it does not follow that the patent system is outmoded. As the saying goes, "The more things change, the more they remain the same." Changing circumstances do, however, suggest the need for close reexamination to see whether corresponding changes in the system are needed to make it work better. And that, as I understand it, is what S. 1321 is all about.

Let me turn without further ado to the problems that currently beset the patent system and the provisions of S. 1321 that are proposed as a means of coping with these problems-or, more specifically, to those particular changes to which the present hearings are addressed-and then ask whether these proposals offer tenable and viable solutions.

S. 1321, as I read it, has both good and bad points. On the plus side, speaking generally, it attempts in a number of respects to come to grips with some of the more serious problems that beset the patent system, and provides solutions for some of these problems or at least a good starting point for arriving at solutions. In doing so, it avoids some of the inadequacies and shortcomings of the predecessor revision bills that followed the Report of the Presidential Commission. On the negative side, its shortcomings, as I see it, are three-fold: One, in certain respects it seems to impose unwarranted and unnecessary burdens on patent applicants and patentees. Two, certain proposals, although they may ultimately prove meritorious, seem sufficiently uncertain in their effects as to call for more thorough investigation and research into their impact before pushing ahead with legislation. Three, even with all the new features contained in the bill, it lacks certain additions that could contribute considerably to the workings of the system.

In the remainder of my testimony, I will attempt to spell out the basis for these observations.

The first step, obviously, is to ask what are the problems of the patent system. By-passing the problems that stem from the basic changes previously mentioned, five main problems exist, as I see it, even taking the system in its traditional operation. One is the failure of the system to provide the patent holder with firm assurance that the patent issued to him will ultimately stand up. The second is the delay in processing one's claim to patent rights, both at the application stage and in later litigation. The third is the cost that attends these proceedings, again, at both the application and prosecution stages-espe

cially the latter. A fourth problem is the arbitrariness and inflexibility of an "invention" or "non-obviousness" test which draws a sharp line between "reward" and "no reward" instead of recognizing that gradations exist in the creative process, and that there is need for a form of reward that is better keyed to the level of ingenuity-what the patent author, Emerson Stringham, used to refer to as "inventiv-level." This is closely tied to the first problem of uncertain validity and will be discussed as part of that issue. The fifth problem is the need for international harmonization, a need that becomes more insistent as international transactions expand and the movement toward international procedural cooperation gains strength. This problem, I pass over inasmuch as S. 1321, in contrast to the original Commission Report and initial legislative proposals, gives it no serious attention.

Let me turn now to the five specific features of S. 1321 that, I understand, are the central subjects of the present hearing, and discuss them in the light of the major problems of uncertainty, delay and expense that I have mentioned. These five features involve (1) opposition proceedings and related means of bringing to Patent Office attention evidence relating to validity and especially evidence concerning prior art; (2) the establishment of a Public Counsel in the Patent Office; (3) a deferred examination procedure; (4) maintenance fees; and (5) creation of the Patent Office as an independent agency.

1. OPPOSITION PROCEEDINGS

Section 135 of S. 1321 provides for an opposition proceeding whereunder any person may submit to the Patent Office evidence bearing upon the patentability of a claimed invention. Thereupon, the examiner shall reexamine the application and the question of patentability in the light of the evidence thus submitted. As written, section 135 permits the opposer to remain unidentified or to become a party at his election, and permits him to submit any information bearing upon patentability without limiting him to specific categories of evidence such as printed publications or issued patents. Opposition must be instituted after publication of the application pursuant to section 122, but prior to notice of allowance of the patent. Section 138 provides that an opposer shall not be estopped, as a result of his action, in subsequent court proceedings.

An opposition proceeding of some sort is long overdue in our law. Other countries have had it for decades and presumably find it desirable, on balance, since there appears to be no disposition to do away with it, as far as I am aware. Experience has demonstrated that the ex parte examination procedure to which we have been dedicated simply does not work. The large number and proportion of issued patents that are subsequently invalidated through court proceedings is ample testimony to this fact. Procedures that permit the issuance of patent after patent that never should have issued are unfair to the public, unfair to would-be users of the technology in question, and unfair to the patentee himself. It is inefficient, expensive and discrediting to the patent system as an institution. Nor, as a realistic matter, does there appear much chance of the situation improving as long as we persist in a purely ex parte procedure. The Patent Office examiner cannot do the job alone. He must have some help in reviewing the application and the relevant prior art. This help can come from the patentee himself, in the form of the patentability brief and other obligations of disclosure, as provided in sections 112, 115 and 131. It can come from specially-appointed officials who are charged with responsibility for critically reviewing applications in the light of relevant prior art, such as the Public Counsel provided for by section 3(d) and which I will discuss later. Both of these innovations should prove helpful. The most effective help, however, is likely to come from interested third parties as contemplated by the section I am now discussing. Through this proceeding, the Patent Office examiner may be made aware of information that was available but which he overlooked, relevant prior art that he had no means of locating through his own efforts, and analysis and evaluation that may be helpful to him even with respect to evidence that he did possess. In short, effectively administered opposition proceedings could be of considerable help even to the most competent and conscientious examiner.

The procedure may have two additional effects, both salutary in terms of a satisfactorily operating patent system. First, the mere existence of an opposition proceeding should put the examiner (and the applicant in the preparation of his patentability brief, as well) on his mettle since he knows that, in con

trast to present proceedings, there is a strong likelihood that any shortcomings or slip-ups of which he may be guilty will promptly come to the attention of Patent Office officials. Second, as a result of improved examination procedures and, for that matter, as a result of the sheer fact that the opportunity to oppose exists, the presumption of validity in later court proceedings should be substantially strengthened.

Certain specific provisions call for comment. If the provision for publication of the application prior to allowance is deleted-and in my opinion it should be-section 135 (a) will require revision. The question then would be whether to publish the application for opposition after tentative allowance but before issuance, or whether to issue and then permit an opposition. Since experience in other countries indicates that opposition proceedings are sometimes misused as a device for tieing up and delaying enforcement proceedings by a patentee. the latter would appear to be preferable, especially if the present law is amended to make patents run from date of application instead of date of issu

ance.

With such change, the question would also arise whether a time limit should be set for instituting an opposition proceeding. A statute of limitations of some sort has often been suggested but, on balance, it would seem preferable not to set time limits. Situations arise in which a potential opposer does not have sufficient information, resources, or interest in contesting, as to warrant his filing an opposition within a given period.

In the interests of expedition, however, the Subcommittee may wish to consider possible means of encouraging prompt opposition, short of an absolute requirement that it be brought within a given period.1

Finally, there is the question whether an opposer should be permitted to become a party to the proceeding. Section 135 (d) permits this. So do the opposition laws of other countries. It may be that experience will demonstrate that opposition proceedings cannot be meaningful without such participation, but initially it would seem desirable to try a more limited approach in the interests of minimizing expense, delay and procedural complexity, namely, of permitting an opposer to submit his evidence for consideration, making that evidence a part of the file (without identifying the opposer unless he consents), but not permit him to become an actual party.

2. PUBLIC COUNSEL

Section 3(d) provides for a "Public Counsel" whose function is to "assure as an advocate, and through the adversary process, that high quality patents which meet the statutory and constitutional criteria therefor issue from the Patent Office." In this role, he is free to participate in any Patent Office proceedings in which a public interest appears to be involved. In addition, a somewhat obscure provision provides that he "shall prosecute or defend appeals from any final action of the Patent Office." Section 3(d) is implemented by section 24 giving the Public Counsel authority to issue and enforce subpenas, by section 132 (a) under which a primary examiner may request the Public Counsel to intervene in examination proceedings, by section 134 (a) making him "responsible for briefing and arguing" cases (presumably in support of the Patent Office rejection, although the section does not say so expressly) before the Board of Appeals, and by sections 143 and 145 giving him comparable responsibilities on reviews of Patent Office rejections by the Court of Customs and Patent Appeals and the District Court for the District of Columbia.

The creation of a Public Counsel, like the opposition proceeding (and, for that matter, provisions not discussed here relating to patentability briefs and disclosure statements, inventors' and applicants' oaths, statements by counsel for applicants, and putting the burden of proving patentability upon applicant), is designed to reduce to the minimum the possibility of a patent issuing that should not issue. The Public Counsel, in short, plays the role primarily within the Patent Office that a serious opposer would play, working from outside, in an opposition proceeding.2 Thus, to the extent that he performs effee

1 Although not presently in S. 1321. the Subcommittee may wish to consider an extension of the opposition principle by authorizing courts handling patent litigation to submit questions of validity to the Patent Office for consideration in the light of subsequently developed evidence.

2 For that matter. it would appear that under section 135 he could himself institute an opposition proceeding, in addition to his internal operations, just as could any other member of the public.