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Mr. DUNNE. Most definitely, most examiners are aware of the goals and chart their yearly work to approach these goals. Most definitely yes,, sir.

Senator Hart. Whether the question of promotion hinges on having met the quantity goal or satisfying your superior that you had met the quality goal, whichever is the stronger motivation on the part of the examiner, is there a bias built into the system in favor of allowing a patent rather than disallowing a patent?

Mr. DUNNE. Senator, I would say there is not a bias built in allowing a patent because one of the statistical numbers that are used to evaluate performance is the percentage of allowance. I know the Patent Office will never say they have denied promotion or recommended promotion based on that number. The examiners put a premium on that number. They know that the man before them on that docket was getting 70 percent of the cases allowed, 30 percent abandoned. That might not be his figure. He knows that if his numbers are 80 percent allowance, then he is doing something different than the other examiner before him did. He adjusts it accordingly. He uses that as his own personal check. That would be the only pressure or imput from the statistical numbering system on allowances.

The goals may affect the amount of time spent on a case. They would not affect how he would dispose. The system does not force the examiner to issue or abandon. It does not put any pressure on him in this regard. It may affect the time that he spends reaching an issuance or having the case abandoned, not the result.

Senator Hart. Quality in the product reflects in part the amount of time he puts into it.

Mr. Dunne. Yes, sir, Senator.

In anything you do, the more time spent, the better quality. The examining corps puts a very high premium on the allowability of claims over the art where they should be searching.

Because of the pressures of time, the first things that may go may be checking of spelling, syntax, grammar. If you talk to the older examiners, they are nitpickers on spelling and punctuation, while that does not happen anymore because of the pressures of time. The examiners do an adequate search, I would feel. The pressures of producing cases at a certain hourly rate are not that strong that they affect the areas of search. They may affect other areas of insignificant consequence.

Senator Hart. Insignificant?

Mr. DUNNE. Less significant than the actual search against the actual time.

Senator Hart. Whether or not that may be of lesser, consequence, do they bear on the likelihood of making a proper decision in respect to the question of patentability?

Mr. DUNNE. I would say generally no. They might be more in the line of having a document that meets the high standards required

As far as the claims themselves, on allowability, no.

Mr. Tegtmeyer talked about this point, and I have to agree with him wholeheartedly, that searching as I mentioned before, is directed, mandatory in certain areas, and some at the discretion of

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the examiner. Once you get beyond that area, if you think about concentric circles, next you get to the next circle, you are greatly increasing the search area. If you are going to look there you might as well look all around the circle. Everytime you add to that circle, you are just increasing the search time with minimal and more minimal chance of finding anything pertinent.

Senator Hart. The Patent Office opposes and your Society supports the deferred examination system.

Now, the Patent Office suggested that deferred examination would not save very much time.

How do you react to that, save very much time for the examiners.

Mr. DUNNE. This becomes a statistical interpretation. For example, several witnesses have tossed around the figure of 60 percent, in the Netherlands. Many of those applications were never examined because they received a prior examination in the United States, thus the applicants, who might also have been U.S. applicants, decided that the U.S. examination did not show anything of value could be obtained. There would be a lot of influences we would not have on a deferred examination in the United States.

Another input into that statistic on a deferred examination system. It encourages filing of an application for several reasons. One, you have two fees, the filing fee and the examination fee, so you are encouraging filing. Also, since you have deferred examination system, which I think is a strong advantage to it, corporations or inventors would file an application before commercially their time is due because they could defer it. Inventions would be disclosed earlier, and this would be a benefit to the public.

With this you might get a very large increase in the number of filings. For example, the Patent Office in the last calendar year had 115,000 applications. Deferred examination might skyrocket that figure. If that happens, we may still be examining 115,000 only examining 40 percent, thus we may not be gaining anything. We don't know. We would have to check the reaction of the patent community on this.

The Society feeling is that there are two types of patent applications that will not be examined on prior art. These types of patent

plications are those that are made for defense purposes to prevent subsequent harassment, and those people who are waiting for their time to come. These will not be examined under deferred examination.

Because of that, we feel that there will be a reduction. The specific number would be hard to predict.

One more comment. One reason we support deferred examination in the view of this possible balance of arguments here and thus a close question is the fact that S. 1321 provides that any party can call an application up for examination, including the Public Counsel. Deferred examination could prove to be a handicap to the patent system. The Public Counsel, at the risk of losing fees, could order up all examinations to be examined by his own authority, and do away with deferred examination. Therefore, the Society feels it is worth a try to see how these numbers are going to balance out. We cannot predict-we are not going to do any harm if we try it.

Senator Hart. I am glad you reminded me that no harm would be done if in fact the Public Counsel could call them up. Assuming that the number of applications does not skyrocket, would it not follow logically that the deferred examination would permit a higher quality of work product from the examiner?

Mr. DUNNE. The society feels it would definitely increase the manhours available per application. That would possibly increase the quality, it probably would increase the quality, yes.

However, various sections of 1321 are going to institute procedures that are going to require more time. For example, subpena power alone. If we start getting into discovery procedures during the examination process, I am sure you are aware that the discovery process during litigation is horrendous. If we start bringing these procedures to the Patent Office, we are not going to be talking about 15 hours per case. We are going to be talking about 2 weeks just on discovery alone. So we had better have deferred examination if we are going to have subpena power and discovery.

Senator HART. 'Even that conditional answer hinges on whether the subpena produces, a lot more work.

You favor the making of an independent agency of the Patent Office, and you say—and this is very early in your statement the first page—“decisions of policy affecting the patent system are influenced by the Secretary of Commerce who is charged with furthering American business interests."

Do you have any specific example of how this relationship with the Secretary of Commerce has affected the Patent Office?

Mr. DUNNE. Senator, I am not privy to the inner councils of Government, so I really could not answer that. I can conjecture on types of situation that there may be influence, but to say there has been influence, I could not say or would not want to suggest that there has been.

I think the point here—there is a propensity for this influence. This influence might be rightly so. The Secretary of Commerce is charged with furthering America's business interests. The American business has a large place in the patent system, particularly when you are talking about technological societies. Businesses are technologically oriented. This input may be very proper, .

Our point is, in furthering—in being charged with furtheringthe progress of American commerce does not necessarily go hand in glove with furthering technology in the patent system. I am talking rery generally now. I am not trying to suggest that this has happened.

But, as an example, the recent Deep South case decided by the Supreme Court said an American manufacturer who is making a patented machine in parts to be shipped abroad and assembled would not be infringing on a patent on a complicated machine-in this case, it put the shrimp in one end and it comes out boxed and frozen—it is a very complicated machine. If you can assemble it in the United States and ship it to a foreign country, to be bolted together with three bolts, you would have a device that you would not be infringing the patent in America. This upsets a lot of people.

However, it has advantages to public policy. It would suggest that manufacturers who want to compete in marketing a shrimp-making machine, do not have to go abroad to their market to set up manufacturing facilities. They can set them up here in the United States, use American labor, American materials, American capital. Here we have a situation where the patent policy, or the patent people, may feel that it is inappropriate to allow American firms to manufacture a patented device in parts and such is, in fact, making the device, infringing a patent while American business interests may seem to indicate that this was very good, because it helps the American company, the balance of trade, and the rest.

These types of conflicts of interest would exist in making decisions on marketing patents. I think these kinds of influences are proper, but they should not be the orientation of a man who oversees operations as the Secretary of Commerce. He does have oversight power. There may be possible conflicts.

Again, I would like to make perfectly clear I am not suggesting this type of discussion has ever gone on in the halls of Commerce. This is the type of example I could dream up.

Senator Hart. You have made it clear that you are not suggesting that either proper or improper influences have been exercised. But you do

suggest there is a propensity, or inherent possibility? Mr. Dunne. Yes, sir, I do.

Senator Hart. Do you, as an individual, have any opinion as to whether the frequent changes in the person of the Commissioner of Patents, a tradition that goes over a long history, affects adversely the morale of the personnel in the Patent Office ?

Mr. DUNNE. That would depend about the feelings about the Commissioner in office at the time. I have been through three Commissioners. I believe it is harmful, sir. I most definitely do. I think it has an adverse affect on morale. Continuity of programs, that are the basic programs in the operation of the Office have been maintained. I have been in the Office under Commissioner Schuyler and Commissioner Godtschalk and now Commissioner Tegtmeyer.

There has been a continuity of programs. There have been innovative programs come in under the different administrations which I think is good. But I think three Commissioners within 3 years is a bit out of hand. Of course, if we go back 5 years, they number more. Effective management cannot be done by a 1-year Commissioner, particularly in the Patent Office.

In the Patent Office, we have a group of professionals that are fairly unique in Federal service. They are fairly unique anywhere. They are trained as engineers, scientists, highly well educated technical people. Most have a law degree or are attending law school. We have an unusual profession, not one that can be managed by fiat, one that can be managed only by having faith in the programs, particularly when you get to the upper management levels.

For a Commissioner to effectively manage or administer-as opposed to policy-to effectively administer the Office requires great confidence from his Directors and his supervisory primary examiners and the examiners themselves. We are an independent group of employees.

I think it is very harmful, the changeover. We do not have trust, faith, or confidence in the everchanging leader type of concept, which is definitely harmful.

Senator HART. Mr. Brennan?
Mr. BRENNAN. No questions.
Senator HART. Mr. Nash?
Mr. Nash. No questions.
Senator Hart. Mr. Dunne, thank you very much.
Mr. DUNNE. Thank you, Senator.
Mr. BRENNAN. Mr. Francis Browne.

Senator Hart. Mr. Browne, I think you joined us to discuss the aspect I was last talking about with Mr. Ďunne.

Mr. BROWNE. Yes, Senator.

STATEMENT OF FRANCIS C. BROWNE, ESQ.

Mr. BROWNE. My name is Francis C. Browne. I am the senior partner in the law firm of Browne, Beveridge, DeGrandi & Kline, and a member of the bar of the District of Columbia and Maryland.

My own personal background is-I started in patent work in 1938. I am admitted to practice before the United States and Canadian patent offices. Some of my early patent practice was in industry and government. Since 1945, I have been continuously engaged in the private practice of patent, copyright, and trademark and unfair competition law here in Washington.

I have held office in and served on the board of managers of the American Patent Law Association. I have been chairman of various committees of the American Bar Association Section of Patent, Trademark, and Copyright Law. I am a past chairman of the patent section of the Bar Association of the District of Columbia.

I have served as a consultant to the House of Representatives Committee on Science and Astronautics on the subject of Government patent policy and also as an adviser to the Organization of American States on patent and trademark matters.

I am submitting this statement on my own personal behalf and not on behalf of any organization or client. So far as I know, no organized bar association has considered the proposal I am about to make. However, in discussing the substance of my proposal with some former Commissioners of Patents and other highly regarded members of the patent bar, they have indicated that the idea has some merit and have expressed surprise that it has not been suggested before now.

I am interested, particularly, in the administrative process by which the patent system operates in implementing the statutes enacted by Congress under article I, section 8, of the Constitution. The key to efficient administration of the patent statutes and effective operation of the U.S. patent system, in my opinion, lies in bringing the organization and function of the U.S. Patent Office more directly under the control of Congress.

By way of historical background, it can be recalled that Congress, in exercising its powers under the Constitution to promote the progress of science and useful arts enacted the first patent law in 1790.

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