they contribute all to heavily to the economic pollution that inhibits and stagnates our national prosperity. I suggest to the President that he take steps within the Executive Branch to establish a unified, single policy of his Administration which will balance the implementation of our patent laws and our antitrust laws so as not to favor one or the other, or individuals who might personally benefit from one or the other, but rather will maximize the beneficial effects of both to the nation as a whole. And lastly, I suggest to the Congress that it should expeditiously consider adopting such legislative proposals as I have advocated in order to increase the utilization of patented inventions. If the Patent Office continues to grant patents under the present laws, the Antitrust Division continues to attack them, and the courts continue to invalidate them, all without regard for the net effect on our national prosperity, it is high time to start a patent/antitrust ecology movement. After all, this is the Environmental Decade, isn't it? And when we start, let's learn from the blunders and findings of the environmental ecologists; let's avoid collision courses 27 and let's eliminate seeming remedies for one aspect of our economy's problems which only result in causing other adverse effects upon our economy and our nation's economic health and welfare.

Hon. JOHN L. MCCLELLAN,

WASHINGTON, D.C., September 27, 1973.

Chairman, Senate Judiciary Committee, Subcommittee on Patents, Trademarks, and Copyrights, U.S. Senate, Washington, D.C.

DEAR SENATOR MCCLELLAN: I offer comments to be considered by your subcommittee and for the record.

My comments are primarily additive rather than cumulative to those already received by the subcommittee.

I wish to help provide the best possible Patent Incentive System. All points herein considered made have been tested by whether our country will be a better one in which my children and theirs, and others, will live. In my book there is no special interest. The welfare of our country and to promote the progress of the useful arts, arts useful to make ours a better country, and one which will hold its own among nations for as long a time as possible is my goal!

Tested against such a template the answer for every legislative provision must be that it will increase or at least not diminish the incentive to innovate, to disclose in a patent application, especially so in cases in which through shortage of funds, or otherwise there is a tendency and real possibility for secrecy rather than for disclosure. All people do not function identically. It is clear that therefore a broad picture should be taken so that optimum, rather than perfect, legislation is the goal.

I have viewed each patent revision bill, beginning with S.1042. As you know, I have been active in and a chairman of a number of committees in industry and in the patent bar. I have a record of over 20 years patent legislation work; have organized and coordinated many efforts both directly and indirectly involving legislation; and have been on and have chaired patent legislation committees. Presently serving on the Council of the D. C. Bar, PTC Section, I am the liaison for it with our Patent Legislation Committee. I am a

It is encouraging to note that this objective is shared by the Justice Department's Antitrust Division. The Chief of its Patent Unit, Richard H. Stern, Esq., makes this clear in a alk he gave on October 7, 1971 before the Practising Law Institute in New York City entitled "Harmonizing Patent Law and Antitrust Objectives", 47 PTCJ D-2. In the principal area of conflict between patent law usages and antitrust law enforcement, namely patent license limitations, such harmonization can perhaps best be accomplished in ways succinctly expressed by Professor S. Chesterfield Oppenheim in "The Patent-Antitrust Spectrum of Patent and Know-How License Limitations: Accommodation? Conflict? or Antitrust Supremacy?", 15 IDEA 1 (Spring 1971). Prof. Oppenheim concludes that article as follows:

"... I recapitulate three fundamentals for accommodation of public patent policy and antitrust policy related to license limitations:

"First, I preserve to the patentee the full reward to which the exclusive rights of the patent grant entitle him within the scope of the claims of his patented invention. "Second, apply the antitrust laws only when there is proof of plus antitrust elements arising from restrtints beyond the exclusivity bounds of the patent grant.

"Third, reject the fallacy that federal patent policy preempts licensing for royalties of trade secret or secret know-how and continue to protect valid secret proprietary information pursuant to long-established federal and state judicial precedents."

member of the Antitrust and Trade Regulation Committee of the Chamber of Commerce of the United States.

I speak from a background of childhood in which I saw my father lose his health in seeking to protect his invention; patent applications covering which finally stood between him and the entire loss of it. He won because of the security of his patent position, that is, a position which secured to him his inherent right to his invention. The record is known. I will not here repeat it. I say with humility that I am probably as qualified to speak on the "incentive" of our great United States patent incentive system as perhaps any other living person. I feel that a person such as myself should not remain silent at this crucial time in the history of our country. My motivation to speak out is set forth herein.

I view the present patent law revision bill with misgivings because I do not see the kind of provisions which, on the whole, on balalnce, I can accept as being truly for the betterment and welfare of our country.

Accordingly, the comments I offer are set out with the hope that those who view the system as I do will consider and be persuaded to adopt them. If there is not agreement with all points, hopefully, these comments will have served at least for the betterment of the functioning of our Patent Incentive System and therefore our great United States.

In reading these comments I ask you to be ever mindful that the 77 million dollar Patent Office budget is relatively so small compared with "welfare" systems and schemes of our federal government that any increase or decrease in costs accomplished by legislation can be ignored. As you know in your capacity as Chairman of the Appropriations Committee, we are, today, appropriating tremendous amounts for all kinds of government operations which are legislated by Congress for the "welfare" of our country.

You need not be reminded, Sir, that comparing the relative merits of such welfare legislation with the Patent Office functions there is no doubt that the Patent Office is as essential as the best of the welfare programs.

Patents make jobs, which make incomes, which make taxes. The patented inventions ultimately make better living for all through progress of the useful arts. These patented inventions stimulate that progress.

The jobs, the processes, products, and other benefits for better living and national defense motivated into existence by our great United States patent incentive system are legion. This makes the Patent Incentive System the root of real welfare for the citizen and his country. Even at this late date, in the operation of our very old but good system, this needs to be told and repeated. The taxes for providing the non-patent system schemes of our government are generated in large part by the operation by our Patent Incentive System, as you know.

Much revenue in this country, as well as coming into it from abroad, results from patent protection here in the United States. A U.S. inventor must secure his rights here, for usually the real market for it, for him, is here. Unless in such case he has protection here he cannot afford to reveal his invention abroad.

I have read the statements and have heard every word of the testimony presented to the subcommittee September 11, 12 and 14, 1973. I am pleased that some of my work has been reflected to the subcommittee.

1. I believe that no legislation, even resulting from the no doubt well considered Administration bill, should be enacted until the public, preferably in public hearings, has had an opportunity to develop its ideas, suggestions and possibly even better principled provisions. I urge you to provide hearings on any new bill introduced whether by the Administration or any other group of citizens.

Such hearings should not be open to review specific provisions on which those concerned have been heard. There should be time to put forth positions and arguments on real departures either from present law, or priorly reasonably considered provisions of early bills.

2. S.1321, undoubtedly introduced with the welfare of our great country in view, contains provisions improving the stature of the Patent Office which I can accept. For the most part it contains provisions, on only some of which the public has been invited or permitted to comment reasonably and at the hearings, which I and great many others, including the Administration, cannot accept. Please note the addendum, later discussed.

I will give one glaring example which has not been discussed at the hearings.

S. 1321 would not permit a patent for an "obvious" solution for a discovered problem, the "discovery" of which, today, is considered patentable under the law and cases. Such a provision in S. 1321 is evidence of a need to further study the essence of patentable invention as therein defined. There are other less readily noticeable but equally important departures in S. 1321 on which no hearings were held, e.g., making public abandoned applications.

Other unacceptable provisions exist in S. 1321. I ask whether you think that a prior public use, known only behind the Iron Curtain, should defeat a patent when it becomes available in this country only after deep, expensive, time-consuming search conducted with a view to defeating a U.S. patent. Has the constitutional ". . . progress of the useful arts . . ." been promoted by the use unknown in this country prior to the publication of the patent?

The broad picture requires that public consideration be given to such provisions.

3. In 1966 the Administration Bill S. 1042 introduced by you by request was surprise to almost all of industry, including the patent bar. There ensued a year of great tension between the Administration and the bar representing the industrial, inventive community. I am glad to say that I initiated and had an active part in the "reconciliation" of September 18, 1967, following a hard summer just prior to which was held in April the emergency meeting of the American Bar Association, Patent, Trademark and Copyright Law Section in Washington, D.C., attended by over 400 members. Your ably conducted hearings of May 1967 then followed.

The Administration Bill submission is understood to involve about 280 pages, which must needs be reviewed by those who are truly concerned. Time must be available to study, to comment and to be heard.

Clearly, any rush to legislate should be moderated by the United States of America way of affording the interested citizens opportunity to publicly present their views.

4. I believe that patent system reform should be accomplished to include licensing of patents which should now be clarified and stabilized by statute, so the public and the courts will know better what can or cannot be done with rights which are secured by patents. Let's go the whole way and have better Patent Office functioning and a better, more fruitful progress of the useful arts with licensing in a clarified, stabilized climate. The Congress has the plenary power and duty to proceed on this basic sine qua non! I am among those who believe that there is time, if the Administration so chooses, to bring in an amelioration of the present licensing situation which adversely affects the rate of growth of our economy, especially now so badly needed when virtually ever-present inflation is all but rampant! I incorporate by reference the points of my letter to you, printed page 647 of the record of the May 13, 1971 hearings. For the economic posture of our country both here and in a world of nations, there should be statutory guidelines now! If it truly appears that the bill to be reported out cannot be achieved with licensing provisions I bow to the inevitable but must urge inclusion of such amendments when the Administration is indicating that the Department of Justice and Department of Commerce soon may come to agreement on them.

I believe that the system needs to be revised, not just the operation of the Patent Office. The laws and rules now on the books have well served the operation of the Patent Office. The testimony and statements before you show that reduction, of the only 25 percent of litigated patents being held invalid, can be obtained if the prior art is available to the examiner. All parties agree that the law should provide the means for getting the art before the Patent Office. This can be done simply 1. without full scale adversary oppositions as are now largely anathema abroad; 2. without a public counsel in the Patent Office who as a "big brother" to the Commissioner of Patents, reducing his status, would have to examine each application for patent to avoid two standards of validity or discrimination (a second Patent Office examining staff!); 3. without the administrative burdens attendant the manifold new steps provided, and 4. without the many other burdens which, as related by the witnesses, are built into S. 1321.

In passing, a point of extreme importance in considering validity of patents is the time it takes to develop the secondary tests of patentability set out by

the Supreme Court. Another point: even if sanctions are imposed for not opposing the issuance of a patent, assuming a party-litigant has the art and the interest at the time set for protesting the issuance of the application, it is clear that the courts in the public interest will permit him to bring in his prior art.

5. It is time that the record of validity of the patents issued and litigated be emphasized in contradiction to those few who talk without statistical facts or who are repeating alleged statistics. As can be gleaned from the statements of some of the witnesses and from at least one written statement furnished to the subcommittee the patents held invalid over art already available to the Patent Office are only 25 percent of those litigated. As seen in the U.S. Patents Quarterly Reports, in the period 1968 through 1972 the courts considered 880 patents. The number of patents issued during that period is of the order of 75-80,000 per year. (75,000 × 5 = 375,000 patents-Surely 880 is a very small percentage.) To scale up from these few obviously selected patents is not warranted. Obviously, only a patent which already is of doubtful validity is taken to court. The reasons for doubt are 1. there is a disagreement between patent lawyers on opposing sides as to the teachings of the art available to the Patent Office, 2. there is new art which the defendant's lawyer believes will invalidate the patent, 3. in a small number of cases, there is some other issue on which both sides think they can win, and 4. the judgments of reasonable men can and do differ.

Former Commissioner of Patents Edward J. Brenner testifying, aptly remarked to the Chairman conducting the recent hearings that even the Supreme Court decisions, oftentimes, are 54 or otherwise split. Yet the matter of human judgment is ever present, even in patent matters. Of the 25 percent of the litigated patents held invalid, in cases in which the art available to the court was also before the Patent Office, there are the patents on which judgments of the court and those of the Patent Office examiner or the Board of Patent Appeals in the Patent Office or of the court which may have in effect granted the patent, are simply different. This can be quickly agreed when the split decision of the courts on obviousness of invention are considered.

No system will be devised which can avoid imprecision or lack of sameness in the exercise of human judgment so that of the "25 percent" patents litigated there are unavoidably some invalid patents.

So let's look to the positive results of the United States patent incentive system and tread lightly before we make drastic changes in it.

6. It can be said with assurance that the provisions of S. 1321 designed to avoid fraud or unclean hands are far too burdensome on the Patent Office and on the applicants and, therefore, on the country relative to the good such provisions may accomplish. It is thought the Administration bill may, in part, be evidence of over-reaction to insufficiently warranted criticisms.

There are laws on the books to deal with fraud or unclean hands. Witness the patents which are held invalid for the very small number of humans who intentionally seek to obtain a patent improperly. In the 880 patents above mentioned, only 66 had allegations of fraud or unclean hands. The courts held fraud or unclean hands in only 17 cases! I.e., only 1.94 percent of the 880 patents considered. Though provisions of S. 1321 may appear well founded, the use to which adversary proceedings, or public counsel, as defined, can be put, practically, cannot be expected to have a substantial effect on validity. Why burden the Patent Office, the applicants and our country with the great cost of lesser invention and lesser disclosure at a time when our country needs innovation so badly?

7. The allegation was voiced that examiners are allowing cases due to pressure of the disposal system. This allegedly results in invalid patents. It is implied that the examiners of the Patent Office are so lacking in good faith. intellectual honesty and professionalism that they would allow a case just to make disposals. It was stated in effect, that the rate of disposal had increased because of the allowance of more invalid patents. No mention was made that during the period in question the staff of the Patent Office, which has had at much earlier times a turnover of about 20 percent* each year, had been stabilized by better working quarters, better status, better pay and increased

Now of the order of about 6-10 percent.

responsibilities! The examiners as a group are now more skilled not only in the patent law and practice thereunder but in the art which they can and do search more rapidly. So knowledge and experience do count; the small increase in the rate of "disposals" surely can be traced to such better staff in the Patent Office!

Abandoned cases and counted as "disposals." An Examiner's Answer on Appeal also is counted as a "disposal" (but not for the reduction in office inventories). Thus, about one third of the "average" examiner's disposals are not allowances.

That the "young examiner studying law" can be importuned to allow an unpatentable case should be documented with actual case histories. In my long and wide experience in a great many sections of the Patent Office, the young examiner has been most difficult to convince and has ordinarily held to an unnecessary, higher standard of invention than the more experienced ones who have become more sure that they are correctly deciding the issue. The relatively inexperienced examiner is, ordinarily, less impressed by the invention when he sees it after viewing the art. He applies more "hindsight" at this time of his career than he will later!

I have worked in patent prosecution since I was twelve years old. Today I am almost 59. I have been intimately associated with or have directly presented, prosecuted, supervised and trouble-shot hundreds of cases. I do not recall a single application-and I dare to say readily none can be found-in which the Examiner allowed the case without a real basis other than "a quota system." It is just as easy to send the applicant a final action or to appeal as not to do so. And the affirmances or reversals on appeal tell the story about quality. In my view, many cases which have patentable merit are abandoned simply because lack of funds and manpower available to the inventor precludes appealing all cases. I agree with the Patent Office Society spokesman that the U.S. Patent examiner will not allow simply because of a disposal system quota.

All human endeavor is measured and we all do or should work toward reasonably established goals.

An interesting fact, which I seek to underscore, is that my experience in supervising and training patent lawyers clearly makes evident that the persons producing the higher number of cases and disposals almost always are those who do the higher quality work. I have observed this to be true for over 25 years of record keeping! Of course, all quota systems should be equitable in assigning points of credit for quality as well as for quantity. I believe, from rather close association with the Patent Office and a good number of the members of the staff, as well as intimate knowledge of persons who are high quality producers there, that they are usually the high quantity producers.

Suffice to say, when the Chief Counsel asked a witness for evidence of the increase in the "hordes" of invalid patents being issued, the witness had none to offer! I will not dwell on the clearly unfounded allegations of the witness save to point out that those who have presented statistics have given their evidence which can be checked readily. I know that the Subcommittee of our great Judiciary Committee will not act on unfounded "testimony." It will ascertain the facts.

8. Generally there is a great deal of "shop talk" or "gab" in the profession of patenting. Much of it is repeated on a hearsay basis. People who are otherwise learned and careful use poorly chosen words and phrases, quite loosely, to describe what they think is a fact-without really knowing it. Incomplete presentations must be viewed critically.

Although there is always room for improvement, when a thorough analysis is given it is at once evident that the vast majority of U.S. patents are validly issued and, importantly, that the progress of the useful arts is now well promoted by the system. More especially this is so when the total picture is viewed:

(A) The Patent Office terminates the prosecution of only 70 percent of applications filed by issuing a patent.

(B) Allowing even for differences in judgment or opinion of reasonable persons, the Patent Office Board of Appeals affirms on the order of 75 percent of the examiner's actions rejecting claims. This is a high percentage, encouraging the examiners to reject claims. And the Courts affirm on the order of 70 percent of cases appealed from the Board of Appeals. Again, a high percentage encouraging a good standard of patentability.