Page 2, lines 7-24; page 3, lines 1-13 (simplifying license for foreign filing requirements).

I think that stifling of American competitiveness through government red tape is a far greater danger to national security than loss of information through foreign patent filings. Absent strong and thoroughly justified objections by the Defense Department, I would hope that your committee would look favorably on any reform that allowed U.S. industry to compete more easily in the international marketplace.

Page 3, lines 14-25; p. 4, lines 1-4

These sections take proper account of the team nature of most inventive activity in the United States today. They overcome what has amounted to forfeiture on the basis of a technicality, where the rewards were for having clever lawyers rather than brilliant scientists and

engineers on corporate staffs.

Page 4, lines 3-6 (affidavit)

It is not clear to me that this section will have the desired result of reducing costs; rather it could lead to even greater expenses in turning more interferences into Federal court cases. If enacted, there should be a sunset provision requiring the Commissioner of Patents and

Trademarks to report back on its effects on the cost of patent litigation,

and it should be made part of permanent legislation only if it was successful.

Page 4, lines 7-14 (interference settlement filling)

This seems to be an appropriate change that will relieve from forfeiture without significant danger of increasing antitrust violations.

Page 4, lines 15-23 (arbitration)

If settlement is to be allowed, arbitration also should be allowed. THere is a problem, however, with the way the bill is phrased. Suppose the arbitrator finds that A conceived and reduced to practice in March 1982 and that B conceived and reduced to practice in January 1983, so that It still should be open to the PTO to contend

A wins the interference.

This would require

that A really did not invent until June 1983 and so was barred by a May 1982 publication that was not before the arbitrator. rejection of the arbitrator's finding that A invented in March 1982 and

even rejection of the finding that A had priority over B. It is not clear from the language given in the bill that the Patent Office could make such a rejection.

Page 4, lines 24-25; page 5, lines 1-19 (licensee estoppel)

This section seems to give a fairer balance between the interests of licensor and licensee than given by the present confusing mix of court decisions.

Page 4, lines 17-19 (retroactivity)

Is the law meant to apply to existing licensing contracts so as to change the rules of licensee estoppel with respect to them? If so, this would seem to be an unfair change of rules in the middle of the game. If

not, the statute should clearly state not.

UNIVERSITY OF CALIFORNIA, LOS ANGELES

UCLA

*

BERKELEY DAVIS · IRVINE LOS ANGELES RIVERSIDE SAN DIEGO SAN FRANCISCO

November 14, 1983

SCHOOL OF LAW

LOS ANGELES, CALIFORNIA 90024

The Honorable Robert W. Kastenmeier

Chairman, Subcommittee on Courts,

Civil Liberties and the Administration of Justice
U. S. House of Representatives
Committee on the Judiciary
Washington, D. C. 20515

Re:

Proposed Legislation H.R. 3286 and H.R. 3878

Dear Congressman Kastenmeier:

Thank you for your letter of September 29, 1983 enclosing copies of the above House bills and inviting my comments. I am happy to respond.

H.R. 3286 EMPLOYEE INVENTIONS

This bill appears to me to codify the case law relating to employee inventions, made on the employee's time and not relating to the business of the employer, in a manner consistent with wellestablished precedent, c.f., U. S. Dubilier Condenser Corp., 289 U.S. 178 (1933). In addition, it provides for a shopright consistent with applicable law principles; Cambridge Wire & Cloth Co. v. Applegarth, 141 U.S.P.Q. 44 (Md. Cir. Ct. 1964). The bill resembles the provisions of the California Labor Code, Sections 2870-71 enacted in 1979.

In view of its correspondence with well-established case law, I assume that this should be a noncontroversial bill. My only thought is that, because the case law is not in doubt in this area, is there any need to take up the time of Congress by codifying it into legislation. That, however, is a question which is uniquely. within your province.

I believe the intended objective, to encourage joint R & D ventures under circumstances where the participants would presently be inhibited for fear of running afoul of the antitrust laws, will

be served by the proposed legislation under Title II. The requirement for notification to the Attorney General and Federal Trade Commission should have the effect of keeping the participants honest from the outset. In addition, the limitation of damages, after such a notification, to single damages should have the effect of encouraging notification to reduce liability thereby reducing the incidence of behind-the-scenes joint R & D programs and increasing the scrutiny of those that are entered into.

I am a little troubled by Section 204 (c) permitting

a request for nondisclosure of information or documentary material submitted as part of such notification not be made public. I appreciate that this requirement is necessary where trade secrets or business confidential information needs to be preserved in confidence. On the other hand, this provision should not become an excuse for the parties to a joint R & D venture to prevent a third party that believes itself to have been injured by a violation of the antitrust laws resulting from the venture from obtaining access to such information. Perhaps it would be advisable to add an additional sentence to Section 204 (c) to the effect that nothing in that section shall prevent a court from ordering discovery of such information or documentary material for good cause subject to an appropriate protective order where justified.

Title III - Reduction of Antitrust

Damages for Patent Antitrust Licensing
Violations to Single Damages

Section 301 of H.R. 3878 would restrict actual damages for a violation of the antitrust laws in a license under a patent to single damages, rather than trebled damages.

In approaching this question, the starting point to me is to ascertain what utlimate objective is desired at this interface of the patent and antitrust laws. It seems to me that the answer is to try to increase competition and at the same time maximize the reward to the patent owner to stimulate the incentive to invent. Both objectives, I believe, would be achieved by reducing the risk of antitrust damages to single damages in the patent license context.

One of the most serious problems with the present application of the antitrust laws to patent licensing is difficulty which businessmen face in trying to find the line that the courts have drawn between acceptable licensing practices and those that might give rise to an antitrust violation. From the point of view of