the last Congress, it is contra to the system that you have been hearing and talking about here the past few days, namely the system in Germany and Japan which is a full blown inter partes procedure.

Mr. Rosa's idea was apparently before its time. The patent bar criticized it because of the experience in Great Britain where, if art is cited by anyone after allowance and publication of an application, the examiner gives the applicant the opportunity to amend his claims so as to get around the cited reference. It took two decades of debate and maturity of the proposal's critics to see in it the tremendous potential it possesses for giving real meaning to the statutory presumption of validity which a patent is supposed to have upon issuance by the Patent Office. The President's Commission on the Patent System, in its 1966 Report's Recommendation XI, urged that an ex parte opposition be legislated into our patent practice and procedure. I might add that I was so convinced of the merits of Mr. Rosa's proposal, when the President's Commission invited suggestions for revision of our patent laws I wrote it a 3-page letter describing the proposal and urging its adoption. It was, by the way, the only suggestion I felt moved to make to the Commission.

Ex parte opposition is a sensible, practical form of adversary procedure. With a minimum amount of delay in the proceedings, the whole world literally has an opportunity to aid the examiner or others in the Patent Office who may be assigned to review the art thus cited after allowance of the application. It is quite different from and avoids all the ills of the inter partes type of adversary procedure, and I say this based upon years of considerable personal experience with that type of procedure in Germany and Japan. It is quite obvious that inter partes oppositions are dragged out incessantly by permitting third parties to cite new references and new arguments against patentability ad nauseum. This is such an expensive procedure that only the wealthy individual or corporate applicants can afford it. Not only that, but the practice is counter-productive in the sense that it permits a cloud to hover over prospective patents for long periods of time during which the public, as well as the parties to the proceeding, are left in considerable suspense, not knowing whether to invest or avoid investing in the invention or some related development that may be unique to some extent but which still may be affected if the patent under opposition ultimately should issue. This is particularly vile if the parties to the opposition have no intention whatsoever to do anything else but harass and delay the issuance of the patent. I can tell you of one instance in which my company had a very important matter in Japan that caused me to go to that country to try to straighten it out. It had gone on for 10 years and involved no honest-to-goodness attempts to reach a decision before we were able to force an end to the proceeding by demanding a showdown in the courts. We have had them that long in Germany, too.

Now this type of harassment is bad enough where it affects corporate activities, but presumably they can afford to put up with the delay and heavy expenditure. The independent inventors however, are going to be put out of business by that sort of proceeding. They cannot afford to put up with delays of that type and the legal and

other fees that have to be paid to defray the expenses. Not only that, but from my own observations and experiences, I seriously doubt that you could end up with a better result, a better product, a more bona fide valid patent by having an inter partes proceeding, than you could with an ex parte proceeding. Again, providing that the ex parte proceeding was carried out along the lines which are bound to produce the results that you and we are seeking, I feel that it would be much superior and result in greater overall benefits than an inter partes proceeding.

Commissioner Gottschalk earlier today made reference to a procedure which the Patent Office is about to entertain. Actually, the hearings have been published in the Federal Register and they will be held on October 31. The subject of those hearings have been given the title of Voluntary Protest Proceedings. NAM is fully in favor of that type of adversary proceeding. Personally, I am strongly in favor of it, too. As a matter of fact, I believe I was instrumental in having it come to the attention of the Patent Office. Over a year ago, under the auspices of the American Patent Law Association, a special committee was established to consider problems involved in patent practice and procedure, and periodically the recommendations of this committee were funneled to the Commissioner for his consideration. Last January I happened, by letter to our chairman, to propose that the Patent Office should administratively adopt this type of voluntary ex parte opposition procedure, so in saying I am definitely in favor of it. I am in effect doing no more than endorsing my own proposal.

Now what is the voluntary protest procedure? It is essentially going to be very similar to that which is in or has been in section 191 of S. 643, of the last Congress. The only difference is that it will be volunatry, whereas S. 643 would have made it mandatory. In view of this possibility of administrative adoption, why adopt the complicated adversary procedure by legislation called for in S. 1321 until we have had a chance to test that voluntary procedure? I am in full hopes that after the hearings are held next month, they will be adopted and implemented administratively.

I trust you are familiar with the way this will work. The only difference between it and what was in S. 643 is that, in the absence of legislative mandate, it makes it possible for an applicant to voluntarily submit his application upon issuance for re-examination so that the whole world can come in and cite references, which the examiner may have possibly overlooked or failed to find. This is a true adversary procedure and it has every advantage of the inter partes type procedure without its flaws of harassment and heavy costs which I must say I seriously object to, and which I know NAM formally has objected to, also.

Incidentally, since the voluntary protest procedure was announced, it is very interesting that the comments I have informally received from numerous people in the patent profession are that, although it is voluntary, in effect it will be the same as if it were mandatory. If an applicant for patent, upon receiving notice of allowance from the Patent Office, declines to take advantage of the voluntary opportunity, what will he say if his patent should go into litigation in the

Federal courts when the court asks why the applicant failed to take advantage of it when he had the opportunity? The court may well ask whether there was some reason why the applicant didn't want to expose his patent to public review before final grant. In the absence of a satisfactory answer, the court may well be disposed toward ruling against the applicant on one ground or another.

Well, with this premise, I believe you can see that this voluntary thing may work out to be the equivalent of a mandatory proceeding. I just suggest and many people I have talked to seem to agreethat this is what will happen. If so we will have accomplishes the desired objective action, without the need of legislation. What's more, if there are any problems which surface during its implementation, it will be much simpler to make necessary adjustments administratively if there are no rigid legislative requirements that restrict the making of such changes.

Now, Senator, again referring to your introduction of S. 1321, you called attention to the fact that of the patents adjudicated by the courts in recent years, 72 percent were found invalid. When you did so, you struck at the heart of one of the most critical issues involv ing everyone who is concerned with the patent system today, both its proponents and its critics. Actually, those figures should be re-analyzed in terms of which patents get to be reviewed by the courts. and what decisions were included. I understand the Patent Office has made such a study and has determined that the real figure is more like 50 percent than 72 percent. Anyway, I won't even attempt to discuss it at this point because I have made no study of the matter myself. But putting that aside for the minute, valid patents are all important, and from your espousing a strong patent system in this particular reference, Senator, you clearly are seeking to have legislation that will make for valid patents, as are all of us who are interested in a truly viable patent system. In this area I will depart momentarily, but only indirectly, from the specific questions you asked.

It so happens that I proposed another innovation a while back which might lead to patents that will practically never become invalid in the Federal courts. If the proposal were to be adopted. patents will become incontestable on that issue except for possible. fraud

Senator HART. Except for possible what?

Mr. FORMAN. Fraud in the Patent Office, Senator.

If fraud is an issue that comes out in the courts in the course of a patent infringement suit, of course, it would then have to be adjudicated. But the issue of patent validity on any other ground, such as prior art, will not be able to be raised. In any event, sir, I remind you, if I may, that last fall I sent you and other Members of the Patents Subcommittee a copy of a paper I wrote in which that proposal was discussed. I want to take the opportunity at this time to thank you for your kind letter acknowledging it. You didn't say anything specifically about that proposal but you did remark-and if I may I am going to give this letter to your counsel-that though you could not agree with everything I stated you found the paper interesting, and so forth and so on.

I hereby hand to Mr. Nash, your counsel, a copy of my paper, as it was published in the February 1973 issue of the Journal of the Patents Office Society. Your and your staff should note with interest that my proposal has received public endorsement by the Honorable Bruce B. Wilson, Deputy Attorney General for Anti-Trust, as a possible solution to the problem of invalid patents. I think if you are looking at this whole question the proposal I advocated there ought to be considered in depth before you finalize your recommendations for a new patent statute.

Now, I won't go into the description of it now unless there is some reason for your wanting me to do so, possibly to explain how that proposal will operate, because I believe my published paper will describe it to you and others concerned in adequate detail.

Let me refer now to the proposal for a public counsel in the Patent Office. First of all, the NAM position is definitely opposed to the proposal spelled out in S. 1321, which would create an office of public counsel in the Patent Office under certain specific conditions. NAM is not opposed to studying the need for such a public counsel in the Patent Office or how he should function, but it urges that before making any moves in that direction-since it is so drastic a change, particularly as spelled out in S. 1321-that very serious detailed study of the staffing and the day-to-day operations of that Office should first be carried out and made available to the public with an opportunity given for the public to give its detailed comments. Also, alternative ways to that proposal should be considered as part of the study.

I was pleased to hear Professor Stedman speak along these same lines with regard to that issue earlier today, and I think we see eye to eye on that; we cannot and should not move into something as complicated as what is proposed in S. 1321 without such a study in depth. Personally, I would suggest something, too, apart from what he has said. I question whether by legislation one should spell out so completely to almost the nth degree just what a public counsel should do. I think it more sensible, if a public counsel or ombudsman is going to be in the Patent Office at all, the manner in which he should function should be left to the administrative discretion of the Commissioner of Patents, and let him work it out and try to see now it can be best done to make the office of the public counsel accomplish the goals you and we are seeking.

Getting back to the formal position of NAM on this point, I would like and also I could endorse this personally myself-I would say most of the functions that are expected to be performed by the public counsel actually are now available. For example, the government, through the Justice Department, now has the power under certain circumstances to go to the courts to sue to cancel a patent. Second, the Justice Department or any other agency of government would be in a position to participate in the proceedings of section 135 of S. 1321 or the proceedings in the re-examination after issue proceeding spelled out in sections 191 and 192 of S. 643 of the last Congress. Third, even now the examiner in the Patent Office has the right to be present and argue his side of the case when it is up before the board of appeals.

23-932-74- -27

As a fourth point, a member of the office of the solicitor in the Patent Office handles the case for the Patent Office in every appeal which is made to the district court, the court of appeals, or the Court of Customs and Patent Appeals. So you see you have at least four different levels or four different situations where in effect the very functions that you wish to have assigned to the public counsel are now available and in force.

One last point on the public counsel provision in S. 1321. I see serious administrative problems, particularly as spelled out for the public counsel, in the bill, but possibly the worst administrative situation I can envision is the fact that you are setting up in effect two Commissioners in one Patent Office and in certain respects they both have the same responsibility. In fact, as I read it, I think the public counsel can overrule the Commissioner in some situations. I don't think that is what was intended, and it certainly is not to be desired, but the provisions of the bill may make such a result possible.

Although I have made all of these statements about the objections to the public counsel proposal, let me remind you that I did state that there may be some merit to it; it depends on how it is implemented. Earlier today I mentioned the existence of an informed APLA Patent Office Advisory Committee. I recently had occasion to make another suggestion to that committee along the following lines. If the voluntary protest proceeding is carried into effect after the Patent Office holds hearings on it next month, why don't we have the Commissioner consider providing for a form of public counsel who will serve only to act as a representative, the advocate if you please, of the people who cite art to the Patent Office in the voluntary cases? To do this will give us the benefit of actual experiences with a public counsel in those situations first, and in that way we may find out if there are any bugs in the procedure as it is imple mented. Maybe in that way we can arrive at a procedure that will accomplish the goals you are seeking and which we in industry and we in the patent profession all would like to see.

Getting on with the next point, Senator, the deferred examination of patent applications, basically NAM is opposed to this but, if a detailed study of this subject should provide convincing evidence that the benefit of such an approach would exceed the cost on a national basis, NAM would agree to the desirability of its establishment. Here again I refer back to my good friend Professor Stedman's testimony earlier today. He seemed to advocate the same thought; deferred examination may have its merits, but as far as the U.S. patent operations are concerned, it deserves very detailed study before we just jump into it. The panacea that some people see in deferred examinations may be just a mirage. We don't know for cer tain, thoroughly and beyond all possible objections, that the systems in Holland, in Germany, and elsewhere are absolutely satisfactory.

My office has worked with deferred examinations and we found some flaws in it. I have talked to Dutch practitioners and German practitioners about it. We have attorney associates in those countries and they say they are not completely satisfied with it, some even saying that it should be done away with. So I am not sure that we should just adopt it simply on the basis of the fact that it looks like