STATEMENT ON PATENT LAW REVISION AS SET FORTH IN S. 1321 SUBMITTED BY THE BAR ASSOCIATION OF THE DISTRICT OF COLUMBIA

I. INTRODUCTION

The Bar Association of the District of Columbia presents the following statement to the Senate Judiciary Committee, Subcommittee on Patents, Trademarks and Copyrights. This statement on Patent Law Revision as set forth in S. 1321 has been prepared by the Patent, Trademark & Copyright Law Section of the Association.

With the history of the earlier patent revision bills, the statements on S. 1321 recently made by others to the Subcommittee, and the testimony at the hearings held September 11, 12, and 14, 1973 in mind, the following comments are offered on S. 1321. It is asked that this statement be printed in the record. There are in the Association about 370 members specializing in patent, trademark, copyright, trade secret, and in patent and trademark licensing law. A questionnaire was circulated on the five (5) items, noticed for hearing in the Congressional Record, to each member of the Patent, Trademark & Copyright Law Section of the Association. This statement contains the votes received in response to the questionnaire, as well as general statements based on comments received in conjunction with the votes on the questionnaire and a study of statements and testimony offered the Subcommittee at the hearings.

II. GENERAL COMMENTS

There are several important points to be considered prior to addressing the specific results of the questionnaire.

A. The public should be heard on all provisions of proposed legislation S. 1321 contains a number of provisions which are beneficial, e.g., the estab lishment of the Patent Office as an independent agency. It also contains provi sions which are entirely new, yet have not been set for hearing or for comments by the interested public. Legislation by the Congress of the United States ought not to be adopted until the public has had opportunity to he heard on all its provisions.

It appears from testimony by representatives of the Administration at the recently concluded hearings that the Administration is readying a bill. The chairman of the hearings announced that markup will begin October 1 and that a bill is expected to be finished in the Senate this session. The proposed Administration bill has not been made available to the representatives of the public, the trade associations, or to the Bar generally.

It seems quite reasonable to afford, to those most intimately interested in the patent law, as representatives of the inventor community, the investor community, and the public at large, an opportunity to study in depth and to comment on a bill which apparently so significantly departs from earlier bills. The Association takes the position that time is required to study and com ment appropriately on the Administration bill and on the sections of S. 1321 on which no hearings have been held.

B. The patent system should be improved without drastic changes which will destroy the patent incentive

It was asserted at the hearing and in earlier entries into the Congressional Record that the examiners are convinced to allow patents by highly skilled attorneys and that this results in the allowance of increasing numbers of invalid patents. There is no evidence that the proportion of invalid patents being issued has increased.

It is not proper to scale up the meager statistics of the relatively few cases which reach the courts. The vast majority of patents are honored through licensing. Only the questionable ones are litigated and they represent a smali percentage as compared to those that are honored. We don't believe such meager statistics warrant the drastic changes suggested.

In the past few years, owing to stability of the examining staff in the Patent Office, particularly due to its more effective quarters and increase in responsibility and salary of the examiners, the Patent Office has been able to retain its good examiners. These examiners, on a time basis alone, have become more familiar with the art, and in every way more capable of disposing of cases in less time. Skill in any art speeds up the artisan's ability to

produce. The Patent Office examiners are specialists and are now more competent to pass on patentability in view of the stability of the staff.

There was talk at the hearings of pressure of a disposal quota system upon the examiners. Generally, a society lives by its productivity. All enterprises to be successful must have goals. The Congress has goals for itself. Of course, such goals need to be reasonably attainable. It is human to become lax and to produce at a comparatively low rate in the absence of goals to be reached or at least striven for. There must be a measure of productivity in any system. The inquiry should be directed to the reasonableness and fairness of any quota or disposal arrangement of the system. Credit should be given to an examiner based on a balance of quality and quantity. Quality supervision in the Patent Office as in any other operation serves to hold accountable any examiner who does not do an adequate job. Our country should have the best. However, it cannot afford the luxury of an unattainable perfect system. It seems that the greatest need and possibly one going a long way toward curing the ills of the system is to make the best art better available to the examiner who then will know what it is and will be able to use his skills, as "a specialist", to apply that art properly to the proposed claims.

The few cases of asserted abuse of the patent system do not merit the very drastic changes proposed in S. 1321 which administratively will run into prohibitive costs and delays and which will derogate from the United States Patent System.

C. The users of the patent system seek valid patents

There was also testimony at the hearing to the effect that industry actually wanted a low standard of patentability so that it could obtain many patents readily. This is as far from the actual fact is a statement could be. In fact, most organizations, far from filing to obtain invalid patents, actually do not file on all the cases they believe to be patentable because of the cost involved. The lawyers acting on behalf of their principals in industry are interested in obtaining valid and enforceable patents. Litigation is costly and they are not interested in obtaining unenforceable patents which will not stand up in court. D. Any patent law revision bill should include licensing clarification and stabilization provisions

In response to a question asked at the hearing, this Association favors including patent licensing provisions in any patent law revision bill. The licensing of patents is just as much in need of clarification and stabilization as the Patent Office operation is in need of restructuring.

III. THE QUESTIONNAIRE

The five (5) points set for hearing and on which a questionnaire was sent to members of the Patent, Trademark & Copyright Section of the Association are now discussed.

A. Greater advocacy proceedings are favored

The question submitted to the Section reads:

"Are you in favor of greater advocacy proceedings in the U.S. Patent Office with the opportunity of the public to participate in the examination?"

The Section members were in favor of greater advocacy proceedings including public participation in the process. The approval of the question is an in principle approval and not necessarily approval of any particular provision of

S. 1321.

Although "greater advocacy" is favored, many feel that the public should not take any part in the prosecution of applications prior to allowance of the application or prior to the allowance of at least some claims by the Patent Office.

Those in favor believe that validity would be improved if better art were before the examiner. This would strengthen the system, increase the confidence of the judiciary in patents, and give a better image to patents. It is recognized that increased costs, greater delays, discouragement of filing of patent applications, complication of matters in the Patent Office, and harrassment of applicants could also result. Some of these detriments might be unavoidable with new advocacy proceedings. However, proper safeguards should be taken to minimize such detriments.

B. Public counsel in the patent office is not favored

The second question referred to the membership reads:

"Are you in favor of a public counsel participating in an examination proceeding?"

There was a strong disfavor voiced to the establishment of a public counsel as provided in S. 1321.

Apparently public counsel is sought to be provided by S. 1321 simply because of the allegation that "hordes" of invalid patents are being currently issued. There is no basis for such an allegation.

The establishment of public counsel as provided in S. 1321 would not help get the best art before the examiner, but rather will cause delays and will be costly, establishing more bureauracy and expenses which will freeze out the smaller or independent inventors and businesses.

The examiner is a "specialist" in a much better position to evaluate pertinent prior art than a generalist from any public counsel office.

Importantly, unless each application is reviewed by public counsel in an identical manner and to the same extent, it will be argued that a given patent is not entitled to a high presumption of validity because the patent wasn't examined by the public counsel. Obviously public counsel could not review every application.

The Department of Justice spokesman stated at the hearing that Court decisions strongly suggests that the "primary goal" of patent reform should be to get as much information as possible before the Patent Office from all sources -the applicant himself, the office search files, and members of the public. A public counsel will not help achieve this goal.

C. Deferred examination is favored

The question put to the Section reads:

"Are you in favor of deferred examination before expiration of five (5) years from the filing date?" This question was answered affirmatively by a majority. Reasons given in support were it would: (1) save applicants money; (2) reduce the Patent Office workload; and (3) give an applicant more time to evaluate his invention prior to spending money for examination.

Also noted in many answers was the problem that there would be a long period of uncertainty during which the public would not know the scope which would ultimately be accorded the published application.

D. Maintenance fees are not favored

The question put to the Section reads:

"Are you in favor of maintenance fees?"

There was a strong objection to maintenance fees in general. The extent of the fees provided for in the S. 1321 provision is considered prohibitive and confiscatory. Further, this provision would create a tremendous administrative burden for the Patent Office in deciding the myriad of petitions for pauper's or special treatment. At the same time the public would be uncertain as to the status of many patents.

The cost of developing and commercializing inventions is already a great enough burden to impose upon the inventing, developing and investing community. If over a period of many years one develops a sizable number of patents directed to the area of his invention, considerable costs could result from maintenance fees which could seriously inhibit further commercialization efforts. It seems more logical that such monies be utilized by the private enterprise system to further its efforts to commercialize the invention.

Often the only basis an inventor has to obtain funding for the development of his invention is his unexpired patents. If the patents lapse for want of maintenance fees, there will be no financing and important developments will be lost.

E. Establishing the patent owce as an independent agency is favored The question submitted reads:

"Are you in favor of the Patent Office being an independent agency?" The Section members voted in favor of establishing an independent Patent Office. Reasons given were (1) that Patent Office policy should be established by people experienced in the patent field, (2) there would be more independence of thought and action, (3) there would be more effective administration

of the system, (4) the Commissioner would have stronger control, and (5) there would be greater prestige for all Patent Office employees which would raise the quality level of examination.

Many of those who were opposed to the question, favored elevating the Commissioner to the secretaryship level in the Commerce Department. Certainly, the Association would approve elevating the position of Commissioner of Patents to that of assistant Secretary reporting directly to the Secretary of Com

merce.

Either of the above changes would help attract to all levels of the Patent Office the best possible talent and help to retain the very good talent that is there now. Obviously, status is an important item to most people. Upgrading the Patent Office from top to bottom would no doubt be salutary.

IV. CONCLUSION

The Association would like to note that there are numerous other provisions in S. 1321 which are new and significant. Accordingly, it is hoped that Congress will give the public an opportunity to comment on these other provisions if consideration is being given to their adoption.

The Bar Association of the District of Columbia thanks the Subcommittee for the opportunity to submit this statement.

AUSTIN F. CANFIELD, JR.,

President.

STATEMENT OF ELECTRONIC INDUSTRIES ASSOCIATION

The Electronic Industries Association is the National Trade Association representing U.S. electronics manufacturers. We appreciate this opportunity to comment on the subject of patent reform legislation.

The electronic industries of the United States have an annual sales volume of nearly $30 billion and employ well over one million people. Members of our Association range from manufacturers of the smallest electronic part to corporations that design and produce the most complex systems used in industry, defense and space.

The Electronic Industries Association endorses a broad evaluation of the patent system and constructive efforts to improve the system. In this connection, we note that two major areas appear to be covered in the legislation and serve as the background for these hearings. One of these is the development of concepts which would attain greater certainty with respect to patent validity. The other appears to have its basis in the question of the backlog of patent applications within the Patent Office. It is our view that there is no insurmountable problem with respect to this backlog and therefore feel that specific provisions in the legislation that deal with this topic are for the most part unnecessary. This statement is therefore primarily directed towards the question of improving patent validity.

By way of further introduction, we wish to make it clear that we are strongly opposed to "change for the sake of change". It is believed that various provisions of the proposed legislation, e.g., Sections 112, 263 and 153(b), radically change well established precedents, create uncertainty where certainty now exists, and impose a burden on the applicant of such magnitude that the task might not be worth the reward. The underlying rationale of these sections is apparently premised on the philosophy that the patent applicant is receiving something for nothing. Let it not be forgotten that the Constitutional purpose of the patent laws is to reward the inventor for his disclosure to the public.

Following are specific comments with relation to the five items listed in the announcement of these hearings:

ADVERSARY PROCEEDINGS

This Association agrees with the general premise that there should be a greater opportunity for the public to participate in the patent process. We specifically favor the concept of such public involvement as a positive step towards increasing the quality of issued patents. However, we are concerned that any legislative mandate for proceedings of an adversary nature between

an applicant and the public at large could frustrate the very purpose of the patent system by encouraging the suppression of new technology rather than its early disclosure.

The cost of obtaining a patent already exceeds the financial means of many prospective applicants. Any proposal which would further increase these costs by providing for additional inter partes proceedings within the Patent Office, and attendant appeals could effectively result in the extinction of the patent system for all but the affluent applicant. Accordingly, while we agree that the public should be given an opportunity to provide the Patent Office with pertinent references and other facts relevant to patentability, we urge that such rights be subject to appropriate safeguards, both with respect to time and participation, so as not to unduly impede "... the progress of science and useful arts". We believe that the Patent Office, given the proper legislative authority, is best qualified to establish such safeguards.

In this regard, we call your attention to the Notice of Proposed Rulemaking regarding "Protests to the Grant of a Patent" dated May 15, 1973 and published in the FEDERAL REGISTER on June 4, 1973. We feel that the enactment and evaluation of regulations of this nature are necessary first steps in the direction of public participation. The experience which will then be gained will enable the Patent Office to determine the degree to which public participation can be effectively integrated into the existing patent system.

Accordingly, we suggest that the legislative intent with respect to the proposed Bill be revised to invest the Commissioner of Patents with discretionary authority to promulgate guidelines for public participation, based upon Patent Office experience and capability.

PUBLIC COUNSEL

EIA is opposed to the concept of a Public Counsel in the sense of a new independent office or public adversary.

We are similarly opposed to any government participation in the patent process other than participation by the Patent Office the agency that is charged by statute with the control and issuance of patents.

We submit that the creation of a whole new entity or group to do battle with the Patent Office, on behalf of the public, would result in great expense and delay in the patent process and thus would be counter-productive to the favorable benefits of "public participation". We believe that the Patent Office, given the proper legislative authority, has the expertise necessary to properly implement a full and democratic concept of public participation.

DEFERRED EXAMINATION

The EIA sees no present need for the institution of a system of deferred examination. The needs and conditions within European countries where such a system is in force are not present in the United States. We submit further that the institution of a system of deferred examination would be contrary to efforts to achieve early certainty with respect to the scope of patents.

Following are some of our specific concerns with reference to deferred examination:

It appears to us that the manner in which this country, and more specifically the Patent Office, are progressing in the handling of patent applications, and the decrease in the applications' backlog in this country, seem to mitigate much of this basis for deferred examination.

Each company or interested party would be forced to devote a disproportionate amount of time, energy and money for the constant and continuing examination of all of its many competitors' applications and claims. This burden we might point out falls with even greater impact on smaller companies and individual inventors.

We submit that achievement of certainty as to patent validity can be more readily achieved under some form of constructive public proceeding. Extended time for amending claims, permitted under deferred examination, permits tailoring of claims to cover a competitor's product where the original tenor of the claims may have been directed to entirely different subject matter.