an easy way to possibly cut down the number of cases that the Patent Office has to review to get rid of a backlog. Even this cause is fallacious when you make a comparison of the systems. They had a 5-year or more backlog in Holland when they went to this system. We now are running on an average of about 211⁄2 years in the United States, and I understand it is getting close to 2 years in the examination phase from filing to issuance. Moroever, as you know, the Patent Office has for several years been striving for one of its major objectives, i.e., to get the entire proceeding from filing to issuance down to 18 months. If we get it down to 18 months, I see no reason why we have to go to a system of deferred examination which has problems such as the following:

First of all, it would seem to me-and I think Professor Stedman mentioned it before, so I will have to give him full credit since he pre-empted me on it-I know that people will rush in and are rushing into the Patent Offices having deferred examination procedures with half-baked applications. Why? The answer is simple. Why should one bother testing out every single thing that has to be tested before one gets a really thorough application, when one could just rush in to the Patent Office and get an early filing date, and then wait 5 years or 7 years before actually having to decide whether one has the right application to pursue under a full examination? It is almost an invitation to have applicants rush in and file in the Patent Office a lot of useless applications. It is my guess that this may account for the reason why, Senator, when you introduced the bill, your introductory statement said that in Holland 59 percent of the applicants for patents eventually chose to let their applications lapse. Well, if they are the kind of applications for patent that haven't been fully studied, the kind where the research work hasn't been fully worked out before they file, obviously there would be a lot of useless patents and they should be dropped. If a good pre-examination search is made by the applicant, and the opportunity is available for him to test out the various aspects of his invention before filing, the chances are that fewer applications will be filed. This is the system we now have in the Virgin Islands. If we go to deferred examinations possibly many thousands more applications will be filed needlessly, only to be dropped in due course. If so, we may not get any benefit out of the procedure-just more work and more costs for all concerned.

Whatever objectives or goals to be obtained by the deferred examination, it is deserving of note that the Patent Office does have right now a sort of deferred examination in what it calls its defensive publication program. It was implemented on May 1 of 1968 and in effect this works as if it is a 21/2-year deferred examination system. Under this program an applicant has that period of time after filing his initial application to decide whether he wants the case examined by the Patent Office. That is deferred examination. If you think this is desirable, find ways and means to encourage it. This is voluntary, Senator, to find ways to induce the people to use it. It already is in existence, and you don't even have to pass legislation to accomplish it. I understand that from May 1968 through January 1973 some 861 requests for defensive publications had been received by the Office.

Now let me get on to the question of maintenance fees. For years NAM has been on record that it endorses the proposition that Patent Office fees should support a fair share of the cost of operating the Patent Office, and this continues to be the NAM's position. NAM does not favor maintenance fees, primarily for the reason that they involve burdensome and costly administrative problems which would be a heavy burden on the applicants, on innovators, and on investors, in developing new inventions. Here again, let me remind you that we should think in terms not only of major corporations with big budgets for this purpose, but also the little fellow who possibly cannot afford it. Yet, if maintenance fees are to come, this will certainly be the lesser evil than, let us say, an increase in the filing fees or the issuance fees which may discourage independent inventors from resorting to the patent system to protect their inventions. On this point let me call attention to a publication, an editorial in the Journal of the Association for Advancement of Invention and Innovation, February 1973, called "The Effect of Patent Office Fees on Independent Inventors." This study seemed to indicate that at least in the middle 1960's there was a significant drop in patent applications filed at the time that we had the patent filing and issuing fees increased, and this should be a fact to be heeded and considered carefully before we go to heavy maintenance fees or increased filing and issuance fees because I don't think we want to discourage the filing of applications on potentially useful inventions.

In any event, we should be extremely cautious if we are to go to a maintenance fee system. Certainly the figures used-the proposals in S. 1321-seem highly excessive and possibly confiscatory of patent property if they discourage people to try to pursue their patents. and possibly to let them lapse before they catch on and become actively utilized. Such discouragement may lead to fewer inventions being developed to the point where they can contribute to the progress of our country, and this would certainly be a lamentable result. Now, to the last point of the five to be considered at these hearings, namely the question of the restructuring of the Patent Office. This particular issue received considerable study by two NAM groups, not just its patents committee but a group of corporate executives, because it seemed like such an important departure that was being proposed. The position arrived at was that the association recognizes the laudable objectives in the proposal to establish the Patent Office as an independent executive agency reporting to the Congress. On its face it would appear to give the Patent Office an elevated status within government and presumably, as was brought out earlier, this would make the official spokesman of such an agency be one of increased prestige in dealing with the Congress and other Federal bodies, and with the representatives of foreign governments concerned with international patent and trademark affairs. However, like a lot of other things which look like ideal solutions at first blush, a second look sometimes develops some flaws and I think we see them in this case. We question whether the possible attainment of these objectives would offset the disadvantages which may well develop in taking the Patent Office out of the Department of Commerce. Instead of doing that we recommend that such a basic admin

istrative change at least warrants in-depth studies of the possible effects in various areas of national interest. Based on past experiences with the present structure it must be stressed that there clearly are advantages in having a Cabinet officer at the organizational pinnacle in which the Patent Office is located. Thereby matters affecting the patent system may, when necessary, be more readily brought to the direct attention of the President-and his support may be enlisted for programs meriting and requiring such backing if they are to succeed.

In terms of intragovernment relationships it seems that the position and support of the Secretary of Commerce may be of far greater value to carrying out the goals of the Patent Office than would be the relatively lesser prestige and weight of the head of the Patent Office if the latter were to be an independent executive agency.

Even in terms of its dealings with Congress, the Patent Office may find itself far more effective in presenting proposals for new legislation and such things as establishing budgetary needs, and so on, than if it were to operate as one of the many independent regulatory agencies.

Now, sir, I am going to make reference to some authorities in the field as I try to act as a pseudo expert in the field of public administration, and that is the reason, incidentally, why I gave you my particular academic qualifications in that area earlier. I refer to at least one work, a classic in its field, a textbook I used as a student and in a later edition which I used in the course I gave, namely "Elements of Public Administration," edited by Prof. Fritz Morstein Marx, who has served with distinction on the faculties of Pennsylvania, Princeton. New York, Harvard, Columbia, and American Universities, as well as on the staff of the Director of the Bureau of the Budget. In particular, I will refer to one of the chapters in that book authored by Prof. James Fesler of Yale who formerly was in the U.S. Budget Bureau before it became OMB, and who also served on the first (Hoover) commission on the organization of the executive branch of the Government. He has other qualifications which all in the field of public administration well recognize. He wrote a chapter entitled the, "Independent Regulatory Agencies," and I have abstracted from it just a few thoughts. First, on this question of independence. What is it is it real? We should inquire as to independence from what? Independence from the Chief Executive? That is one possibility. Independence from the legislature? That is the other possibility. To have them both would amount to complete, genuine independence, but he says both of these are myths. In reality there is no such thing. You cannot be completely independent of either, and if you examine the history of the independent regulatory agencies, I think no one could deny it. On its face each independent regulatory agency does possess some degree of independence. Some have more and some have less, but in no case is independence absolute. It may be, as we have heard testified today, that there have been problems in the existing structure of the Patent Office vis-a-vis the Department of Commerce or the Assistant Secretary of Commerce for Science and Technology, and so forth-it is not for me to go into that

discussion-but I think it important to raise one question. Will we of necessity overcome the alleged problems with the existing structure of the Patent Office in the Department of Commerce merely by going to the independent agency? I have my serious doubts. I don't think it is worth the risk doing so, at least not without a complete and thoroughly weighing of all the pros and cons, and without first attempting to resolve the alleged problems within the confines of the existing administrative structure.

Just to mention a few thoughts of Professor Fesler about this idea of complete independence, first of all with reference to the Chief Executive, S. 1321 doesn't point out anything about removal. It talks about appointment but is the Commissioner to be appointed for an indefinite term? There have been some interesting cases involving tests of the President's authority or lack of it to remove the head of an independent agency. Suppose you get the head of an agency-the Commissioner in this case-who just doesn't measure up according to someone's judgement. In that event who takes what action? I merely raise the question; I don't and won't have the answer, not without considerable study at any rate.

As far as this independence from the legislature, well, the agency, naturally will require financial support and basic authority, both of which it will get from the legislature. The legislature can control the purse strings. Maybe the independence is again transparent and not at all real, if by controlling the purse strings the legislature can control the operation of the agency. The same thing would apply to Chief Executive, I guess, if the agency head needs clearance or cooperation from the executive line departments. Possibly he won't need it from the OMB, but if he needs it from the Comptroller General there is bound to be exerted some kind of control. Will such control be better than what is available now in the Commerce Department? All I am saying here is that when we think of independence we better think fully how far we can go, and whether we will really gain the objectives that S. 1321 talks about.

Another point that Professor Fesler suggests and discusses is the price of independence. This is exceedingly important. Are we willing to pay the price? There is definitely a need for policy coordination in the operation of the Patent Office. The public has the right to expect that the left hand should know what the right hand is doing. Will we be able to coordinate what the Patent Office does with the Federal Trade Commission, with the Justice Department and other departments any better than we do now with the Patent Office in the Commerce Department? That is the first question. I think it needs to be answered. It certainly needs to be studied.

Second, is the question of setting performance standards. The bill suggests that there will be an advisory council. Well, we have learned from history that independent agencies-well, the fact is that even line agencies of government have their clientele, so to speak, and pretty soon the clientele come in and effectively set the standards. How independent will the advisory council be? These are questions I can't answer at this time, but I do raise them as somethings that have to be answered before we go to such a drastic change as an independent agency status for the Patent Office.

A third and last point that Professor Fesler makes on the issue of the price of independence is the question of vesting authority in an agency that is not subject to an official who answers to the people, in other words, a nonelected official. Today, with the Patent Office in the Commerce Department, whether or not we find flaws with the administrative structure or with the personnel involved, at least the presidentially appointed officers are answerable to the electorate. If the electorate is dissatisfied with the management of any phase of the executive branch it can bring about changes by asserting itself at the polls. The independent regulatory agency is devoid of responsiblity to the electorate because it is insulated from the voters. This has been one of the problems pointed out by many authors about our regulatory agencies today. In view of this I must ask whether the proposal to make the Patent Office an independent agency will add a problem rather than solve one?

Well it seems to me, Senator, that there are at this time more important substantive issues affecting the American patent system that require the attention of the Congress than that of entertaining purely administrative proposals which are so drastic as almost to be revolutionary. Perhaps, after the Patent Office has had an opportunity to accommodate its operations to the handling of the proposed immediate substantive changes, the time will become more appropriate to consider whether the office basically responsible for the operations of the American patent system would best be administered essentially as an independent agency or to be continued as a segment of a major Federal department.

In conclusion, sir, on behalf of NAM and for myself I wish to state that we are pleased that the present hearings may be the first sign of forthcoming patent law revision in various substantive areas that have been under study for some time. These matters and international proposals, including for example the patent cooperation treaty, indeed warrant direct legislative attention. The viability of American industry-and I might add the importance of it to all inventors large and small-stands to be basically affected by such positive activity.

Thank you very much.

Senator HART. Thank you Dr. Forman. I should for the record ask you to clarify to the extent you can the way NAM develops its positions. We have raised this with other witnesses speaking for associations and groups. How do you reach a position? How many participants do you have? What is this machinery?

Dr. FORMAN. Senator Hart, we have here today my colleague, Mr. Bennett, who is a vice president of NAM. I think he is better qualified than I to answer that particular question. May I ask him to speak?

Senator HART. Yes. Did you get the question?

Mr. BENNETT. Yes, I did, Senator. My name is Reynold Bennett and I am vice president for industrial innovation of the NAM and this area involves the Patents Committee, the Science and Technology Committee, and two other committees. But with regard to your question more specifically, the NAM and its policies, Senator, its policies are approved by the board of directors of the NAM and