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right to equal protection of the law and the right to freedom from discrimination are to the ordinary citizen. The taking of an invention from one by an eroding judicial process, i.e., by discriminating against his invention, is just as much a removal of his constitutional rights and he is discriminated against just as much."
Whether or not one agrees with Fay's premise, the fact remains that each patent a court holds invalid represents one more invention which may not be brought to commercial application or to its fullest possible utilization because its originator, assignee or licensee generally will refrain from investing sizeable sums to develop something that anyone can freely imitate after the development has been completed. As President Nixson said, “an asset unused is an asset wasted." Who is to answer and be held accountable for all these potential assets which the federal courts send down the drain marked "patent invalidity?" The Patent Office has for decades been admonished by the courts, by the Congress, by the Executive Branch, by industry, by inventors, by patent attorneys, by just about everyone, to issue patents which will not be held invalid when subjected to judicial scrutiny. The record of patents in the courts clearly indicates the Patent Office is not succeeding in meeting that goal. That poor record, incidentally, appears destined to become worse each year as the Justice Department's Antitri Division steps up its efforts to attack patents, even those not accused of being misused in violation of our antitrust laws, but are alleged to be invalid on other grounds.
What are some possible remedies to this unhappy situation? Several have been suggested by Fay and others, 21 One solution which I have been vocal in supporting from the time it was first proposed is the "Ex Parte Opposition" provision which constitutes Recommendation XI of the Report of the President's Commission On The Patent System,?? and has been incorporated in Senator JeClellan's current Patent Revision Bill.23 This provision calls for a citation period of six months after the Patent Office publishes an application for patent otherwise found to be allowable, before the grant is made final. In that period anyone openly or anonymously, can call to the attention of the Patent Office any reference or fact which could cause claims previously found allowable to be rejected. Once this provision is enacted into law the courts should find it possible to place greater faith in the results of the Patent Office's examining procedures. Thereafter, issued patents will be considered not only to have cleared past the searching scrutiny of trained Patent Office examiners, but also the watchful eyes of the members of the public who are likely to be adversely affected by issuance of patents to others in their fields of interest. Even attorneys in the patent unit of the Justice Department's Antitrust Division may find this an excellent aid in their campaign to prevent invalid patents from being granted and thereby become capable of being used to limit competition.
As a supplement to "Ex Parte Opposition" I have another proposal to make, one which I believe deserves very serious consideration by all concerned with maximizing the utilization of patented inventions and diminishing the waste of potentially important national assets represented in patents which are commercially unexploited because they have been judicially invalidated. This proposal, taking a page out of the Lanham Trade Mark Act, 24 is to make patents incontestable under certain conditions after a prescribed number of years.25 My thought is that the grantee of a patent having the 17-year term of our present patent statutes would have the opportunity to make an election at the end of, say the 5th year following issuance of the patent. By simply making application to the Patent Office the patent could be recorded as being incontestable thereafter for any reason other than proof of fraud having been committed in the process of obtaining the patent grant. In exchange for this mantle of incontestability the patentee must agree to having the term of his patent foreshortened to a total, say, of 12 years. If the patentee chooses not to avail himself of this opportunity to make this election, the patent will be eligible to run to its full term of 17 years but will continue to be subject to the same attacks and risks which have contributed to the high invalidity record discussed previously.
21 Cf. Vojacek. J., “A Survey of the Principal National Pttent Systems,” Prentice-Hall (New York 1936) ; and Fortas, “The Patent System in Distress," 147 IDEA 571 (1971).
*** Report issued on November 17, 1966 responsive to E, 0, 11215 which established the Commission on April 8, 1965.
22 S. 643 (!2nd Cong., 1st Sess.) 8 191, 1971. 24 P. L. #S9 (79th Cong., 2d Sexs.) 1946.
25 The basis for this proposal was derived from a recommendation made by the American Society on Inventors, through their spokesmen Dr. E. Burke Wilford and Albert G. Fonda, in testimony at the Hearings on the Scott Amendments. (Cf. Record of Hearings before Sal committee on Patents, Trademarks and Copyrights, U. S. Senate, on S. 643, S. 12.53, and S. 12.5), Part 2, p. 444 (May 13, 1971). Their recommendation, which they declared was similar to a provision in the Japanese patent law. was to set a limit of 6 years after patent issuance within which patents could be attacked. In private conversations with them later, they suggested to the present writer that after that time the patents could only be attacked on the grounds of fraud having been committed in the prosecution thereof through the Patent Ofice.
To those who may instantly react against the notion of incontestable patents as being undesirable for one reason or another, let me remind them that the provision therefor would be coupled with the public opportunity to attack them in Ex Parte Opposition stage. To those who are loathe to accept the concept of patents being incontestable even though “the perfect reference" to invalidate them is found too late to cite during the opposition period, I would sympathize with their personal loss but I would take solace in the thought that the public-at-large may derive numerous benefits. I submit that, just as been pointed out in the comparison made between the benefits of pollution abatement vs. their costs, the very high costs to our national economy of having “100% valid" patents may exceed the gains which we have heretofore thought were received by safeguarding the public against all “invalid” patents.
Inconstestable patents can materially reduce the workload of an already over burdened federal judiciary, for one thing. But even more important is the likelihood that the inventor, the patentee, the assignee all will be in a really secure position for the first time in our history to make important decisions such as whether to invest sizeable sums of money in erecting a plant to produce a patented invention. No longer will they have to worry about the likelihood of their patents being attacked and invalidated. With such assurance development of patented inventions, both technological and commercial, will be able to proceed in an orderly, logical fashion as never before.
Of course, if a patent owner is confident that his patent is invincible or at least is willing to take the risks involved he need not take the shortened term route, and can seek the benefits afforded by the full 17-year patent life time.
Why the option? What's the rationale underlying the shortened term ? The term of a patent grant is arbitrary, to begin with, and varies from country to country. Whatever the full term provided by law, the provision of an election of a shorter term can produce certain socially desireable results. Reduction and savings in court time and expenses to all parties concerned in litigation is one such result. Increasing the likelihood of commercial exploitation of patented inventions—the avoidance of wasted assets in the form of inventions that no one cares to exploit because they are not protected by patents—is another. A third, of course, is that the shortened term will place the patent in the public domain years earlier than at present, thereby increasing competition but doing so only after the patent owner has had a reasonable lead time to recoup his investment and make a deserved profit.
If our laws are changed to provide for a patent term of, say, 20 years from the date an application is filed 26 (rather than the present 17 years after patent issuance), the proposal for incontestability could be adopted with ces. tain modifications. As a nucleus for discussion I would suggest that the election and application for incontestability could be made by the Sth year following the filing of the patent application, and the patented term then would be foreshortened to 15 years from the application filing date.
Coming back to statements I made earlier, I again call attention to the tremendous wastes in precious manpower, time, financial and other national resources, first in the patenting process and then in the courts, not to mention the discouraging wastes in time and money spent for research and development leading to products and processes that never become properly commer cialized for lack of sound patent protection.
I call attention again to the need for better utilization of the great national resources potentially represented by inventions that require the shelter of patent protection in order to promote their development. I again echo President Nixon's words that "an asset unused is an asset wasted." I will add that un-utilized inventions may be among our country's most wasted assets, and
* S. 643 (92nd Cong., 1st Sess.) & 154 (b), 1971, calls for just such a provision.
they contribute all to heavily to the economic pollution that inhibits and stag. nates our national prosperity. I suggest to the President that he take steps within the Executive Branch to establish a unified, single policy of his Administration which will balance the implementation of our patent laws and our antitrust laws so as not to favor one or the other, or individuals who might personally benefit from one or the other, but rather will maximize the beneficial effects of both to the nation as a whole. And lastly, I suggest to the Congress that it should expeditiously consider adopting such legislative proposals as I have advocated in order to increase the utilization of patented inventions.
If the Patent Office continues to grant patents under the present laws, the Antitrust Division continues to attack them, and the courts continue to invalidate them, all without regard for the net effect on our national prosperity, it is high time to start a patent/antitrust ecology movement. After all, this is the Environmental Decade, isn't it? And when we start, let's learn from the blunders and findings of the environmental ecologists; let's avoid collision courses 27 and let's eliminate seeming remedies for one aspect of our economy's problems which only result in causing other adverse effects upon our economy and our nation's economic health and welfare.
WASHINGTON, D.C., September 27, 1973. Hon. John L. MCCLELLAN, Chairman, Senate Judiciary Committee, Subcommittee on Patents, Trademarks,
and Copyrights, U.S. Senate, Washington, D.C. DEAR SENATOR MCCLELLAN: I offer comments to be considered by your subcommittee and for the record.
My comments are primarily additive rather than cumulative to those already received by the subcommittee.
I wish to help provide the best possible Patent Incentive System. All points herein considered made have been tested by whether our country will be a better one in which my children and theirs, and others, will live. In my book there is no special interest. The welfare of our country and to promote the progress of the useful arts, arts useful to make ours a better country, and one which will hold its own among nations for as long a time as possible is my goal!
Tested against such a template the answer for every legislative provision must be that it will increase or at least not diminish the incentive to innovate, to disclose in a patent application, especially so in cases in which through shortage of funds, or otherwise there is a tendency and real possibility for secrecy rather than for disclosure. All people do not function identically. It is clear that therefore a broad picture should be taken so that optimum, rather than perfect, legislation is the goal.
I have viewed each patent revision bill, beginning with S.1042. As you know, I have been active in and a chairman of a number of committees in industry and in the patent bar. I have a record of over 20 years patent legislation work; have organized and coordinated many efforts both directly and indi. rectly involving legislation; and have been on and have chaired patent legislation committees. Presently serving on the Council of the D. C. Bar, PTC Sec. tion, I am the liaison for it with our Patent Legislation Committee. I am a
It is encouraging to note that this objective is shared by the Justice Department's Antitrust Division. The Chief of its Patent Unit, Richard H. Stern, Esq., makes this clear in a alk he gave on October 7, 1971 before the Practising Law Institute in New York City entitled "Harmonizing Patent Law and Antitrust Objectives", 47 PTCJ D-2. In the principal area of conflict between patent law usages and antitrust law enforcement, namely patent license limitations, such harmonization can perhaps best be acromplished in ways succinctly expressed by Professor S. Chesterfield Oppenheim in "The Patent-Antitrust Spectrum of Patent and know-How License Limitations : Accommodation? ('onflict? or Antitrust Supremacy ?", 15 IDEA 1 (Spring 1971). Prof. Oppenheim concludes that article as follows:
“... I recapitulate three fundamentals for accommodation of public patent polley and antitrust policy related to license limitations :
*First, I preserve to the patentee the full reward to which the exclusive rights of the patent grunt entitle him within the scope of the claims of his patented Invention.
*Second, apply the antitrust laws only when there is proof of plus antitrust elements arising from restrtints beyond the exclusivity bounds of the patent grant.
*Third, reject the fallacy that federal patent policy preempts licensing for royalties of trade secret or secret know-how and continue to protect valid secret proprietary Information pursuant to long-established federal and state judicial precedents.'
member of the Antitrust and Trade Regulation Committee of the Chamber of Commerce of the United States.
I speak from a background of childhood in which I saw my father lose his health in seeking to protect his invention; patent applications covering which finally stood between him and the entire loss of it. He won because of the security of his patent position, that is, a position which secured to him his inherent right to his invention. The record is known. I will not here repeat it.
I say with humility that I am probably as qualified to speak on the “incentive” of our great United States patent incentive system as perhaps any other living person. I feel that a person such as myself should not remain silent at this crucial tinie in the history of our country. My motivation to speak out is set forth herein,
I view the present patent law revision bill with misgivings because I do not see the kind of provisions which, on the whole, on balalnce, I can accept as being truly for the betterment and welfare of our country.
Accordingly, the comments I offer are set out with the hope that those who view the system as I do will consider and be persuaded to adopt them. If there is not agreement with all points, hopefully, these comments will hare served at least for the betterment of the functioning of our Patent Incentive System and therefore our great United States.
In reading these comments I ask you to be ever mindful that the 77 million dollar Patent Office budget is relatively so small compared with "welfare" systems and schemes of our federal government that any increase or decrease in costs accomplished by legislation can be ignored. As you know in your capacity as Chairman of the Appropriations Committee, we are, today, appropriating tremendous amounts for all kinds of government operations which are legislated by Congress for the "welfare” of our country.
You need not be reminded, Sir, that comparing the relative merits of such welfare legislation with the Patent Office functions there is no doubt that the Patent Office is as essential as the best of the welfare programs.
Patents make jobs, which make incomes, which make taxes. The patented inventions ultimately make better living for all through progress of the useful arts. These patented inventions stimulate that progress.
The jobs, the processes, products, and other benefits for better living and national defense motivated into existence by our great l'nited States patent incentive system are legion. This makes the Patent Incentive System the root of real welfare for the citizen and his country. Even at this late date, in the operation of our very old but good systein, this needs to be told and repeated. The taxes for providing the non-patent system schemes of our government are generated in large part by the operation by our Patent Incentive System, as you know,
Much revenue in this country, as well as coming into it from abroad, results from patent protection here in the United States. A U.S. inventor must secure his rights here, for usually the real market for it, for him, is here, l'nless in such case he has protection here he cannot afford to reveal his invention abroad.
I have read the statements and have heard every word of the testimony presented to the subcommittee September 11, 12 and 14, 1973. I am pleased that some of my work has been reflected to the subcommittee.
1. I believe that no legislation, even resulting from the no doubt well considered Administration bill, should be enacted until the public, preferably in public hearings, has had an opportunity to develop its ideas, suggestions and possibly even better principled provisions. I urge you to provide hearings on any new bill introduced whether by the Administration or any other group of citizens.
Such hearings should not be open to review specific provisions on which those concerned have been heard. There should be time to put forth positions and arguments on real departures either from present law, or priorly reasonably considered provisions of early bills.
2. S.1321, undoubtedly introduced with the welfare of our great country in view, contains provisions improving the stature of the Patent Office which I can accept. For the most part it contains provisions, on only some of which the public has been invited or permitted to comment reasonably and at the hearings, which I and great many others, including the Administration, cannot accept. Please note the addendum, later discussed.
I will give one glaring example which has not been discussed at the hearings.
S. 1321 would not permit a patent for an “obvious" solution for a discovered problem, the "discovery" of which, today, is considered patentable under the law and cases. Such a provision in S. 1321 is evidence of a need to further study the essence of patentable invention as therein defined. There are other less readily noticeable but equally important departures in S. 1321 on which no hearings were held, e.g., making public abandoned applications.
Other unacceptable provisions exist in S. 1321. I ask whether you think that a prior public use, known only behind the Iron Curtain, should defeat a patent when it becomes available in this country only after deep, expensive, time-consuming search conducted with a view to defeating a U.S. patent. Has the constitutional “... progress of the useful arts . been promoted by the use unknown in this country prior to the publication of the patent?
The broad picture requires that public consideration be given to such provisions.
3. In 1966 the Administration Bill S. 1042 introduced by you by request was surprise to almost all of industry, including the patent bar. There ensued a year of great tension between the Administration and the bar representing the industrial, inventive community. I am glad to say that I initiated and had an active part in the "reconciliation" of September 18, 1967, following a hard summer just prior to which was held in April the emergency meeting of the American Bar Association, Patent, Trademark and Copyright Law Section in Washington, D.C., attended by over 400 members. Your ably conducted hearings of May 1967 then followed.
The Administration Bill submission is understood to involve about 280 pages, which must needs be reviewed by those who are truly concerned. Time must be available to study, to comment and to be heard.
Clearly, any rush to legislate should be moderated by the United States of America way of affording the interested citizens opportunity to publicis present their views.
4. I believe that patent system reform should be accomplished to include licensing of patents which should now be clarified and stabilized by statute, so the public and the courts will know better what can or cannot be done with rights which are secured by patents. Let's go the whole way and have better Patent Office functioning and a better, more fruitful progress of the useful arts with licensing in a clarified, stabilized climate. The Congress has the plenary power and duty to proceed on this basic sine qua non! I am among those who believe that there is time, if the Administration so chooses, to bring in an amelioration of the present licensing situation which adversely affects the rate of growth of our economy, especially now so badly needed when virtually ever-present inflation is all but rampant! I incorporate by reference the points of my letter to you, printed page 647 of the record of the May 13, 1971 hearings. For the economic posture of our country both here and in a world of nations, there should be statutory guidelines now! If it truly appears that the bill to be reported out cannot be achieved with licensing provisions I bow to the inevitable but must urge inclusion of such amendments when the Administration is indicating that the Department of Justice and Department of Commerce soon may come to agreement on them.
I believe that the system needs to be revised, not just the operation of the Patent Office. The laws and rules now on the books have well served the operation of the Patent Office. The testimony and statements before you show that reduction, of the only 25 percent of litigated patents being held invalid, can be obtained if the prior art is available to the examiner. All parties agree that the law should provide the means for getting the art before the Patent Office.
This can be done simply 1. without full scale adversary oppositions as are now largely anathema abroad ; 2. without a public counsel in the Patent Office who as a "big brother" to the Commissioner of Patents, reducing his status, would have to examine each application for patent to avoid tuo standards of validity or discrimination (a second Patent Office examining staff!) ; 3. without the administrative burdens attendant the manifold new steps provided, and 4. without the many other burdens which, as related by the witnesses, are built into S. 1321.
In passing, a point of extreme importance in considering validity of patents is the time it takes to develop the secondary tests of patentability set out by