and by 5 years' further experience with new approaches that have been introduced in the patent systems of some of the other major countries of the world. We think it is time to give serious thought to modifying our patent procedures.

First, let me discuss the proposal to adopt a deferred examination system. Such a procedure is now used by several important countries, including the Netherlands, Germany, and Japan. In spite of early trepidation and predictions of disaster for this procedure, we think it is fair to say that the results of deferred examination have been good. As anticipated weak patent applications and those of minor commercial merit have been abandoned without the cost or effort of examination. The fund of public knowledge has thus been increased, and most importantly, the examining corps of the countries involved have been able to expand their efforts on careful scrutiny of those applications for which examination is requested.

We favor a deferred examination system, but hasten to add that we have reservations about certain details of the proposals of S. 1321 in this regard. S. 1321 proposes at paragraph 122 (a) that patent applications be laid open to public inspection at an early, unspecified time "before the date of first examination." In the case of applications for which examination has not been requested, that is, those deferred, we recommend strongly that they be published 18 months after the priority date assigned the application but with the proviso that the applicant have the right to withdraw his application from the Patent Office up to that time if he wishes. This procedure is used by other countries with deferred examination systems and seems eminently reasonable and fair to us. The applicant has a limited option of foregoing patent protection if circumstances change from the time he files his application, and he has 18 months to do the development and market research necessary to define the true scope and value of his invention. Chemical technology is a complex and time consuming art, and we regard 18 months as a minimum reasonable time for evaluating a new discovery.

Turning now to the broader question of whether some form of adversary proceeding should be incorporated in the patent examining process, the American Chemical Society believes that in principle this would be a desirable change from the present ex parte examination. We favor the adoption of new procedures that would have the effect of insuring as nearly as possible that all known prior art is considered by the Patent Office before a patent is granted, for the reasons given above. However, we have serious reservations about the specific provisions of S. 1321 for achieving this result. We believe the powers given in paragraph 3(d) to an Assistant Commissioner to be known as the "Public Counsel" are so sweeping that more mischief than good might be expected from such an officer. We believe that the same result could be achieved more economically and with greater assurance of success by some form of opposition proceeding based on information submitted to the Patent Office by interested third parties. We do not favor the exact procedure in S. 1321 insofar as it provides that the third party may participate in the reexamination process as defined in paragraph 135 (d). The reason we have this reservation is our experience with the frequent

use in other countries of the world of such opposition procedures to harass applicants and delay issuance of patents. I think that would be particularly true in the case of single inventors and so forth. However, we do favor the provisions of paragraph 135 (a-c) which provide for the submission by third parties of prior art not cited by the examiner as the result of his search, followed by examination of the application by the Patent Office on the basis of this art. We are satisfied that this procedure without additional provisions would go far to insure the issuance of U.S. patents that would stand up in the

courts.

In Senator McClellan's announcement of these hearings, he also asked for comment on the proposal in S. 1321 that a system of maintenance fees be established for U.S. patents. We believe that this would be desirable, both to provide a measure of financial support for the operations of the Patent Office and to accelerate the process of moving technology into the public domain. However, the specific sums mentioned in S. 1321, that is, $1,000 per annum with a 25 percent escalation each year, seem exorbitant to the point of being confiscatory, and we urge that a more modest scale be adopted. We are favorably impressed by the provision that maintenance fees may be deferred or waived in the case of individual inventors or small companies and would hope that equitable procedures can be accepted along these lines.

Lastly, comment was requested on the proposal to give the Patent Office the status of an independent agency. The American Chemical Society maintains its long-standing conviction that a strong patent system has been a major factor in encouraging the outstanding success we as a Nation have achieved in science and technology. The stability of the Patent Office appears to have been weakened to some degree in recent years by frequent changes in its leadership and by apparent disagreements between departments of the administration on patent policies. We believe that a strong Patent Office dedicated to firm, impartial implementation of the patent statutes is of vital importance to the health of our technologically based economy. We favor the proposal to make the Patent Office an independent agency to give it freedom from any undue political considerations. This should enhance the respect we all have for this excellent and important organization.

To summarize, the American Chemical Society favors changes in the patent statutes that can be expected to strengthen our patent system and lead to the issuance of carefully examined patents capable of standing up in the courts and earning the respect of all. As the leading scientific and technological Nation in the world, our patent system deserves no less.

Thank you.

Senator HART. Mr. Nixon, thank you very much. I hope you would express to the society the feeling of the subcommittee that the balance and fairness of this testimony is noteworthy. I recall the position the society took in 1968.

Dr. NIXON. 1968?

Senator HART. And the changes that are reflected in your position now. I think you identified as principal reasons for the change the

opportunity to evaluate new methods of what has been developed in other major industrial countries, plus the continued unsatisfactory or relative unsatisfactory quality of the work product of the Patent Office.

We are gratful that you and your associates would do what politicians are very reluctant to do, and that is to ever admit that they could take a new look at anything.

Dr. NIXON. Thank you.

Senator HART. Having said that, and inasmuch as we have asked each spokesman for an organization who has testified to identify their membership and the way the position they have taken is developed, and to what extent their position has been reviewed, would you describe your committee?

Dr. NIXON. It is a continuing committee, so that they are continually looking at legislation that is proposed, not only this legislation but for instance the Moss bill and other bills. This is a very important fuction, we feel, of the society, to be sure that our members understand the effect of legislation which is proposed and try to make sure that it serves all of the community in the best manner.

Senator HART. Well, your society's membership is very broad?
Dr. NIXON. Right.

Senator HART. Would it be possible for you to provide for our record the names and affiliations of your Board members?

Dr. NIXON. Oh yes.

Senator HART. And would that also be possible with respect to the membership of the committee you mentioned, the Committee on Patent Matters and Related Legislation?

Dr. NIXON. Yes.

Senator HART. And now on page 4-and I read this not in the nature of a question but to underscore it.

It is obvious that many patents of doubtful merit are being granted by the United States Patent Office. We take note, however, of the finding by Professor Irving Kayton of the George Washington University National Law Center, that, when the courts considered no prior art other than that known to the Patent Office during examination of the patent application, 75% of litigated patents are upheld. While different conclusions may be drawn from this striking fact, we prefer to take it at face value.

And, parenthetically, I do too.

If the Patent Office had the manpower and resources to bring the totality of existing art into consideration during examination, we would expect that the great majority of issued patents could withstand challenge in the courts, and confidence in the patent system would be improved immeasurably.

Now, I would paraphrase that this way. If all of the relevant facts are before a Patent Office Examiner and he has a reasonable time to consider them, he will come up with the correct answer? Dr. NIXON. Yes, I think that is correct.

Senator HART. That really is what we mean when we talk about an effort at patent reform.

Dr. NIXON. Yes.

Senator HART. That is really what we mean. That is really the focus and the basic purpose of the legislative effort reflected in Senator McClellan's hearings here.

You do comment on Patent Office fees. For our record, would you give us your reaction to a system of nominal filing and issue fees?

Dr. NIXON. Well, I think we are in favor of that, that is of those sort of fees, Senator. We are not questioning that at all.

Senator HART. Well let me give you the four elements and ask your reaction which we would like. It may make it easier and more understandable if we have that in the record: a system of nominal filing and issue fees; maintenance fees, every 3 years, starting in the fifth year at a rate decided by the Patent Office Commissioner designed to recoup the 65 to 75 percent of the Patent Office costs; with power vested in the Commissioner to grant special exemptions to individuals and small businessmen and so on. Now, have you any feeling as to that matter?

Dr. NIXON. Well, just offhand, Senator, it sounds like a better proposal than what is here present. The foreign countries do have a maintenance fee system but they are much more modest than what is proposed here, which would total something over $100,000 for a complete patent that ran through to exhaustion. And the general principle we support is that the government try to recover a substantial proportion of the Patent Office costs, Senator. Senator HART. Mr. Brennan?

Mr. BRENNAN. No questions.
Senator HART. Mr. Nash?

Mr. NASH. No questions.

Senator HART. Doctor, before you leave, do any of your colleagues care to make any comments or give any further remarks?

Dr. NIXON. Well, they are very modest people, but they might be persuaded to.

Dr. CAIRNS. The only thing I might say, since I have testified here before relative to the prior legislation, Senator, of course the bill was quite different when we testified in 1968 so naturally our comments and our views would be differentiatable. And this general comment here, Senator, did not indicate too significant a reversal except perhaps on the question of deferred examination. We are still very anxious to see a high quality job done and to support the Patent Office in any way that we can.

Senator HART. Thank you, Doctor. It was indeed the position on deferred examination that I had particularly in mind when I made the comment.

Gentlemen, thank you very much.
Dr. NIXON. Thank you.

[The material requested earlier appears as follows:]

AMERICAN CHEMICAL SOCIETY

BOARD OF DIRECTORS-1973

JOINT BOARD-COUNCIL-COMMITTEE ON PATENT MATTERS AND RELATED
LEGISLATION-1973

Senator HART. Mr. Brennan.

Mr. BRENNAN. The next witness is Mr. Stanley Clark.

Senator HART. Mr. Clark, would you identify yourself for the record?