Lapas attēli

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 deseribe 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 surns 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 technol(gy. 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 Ofice 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 Techmology 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 Su'retary 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 direrted 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. Sincerely,


[The following was ordered printed at this point in the record :)


Washington, D.C., October 2, 1973.
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 budg. etary 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 devel. oped 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 fnlly endorse the response General Counsel Bakke gave to Senator Hart's ques. tion 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,


Acting Secretary of Commerce. Enclosure.




$663, 000

– 20,000

Amount reserved July 1, 1972.
Projects assessed against reserve:

Competitive assessment study of tire and aerospace industries.-
The study determined international technological activity in these

industries and can be related to Patent Data in order to more

adequately assess its meaning for American industry. Amount returned for use by Patent Office May 2, 1973.

643, 000


593, 000

- 60,000

- 263, 000

-8, 000

Amount reserved July 1, 1971..
Projects assessed against reserve:

Study of multi-national corporations.-
The study provided information on methods of transfer of tech-

nology as it affects international trade. This information is useful
in determining how international patent agreements should be
designed and the impact of foreign patent filing in the United
Price, Waterhouse study to design production control system

for Patent Office..
This two phase study was of direct benefit to the Patent Office, and

resulted in the implementation of PALM II, the present auto-
mated production control program of the Patent Office.

Key punch and personnel financing training---
Upgraded training of personnel in processing and finance divisions
of the Patent Office.
Departmental executive ADP program and management

training -
Upgraded key ADP personnel of the Patent Office.
Development of criteria and methodology to screen Government

held patents for commercial potential.
Part of funding used to support initial Battelle Institute studies of

Government Owned Patents in response to March 17, 1972,
Science and Technology Message of the President. The studies
resulted in the Government Owned Patent Promotion program
of the Science and Technology area.
Technology assessment and forecasting using patent data, sys-

tems design, programming, processing and analysis. .
In response to a request from Secretary Peterson, an office was

set up in the Patent Office to assess trends in technological activity as shown by Patent data. The results of these studies are to be published in semi-annual reports.

Total, All Projects.--

-11, 000

-75, 000

-99, 000

-$518, 000

Amount Returned to the Patent Office June 30, 1972.

75, 000

Mr. BRENNAN. Prof. John Stedman.

Senator Hart. Professor, would you identify yourself for the record please?


Mr. STEDMAN. My name is John Stedman and I am professor of law at the University of Wisconsin where I have been teaching for many years. One of the areas in which I have spent considerable time and given considerable attention has been the area of patent law and intellectual property. In this connection I have been conopposition proceedings pose some problems at times, as far as I know no country that has such a proceeding shows the least disposition to abandon it. Our own experience—and there has been ample testimony here during these hearings as well as in other instancesindicates clearly that the ex parte procedure simply will not work satisfactorily. The Patent Office examiner simply cannot do the job alone. He needs help. There are three places where he can go for it. He can go to the applicant, and there are provisions in S. 1321 which require that the applicant give him far more assistance than he has given in the past. Those who are working with the applicant, including his attorney, must also give assistance in the form of briefs, disclosures, and so forth. Second, the examiner can go to inside help. This is what is contemplated in the public counsel proposal that I will discuss next. The third source to which he can look is the outside third party, and this is what the opposition proceeding is all about.

The probabilities, I suspect, are that an adequately operating opposition proceeding is likely to prove the most effective. There is nothing like self-interest, after all, to push a person into doing the best possible sort of a job in pressing a case, and it is the self-interested individual that is the most likely to appear in an opposition proceeding.

Two additional points are worth noting in connection with the opposition proceeding. The mere existence of an opposition proceeding is going to put both the primary examiner and the applicant on their mettle to do the best job they possibly can. If they know that within a very short time after the applicant's disclosures and the examiner's search, the matter is going to become a public record and opportunity will arise for third parties to come in and show where such disclosures were inadequate or such searches were inadequate, this is certainly going to force them, if they were at all disposed otherwise, to do the best possible and most thorough job that they can.

A second factor to consider in connection with the opposition proreeding, is the probable salutary effect upon the courts. At present, the presumption of validity which is formally on the books, is almost nonexistent and probably for good reason. The courts have had before them too many instances in which it was quite clear that there was no justification for presuming that a particular patent was valid. Courts have traditionally been unwilling to accord extensive presumptions in favor of an agency where they have not had confidence in the operations of that agency. The existence of an opposition procedure, especially if the opposition occurs but probably, even if one does not occur, is likely to result in a shift in court attitudes and enable us to get away from the distressing, expensive, complex procedures in which the whole matter of validity is tried all over again before a court. I would be the last to urge that there be a strong presumption if one is not justified, but for the reasons that I have previously mentioned, a stronger presumption would be justitied as a result of the opposition procedure because there would be inore reasons for believing that a patent was valid once it has been

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