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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.

Many 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 consideration 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 Association range from manufacturers of the smallest electronic part to corporations that design 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 primaril: 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 published 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 independent 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 favorabile 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 EIA 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 be 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 or 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.

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 he maintained at reasonable levels. Obviously, the sum 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 than 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 system 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 as a business tool and be able to withstand any outside pressures which could ultimately subvert its purposes.

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

Washington, D.C., Norember 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 Ecology vs. 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. HART, 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. PETERSOX, 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. Joun L. McCLELLAN, Chairman, Senate Patents Subcommittee,
Ilon. QUENTIN N. BURDICK, Member, Senate Patents Subcommittee,

Hon. HIRAM L. Fong, Member, Senate Patents Subcommittee,
Hon. Hugh 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 appa rent 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 Hon. Bruce B. Wilson, Deputy Assistant Attorney General, Antitrust Diri. sion, 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 progre88," which he declared merited serious consideration. Referring to Forman's proposal for an incontestable patent, Mr. Wilson stated:

C'ertainly 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 ? of wide circulation I won't repeat any of its detailed points at this time. It should suffice to say that its theme cousisted 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.

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

2 Forman, "Changing characteristics of Private Property", Record of Hearings Before Subcommittee on Patents. Trademarks, and Copyrights, U. S. Senate, on S. 643, s. 12:13, and S. 1255, Part 2, p. 633. (May 13. 1971) : 53 J. Pat. Off. Socy 530 (August 1971): 8 The Conference Board RECORD 41 (October 1971); 2 Patent Trends No. 3 (March 3 Lynch v. Household Finance Corp., 40 LW 4335 (March 21,1972).

cally have been made by some law enforcement authorities to take on the specter of illegality when they involve the use of intellectual property. Pointing to the foolhardiness of such a situation, and the detriment it has caused in interfering with the progress of the arts and sciences which the Constitution calls for in providing for our patent system, I urged adoption of the Scott Amendments to rectify this condition.

It is interesting note that since the time I gave that speech the U.S. Supreme Court, in a decision 3 involving a garnishment of a working mother's savings account, has spoken out strongly in favor of private property rights even in the face of an attack based upon human or civil rights. Said the Court, “the dichotomy between personal liberties and property rights is a false one. Property does not have rights. People have rights. The right to enjoy property without unlawful deprivation, no less than the right to speak or the right to travel, is in truth a personal right whether the property' in question be a welfare check, a home or a savings account. In fact, a fundamental interdependence exists between the personal right to liberty and the personal right in property. Neither could have meaning without the other. That rights in property are basic civil rights has long been recognized. Congress recognized these rights in 1871 We do no more than reaffirm the judgment of Congress today." 4

Editorializing on this case, the Wall Street Journal 5 noted that the Court's rejection as false any distinction between property and human or civil rights "put private property where it belongs—in the broad context of civil rights and individual liberties, not as a thing apart.” It is encouraging to note that the Court, even in the midst of current heated public arguments over civil rights and socio-economic reform, adheres to the principal that property rights are equal to such other liberal rights as freedom of speech, press and assembly. Perhaps, then, when the Court considers matters involving intellectual property rights it will give them the same recognition and the same treatment, by keeping in mind that intellectual property is but another form of private property.

I will have more to say on the subject of the Scott Amendments and private property rights later. In actuality, it is only one phase of a much broader subject, a problem of tremendous importance to our national welfare. I refer to the much too old conflict between those who administer our patent system and those who enforce our antitrust laws. In this conflict we have a strange dichotomy of two governmental groups, each bent upon fostering programs aimed at achieving identical goals of improvement to the nation's economic prosperity, and yet each claiming that the other is causing mayhem to our economy and thereby to our nation's economic welfare.

A pity it is that this conflict has led to tremendous wastes in precious manpower, time, financial and other national resources, first in the patenting process and then in the courts. These wastes are even further much aggravated by the fortunes spent uselessly in research and development programs, the construction of plants and the implementation of marketing projects, all of which may go down the drain as the aftermath of judicial decrees holding patents invalid or a business agreement involving patents illegal under some novel antitrust theories. These wastes are polluting our economic atmosphere, and the matter is as deserving of ecological consideration and treatment as much as or more than any other pollutant that has been deemed harmful to man.

Ecology, I need hardly remind you, is the "in" thing of the 1970's. A Congressional committee has labelled this period as "The Environmental Decade", and President Nixon has called attention to the preciousness but vulnerability of our natural resources which caused a need to develop new attitudes and new management techniques in order to preserve a good environment. The House committee pointed out that a major problem is that many federal agencies are involved in programs for managing the environment which work at cross-purposes, and called for better coordination of those agency activities.?

An example of a need for better coordination familiar to most of you may be found in the governmental edicts affecting the manufacture and sale of

Id at 4339.
5 “Supreme Court and Private Property", WSJ April 3, 1972.

* House Report No. 91-1082 (91st Cong., 2d Sess.) 1970, by the Committee on Government Operations, p. 2.

Id at pp. 15-16.

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