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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 giren 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 deci. sions 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 eramination 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 administratire 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 he 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 independ. ence 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.

Jany 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 Commerce.

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 (onsideration 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 Assoriation range from manufacturers of the smallest electronic part to corporations that desigu 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 pul lished 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 independeut 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 ELA 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 he 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 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.

or

MAINTENANCE FEES

This Association certainly appreciates that a concept of reasonable maintenance fees is one intended to keep initial costs down--and this encourages greater entry into the patent process by small companies and individual inventors. We subscribe to any constructive steps that can be taken to insure the widest practicable access to the patent process.

However, we believe that the total costs involved in the patent process must be maintained at reasonable levels. Obviously, the suin of the fees directly attributable to obtaining a patent should not exceed a reasonable proportion of the costs of the Patent Office.

In addition, we are specifically opposed to the schedule of maintenance fees described in S. 1321 as being unreasonably high and bearing no foreseeable relationship to the costs of the Patent Office.

The charging of inordinate fees can result in subverting the patent process. As the costs of maintaining a patent grow to such a magnitude, the net result is that parties find it more economical to copy rather thau innovate or develop new products.

INDEPENDENT AGENCY EIA is in favor of any constructive efforts which would truly result in improving the patent process for all. For instance, we object to the current vulnerability of the Patent Office budget within that of the Commerce Department which does not provide for sufficient protection against use of funds for purposes unrelated to the patent system.

In any event, it is clear that basic to any reform of the patent systein is a necessity for upgrading the status, prestige, and even visibility of the Patent Office wherever it be located.

In this context, we submit that creation of the Patent Office as an independent agency would be a positive step to achieving these general basic aims. When we say this, however, it must be made clear that the agency must be structured so as to not merely expand the bureaucy. It must be in a position to view patents a business tool and be able to withstand any outside pressures which could ultimately subvert its purposes.

U.S. SENATE,
COMMITTEE OY THE JUDICIARY,
SUBCOMMITTEE ON ANTITRUST AND MONOPOLY,

Washington, D.C., Novemocr 15, 1972.
Mr. HOWARD I. FORMAN,
Patent Department,
Rohm and Haas Co.,
Philadelphia, Pa.

DEAR MR. FORMAN: Thank you for sending me a copy of your recent delivery entitled, “Patents/ Antitrust Ecologvs. National Prosperity." Although I cannot agree with everything stated, I found your paper interesting and appreciate receiving all diverse views on this important subject. Sincerely,

PHILIP A. IIART, Chairman.

ROM AND Haas Co.,

Philadelphia, Pa., October 25, 1972. To:

President RICHARD M. Nixon,
Dr. EDWARD E. DAVID, Jr., White House Science Advisor,
Hon. PETER G. PETERSON, Secretary of Commerce,
Hon. RICHARD O. SIMPSON, Acting Assistant Secretary for Science and

Technology,
Hon, ROBERT W. CAIRNS, Deputy Assistant Secretary for Science and Tech-

nology,
Hon. ROBERT GOTTSCHALK, Commissioner of Patents,
Hon. RICHARD G. KLEINDIENST, Attorney General,
Hon. THOMAS E. KAUPER, Assistant Attorney General-Antitrust,
Hon. John L. McCLELLAN, Chairman, Senate Patents Subcommittee,
Hon. QUENTIN N. BURDICK, Member, Senate Patents Subcommittee,

Hon. HIRAM L. FONG, Member, Senate Patents Subcommittee,
Hon. Hugu Scott, Member, Senate Patents Subcommittee,
Hon. PHILIP A. Hart, Member, Senate Patents Subcommittee,

THOMAS C. BRENNAN, Esq., Counsel, Senate Patents Subcommittee. GENTLEMEN : Attached hereto, for each of you, is a copy of a paper I will be delivering on October 26, 1972, entitled “PATENTS/ANTITRUST ECOLOGY vs. NATIONAL PROSPERITY". In this paper I have proposed actions to be taken by the Executive and Legislative Branches in order to overcome the apparent impasse confronting those who advocate the vastly divergent views regarding the proper application of our patent and antitrust laws. The actions proposed are fully within the recommendations made in President Nixon's mes. sage to the Congress on March 16, 1972 regarding the importance to the nation of research and development, science and technology. I respectfully urge your consideration of these proposals as being of potentially great importance to the nation. Sincerely,

HOWARD I. FORMAX.

PATENT/ANTITRUST ECOLOGY VS. NATIONAL PROSPERITY

(By Howard I. Forman) (Ed. NOTE: In a speech before The Philadelphia Patent Law Association on November 30, 1972 entitled Patents and Antitrust: How Clear is the Water", the Ilon. Bruce B. Wilson, Deputy Assistant Attorney General, Antitrust Division, referred to the following paper by Mr. Forman and particularly one of the latter's proposals "to make patents more reliable and to make the patent system the incentive it was designed to be in futhering this country's technological progress," which he declared merited serious consideration. Referring to Forman's proposal for an incontestable patent, Mr. Wilson stuted:

Certainly we would be taking a risk to adopt such a provision. The risk would be that an invalid patent might become incontestable. But the risk might, perhaps, be worth taking, and the idea deserves further consideration. Certainly, incontestable patents would contribute toward the resolution of the concern expressed by the Chief Justice and a unanimous Supreme Court orer the effect of patent litigation upon a heavily burdened judicial system. As you all know, patent cases tend to be complicated and long-drawn out litigation, weighing heavily upon judicial time. Perhaps more important, however, incontestable patents would place their owners in a secure position so that large investments could be made leading to commercialization of their inventions. Research and development, in and of itself, is a fine thing, but unless the product of that research and development reaches the marketplace, the ultimate consumer is no better off than if no research or development had taken place.)

The invitation which I received to address you today was accompanied with the suggestion that I might elaborate upon a subject I discussed at a meeting of the National Industrial Conference Board about 18 months ago. That subject was the "Scott Amendments" to the current Patent Law Revision Bill.1

The paper I presented then bore the title "Changing Characteristics of Private Property". Since it has appeared in four publications 2 of wide circulation I won't repeat any of its detailed points at this time. It should suffice to say that its theme consisted of analogies drawn between the well-established, universally accepted legal rights to one's real property and what we normally consider to be personal property, on the one hand, and rights to one's intellectual property (e.g. patented inventions) on the other hand.

The conclusions reached, which I will re-state in a somewhat over-simplified manner, were that acts involving the use of personal and real property. that have never previously been considered to be improper, unexplainedly and illogi

* Presented before the Licensing Executives Society, Annual Meeting. Oct. 26. 1972, San Antonio, Texas.

Also published in "Les Nouvelles”, the Journal of the Licensing Executives Society, December 1972.

1S. 643 (92nd Cong., 1st Sess., 1971).

? Forman, "Changing characteristics of Private Property". Record of Hearings Before Subcommittee on Patents, Trademarks, and Copyrights, U. S. Senate, on 8. 643 S. 1953. and S. 12:57, Part 2, p. 63: (May 13. 1971); 53 J. Pat. Of. Soos 5:30 (August 1971; 8 The Conference Board RECORD 41 (October 1971); 2 Pntent Trends Yo. 3 (March

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