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the Patent Office staff and that sort of thing. Do you care to respond to that?

Mr. ZEIDMAN. This is a question which perhaps the Patent Office can more appropriately respond to. I would only say that there is already criticism of the Patent Office and of the existing system in regard to delays and I do not believe that the change which has been suggested here could be expected to substantially increase that kind of criticism. Indeed I would hope that some provisions of the bill in regard to expediting procedures, modernizing, studies, and so forth, would indeed increase the present efficiency and speed with which the Patent Office moves.

Mr. HUTCHINSON. Thank you.

Chairman KASTENMEIER. Thank you Mr. Zeidman and Mr. Davidson for your appearance this morning.

The Chair would like to announce that hearings will continue on this bill tomorrow morning at 10 a.m. in this room. At that time we will hear from the following two witnesses : Henry J. Cappello, representing the patent committee of the National Small Business Association, and Mr. J. Rabinow, president of the Rabinow Engineering Division of Control Data Corp. Until that time the committee stands adjourned.

(Whereupon, at 12:10 p.m., Wednesday, April 26, 1967, the subcommittee hearing in the above-entitled matter was 'adjourned.)




Washington, D.C. The subcommittee met, pursuant to adjournment, at 10 a.m., in room 2226, Rayburn House Office Building, the Honorable Robert W. Kastenmeier presiding.

Present: Representatives Kastenmeier, Edwards, Poff, Hutchinson, and Roth.

Also present: Herbert Fuchs, counsel; and Donald G. Benn, associate counsel.

Chairman KASTENMEIER. The subcommittee will come to order for the further consideration of H.R. 5924, the Patent Reform Act of 1967, and in this connection the Chair calls as the first witness today Mr. Henry J. Cappello, representing the National Small Business Association and his colleagues whom I shall ask Mr. Cappello to introduce.



Mr. CAPPELLO. Mr. Chairman and members of the subcommittee we appreciate this opportunity to present to the committee our views on H.R. 5924, the Patent Reform Act of 1967. I am Henry J. Cappello, consultant on patent policy to the National Small Business Association. I am also president of Space Recovery Research Center, Inc., of Boca Raton, Fla. With me, on my right, is Mr. J. P. Perry, president of Eastern Rotocraft Co., of Doylestown, Pa., chairman of the NSBA Patent Policy Committee; and on my left, Mr. Roy A. Patton, Jr., president of Multicon Division of Franklin National Investment Corp., Fort Wayne, Ind., a member of the NSBA Patent Policy Committee.

While we do not agree with the report of the President's Commission in its entirety, we strongly support the objectives of the Commission as set out in pages 3 and 4 of the report. Of one thing there can be no doubt, changes are needed. The individual inventor and small businessman no longer derive from the patent system that measure of incentive, encouragement, and protection which promoted our tremendous growth and prosperity during the Industrial Revolution. In today's highly developed technology, the small inventor and businessman continue to make notable contributions to innovation. The Commerce Department Panel on Invention and Innovation, in its report, titled "Technological Innovation, Its Environment and Management,” issued January 1967, sets out at page 16 the following findings:

Prof. John Jewkes and others showed that out of 61 important inventions and innovations of the 20th century that were selected for analysis, over half stemmed from independent inventors or small firms.

Prof. Daniel Hamberg of the University of Maryland studied major inventions made during the decade 1946–55 and found that over twothirds of them resulted from the work of independent inventors and small companies.

Prof. Merton Peck of Harvard studied 149 inventions in aluminum welding, fabricating techniques and aluminum finishing. Major producers account for only one of seven important inventions.

Prof. Hamberg also studied 13 major innovations in the American steel industry. Four came from inventions in European companies. seven from independent inventors, and none from inventions by the American steel companies.

Prof. John Enos of the Massachusetts Institute of Technology studied seven major inventions in the refining and cracking of petroleun. All seven were made by independent inventors. The contributions of large companies were largely in the area of improvement inventions.

Despite general recognition of the contributions of the independent inventor and small businessman, the patent system as constituted and operated today provides very little incentive or protection for them. Their difficulties stem primarily from (1) issuance of patents of questionable value when measured against their ultimate validity or enforceability; (2) excessive costs and delays in obtaining the patents: and (3) the expense of litigation. The small businessman's problems are compounded further by competitive disadvantages implicit in defensive use of patents by big business, and predatory infringement by the Government and Government contractors.

Another factor contributing to the patent problems of the individual inventor and small businessman is the behavior pattern of other interested groups and officials including the patent bar, Department of Commerce, and the Patent Office, and the Antitrust Division of the Department of Justice. All give lip service to the interests of small business, but we suspect that their objectivity is often unintentionally clouded plus the fact that it is always easy to sacrifice the little guy. We do not disparage the contributions of these groups; we suggest, however, that some of their recommendations with respect to H.R. 5924 may not be entirely objective.

The proposed legislation deals with many concepts that are new to U.S. patent law but which have been successfully employed in foreign countries or are in the experimental stage in foreign countries. The conclusions which can be drawn from foreign experience need to be carefully scrutinized because some may be completely inapplicable to U.S. requirements and our overall patent environment.

The interest of the inventors and small businessmen, as the prime innovators in this country, should be, in our opinion, a primary consideration in any revisions of the patent system which are undertaken. Except for the areas which we will discuss, we have no objection to the report of the President's Commission and implementing legislation, H.R.5924.

Our comments are directed to the major changes proposed in H.R. 5924 and we will submit, prior to the conclusion of these hearings, suggested statutory language for specific perfecting amendments to implement our recommendations.

The first-to-file concept.-This proposed change has considerable merit for the reasons stated by the Commission. In taking a position in support of the first-to-file concept, we disagree with the contention that such a system discriminates against smaïl business. In our view, the present system with its costly and time-consuming interferences and the requirements for witnessed and corroborative records, in many instances give large companies an unwarranted advantage over smaller concerns. While supporting the general principle of first to file, however, we feel that certain safeguards need to be included if this procedure is to serve the needs of small business. In our experience, it is not unusual for a considerable period of time to elapse between initial reduction to practice of an invention, and its refinement to the point that a complete set of claims can be drafted. In the case of the last invention patented by my company involving what appeared to be a simple aerological device, it took approximately 20 months for the inventor to analyze his invention sufficiently to realize it was a useful patentable invention, even though he had worked with it in private practically every day. The description and the working model supplied were sufficient for the patent attorney to draft seven claims (all of which were allowed), but in the period between drafting of the claims and issuance of the patent, a period consuming 2 years, it became obvious that some of the principles of operation had been misunderstood and that some auxiliary improvements could be made to improve the performance of the product and provide additional claims. As a result, a continuation in part was filed. About a month after this, the patent was issued. Subsequent to issue, it was discovered that our company still did not completely understand how or why the device works, and that at least two errors had been made innocently in the original claims. A reissue patent was then applied for. This history of one patent shows clearly that an individual inventor or small company with limited resources needs time to perfect new concepts so that complete and accurate claims can be filed.

We believe that a personal grace period of not less than 6 months, and preferably a year, must be provided for inventors. Furthermore, current practice encompassing continuations, continuations in part, and reissue should be retained in the law.

The concept of a preliminary application is sound only if such preliminary application serves to provide an effective means for the inventor to disclose his invention with some assurance that a reasonable disclosure will satisfy the requirements for the complete application. The language of the proposed legislation, section 120(a) (2), requires, in our opinion, that the preliminary application relating to the invention sought to be patented include "every feature recited in the claims therefor.” This is an impossible burden for anyone other than a patent attorney to meet. However, if a personal grace period of 1 year were provided, this would eliminate the necessity for filing of preliminary applications, with all of the difficulties associated therewith. A complete application could be filed within the personal-grace period. This would mean only one trip to the patent lawyer with considerable savings in legal fees.

Some critics of the proposed legislation have suggested that the firstto-file system would induce pirating of inventions and other chicanery to deprive the true inventors of their rights. Our opinion is that section

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