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Senator Hart. I wind up the hearings having a better understanding of the patent office and the patent system. Everybody here has contributed largely to that. Thank you. .

I do have a closing statement.

Tradition compels a closing statement at the end of a hearing. So, rather than reform this venerable practice, here goes.

I opened the hearings by stating that: No system designed in 1836 can remain viable under the economic and technological conditions of 1973. And that is why the patent system is under attack. Unless it is reformed to create procedures, safeguards, and mechanisms to weed out the bad patents before issuance whether fraudulent or not-and to assure the expeditious and impartial issuance of patents that meet the constitutional and statutory standards, the patent system will die of atrophy.

A fair reading of the hearing record, I believe, shows remarkable agreement as to the patent system's main vices. They interact and result in a game of blind man's bluff on a motorcycle, the objective seemingly being to find the edge of the cliff as quickly as possible. These vices include:

1. The ex parte manner in which patents issue.

2. The failure to disclose material information by persons dealing with the Patent Office.

3. The lack of modern search facilities and compulsory process to enable the Patent Office to obtain or compel the furnishing of such material information.

4. A tendency by Patent Office management to emphasize production goals: quantity rather than quality.

5. A lack of interest and understanding by the Patent Office of the public impact of spurious patents.

6. Submergence of Patent Office needs to the broader objectives of the Department of Commerce.

These inadequacies have interacted over the years and result in more than 70 percent of litigated patents being declared invalid. Although only one percent of the patents are litigated, those that reach the courts have a significant impact on the consuming public, For example, two invalid drug patents alone—tetracycline and ampicillin-cost consumers more than $1 billion in overcharges. Guesstimates at the hearings indicated that a significant proportion of nonlitigated issued patents are not of sufficient inventive quality to merit a patent.

If patent reform was deemed vital in 1966, today it is imperative. Just as the President's Commission then recognized that meaningful reform could not be achieved by patchwork, a viable patent system today requires the institution of a multifaceted and interrelated approach. This includes:

i. Assuring disclosure of all material information by

(a) Replacing the ex parte method of issuing patents with a public adversary proceeding;

(b) Requiring a patentability brief and a comprehensive oath by inventors, attorneys, and applicants;

(c) Authorizing the use of subpenas and the discovery process; and

(d) Creating the Office of Public Counsel within the Patent Office to represent the public interest in assuring the expeditiour issuance of valid patents and the prompt rejection of others.

2. Modernizing Patent Office search facilities to facilitate prompt and complete access to relevant prior art.

3. Eliminating production goals and quotas stressing quantity rather than quality.

4. Instituting a deferred examination system to allow a more thorough examination of fewer applications.

5. Instituting a system of maintenance fees to return individual inventors and small businessmen to the mainstream of technological progress.

6. Removing the Patent Office from the Department of Commerce and making it an independent agency.

The subcommittee will begin marking up a patent reform bill shortly, and it is expected that a patent reform bill will be reported before the recess. Testimony of administration witnesses indicates the existence of a progressive administration bill, and I again urge the administration to provide the subcommittee with its patent reform proposal.

As I said, I want as we adjourn these hearings to express my appreciation to the Chairman of the Subcommittee, Senator McClellan, for his willingness in authorizing the hearings and I hope that the subcommittee will find that the addition of these hearings permits us to say we have just covered the whole front.

I am grateful to Mr. Brennan for his always careful arrangement of the details and as to the management of the hearings and I thank Mr. Brennan and Mr. Nash for developing a witness list that I believe has been helpful to all of us.

I won't repeat what was said in the opening statement, namely the subcommittee's wish to get a bill to the Senate before this session closes. As we look to this calendar, this may be just another political pipe dream but it is my understanding the staff will now being to develop basic procedures for markup. I can't resist saying at this point that if the Administration wants the attention it is entitled to, the sooner it gets it bills in, the better for all of us.

I thank again all who have testified.

[Whereupon at 1:30 pm the subcommittee recess subject to the call of the Chair.]

APPENDIX

AEROSPACE INDUSTRIES ASSOCIATION OF AMERICA, INC.,

Washington, D.C., September 28, 1973. Senator John L. MCCLELLAN, Chairman, Subcommittee on Patents, Trademarks

and Copyrights, Russell Senate Office Building, Washington, D.C.

DEAR Senator MCCLELLAN: The Aerospace Industries Association of America, Inc., has long supported the U.S. Patent System and legislation which strengthens that system. It is with this objective in view that the attached statement of the Association on S. 1321 is offered. Yours very truly,

KARL G. HART, JR. Attachment.

STATEMENT TO THE SUBCOMMITTEE ON PATENTS, TRADEMARKS AND COPYRIGHTS,

COMMITTEE ON THE JUDICIARY, U.S. SENATE CONCERNING S. 1321 (HART)

The Aerospace Industries Association of America, Inc., (AIA) is the national trade association of companies in the United States engaged in the research, development and manufacturing of aerospace systems, including but not limited to manned and unmanned aircraft, missiles and astronautical vehicles, their propulsion or control units, and associated equipment.

The five topics which are the subject of the present hearings have been discussed in great detail by way of both the spoken and written word. Accordingly, AIA believes that the needs of the Subcommittee can best be served with a concise, to-the-point statement. Public Adversary ProceedingAIA supports such a proceeding wherein the public can present pertinent prior art to the Patent Office for a designated time after an application is deemed allowable by an Examiner. The AIA does not support, however, an inter partes opposition practice on the basis of its being time-consuming, burdensome and no more effective toward improving the overall operation of the patent system than an adversary proceeding wherein prior art is made known to the Patent Office. Office of Public Counsel-Although AIA questions the effectiveness of the Public Counsel as proposed in S. 1321, AIA does support the position of the Department of Commerce that certain of the functions proposed for the Public Counsel would be practical and would strengthen the tools of the Patent Examiner so as to improve the examination procedure. More specifically, the AIA supports the administrative implementation of such functions as deemed appropriate by the Commissioner of Patents. The AIA does not support the establishment of an Office of Public Counsel because the Office would be costly in view of the large staff required, much of it to carry out duplicate work more appropriately assigned to the Examining Corps; it could be burdensome to patent applicants and Examiners from the standpoint that more mischief than good might be expected from a Public Counsel having such sweeping powers as are delegated in S.1321. Deferred Examination The AIA does not support deferred examination in the United States because there is no need for it in view of the limited Patent Office backlog. The position taken by its proponents that the quality of the resulting patent work product should be enhanced, is erroneous. There is no assurance under a deferred examination system that the Examiner will be granted more time, for example, per patent application by his management because average time allocation per patent application is a matter which ultimately finds its way back to Congress. It was pointed out in oral testimony by a former Commissioner that during his term he had to manage the operation of the Patent Office with the resources made available to him by way of the appropriations allocated by Congress. In this connection, there is nothing to prevent a future Congress from allocating such lesser operating funds under a deferred examination system and in view of a smaller backlog, as to result in no more time per patent application as is currently available to the Examiner. Fee Schedule and Establishment of Maintenance Fees—The AIA supports reconsideration of fees generally in keeping with previous proposals to apportion costs of examination equally between the Patent Office and the applicant; to direct the cost of supplying patent copies and other services entirely to the recipient thereof; and to have the cost of maintaining search and library facilities, the printing of patents, and the like funded entirely by the public as a public benefit function.

The AIA does not support the establishment of maintenance fees which it views as a burdensome tax in principle, and in point of fact, as specified in S. 1321, a confiscatory tax. The suggested fees are in noway commensurate with any benefit to the patent-owner or to the public. The extent the proposed fees might preclude the filing of patent applications, they would work to the public's detriment. Administrative Restructuring of Patent Office-The AIA has not formed a position with respect to establishing the patent Office as an independent agency. The AIA supports the elevation of the Commissioner of Patents to the position of at least an Assistant Secretary. Accordingly we support the corresponding provision in S. 1957 introduced by Senator McClellan.

The AIA would like to make two additional general comments for the record. The first pertains to an inference during the hearings as to a lack of interest by industry as to the matter of general patent law revision. Industry generally, and the AIA, in particular, as evidenced by its frequent statements to the Subcommittee, is vitally concerned with having a strong patent system and one in which there is public confidence. The second is to request an opportunity to comment upon the forthcoming Administration bill referenced in the testimony of both the Department of Commerce and the Department of Justice. This request is particularly directed to any new concepts and provisions within the Administration bill that may have previously been studied and discussed in connection with general patent law revision matters before the Subcommittee.

AMERICAN BAR ASSOCIATION,

Chicago, Ii., September 26, 1975. Re: S. 1321 Hon. John L. MCCLELLAN, Senate Subcommittee on Patents,

Trademarks and Copyrights, Washington D.O.

DEAR SENATOR MCCLELLAN: On behalf of the Amercan Bar Association, I wish to supplement the statement previously filled with the Committee.

We wish to make of record positions of the Association with respect to features of S. 1321 not previously discussed. Obviousne88.-A.B.A. approves revision of 35 USC 103 to read :

“A patent may not be obtained though the invention is not identically disclosed or described in the prior art as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and such prior art are such that the subject matter as a whole was obvious from such prior art to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made, nor because the invention has simplicity or is the last step in an evolutionary development, nor because it is not revolutionary, basic, scientific or technical in character. Claims for a new combination or assemblage of known mechanical or other elements shall be subjected to the same "standard of patentability as is applied to claims for other types of subject matter."

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