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light as possible at the beginning when the return from the invention is small and its value conjectural, and increase later if and when the invention proves its worth. (3) It also fits in well with the concept of defensive patenting which has operated in some measure in recent times. (4.) Although there is currently under consideration a voluntary semi-opposition procedure that would partially perform the function that the deferred examination and opposition procedures of S. 1321 contemplates, it would seem preferable to write these into the statute rather than leave them to the legal and operational uncertainties that necessarily attend a voluntary, nonstatutory procedure.
4. FEES, INCLUDING MAINTENANCE FEES Section 41 of S. 1321 provides for a fee structure that departs in several respects from present law. One, it leaves the setting of specific fees to the Commissioner, except for putting a ceiling (of $100 for each fee) on initial fees and on the maintenance fees charged during the first three years, and a floor (of $1000, increasing by 15% a year) on maintenance fees beginning with the fourth year. Two, as just indicated, it provides for small initial fees and a small maintenance fee during the early years and a very substantial annual maintenance fee thereafter, with a provision for waiver if the patent is surrendered within four years after issuance, and for some deferment of fee payment, up to ten years under certain circumstances. Three, the Commissioner is empowered to grant substantial exemptions (up to 50% of regular fees and up to 80% of maintenance fees) to individual inventors and small businessmen. Fourth, fees are to be set on a basis that will make the Patent Office 65–75% self-sustaining.
Some of these provisions have considerable merit, at least in principle. As previously stated, a policy of keeping costs low at the stage when the invention is producing little or no income-especially since these Patent Office fees follow hard upon the heels of the bulk of one's research expense and professional fees and then offsetting the early low charges with higher charges later, seems sound both as a matter of equity and as a means of maximizing inventive stimulus. This is what the maintenance fee structure does, in addi. tion to providing an effective means of washing out those patents that prove to be of no enduring economic significance-a sort of street-cleaning job. The soundness of the approach is suggested by the fact that most other countries have a long-standing maintenance fee system and show no disposition to abandon it. The concept of providing special concessions in hardship cases, typically cases involving individual inventors and small businessmen, also appears sound. It would seem preferable, however, that some body more experienced in these matters than the Commissioner of Patents, such as the Small Business Administration, be given the job of processing these cases and that decisions be based on equities and hardship rather than on whether one is a large or small concern, an individual or a corporation.
My main reservations concerning the proposed fee structure are three-fold : (1) Because of the administrative burden and chances for slip-up involved, it would seem much better if maintenance fees were to be omitted during the early years of the patent-say, the first five years after issuance-and then assessed only periodically, perhaps every three years thereafter.
(2) The maintenance fee schedule that would apply after the third year strikes me as seriously out of line, both in terms of the disproportionate charge as compared to the cost of processing patent applications and in terms of the cold water it throws on the fire of invention and innovation. It seems to suggest to the inventor and those in privity with him that his patent is an unwanted evil and that everything possible will be done, once he has obtained it, to force him to get rid of it. This seems hardly the way to achieve the Constitutional purpose of promoting the progress of science and useful arts through the grant of patents. Furthermore, it leaves the impression that maintenance fees are being used as a cover-up to collect much higher fees instead of being used in the legitimate fashion for which they should be used.
(3) Granted that there exists a long-standing tendency to think of the Patent Office as an institution that should be entirely or substantially self-sustaining-indeed, the Patent Office itself embraced that attitude not too many years back-the principle does not hold up well under close examination. Either the patent system is in the public interest or it is not. If it is not, we should get rid of it. If it is, as the Founding Fathers and most of their progeny bave firmly believed, we should give it the support needed to enable it to work effectively. Certainly, considering the nature and extent of the modern federal budget, any. contention that we cannot afford to do so is singularly unconvincing. This is not to say that the patentee should pay no fees at all or only nominal fees. It is only fair that he should pay his way to some extent. Furthermore, fees should be high enough to make the applicant ask, “Is this trip necessary?" It is to say, however, that Patent Office fees should not be used to make money on the patentee, and further that they should not be so high as to drive inventors out of the market. These observations become all the more relevant considering the fact that as inventions become more complex, applicable art more voluminous, and the collection of relevant data more thorough, processing costs are likely to go higher rather than lower. It seems somewhat anomalous and inconsistent with the "stimulus" theory that underlies the patent system to box ourselves into a situation in which the more effective we become in screening out patents that should not issue, the more we charge the patentee in case one does issue.
One last word concerning maintenance fees. Like opposition proceedings, such fees have a long history in Europe, as I have previously mentioned. As a prelude to their introduction here, a careful study of their operation elsewhere should be made, so that we can profit from the experience of other countries.
5. THE PATENT OFFICE AS AN INDEPENDENT AGENCY Section 2 of S. 1321 sets up the Patent Office as an independent agency. My comments on this proposal will be very brief.
The primary function of the Patent Office is to pass upon patent applications, a quasi-judicial responsibility. In discharging this responsibility, it would seem desirable that the Office operate independently of the Executive departments, such as the Department of Commerce.
S. 1321 does contain some provisions designed to perform services to the public (see, for instance, sections 6(a) and 8(f)), which might appropriately be left to the Department of Commerce if this were deemed desirable provided unnecessary duplication and loss of efficiency could be avoided. What effect separation from the Department of Commerce would have in terms of personnel, operating efficiency and budgetary considerations, is a matter on which I do not feel qualified to comment, but it is hard to see how the interests of the Patent Office and its efficient operation could be hurt by such a move.
6. MISCELLANEOUS PROVISIONS The foregoing comments complete my testimony on the points to which, as I understand it, the Subcommittee wished to direct its attention in this set of hearings. There are, of course, many other features of the bill that are of considerable significance, some of them salutary, some of them not. There are also certain provisions which might well have been included, but were not. I will not attempt here to do anything more than merely list some of these items, but if the Subcommittee should be interested at a later date in exploring them and others, I will be glad to develop my views in more detail at that time. a. Miscellaneous items of a salutary nature
Among the provisions in the bill that strike me as desirable, granted that some of them may need revision of sorts, are the following:
(1) Section 6(e) calling for both research and development in the area of mechanized searching. (Recognizing that sporadic efforts have been made and are currently being made by the Patent Office to develop competency in this area, and recognizing also that serious problems arise in using mechanized searching effectively, increasing reliance upon such methods seems both inevi. table and indispensable to adequate performance in future patent administration. Indeed, a time could come when the test of what constitutes prior art will be determined by what comes out of the computer. Consequently, we had better be getting on with the business, and a mandate to the Patent Office from the Congress to this effect would seem quite in order.)
(2) Provisions designed to give greater assistance and service to the public, exemplified by sections 6(a), 6(d) and 8(f).
(3) The provisions of section 147, giving the Court of Appeals of the Dis. trict of Columbia jurisdiction to review decisions of the Court of Customs and
Patent Appeals. (One may grant the high level of sophistication and competency in patent matters that exists in the CCPA. At the same time, the anomaly of the comparable District Court proceeding being subject to intermediate review while the CCPA proceeding is not, the fact that ways are being sought to reduce the burden on the Supreme Court by providing more intermediate appeals, the recognition that historically the CCPA was set up to assist the District Court, and finally, the difficulties that arise when the CCPA and the Court of Appeals take inconsistent positions, as they have done now and then, all suggest the desirability of at least exploring this proposal carefully and receptively.)
(5) The provisions of section 101(a) setting a one-year limit on the pre-application activities that one can invoke in establishing one's date of invention. (The considerations that, in my opinion, make this provision desirable are set forth in considerable detail in a talk I gave in 1971, published in 2 I.1.C. 241 (1971), a copy of which is attached. This provision in section 104(a) is implemented by the provision in section 112(a) requiring the applicant to set forth in his specification the invention dates upon which he intends to rely.)
(6) The provision in section 112(b) requiring specific diselosure of just what the invention covers. See also section 104(c). (Cf. Guide v. Desperak, 144 F. Supp. 182 (SD NY 1956)). b. Jiscellaneous items of a doubtful nature
On the other hand, S. 1321 contains a number of provisions that are of questionable merit, at least in the light of present knowledge. It may be that more thorough research would show a need for the provision or some modification thereof, but inclusion at this stage seems inadvisable in the absence of such a showing.
Among these proposals are the following:
(1) The inclusion in sections 102(a) and (b) of foreign public use and sale as relevant prior art. (Some modilcation of this provision, e.g., use or sale which is actually known in the United States, or knowledge of which is reasonably and readily accessible, might ultimately be desirable, both because of its relation to applicant's actual public contribution and because it would constitute a desirable step toward international harmonization. In its present sweeping form, however, the proposal could create an almost insuperable barrier to a firm finding of validity and enormously add to the burdens and cost of litigation.)
(2) Section 112(a) requiring the disclosure of "all know-how known to the inventor," if the provision is interpreted as going beyond the present requirement of adequate disclosure.
(3) Section 153, reducing the term of a patent to 12 years from date of application.
(4) Section 286, reducing the statute of limitations to 2 years.
(5) Section 122 providing for publication of applications, and related provisions such as section 134 which makes proceedings before the Board of Appeals public.
(6) Certain provisions that arbitrarily limit the area of patentability, such as the provision in section 104(e) barring patents based upon the perception of a problem, the provisions of section 201(c) barring broadened reissues, and section 203(c) blocking the “terminal disclaimer" solution to the double-patenting problem. (These provisions appear unduly sweeping in their application and, in my opinion, should either be modified or the law left standing as it is at present.)
(7) Section 263, which guarantees compensation to employee inventors in addition to regular salary. (While this section addresses itself to a problem with which Congress properly should concern itself, the issue is one that does not involve the operation of the patent system as such. Consequently, its inclusion in the patent statute strikes me as inappropriate. In this respect it is comparable to the antitrust and Government patent policy issues—a matter to be handled separate from the patent law revision.)
So much for the miscellaneous provisions. As I pointed out previously, the foregoing lists of supported inclusions and suggested deletions by no means cover all the features in S. 1321 that call for comment. Rather, they constitute a selective list of those items that I would single out at this point for special attention, leaving other matters for the future.
7. CONCLUSION In concluding, let me emphasize again the need for coming to grips with the serious problems that beset the patent system. S. 1321 is to be commended for attacking the issues with courage and imagination. Inevitably, in doing so, shortcomings and inadequacies occur. S. 1321 has its share of such shortcomings, many of which I have pointed out, as have others, in the course of these hearings. 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 revi. sion 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. (In this connection, the Subcommittee might well consider reestablishment of the research program that it sponsored for several years beginning in 1955 and which resulted in the publication of 30 monographs that shed light on various aspects of the patent system.)
In broad terms, what is called for is an approach that accepts the basic principles of the patent system, seeks to correct such shortcomings as may exist in it and proceeds with determination to do this, but at the same time proceeds carefully, thoughtfully and cautiously lest we run the risk of throwing the baby out with the bath water. It is in this spirit that I have approached S. 1321 in my testimony this morning. I hope my comments prove helpful.
Senator Hart. We are not going to break for lunch if at all possible but let me suggest a five-minute recess here.
Mr. BRENNAN. The next witness is Dr. Howard Forman, who is appearing on behalf of the National Association of Manufacturers.
Senator HART. Dr. Forman, you are welcome.
STATEMENT OF DR. HOWARD I. FORMAN, ON BEHALF OF THE
NATIONAL ASSOCIATION OF MANUFACTURERS; ACCOMPANIED BY REYNOLD BENNETT, VICE PRESIDENT FOR INDUSTRIAL INNOVATION
Dr. FORMAN. Thank you, Senator. We have a prepared statement which I would like to have introduced in the record.
Senator Hart. It will be in full.
Dr. FORMAN. May I just introduce myself, by the way, giving my qualifications as is normally done?
My name is Howard Forman. I am a patent and trademark attorney of some 30 years' experience. Roughly the first half of my experience was with the government, with the Department of the Army, and the latter half with Rohm and Haas Co., one of the country's major chemical manufacturers. For reasons which will become apparent later and pertinent to one of the issues to be discussed here, I will mention that in addition to my science and law degrees I have a Master's and a Doctorate in Business and Public Administration from the Wharton School of the University of Pennsylvania. For some 7 years I taught at the Temple University School of Business and Public Administration, a graduate course which was named Federal Administrative Process.
Now, Senator Hart, on behalf of the National Association of Manufacturers, I wish to express appreciation for the opportunity to present its views on the proposed critical patent law revision matters being considered at this hearing.
As you know, the NAM is a voluntary association of business concerns of varying sizes and commercial activities located in every State of the Union. Participants in NAM membership are companies and individuals involved in the scientific and technological endeavors that have enabled this Nation to earn the reputation as a leader in providing a climate for creativity which has enabled the development of some of the most important products and processes utilized today.
Senator, in your introduction to the S. 1321, which I found extremely interesting and provocative reading, there were two passages in particular I thought so cogent that I would like to repeat them at this point. I will quote your words: “Last year, President Nixon recognized the importance of a viable patent system, saying that 'a strong and reliable patent system' is an important predicate to United States technological progress and industrial strength." I completely agree with those words.
That is the end of one of your statements. In the other passage you say: "Mr. President, as I said, I know that discussion of patents can be tedious.” Parenthetically, Senator, I think I have to agree. Then you continued: “However, I am sure that most members of this body would agree with President Nixon that we must have a strong and reliable patent system in order to promote invention and the public interest. It is a matter not only of life style and comfort for each of us, but of health, employment, and maintaining our technological superiority.” Then you go on to say that revitalizing the patent system is a necessary prerequisite to restoring public confidences and allowing it to perform its constitutional objectives.
For these words, Senator, NAM salutes you and President Nixon, and personally I must say that I agree with both of you wholeheartedly. I feel that certainly the patent bar also salutes you and the President, and I trust the public at large agrees with you in those expressions of your views. The real question, though, is "how.” How can we bring about the things that you have proposed?
We agree with you as to some of the answers that you have spelled out in S. 1321, but not with all.
Now the announcement of these hearings invited comments on five specific topics and accordingly I will briefly cover all five subjects and then, if you like, would be pleased to answer any questions as best I can. The first one is relative to public adversary proceedings. NAM views with optimism the prospect of improvements to the administrative procedures in the Patent Office which will enhance the validity of issued patents. Specifically, it supports involvement of third parties in calling attention of the Patent Office to any prior art relative to a claimed invention. However, NAM is not in favor of the particular procedures that have been spelled out in S. 1321.
At this point let me just depart from my written statement, and briefly recite some pertinent background information. I can recall some 20 or more years ago when I first heard a suggestion—it was espoused by a gentleman named Mr. Manuel Rosa, who was an official in the Patent Office, and I believe he is deceased now-that there was needed what amounts to an ex parte opposition proceeding in the Patent Office. This is essentially what you have in S. 643 of