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TUESDAY, MAY 11, 1971



Washington, D.C. The subcommittee met, pursuant to notice, at 10 a.m., in room 3302, New Senate Office Building, Senator John L. McClellan (chairman of the subcommittee) presiding.

Present: Senators McClellan (presiding), Fong, and Scott.
Also present: Thomas C. Brennan, chief counsel and Edd N.
Williams, Jr., assistant counsel.

Senator McCLELLAN. The committee will come to order.
The Chair will make a brief opening statement.

The subcommittee is today resuming the hearings on patent law revision. The purpose now is to hear testimony on those patent issues which have developed since the conclusion of the extensive hearings on the Report of the President's Commission on the Patent System, and the bills that were introduced as a result of that report. Because of the change in administration, the subcommittee has delayed reporting legislation for a general revision of the patent laws awaiting the views of this administration.

The amendments introduced to S. 613, the pending patent revision bill by the minority leader clearly raise the most important issue before the subcommittee to be considered in these hearings. These amendments present complex public policy and legal issues touching upon the viability of our patent system, the investment of capital, the competitive free enterprise system, and international trade.

I currently have no position concerning the specific provisions of Senator Scott's amendments. However, I reject the contention that it is not appropriate or desirable for the Congress to enumerate the rights of patent owners, but that any necessary clarification should be provided by judicial decisions and the public statements of officials of the executive branch. I think Congress has a role to play and a duty to perform in connection with this problem. When significant differences of opinion exist as to what patent practices are in the public interest, the Congress should resolve the issue. The minority leader has indicated that he is not committed to any particular test. It is quite likely that constructive suggestions for clarification of the Scott amendments will be made.

The subcommittee has sought to have all viewpoints represented in these hearings. I have been advised by the staff that any person who requested an opportunity to be heard in opposition to the Scott amendments has been allocated time for his testimony.

A second major issue to be explored during these hearings is whether it is necessary to make any modification in the traditional functioning of the patent system in order to advance the national commitment of improving the quality of the environment. It may be that conditions do exist, or will develop in the future, that will warrant some adjustment of the patent laws. However, such alterations should only occur after careful study and adequate hearings. Unfortunately, this did not occur during the consideration of the Clean Air Amendments Act of 1970. Sweeping and unprecedented provisions relating to the compulsory licensing of patents and trade secrets were added to that legislation without any notice or hearings and without consultation with this subcommittee. I did not seek to have that bill referred to the Judiciary Committee because of the overriding public interest in early enactment of the clean air legislation. I appreciate the position taken by those members of the Public Works Committee who subsequently indicated that it was a mistake to have included such provisions without a review by this subcommittee. I am advised by the staff that no one has expressed a desire to testify in support of the retention of section 308 of the Clean Air Act, but that many statements have been received urging its repeal on the grounds that it is unsound and unnecessary.

The third major issue to be considered in these hearings is the adjustment of patent fees. After protracted study the Congress determined in 1965 that the Patent Office should recover about twothirds of its operating costs through the payment of fees. The recovery in fees has now dropped to approximately 50 percent. In order to provide a basis for these hearings, I introduced $. 1255 which retains the structure of the existing fee schedule but increases most fees to produce the rate of recovery previously desired by the Congress and the executive branch. I am not committed to any particular formula, but it is my view that the taxpayers should not be required to support more than one-third of the costs of the Patent Office.

Senator Fong, any statement?

Senator Fong. I have no statement, Mr. Chairman. I am very happy that you have called this meeting on these bills. Thank you.

Senator McCLELLAN. I note Senator Scott has arrived.

Senator, we opened the hearings and I have made an opening statement.

Senator Scott. Mr. Chairman, I appreciate this and I do want to say to those who are here as witnesses that I would appreciate their indulgence as I am caught between the opening of the Senate and the meeting of another committee. I will be very brief because we have made great strides in the fields of technology and science in recent years. I may say that I will simply read my statement and ask the Chairman's approval to submit a number of attachments and enclosures after I have finished.

Senator McCLELLAN. All of the documents and materials submitted will be made part of the record at the end of the Senator's statement.

Senator Scott. I thank the chairman.

The United States has made great strides in the fields of technology and science in recent years. Much of the credit for these advances must be given to the American patent system which has stimulated and encouraged innovation and invention. To insure that the patent system continues to play this vital role, it is necessary to periodically revise and update the patent laws.

It is my privilege to serve on this subcommittee and to work with the Chairman and other members of the subcommittee to bring about needed revision in our patent laws.

During the last Congress, I introduced two amendments to the then-pending patent revision bill. I reintroduced these amendments, the so-called Scott amendments, on March 19 of this year.

I noted during the last Congress that I was introducing these amendments so that they might appropriately be the subject of wide discussion and debate by all interested parties. I was not wed then, nor am I wed now, to the specific language set out in my amendments. I am, however, in full accord with the general thrust and purpose of these amendments. I, therefore, reintroduced these two amendments with the hope that a chance for full congressional consideration and action will be enhanced by the early date of their reintroduction. I am, therefore, very pleased that Senator McClellan is holding these hearings.

Although I will submit substantial explanatory and supporting data at the conclusion of my remarks for the hearing record, I am taking this opportunity to briefly explain the purpose of my amendments.

The amendment (No. 23) proposed to section 301 is intended to make it clear that the patent laws shall not be construed to preempt the right of the courts under State or Federal law to decide issues with respect to enforcement of contracts involving rights to intellectual property such as trade secrets, technical know-how, and unfair competition.

The amendment (No. 24) proposed to sections 261 and 271 deals with patent license provisions and is intended primarily to implement recommendation XXII of the report of the President's Commission on the Patent System.

I believe these amendments address themselves to extremely important questions in the patent law field. There is merit to their underlying principles. It is for this reason that I proposed them to S. 643. However, I harbor no pride of authorship in the specific language and stand ready to examine alternative approaches to meet the needs to which my amendments are addressed. It is my hope, however, that these amendments will serve to further stimulate thought and discussion on the action needed in these important areas.

For purposes of background and clarification, it should be noted that the General Patent Revision bill introduced in the 91st Congress was S. 2756 and is identical to the current bill, S. 643, in all areas affected by the Scott amendments. My amendment No. 23 to S. 643 is identical to my amendment No. 579 to S. 2756. My amendment No. 24 to S. 613 is identical to my amendment No. 578 to S. 2756.

In order to further illuminate the need for these amendments, I ask unanimous consent that the following materials, which I inserted

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