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ever, if it is decided that Patent Office fees should be increased in the range of 50 to 100%, then I think that a system of deferring a portion of the total fees for payment at some time after the filing and issue fees should be given serious consideration. In my opinion, the present Patent Office filing and issue fees should definitely not be increased and in fact probably reduced. I base this conclusion on the information contained in the graph attached to this statement showing the change in percentage of patents issued to individuals during the period 1950–1970, which graph was published in the February 1973 issue of Action, the journal of the Association for the Advancement of Invention and Innovation. My interpretation of the figures in this graph leads me to the conclusion that the fee increase in the middle 1960's resulted in a reduction of several thousand applications in the filing rate by individual inventors. I would also predict that a further substantial reduction in patent filing by individuals would occur again if fees are raised substantially.

Thus, if Patent Office fees must be increased substantially, I would recommend that the filing and issue fees for simple cases be maintained in the range of about $100 as proposed in subparagraph (b) (1) of Section 41 of S. 1321 and that the remainder of the necessary fee be deferred under a system whereby additional fees would be paid every 3rd, 4th or preferably 5th year on those patents which are used commercially.

I believe it is clearly preferable from an administrative standpoint for both the Patent Office and patentees to avoid any system of annual fees. Also, while I am entirely sympathetic with the financial problems of individual inventors and small businessmen, I do not think it is administratively feasible to distinguish this type of patentee under subparagraph (b)(2) of Section 41 of s. 1321 from other types of patentees. Thus, I favor a system in which a portion of the Patent Office fees are deferred and are paid by successful patentees, if fees must be increased substantially, compared with increasing substantially the present filing and issue fees or adopting a system of annual maintenance fees as used in a number of foreign countries.

ADMINISTRATIVE RESTRUCTURING OF THE PATENT OFFICE Based upon past experience with the present administrative structure of the Patent Office, I believe the time has come to seriously consider an administrative restructuring of the Patent Office. I have proposed for several years the establishment of a new position of Assistant Secretary of Commerce for Invention and Intellectual Property to centralize and elevate the voice for invention, innovation and the patent system in the Executive Branch of the Government. While I believe that there are many advantages for such an organizational change, I originally received little support for this proposal. It now appears that there is considerable support for elevating the voice of the patent system to the Assistant Secretary level. Also. I realize that there is a certain amount of support for making the Patent Office an independent agency, such as proposed in S. 1321. · All things considered, I favor on balance continuing to maintain the Patent Office in the Department of Commerce, but on a completely different basis from the present organizational arrangement. More particularly, I would strongly support as a minimum change elevating the position of Commissioner of Patents to the Assistant Secretary level and preferably to the Under Secretary level so that the Commissioner would no longer be required to report to the Assistant Secretary of Commerce for Science and Technology. This administrative change would be similar to the change that was made several years ago in the status of the Weather Bureau which also formerly reported to the Assistant Secretary of Commerce for Science and Technology. I firmly believe a similar change in the organizational structure would have a significant effect on the climate for invention and innovation in our country and in strengthening the contribution of the I'nited States Patent Office in the operation of our nation's patent system. This concludes my prepared statement and I would be pleased to try to

mestions there might be on my comments as to supplying any

mation for the record.

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Mr. BRENNER. Initially, Mr. Chairman, may I say I am testifying purely in an individual capacity this morning, but my testimony is based on my 5 years' service as Commissioner of Patents, as well as my work in patent work in a very large company, a medium-sized company, as well as now being in private practice.

My present work involves the patent activities of independent inventors and small companies, as well as my experience in serving as executive director of the Association for the Advancement of Invention and Innovation, which is an organization of people of many different backgrounds interested in trying to solve the problems, some of the problems that are being discussed here today, and to try to improve the climate for invention and innovation in the United States.

Referring to the matter of public adversary hearings, I would mention that I served as a representative of the Secretary of Commerce on the President's Commission during 1965 and 1966. This was one of the major subjects to which the Commission addressed itself. The Commission came out with a final conclusion that there was a need for a proceeding by which the public could bring to the attention of the Patent Office pertinent prior art which was either missed by the Patent Office or not available to the examiners.

But one of the major conclusions was that the Patent Office should serve as a screening body to identify which prior art might be meritorious and which had little if any value to it. This was based on the experience with the European systems which were evaluated and studied quite carefully, where certain abuses were recognized which have been referred to before, that sometimes patents were not issued until after the patent really expired.

So the proceedings, in many cases, were very time-consuming and very expensive. So what the Commission felt it could propose, would be if the Patent Office were to screen this art, you could get the same substantive results as in a full scale adversary proceeding, and you could eliminate the abuses.

I subscribe to that. I think that that would be in the best interests of the public of the United States.

Just a couple of points of administrative detail in connection with the subject of adversary proceedings. As I recall, the Presidential Commission did recommend that after applications were allowed, they were to be published and subject to having the public call to the attention of the Patent Office prior art that could be considered in the reexamination procedure.

However, when we evaluated this in the Patent Office, we felt that if we had to publish two sets of documents, in other words, publish everything once as an allowed application, and publish everything again as a patent, that the printing costs and the costs to the Patent Office and to the public of processing really two sets of patent documents outweighed any possible advantage.

The administration bill that was introduced to the Congress recommended that the patent be granted and then have a proceeding for

reexamination so as to get all the advantages but yet save substantial amounts of manpower and printing costs.

Second administrative point-when the bill was introduced we proposed and I think this was in S. 643—that the Commissioner would have the administrative flexibility to establish precisely the details of reexamination. So through experience it would be possible to arrive at the optimum arrangement. Therefore, it would seem to me that it would be best not to require the Commissioner to use the primary examiner that may have handled the original case, because there has been strong feeling in certain quarters that it might be better to have a different examiner or different set of examiners to take a fresh look at it, because the original primary examiner might subconsciously have some feeling that because he allowed the case the first time, that maybe it might not be the thing to do.

I do not think there would be anything intentional here, but nevertheless, the idea was to provide the possibility of a fresh look by a fresh group of examiners.

Moving on to the matter of the Office of Public Counsel, my experience would tend for me to conclude that I would be opposed to the establishment of the Office of Public Counsel. In any event, if this were to be considered in any future legislation, I would strongly recommend that a more detailed establishment of what would be involved in this should be presented, because I hear all kinds of different versions. I don't know whether anybody really knows precisely what we are talking about. But my experience would indicate that there could be many administrative problems. I am not sure that the end result would accomplish the intended purpose.

And furthermore, I think for X millions of dollars that would be involved here, I feel that there are other ways that this money could he spent to improve the validity of issuing patents. I'm wholly sympathetic with the objectives, but I think there are better ways to proceed.

For example, the question of whether a patent should be granted or not, I think, could be much better handled by the present primary examiners in the Patent Office who have the education, the experience. They are specialists in their particular field. I think it gets down to the real judgment that has to be made in the Patent Office: that is, is this invention new, useful and particularly unobvious to a man skilled in the art? The primary examiners by their training are inherently better able to make this very important judgment.

I would point out that in my judgment the key to improving the quality of the output of the U.S. Patent Office is to provide means, new means for bringing more information to the attention of the examiners, and there are steps under way here, for example, to improve the examiners' search files for foreign patents and unpatented publications to provide, among other things, English language extracts of these important pieces of prior art.

Also, it seems likely that some sort of reexamination procedure will result from the present hearings, and will be enacted into law, and this will provide greater information to the Patent Office with which to enhance the validity of the issuing of patents.

Also, I would strongly recommend that concentrated effort be made to study and evaluate just what do we mean by quality. When I was Commissioner we started a very extensive program to really get to the nuts and bolts of what are we really talking about. For example, it seemed to me very clear that there is a matter of human judgment involved here where reasonable men can differ. I do not think that you should ascribe any negative aspects to the Patent Office in situations like this.

For example, if the Supreme Court comes down to a ruling of 5 to 4 in favor of a particular view, does that mean that the other four judges do not have a reasonable basis for their position? This is really what goes on in the Patent Office. There are some applications on inventions that are clearly unpatentable, and they are rejected, and there are applications on inventions, I think everybody would agree, are clearly patentable and the patents are granted on these. But out of about 100,000 applications filed each year, in the middle there are some very, very close questions where I think people of reasonable judgment can disagree. I think factors like this need to be evaluated to really come to grips with what kind of quality problem do we have, what is its nature, what steps do you take to improve.

Moving on to deferred examination, this was another one of the major subjects that was carefully considered by the Presidential Commission which came to the general conclusion that they were in favor of a high quality examination system, basically, and that this could be accomplished. They were in favor of it, and only if this were not possible would they recommend any possibility of deferred examination.

When I was Commissioner of Patents in the middle of the 1960's, of course, this subject was a very hot item because the Dutch and the Germans were considering adopting it. We took a careful look at it in the United States, and we came to the conclusion that as far as the U.S. Patent Office was concerned from a budget standpoint, we could save a little bit on examining manpower but in other areas we would have to use more manpower, we would have more printing, and the net effect would be it was not really going to help the U.S. Patent Office from a budget standpoint, and that deferred examination was only really justified in case the Patent Office could not keep up with its workload.

I might say from my personal experience in the private sector, I feel that although there would be savings in certain aspects of patent work under a deferred examination system, I think that this would be completely offset by other costs, and it would really not be a good step for the United States to take.

I would like to make this point very strongly. I think that people should recognize the great contribution that the U.S. Patent Office makes to the matter of certainty of the operation of the U.S. patent system. It is not perfect, but if one were to live without an examination system, I think they would recognize a great deal of the problems that are involved. In fact, the French had a nonexamination system and they concluded that this was not working in the best interests of their country, and they subsequently revised their patent system.

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