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I hereby hand to Mr. Nash, your counsel, a copy of my paper, as it was published in the February 1973 issue of the Journal of the Patents Office Society. Your and your staff should note with interest that my proposal has received public endorsement by the Honorable Bruce B. Wilson, Deputy Attorney General for Anti-Trust, as a possible solution to the problem of invalid patents. I think if you are looking at this whole question the proposal I advocated there ought to be considered in depth before you finalize your recommendations for a new patent statute.

Now, I won't go into the description of it now unless there is some reason for your wanting me to do so, possibly to explain how that proposal will operate, because I believe my published paper will describe it to you and others concerned in adequate detail.

Let me refer now to the proposal for a public counsel in the Patent Office. First of all, the NAM position is definitely opposed to the proposal spelled out in S. 1321, which would create an office of public counsel in the Patent Office under certain specific conditions. VAM is not opposed to studying the need for such a public counsel in the Patent Office or how he should function, but it urges that before making any moves in that direction—since it is so drastic a change, particularly as spelled out in S. 1321—that very serious detailed study of the staffing and the day-to-day operations of that Office should first be carried out and made available to the public with an opportunity given for the public to give its detailed comments. Also, alternative ways to that proposal should be considered as part of the study.

was pleased to hear Professor Stedman speak along these same lines with regard to that issue earlier today, and I think we see eye to eye on that; we cannot and should not move into something as complicated as what is proposed in S. 1321 without such a study in depth. Personally, I would suggest something, too, apart from what he has said. I question whether by legislation one should spell out so completely to almost the nth degree just what a public counsel should do. I think it more sensible, if a public counsel or ombudsman is going to be in the Patent Office at all, the manner in which he should function should be left to the administrative discretion of the Commissioner of Patents, and let him work it out and try to see now it can be best done to make the office of the public counsel accomplish the goals you and we are seeking.

Getting back to the formal position of NAM on this point, I would like—and also I could endorse this personally myself-I would say most of the functions that are expected to be performed by the public counsel actually are now available. For example, the government, through the Justice Department, now has the power under certain circumstances to go to the courts to sue to cancel a patent. Second, the Justice Department or any other agency of government would be in a position to participate in the proceedings of section 135 of S. 1321 or the proceedings in the re-examination after issue proceeding spelled out in sections 191 and 192 of S. 643 of the last Congress. Third, even now the examiner in the Patent Office has the right to be present and argue his side of the case when it is up before the board of appeals.



As a fourth point, a member of the office of the solicitor in the Patent Office handles the case for the Patent Office in every appeal which is made to the district court, the court of appeals, or the Court of Customs and Patent Appeals. So you see you have at least four different levels or four different situations where in effect the very functions that you wish to have assigned to the public counsel are now available and in force.

One last point on the public counsel provision in S. 1321. I see serious administrative problems, particularly as spelled out for the public counsel, in the bill, but possibly the worst administrative situation I can envision is the fact that you are setting up in effect two Commissioners in one Patent Office and in certain respects they both have the same responsibility. In fact, as I read it, I think the publie counsel can overrule the Commissioner in some situations. I don't think that is what was intended, and it certainly is not to be desired, but the provisions of the bill may make such a result possible.

Although I have made all of these statements about the objections to the public counsel proposal, let me remind you that I did state that there may be some merit to it; it depends on how it is implemented. Earlier today I mentioned the existence of an informed APLA Patent Office Advisory Committee. I recently had occasion to make another suggestion to that committee along the following lines. If the voluntary protest proceeding is carried into effect after the Patent Office holds hearings on it next month, why don't we have the Commissioner consider providing for a form of public counsel who will serve only to act as a representative, the advocate if you please, of the people who cite art to the Patent Office in the voluntary cases? To do this will give us the benefit of actual experiences with a public counsel in those situations first, and in that way we may find out if there are any bugs in the procedure as it is implemented. Maybe in that way we can arrive at a procedure that will accomplish the goals you are seeking and which we in industry and we in the patent profession all would like to see.

Getting on with the next point, Senator, the deferred examination of patent applications, basically NAM is opposed to this but, if a detailed study of this subject should provide convincing evidence that the benefit of such an approach would exceed the cost on a national basis, NAM would agree to the desirability of its establishment. Here again I refer back to my good friend Professor Stedman's testimony earlier today. He seemed to advocate the same thought; deferred examination may have its merits, but as far as the U.S. patent operations are concerned, it deserves very detailed study before we just jump into it. The panacea that some people see in deferred examinations may be just a mirage. We don't know for certain, thoroughly and beyond all possible objections, that the systems in Holland, in Germany, and elsewhere are absolutely satisfactory.

My office has worked with deferred examinations and we found some flaws in it. I have talked to Dutch practitioners and German practitioners about it. We have attorney associates in those countries and they say they are not completely satisfied with it, some even saying that it should be done away with. So I am not sure that we should just adopt it simply on the basis of the fact that it looks like

an easy way to possibly cut down the number of cases that the Patent Office has to review to get rid of a backlog. Even this cause is fallacious when you make a comparison of the systems. They had a 5-year or more backlog in Holland when they went to this system. We now are running on an average of about 2i2 years in the United States, and I understand it is getting close to 2 years in the examination phase from filing to issuance. Moroever, as you know, the Patent Office has for several years been striving for one of its major objectives, i.e., to get the entire proceeding from filing to issuance down to 18 months. If we get it down to 18 months, I see no reason why we have to go to a system of deferred examination which has problems such as the following:

First of all, it would seem to me and I think Professor Stedman mentioned it before, so I will have to give him full credit since he pre-empted me on it-I know that people will rush in and are rushing into the Patent Offices having deferred examination procedures with half-baked applications. Why? The answer is simple. Why should one bother testing out every single thing that has to be tested before one gets a really thorough application, when one could just rush in to the Patent Office and get an early filing date, and then wait 5 years or 7 years before actually having to decide whether one has the right application to pursue under a full examination? It is almost an invitation to have applicants rush in and file in the Patent Office a lot of useless applications. It is my guess that this may account for the reason why, Senator, when you introduced the bill

, your introductory statement said that in Holland 59 percent of the applicants for patents eventually chose to let their applications lapse. Well, if they are the kind of applications for patent that haven't been fully studied, the kind where the research work hasn't been fully worked out before they file, obviously there would be a lot of useless patents and they should be dropped. If a good pre-examination search is made by the applicant, and the opportunity, is available for him to test out the various aspects of his invention before filing, the chances are that fewer applications will be filed. This is the system we now have in the Virgin Islands. If we go to de ferred examinations possibly many thousands more applications will be filed needlessly, only to be dropped in due course. If so, we may not get any benefit out of the procedure-just more work and more costs for all concerned.

Whatever objectives or goals to be obtained by the deferred examination, it is deserving of note that the Patent Office does have right now a sort of deferred examination in what it calls its defensive publication program. It was implemented on May 1 of 1968 and in effect this works as if it is a 21/2-year deferred examination system. Under this program an applicant has that period of time after filing his initial application to decide whether he wants the case examined by the Patent Office. That is deferred examination. If you think this is desirable, find ways and means to encourage it. This is voluntary, Senator, to find ways to induce the people to use it. It already is in existence, and you don't even have to pass legislation to accomplish it. I understand that from May 1968 through January 1973 some 861 requests for defensive publications had been received by the Office.

Now let me get on to the question of maintenance fees. For years NAM has been on record that it endorses the proposition that Patent Office fees should support a fair share of the cost of operating the Patent Office, and this continues to be the NAM's position. NAM does not favor maintenance fees, primarily for the reason that they involve burdensome and costly administrative problems which would be a heavy burden on the applicants, on innovators, and on investors, in developing new inventions. Here again, let me remind you that we should think in terms not only of major corporations with big budgets for this purpose, but also the little fellow who possibly cannot afford it. Yet, if maintenance fees are to come, this will certainly be the lesser evil than, let us say, an increase in the filing fees or the issuance fees which may discourage independent inventors from resorting to the patent system to protect their inventions.

On this point let me call attention to a publication, an editorial in the Journal of the Association for Advancement of Invention and Innovation, February 1973, called "The Effect of Patent Office Fees on Independent Inventors." This study seemed to indicate that at least in the middle 1960's there was a significant drop in patent applications filed at the time that we had the patent filing and issuing fees increased, and this should be a fact to be heeded and considered carefully before we go to heavy maintenance fees or increased filing and issuance fees because I don't think we want to discourage the filing of applications on potentially useful inventions.

In any event, we should be extremely cautious if we are to go to a maintenance fee system. Certainly the figures used--the proposals in S. 1321—seem highly excessive and possibly confiscatory of patent property if they discourage people to try to pursue their patents, and possibly to let them lapse before they catch on and become actively utilized. Such discouragement may lead to fewer inventions being developed to the point where they can contribute to the progress of our country, and this would certainly be a lamentable result.

Now, to the last point of the five to be considered at these hearings, namely the question of the restructuring of the Patent Office. This particular issue received considerable study by two NAM groups, not just its patents committee but a group of corporate executives, because it seemed like such an important departure that was being proposed. The position arrived at was that the association recognizes the laudable objectives in the proposal to establish the Patent Office as an independent executive agency reporting to the Congress. On its face it would appear to give the Patent Office an elevated status within government and presumably, as was brought out earlier, this would make the official spokesman of such an agency be one of increased prestige in dealing with the Congress and other Federal bodies, and with the representatives of foreign governments concerned with international patent and trademark affairs. However, like a lot of other things which look like ideal solutions at first blush, a second look sometimes develops some flaws and I think we see them in this case. We question whether the possible attainment of these objectives would offset the disadvantages which may well develop in taking the Patent Office out of the Department of Commerce. Instead of doing that we recommend that such a basic admin

istrative change at least warrants in-depth studies of the possible effects in various areas of national interest. Based on past experiences with the present structure it must be stressed that there clearly are advantages in having a Cabinet officer at the organizational pinnacle in which the Patent Office is located. Thereby matters affecting the patent system may, when necessary, be more readily brought to the direct attention of the President--and his support may be enlisted for programs meriting and requiring such backing if they are to succeed.

In terms of intragovernment relationships it seems that the position and support of the Secretary of Commerce may be of far greater value to carrying out the goals of the Patent Office than would be the relatively lesser prestige and weight of the head of the Patent Office if the latter were to be an independent executive agency.

Even in terms of its dealings with Congress, the Patent Office may find itself far more effective in presenting proposals for new legislation and such things as establishing budgetary needs, and so on, than if it were to operate as one of the many independent regulatory agencies.

Now, sir, I am going to make reference to some authorities in the field as I try to act as a pseudo expert in the field of public administration, and that is the reason, incidentally, why I gave you my par

I ticular academic qualifications in that area earlier. I refer to at least one work, a classic in its field, a textbook I used as a student and in a later edition which I used in the course I gave, namely “Elements of Public Administration," edited by Prof. Fritz Morstein Marx, who has served with distinction on the faculties of Pennsylvania, Princeton, New York, Harvard, Columbia, and American Universities, as well as on the staff of the Director of the Bureau of the Budget. In particular, I will refer to one of the chapters in that book authored by Prof. James Fesler of Yale who formerly was in the U.S. Budget Bureau before it became OMB, and who also served on the first (Hoover) commission on the organization of the executive branch of the Government. He has other qualifications which all in the field of public administration well recognize. He wrote a chapter entitled the, “Independent Regulatory Agencies," and I have abstracted from it just a few thoughts. First, on this question of independence. What is it; is it real? We should inquire as to independence from what? Independence from the Chief Executive? That is one possibility. Independence from the legislature? That is the other possibility. To have them both would amount to complete, genuine independence, but he says both of these are myths. In reality there is no such thing: You cannot be completely independent of either, and if you examine the history of the independent regulatory agencies, I think no one could deny it. On its face each independent regulatory agency does possess some degree of independence. Some have more and some have less, but in no case is independence absolute. It may be, as we have heard testified today, that there have been problems in the existing structure of the Patent Office vis-a-vis the Department of Commerce or the Assistant Secretary of Commerce for Science and Technology, and so forth-it is not for me to go into that

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