permit states, for example, to provide redress by labeling and the like against certain kinds of unfair competition, such as the copying of an article so as to create confusion as to its origin or the "palming off" of goods. Thus, to the extent the Sears and Compco cases may preempt the rights of states to redress these and other types of unfair competition, they would be overturned. The Department endorses Section 301 of S. 643, and would not object to enactment of Amendment No. 23 of Senator Scott. R. INFRINGEMENT Today, the only remedy available against the importation of products manufactured abroad by a process patented in the United States is by way of an exclusion order under section 337 (a) of the Tariff Act of 1930, 46 Stat. 741, 19 U.S.C. 1. Experience has shown this to be a relatively ineffective and uncertain remedy, especially because of the numerous statutory requirements for the granting of exclusion orders. Section 271(b) would consider such acts of importation as infringements, and offer an effective, alternative remedy under the patent laws. We note with approval that section 271(b) does not require the obtaining of patent rights in foreign countries in order to preclude importation into the United States of such products. A requirement to obtain foreign patent rights would be impractical and expensive, and create uncertainties as to the rights of domestic process patent owners. No person should be required to obtain patents in every country where the subject matter is patentable and where a process might conceivably be practiced, in order to enforce his rights in the United States. At times, it is not even clear whether a patent may be obtained in a particular country. Also, domestic patent owners and the courts would be required to interpret foreign laws and patent owners would be penalized for a misunderstanding of vague foreign laws. This provision, as it now reads, will conform the United States laws to those of most other industrialized nations. Section 271(e) of the bill assures that a person carrying out any of its enumerated acts would not be liable for patent misuse, if he is otherwise entitled to relief for patent infringement. The same provision is found in present law, The language of the provision offers a possibility, however, that a patent owner might find himself liable for misuse in the event his patent is ultimately determined not to entitle him to relief for infringement. The Department suggests substitution of the phrase, "enforce or seek enforcement" for "relief for infringement" at line 12 of page 39, to preclude such an interpretation. Insertion of the phrase, "in good faith" after "done" at line 14 is also suggested, to prevent patent owners from suing for patent infringement on the basis of patents they know to be invalid. 8. AMENDMENT OF THE CLEAN AIR ACT Section 6 of the transitional and supplementary provisions would repeal section 308 of the recently enacted Clean Air Act of 1970, which requires the compulsory licensing of patented inventions relating to air pollution. We support repealing this compulsory licensing provision on the ground that it will undermine the role of the patent system and remove the incentive for technological innovations, particularly with respect to independent inventors. The Constitutionally authorized protection the patent system accords to inventors is a key element in spurring the development of new technology. A system of compulsory licensing may significantly deter these incentives, especially in areas when the need for innovation is so urgent. Also, there is no evidence that the developers of new air pollution control technology would refuse to make it available either under licenses or by direct sales to users. T. PRIORITY OF INVENTION BETWEEN PATENTEES Section 291 is taken in concept from the same section of present law. With changes in phraseology, it continues the jurisdiction of federal courts over priority of invention contests between patentees. Section 193 of S. 643, however, also provides the Patent Office with authority to conduct priority contests between patentees. This jurisdictional duplication can and should be remedied by adding ", subject to the provisions of section 193 of this title," after "may" at line 6 of page 43. This would clarify the obvious intent of the bill, and avoid any possibility of subverting the jurisdiction of the Patent Office in priority contests. U. OTHER SUGGESTED AMENDMENTS The Department also recommends a number of less important or minor modifications and corrections for S. 643. In line 35 of page 4, the word "shall" should be changed to "may". This added flexibility would provide the Commissioner with authority to adopt mechanized search and classification systems. In line 30 of page 5, the phrase "and trademarks," should be added after "patents" and "public" should be added after "other" in line 32 of the same page. These insertions clarify the Commissioner's authority to disseminate information to the public. "Person" should be defined in section 100 to assure that the United States is included in its various occurrences in the bill. In addition to other modifications recommended for section 102, section 102(b) should be modified to make clear that foreign patent publications, described in its last three lines, will bar the granting of a patent only if publication occurred before the filing of an application in this country, where the foreign application was filed more than 12 months before the United States filing date of the application. This can be accomplished by the addition of the phrase "or described or caused to be described in the official publication of the application" after the word "title" in line 23 of page 12 and the deletion of the phrase "or described prior to such actual filing date in the official publication of such foreign application in the country where filed" in lines 26-28 of the page. The reference to section 102 in line 23 of page 13 should be made more specific by insertion of "(c)" after "102". If our recommendation to cancel subsection (a) is not adopted, "(d)" should be inserted in line 23 of page 13. Section 111 (c) should be amended by the insertion after "filing" in line 24 of page 14, of the phrase "In the latter case," to begin the next sentence. This change would make it clear that the failure of an applicant to ratify an application would result in abandonment only in cases where there was no written authorization by the applicant for the filing of the application. The chapter heading for section 146 at page 22, between lines 3 and 4, should be deleted, since that section does not appear in the bill. The reference to abandonment of an invention in section 182 might be confused with the "abandonment" mentioned in section 102. The terms have different meanings in the two sections; and it is suggested that the phrase "abandonment of invention" be deleted and "forfeiture of a right to a patent" be substituted therefore. Section 182 should be accordingly amended elsewhere and the chapter heading on page 26 should be similarly amended. Section 193 should be corrected in line 20 of page 32 to read "with sections 102(c) (5), 100(b), and 119 of this title, and offers to present evidence in." In lines 25 and 26 of page 32, "Commissioner" requires correction. Reference to the Atomic Energy Act and the National Aeronautics and Space Act in lines 34-36 of page 45 should be corrected by the deletion of the number 922" in line 35 and the number "437" in line 36 and insertion in lieu thereof the numbers "919" and "426," respectively. The references, as they appear in S. 643 presently, are references to certain sections, rather than the acts themselves. We recommend deletion of section 131 (c). The Commissioner will certainly seek to reduce the pendency period of patent applications by appropriate regulation and practices, as he has in the past, consistent with the funds and other resources available. Accordingly, this provision seems to us an unneeded mandate. We have been advised by the Office of Management and Budget that there would be no objection to the submission of this report to the Congress. Sincerely, WILLIAM N. LETON, Senator MCCLELLAN. Counsel will call the next witness. STATEMENT OF RICHARD W. McLAREN, ASSISTANT ATTORNEY GENERAL, ANTITRUST DIVISION, DEPARTMENT OF JUSTICE, ACCOMPANIED BY BRUCE B. WILSON, CHIEF, CONSUMER AFFAIRS SECTION; AND RICHARD H. STERN, CHIEF, PATENT UNIT Mr. McLAREN. Good afternoon, Mr. Chairman. Mr. BRENNAN. Mr. McLaren, do you wish to read this verbatim, or insert it and summarize it? Mr. McLAREN. I have shortened it somewhat. I had thought perhaps the prepared statement might go in the record, and I could perhaps go through a somewhat shortened version. Senator MCCLELLAN. Very well, Mr. McLaren. You have a prepared statement which I understand you are willing to have inserted in the record in full, and then highlight. Mr. McLAREN. Thank you, Mr. Chairman. I would like to highlight certain portions of it, but begging your patience, I would like to go through a good part of it. Senator MCCLELLAN. Surely. Let it be printed in the record in full. You read such parts of it as you wish and any that you omit will be printed in the record. Mr. McLAREN. Thank you very much. Senator MCCLELLAN. If you will, please, identify your associates. Mr. McLAREN. Yes. I have with me from the Antitrust Division Mr. Bruce Wilson and Mr. Richard Stern; also Mr. Irving Jaffe of the Civil Division is with us today. I appreciate very much the opportunity to appear before you today on the subject of the proposed revision of the patent lawsa matter to which I know this subcommittee has devoted a great deal of thoughtful attention. The lively public debate on the bills introduced in Congress following the report to the President by the Commission on the Patent System has served to sharpen the issues concerning the proposed Patent Code revisions and to clarify their implications for the inventor, the consumer, and for competition. The Department of Justice supports, or has no objection to, many of the changes which would be made by S. 643. We oppose, however, certain changes which would lower the standards for the patent grant, and raise the requirements for establishing invalidity, causing, we believe, uncertainty and unnecessary burdens and restraints on the consumer, the business community, and our competitive environment. Our particular concern is that a lowered standard of patentability will lead to the proliferation of unjustified monopolies-with consequent higher prices to the public. We also oppose Amendments No. 23 and 24-commonly known as the "Scott Amendments". Amendment No. 23 would cast doubt upon the application of certain Supreme Court decisions and could be construed to empower the states to grant patent-like protection to subject matter which is unpatentable under the Federal law. Amendment No. 24 would for the first time introduce into the Patent code specific provisions governing the conveyance or licensing of patents, overriding the general law and creating significant ex ceptions to the antitrust laws and long-established equitable doctrines of patent misuse. I would like to discuss first the provisions of S. 643, the bill to revise the Patent code. Much of the concern which has led to proposals to revise the patent laws stems from the fact that, on a national basis, 72 percent of the patents which are litigated in the courts are held invalid. 1 It is thus obvious, as the Supreme Court has observed in the John Deere case, that there is "a notorious difference between the standards applied by the Patent Office and by the courts." There are, of course, two ways to make the standards applied by the Patent Office and those applied by the courts coincide. Those applied by the Patent Office could be raised, or those applied by the courts could be lowered. Senator MCCLELLAN. Why is that? Mr. McLAREN. I think in part, Mr. Chairman, it stems from the fact that you have more information coming to the courts in adversary proceedings; on the other hand, the proceeding in the Patent Office is an ex parte proceeding. Senator MCCLELLAN. Is the fact that the precedents of the court are not reliable and too often are not followed? Does that have some impact on this? In other words, the court is changing its mind, overruling its previous decisions, does that have some impact on this problem? Mr. McLAREN. I think that is a rather minor factor. The courts have been fairly consistent in their approach, but I think they have had different records to decide upon than those which were available in the Patent Office. I do not think that there have been great changes in the decisions. Senator MCCLELLAN. As I understood some testimony here this morning I do not recall which witness-it indicated that the courts were overruling precedents and thus, this was creating confusion: patent lawyers today do not know how to advise their clients. Mr. McLAREN. Mr. Chairman, with all due respect to these gentlemen, I think that there is a considerable degree of certainty in the law as to what is and what is not permissible. I think that there is a rather narrow gray area. I think it is perhaps more that the client does not like the advice that he is getting as to what he may and may not do. Senator MCCLELLAN. Let me ask you this: Is it your observation, then, and would you conclude that the Patent Office is following precedents of the court in so far as it can do so, and it is inclined to do so, and is doing so? Mr. McLAREN. I think undoubtedly there is a good intention there, Mr. Chairman. I wish they had a higher degree of success. Senator MCCLELLAN. That is what we all wish, and I am trying to find out what the fault is, whether we need legislation to correct that fault. Mr. McLAREN. I think inevitably consideration of a patent application more or less has to be in a semi-ex parte proceeding. But the adversary proceeding, I think, in our form of government, has proved over and over again that it produces a superior result. 1 Graham v. John Deere Co., 383 U.S. 1. 18 (1966). Senator MCCLELLAN. I think that is a strong point. I think that substantiates, to some degree, at least, maybe to a very full degree, what you have been saying. I am just trying to make this record. Mr. McLAREN. Right, sir. Returning to my prepared statement, I was about to say that there are two ways to make the standards applied by the Patent Office and those applied by the courts coincide. Those applied by the Patent Office could be raised, or those applied by the courts could be lowered. Senator MCCLELLAN. How about a little of each? Mr. McLAREN. Well, I think that might be terribly hard to legislate, Mr. Chairman. We believe the standards being applied by the courts to be the appropriate ones and we are therefore opposed to any measures which would dilute these standards. It follows that we support measures which would raise the standards applied by the Patent Office and, to the extent that S. 643 includes such measures, we wholeheartedly endorse it. On the other hand, we believe that some provisions of S. 643 would, by lowering the standards of patentability, make patents easier to obtain from the Patent Office, but more difficult to challenge in the courts. We oppose these provisions, and I will now discuss them in more detail. CRITERIA FOR OBTAINING A PATENT Under present law, an inventor can obtain a patent only if he has made an invention which sufficiently promotes the progress of science and the useful arts to satisfy the constitutional standard for patentability. To do so, the invention must be new, useful in that it provides a specific benefit to the public in currently available form, and not such a slight advance in the art that it will have been obvious to a person of ordinary skill at the time it was made. 35 U.S.C. SS 101, 102, 103. Standard of Invention.-Section 103. Amended section 103 would alter the language governing the standard of invention to provide that a patent may not be obtained if the subject matter sought to be patented was obvious to a person having ordinary skill in the art, rather than retaining the present language which would preclude patentability if the subject matter would have been obvious. We understand that this change is not intended to alter the present body of law as to what constitutes obvious subject matter. This being the case, we question the necessity and advisability of changing the present language. It could be argued, based upon the change in the language, that the law required a showing that there was in fact another person to whom the invention claimed was obvious at the time of the invention. The purpose of present section 103 is to establish an objective standard for invention. As a hypothetical "reasonable man" sets the objective standard in negligence cases, so the Patent Code and well settled judicial precedent establish an objective standard as to what would have been obvious to a person having ordinary skill and |