However, the subject itself is not readily understood. In fact there has been, and is, much misunderstanding concerning it. As mentioned in my testimony, this subject has generated much criticism and conflict and has been the focus of various operating and personal difficulties in the Patent Office. Section 6(e) of S. 1321 reflects the Committee's concern with this subject. In view of its basic importance, a brief statement of the Patent Office situation concerning it would seem to be in order. Patent Office programs of research and development in this area over a period of years have cost much and yeilded little. When I became Acting Commissioner, my awareness of this, and of the importance of this subject, prompted a careful review of what had been done in the past, and also of the efforts then underway with respect to "Project Potomac" (referred to in my testimony, although not by that name.) I concluded, in November 1971, that I had no alternative but to curtail Project Potomac. I did so, for these basic reasons: First, taking at face value the most optimistic views urged by its proponents, Project Potomac would at best have provided the Patent Office, three or four years hence, with the capability to process only a minor portion of the vast volume of material required for Patent Office purposes, with the balance being left to be handled by conventional means. Second, the substantial costs of Project Potomac had been funded by diverting funds from, and virtually completely abandoning, the highly essential "manual" classification program. By the time I became Commissioner, this had already resulted in great deterioration. And since the "manual" classification system is the primary working tool of the patent examiner, its restoration was a pressing need of the highest priority. My decision in this respect was approved by Assistant Secretary Wakelin and by Secretary Stans. It was also in accord with advice I received from computer experts of IBM and from Price, Waterhouse consultants then working with the Patent Office. Nonetheless, I was determined to insure that we derived from the work done on Project Potomac everything of value developed thereunder; and also, that the Patent Office would maintain a forward-looking research and development program in this area. But this program would have to be based on a full and careful analysis of the Patent Office and its operational needs, and pursue a planned and logical approach to the satisfaction of those needs. To maximize our prospects of success, I arranged for a team of experts from the National Bureau of Standards to assist the Patent Office in this program. After careful and extended study, they concluded that Project Potomac was not a valid means of accomplishing the objectives to which it was directed. Their reports also provided a better basis for forward planning and progress, in my view, than had ever before been developed. THE NEED FOR PROMPTLY FILLING KEY POSITIONS The position of Commissioner has now been vacant for almost three months. So far as is publicly known, a nominee has yet to be selected. It is known that several persons of recognized ability and stature have declined offers of appointment. It is manifestly important that this post be filled as soon as possible, and by a person truly and well qualified to cope with its many and varying demands. There is a serious threat to the effectiveness of Patent Office operations in either extending the present period of hiatus and uncertainty, or in the appointment of a person not adequately qualified. Prospects of filling the post soon and well would probably be substantially improved by promptly establishing the Patent Office as an independent agency. Therefore, I would suggest that the Committee might wish to consider accomplishing this by enacting such legislation, split out of S. 1321, as soon as possible. There are also other important positions in the Patent Office now vacant, and these presumably will remain so until after a new Commissioner is appointed. Among these are the positions of Deputy Commissioner and Assistant Commissioner for Legal Affairs. The latter position was established by a reorganization of the Patent Office which I proposed and which was approved December 15, 1972. Two days follow ing that approval, an administration "freeze" was imposed on all hirings. For that reason and also because of the long consideration of my proforma resignation-it was impossible for me to fill that position, as well as other positions of great importance to the operations of the Patent Office. Significantly, the considerations which prompted my establishing that new position were very similar to those underlying various proposals of S. 1321. I was particularly concerned to provide more effective legal input to, and guidance for, the patent examining operation; also, to provide a focal point for the coordination of legal activity throughout the Office and for the development of improved examination procedures. This position has never been filled. The opportunity to present my views is appreciated. I hope they may prove of some assistance to the Committee in its consideration of the issues to which they are directed. Respectfully, ROBERT GOTTSCHALK, ARLINGTON, VA., September 21, 1973. Senator JOHN L. MCCLELLAN, Washington, D.C. DEAR SENATOR MCCLELLAN: I am writing in response to your letter of September 19, 1973 in which you directed attention to the statement in my testimony on September 14 that "regularly substantial sums of money appropriated for the Patent Office are siphoned off for other uses within the Department of Commerce", in which you requested that I "furnish the Subcommittee for the record a more detailed statement concerning line item funds appropriated to the Patent Office which were otherwise utilized by the Department of Commerce," and in which you also stated that you were "requesting the Secretary of Commerce to supply the Subcommittee with a report on this matter". As I am sure you fully appreciate, my above-mentioned statement was made in the context of consideration of the questions whether the Patent Office should be removed from the Department of Commerce and established as an independent agency, and whether the Patent Office as a part of the Department of Commerce is subject to improper or undue influence; and also, that my statement was made following, and in response to, the testimony by the General Counsel of the Department of Commerce that ". .we are aware of no evidence in the history of the Patent Office which would suggest that any improper influence was exerted upon the Patent Office by officials in the Departments to which the Patent Office has been attached". Needless to say, none of my testimony, in any part or degree, was given lightly, but rather with a full appreciation of the seriousness of the issues under consideration, and of the importance of developing all facts relevant to and necessary for their sound and appropriate resolution, including those concerning the actual disposition and use of funds appropriated to the Patent Office. Further, the facts in that regard were, I felt, essential to an accurate appraisal of the recent development in budget request practices of the Depart ment of Commerce which I mentioned in my testimony. Clearly, the Secretary of Commerce is in far better position than am I to furnish the detailed statement of matters in this connection which you have requested. The records and other resources of the Department of Commerce are fully available to him, whereas I do not have access to either. I have not been privy to any records or activities of the Department of Commerce since June 29; and I have no records or other sources of information to which I can refer for assistance in responding to your request. However, I believe that I am in position to at least identify lines of inquiry which, if pursued, should lead to the development of the detailed information which I understand you are seeking. Even so, I am somewhat handicapped by several considerations, which I would breifly note as follows: My terms as Commissioner was limited to 18 months, and my term as Acting Commissioner was limited to 4 months. Throughout this entire period of less than two years, I was deeply immersed in the many and varied operating and professional problems of the Patent Office. Necessarily, for the specifics involved in the handling of financial and other administrative details of Patent Office operations, I relied to a considerable extent on my able and experienced Assistant Commissioner for Administration who joined the Patent Office from another agency in January of 1972. Nor can I claim to have mastered the special terminology employed in governmental circles to such an extent as to enable me to use, with certainty and precision, the terms which might be employed by others to describe particular transactions and events relating to financial transactions of the Patent Office and the Department of Commerce. Having said that, let me be as direct and specific as I can. I twice encountered the practice which I can best describe in general terms as follows. Toward the end of fiscal year 1972, and again toward the end of fiscal year 1973, the Patent Office was necessarily engaged in close and careful monitoring of the payments it made and obligations it incurred, in order to achieve the dual objectives of fully utilizing all resources made available to it, while at the same time insuring against exceeding its funds or authorizations. Toward the end of each of these two fiscal years, I recall being informed that, on orders originating with the Department of Commerce, portions of our thenremaining funds were literally transferred to, or appropriated by, the Department of Commerce for its use for non-Patent Office purposes. While I cannot state the exact sums involved, it is my recollection that in each case they were substantial. Beyond the question of the amounts themselves I was, and remain, considerably disturbed by the manner in which these transfers were effected, and by the questions of principle involved. The same general kind of experience was also encountered in other instances which did not involve the transfer of Patent Office funds as such, but rather the utilization, at the direction of the Department of Commerce, of Patent Office personnel and facilities in pursuit of non-Patent Office objectives. Several examples come to mind. During my tenure as Commissioner, the Administration launched a program, involving the Department of Commerce and other governmental units, to study and improve the policies and techniques involved in the development and commercial utilization of new technology. In part, this included the so-called ETIP program. The Patent Office was called upon to participate in this effort, and made significant contributions of the time and skills of some of its key personnel. A second example concerns the effort to develop an improved Government Patent Policy. This also involved similar requests involvement and Patent Office contributions. One specific aspect of this matter concerned the activities of the interagency committee on Government Patent policy, chaired by the Assistant Secretary for Science and Technology. A third example concerns the development of a program relationg to "Technology Assessment and Forecast". This effort was incubated and hatched in the Patent Office prior to the time I became Commissioner. It was continued and expanded thereafter within the Department of Commerce, under the supervision and control of the Assistant Secretary for Science and Technology, and an "Office of Technology Assessment and Forecast" was established within the Department of Commerce. Its director was, and I believe still is, a Grade 17 employee of the Patent Office. At the time I left the Patent Office, he was continuing to devote full time and attention to that activity, which was of great interest to the Secretary and to the Assistant Secretary for Science and Technology. This program is based upon data derived from Patent Office records; and the substantial effort involved in extracting, compiling and utilizing this information has been largely provided by Patent Examiners and other highly qualified personnel on the staff and payroll of the Patent Office. The initial publication of the Office of Technology Assessment and Forecast was issued in the Spring of 1973. The "Introduction" stated that it resulted "from a recently instituted Commerce Department Technology Assessment and Forecast Program. This program, established under the Office of the Assistant Secretary for Science and Technology, constitutes a new information source for business and industry." The publication does not purport to be a Patent Office report, nor is the program represented as being a Patent Office program. By reference to these several examples, I do not intend to question the desirability or the importance of such activities as they represent, nor to question whether such activities represent proper matters of legitimate concern to the Department of Commerce. My concern derives from the fact that in each such instance, Patent Office involvement in these matters was directed by the Department of Commerce, drew upon Patent Office resources, and necessarily diverted such resources from the statutory duties with which the Patent Office is charged and in respect of which it is held accountable. As an independent agency, the Patent Office would not be subject to such demands on its resources. As an independent agency, its performance of any such functions or services would either be appropriately funded by the Congress, or conducted on the basis of appropriate reimbursement. In either case. such activities on the part of the Patent Office-which might well be in the national interst, and entirely appropriate and desirable-would not represent an unauthorized and inappropriate drain on the resources of the Patent Office. prejudicial to the performance of its statutory duties. Finally, may I suggest that it might be desirable to attempt to develop the relevant facts with respect to what I believe is known as the "Secretary's Reserve Fund". Although my personal knowledge in this regard is quite limited, I believe I am in position to indicate the relevancy of such inquiry to the interests you have expressed. With kind regards. ROBERT GOTTSCHALK. [The following was ordered printed at this point in the record:] THE SECRETARY OF COMMERCE, Hon. JOHN L. MCCLELLAN, Chairman, Committee on Patents, Trademarks, and Copyrights, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: This is in reply to your letter of September 19, 1973, regarding certain allegations made by Mr. Robert Gottschalk, former Commissioner of Patents, during the hearing before your Senate Subcommittee on Patents, Trademarks, and Copyrights on September 14, 1973. The first of these allegations concerned diversion to other purposes within the Department of "substantial sums of money" from funds appropriated to the Patent Office. A thorough review of our records for the period Mr. Gottschalk was associated with the Patent Office, May 1970 to June 1973, has not revealed any instance in which substantial sums of appropriated Patent Office funds were transferred to other Department of Commerce agencies, for other than Patent Office functions. Accordingly, the only conceivable explanation for Mr. Gottschalk's charge is that he imperfectly understood the process of budgetary administration within the Department during his tenure at the Patent Office and misconstrued both the purpose and the use of contingency funds in the "Secretary's Reserve." Since FY 1972, each bureau within the Department has been required to earmark at the outset 1% of its appropriation for high priority projects which were not foreseen at the time the budget was developed and presented to Congress. Towards the end of the fiscal year, funding not assigned to any priority project is released for the bureau's general use. As you can see in the enclosure all projects funded out of amounts reserved from the Patent Office budget in FY 1972 and FY 1973 were either directly beneficial to the Patent Office or had implications with respect to the patent system. A second allegation made by Mr. Gottschalk is that, under the new Science and Technology budget for the Department instituted in FY 1974, consolidation of the Patent Office appropriation with those of National Bureau of Standards, the National Technical Information Service, and the Office of Telecommunications will be used as a means of diverting Patent Office funds to other Science and Technology accounts. I can assure you that to date no funds have been diverted from the Patent Office as a result of this consolidation, nor would I permit any unauthorized transfer to occur. I might add that Mr. Gottschalk can certainly have no basis of experience or observation on which to justify the apprehension he expresses in this connection, since the consolidated Science and Technology appropriation did not become effective until July 1. 1973, after his departure. Mr. Gottschalk again raised the matter of his resignation as Commissioner. I fully endorse the response General Counsel Bakke gave to Senator Hart's question on this subject in the course of the hearing on September 12, prior to Mr. Gottschalk's appearance. However, in light of the fact that Mr. Gottschalk subsequently sought an audience before the Subcommittee in which he once again aired his alleged grievance. I believe some brief further comment may serve to place the matter in proper context. As you know, Presidential appointees in the Executive branch serve at the pleasure of the President and, by extension, the pleasure of the appointee's immediate superior. Accordingly, it is tacitly understood when one accepts a Presidential appointment that his resignation may be requested at any time. It is also tacitly understood, given the dignity of such positions, that when one's resignation is requested, the request is to be honored without quibble. In this instance, Mr. Gottschalk's resignation was requested and he complied. I should also like to comment on Mr. Gottschalk's allegation concerning "improper influence" over Patent Office matters during his tenure as Commissioner. That charge is unfounded. In this connection, a clear distinction must be made between day-to-day operations, which are properly the province of the Commissioner, and, on the other hand, policy matters for which I, as Secretary of Commerce, have ultimate authority and responsibility under 35 U.S.C. 3, 6 and Reorganization Plan No. 5 of 1950. I consider departmental participation in or review of broad policy decisions, including those having actual or potential wide impact on the application or interpretation of the patent laws, an appropriate and necessary exercise of my responsibilities with respect to activities of the Patent Office. Indeed, it is my view that the Department would be derelict in its obligations were there not to be such policy involvement by senior officials. If I can be of any further service to you or your Committee on this matter, please do not hesitate to call upon me. Sincerely, Enclosure. (S) JOHN K. TABOR, Acting Secretary of Commerce. |