Most places where deferred examination has been introduced it has been an emergency measure, where the tremendous backlog of unexamined applications made it almost necessary to defer examining some of them. The situation here is quite different, because our backlog has been dropping steadily. I don't think anyone really considers it unmanageable today. Turning to maintenance fees, while the patent bar in this country has been historically and uniformly opposed to maintenance fees, I believe there currently is some sentiment that fees of this type might be preferable to further increases in the filing and issue fees. We feel strongly that if maintenance fees are put in, they should not be so large as to be punitive or confiscatory. It is a common thing for an inventor to get a patent and not find it possible to commercialize it in the early years. If he is fairly promptly faced with very large amounts that must be paid to keep his patent in force, he may find it necessary to allow it to lapse, when in fact in another year or 2 or at some point the invention might come into use. The fees called for in S. 1321 seem to us entirely too high. We think fees, whatever their nature, should be kept administratively as simple as possible. They should not vary according to who owns the patent nor should there be special exemptions. In this connection, we would urge that the whole question of fees be re-examined. At the hearings held before this subcommittee in May 1971, we submitted a report which urged a somewhat different basis for considering the proper level of fees. This was that the cost for the different types of services that are rendered by the Patent Office be considered separately. Thus, the cost of the examination, we felt, should be divided equally between the Patent Office and the applicant, since the examination process is of value both to the applicant and to the public. Then the cost of supplying patent copies and similar services should be charged entirely to the people who receive the services, and the same thing for the trademark operation, which is primarily for the benefit of the applicants. Then the cost of maintaining search facilities, the library, the printing of patents, seems to us really for the benefit of the public and we feel 100 percent of those costs should be borne by the government. If this basis of fees were adopted, we think it might well be unnecessary to go to maintenance fees. This basis would seem to us fairer to all concerned than picking an arbitrary overall percentage of fees to be recovered. Turning to the administrative restructuring of the Patent Office, in our proposed version of a patent law revision bill, we have simply retained the language of the present statute which would leave the Patent Office where it is, in the Department of Commerce. Nevertheless, many of our members would be pleased to see it become an independent agency. We think it would give the commissioner a desirable degree of freedom of operation. There might be countervailing disadvantages of having the Patent Office not part of one of the executive departments. Of course, an alternative would be to make the commissioner become an Assistant Secretary of Commerce, as provided in Senator McClellan's S. 1957. That, I believe, completes what I have to say on the five topics. The statement that we have filed also notes some other provisions of S. 1321 that for one reason or another seem undesirable to us, but I will not discuss those unless you would like. Senator HART. Thank you very much for adhering to the suggestion that we limit the oral presentation to five subjects. Mr. Kelton, did you care to add anything. Mr. KELTON. No, Senator, no. I think Mr. Dann has adequately covered the situation. Senator HART. You tell us that many of your members would like to see the Patent Office become an independent agency. You don't indicate any dissent among your membership with respect to the earlier points and positions that you have taken. You have 3,800 members. How do you speak for them? Mr. DANN. Well, Senator, obviously we don't all think alike on all of these questions. Our committees have studied them at length. We have symposia to educate our members. Our committees make recommendations to the board of managers of our association. This has on it about 20 people, and we attempt as well as we can to arrive at positions which we feel reflect the majority views of the association. Senator HART. It would be fair, then, to say that the position was developed initially by a committee or committees. Their reports were made to you and the members of the board of managers, and the board of managers then evaluated it and took this position. Mr. DANN. Yes; that is correct. Senator HART. Would you then for the record let us have the names of the members of the board and their private employment, associations, firms, or whatever? Mr. DANN. Certainly. [The information referred to follows:] Hon. PHILIP A. HART, AMERICAN PATENT LAW ASSOCIATION, Subcommittee on Patents, Trademarks and Copyrights, DEAR SENATOR HART: Pursuant to the request which you made on September 11 during the hearings on S. 1321, I am writing to advise you and to make of record the names of the members of the Board of Managers of the Ameican Patent Law Association, together with their present affiliations. At present, thirteen of these are members of private law firms and eight are lawyers employed by corporations. They are as follows: Robert B. Benson-general patent attorney, Allis-Chalmers Manufacturing Company, Milwaukee, Wisconsin Eugene L. Bernard-partner, Morton, Bernard, Brown, Roberts & Sutherland, Washington, D.C. C. Marshall Dann-chief patent counsel, E.I. du Pont de Nemours and Company, Wilmington, Delaware Donald R. Dunner-partner, Lane, Aitken, Dunner & Ziems, Washington, D.C. James W. Falk-patent attorney director, Bell Laboratories, Inc., Murray Hill, New Jersey Thomas E. Fisher-partner, Watts, Hoffman, Fisher & Heinke, Cleveland, Ohio Howard I. Forman-trademark counsel, The Rohm & Haas Company, Philadelphia, Pa. Ralph L. Freeland, Jr.-supervising patent lawyer, Chevron Research Company, San Francisco, California Morton David Goldberg-partner, Schwab & Goldberg, New York, New York Harlan P. Huebner-partner, Huebner & Worrel, Los Angeles, California William R. Hulbert-partner, Fish & Richardson, Boston, Massachusetts Julius Jancin, Jr.-patent counsel, IBM Corporation, Washington, D.C. John T. Kelton-partner, Watson, Leavenworth, Kelton & Taggart, New York, New York Edward F. McKie, Jr.-partner, Schuyler, Birch, Swindler, McKie & Beckett, Washington, D.C. W. Brown Morton, Jr.-partner, Morton, Bernard, Brown, Roberts & Sutherland, Washington, D.C. Sidney Neuman-partner, Neuman, Williams, Anderson & Olson, Chicago, Illinois B. R. Pravel-partner, Pravel, Wilson & Matthews, Houston, Texas James M. Wetzel-partner, Wetzel, Greenawalt & FitzGibbon, Chicago, Illinois Arthur R. Whale-manager, Organic Chemicals Section, Patent Department, The Dow Chemical Company, Midland, Michigan George W. Whitney-partner, Brumbaugh, Graves, Donohue & Raymond, New York, New York Richard C. Willson, Jr.-patent counsel, Marathon Oil Company, Littleton, Colorado Sincerely, C. MARSHALL DANN. Copy to Mr. Thomas C. Brennan, Chief Counsel, Subcommittee of Patents, Trademarks and Copyrights, Senate Judiciary Committee. Senator HART. Thank you very much. Mr. DANN. Thank you, Senator. Mr. BRENNAN. Mr. Chairman, the next witness is Mr. William E. Schuyler, Jr., who is appearing on behalf of the American Bar Association. Senator HART. We welcome you back. Mr. SCHUYLER. Thank you, Mr. Chairman. Mr. BRENNAN. Mr. Schuyler, you have a prepared statement. Do you wish to read it in full or have it printed in the record and summarize it as you proceed? Mr. SCHUYLER. Mr. Brennan, I would prefer to summarize it, I think, in the interests of saving time. Mr. BRENNAN. Mr. Chairman, may the statement be printed in full at this point in the record? Senator HART. So ordered. [The prepared statement of Mr. Schuyler follows:] STATEMENT OF WILLIAM E. SCHUYLER, JR., ON BEHALF OF AMERICAN BAR ASSOCIATION Mr. Chairman and members of the subcommittee: My name is William E. Schuyler, Jr. I am a lawyer in private practice in Washington, D.C. and appear today on behalf of the American Bar Association as a former Chairman of its Section of Patent, Trademark and Copyright Law. Currently, I am the delegate representing that Section in the House of Delegates of the American Bar Association. We appreciate the opportunity to appear before the Subcommittee and supplement testimony at previous hearings on Patent Law Revision. Our Association does not have a position on the creation of an Office of Public Counsel or on administrative restructuring of the Patent Office, so this statement is directed to (A) Public Adversary Proceedings; (B) Deferred Examination; and (C) Patent Office Fees. A. PUBLIC ADVERSARY PROCEEDINGS For many years the American Bar Association has advocated a change in the system of examining patent applications to permit the Patent Office to consider patents and publications cited by the public as evidenced by the following resolution adopted in 1967: Resolved, That the American Bar Association approves in principle consideration by the Patent Office of patents and publications cited by the public within six months after publication of the application, provided that the application has an opportunity to rebut any determination of unpatentability and also has the opportunity to amend the scope of any claim. As contemplated by the resolution, a patent application would be published, and the public would have a reasonable period of time within which to cite patents and publications for consideration by the Examiner. Then the applicant would have an opportunity to rebut any holding of unpatentability and/or amend his claims. This would not be an adversary proceeding as contemplated by Section 135(d) of S. 1321, and certainly does not contemplate an anonymous adversary. The public could submit written arguments or briefs with the citation of prior art. Then, with all the evidence before him, we believe the Examiner in the Patent Office will reach a proper conclusion more expeditiously and economically than would be possible in a full-fledged adversary proceeding. Experience in other countries indicates that full-fledged adversary proceedings unnecessarily prolong the determination of patentability and unnecessarily burden applicants. Such delays and burdens work to the disadvantage of individuals and smaller businesses. Moreover, applicants fees, as provided in Section 41 of S. 1321, would have to be increased (probably multiplied by a substantial factor) to offset the Patent Office expense of administering adversary proceedings. Timing of the publication of the application and the period for the public to cite prior art is of utmost importance. It is the position of the American Bar Association that an application should be published only after allowance by the Examiner. This position is established by the following resolution, also adopted in 1967: Resolved, That the American Bar Association opposes in principle mandatory publication of pending applications without the authority of the applicant before the allowance of the claims thereof, or after the allowance of the claims thereof, without first giving the applicant a reasonable time within which to elect whether or not to abandon the application thereby preventing publication. From its beginnings, our patent system has preserved the secrecy of an applicant's invention, until the scope of patent protection is determined, i.e., until the claims are allowed. Then the applicant has the option of having the patent published or preserving his secrecy by abandoning the application. Mandatory publication of all applications, as provided in Section 122 (c) of S. 1321, forces an inventor to decide before filing whether to seek a patent or preserve his invention in secrecy. This will lead to suppression of some portion of technology now available to the public in published patents, but, of course, will correspondingly reduce the load on the Patent Office. In most other counties, applications for patent are published about 18 months after filing. Multinational corporations, which file applications in many foreign countries, would be unaffected by early publication in the United States, because the technology will be published somewhere in any event. In some instances, even these large organizations restrict filing to the United States to preserve secrecy; if early publication of U.S. patent applications is mandatory, those organizations will probably not file even in the United States. Smaller companies and individuals who do not normally file applications in other countries will be adversely affected by early publication of their United States applications. Protection of technology is often essential to the survival of smaller companies. Making that technology available to larger competition could be fatal. In such cases, the giants could even prolong the adversary proceedings of S. 1321 until the technology is obsolete. Faced with such alternatives, the smaller companies and individuals will decide to rely on their ability to keep the invention secret which defeats the major purpose of the patent system. In an effort to protect the interests of individuals and smaller companies, the U.S. Patent Office has set a goal of issuing patents within 18 months of filing and has made substantial progress toward that goal. Achievement of that goal is a much better solution than mandatory publication of all applications to the detriment of the less affluent applicants. Practical considerations affect the timing of the publication of applications and the period for citation of prior art by the public. Each year some 35,000 patent applications are abandoned. With few exceptions, these abandoned applications do not disclose any worthwhile advance in the art, so there is no justification for the cost of publication, much less the imposition of 75% of that cost on applicants (Section 41). Of the 80,000 applications allowed each year, the Examiner has probably cited the best art in at least 20,000 (25% valid, based on current court statistics) and at least another 20,000 (25%) would be ignored by the public in view of the scope of the allowed claims. By delaying the public participation until after allowance, the number of potential controversies is reduced from 115,000 to something less than 40,000, and the number of publications from 115,000 to 80,000. Participation by the public should be more viable if it takes place after the issues are narrowed during prosecution. At that time, members of the public may readily determine from consideration of the allowed claims whether the prospective patent will affect their interests. If so, they may have the incentive to expend the time and money necessary to make a search and oppose grant of the patent. On the other hand, if applications are published before prosecution, the claims are unlikely to describe the novel subject matter with precision, and the public will find it that much harder to determine whether the prospective patent may affect their interests. Consideration may be given to providing for citation of art by the public and reexamination by the Patent Office after the patent issues. This will avoid duplicate publication of both the application and the patent and afford applicants earlier benefits of the patent where there is no citation. Moreover, an applicant with patent in hand will be better able to raise the money to defend against an opposition than if he has no patent at all. Merits of such a procedure were recognized by this Subcommittee in Chapter 18 of S. 643, 92d Congress (Committee Print, October 20, 1971). B. DEFERRED EXAMINATION Implicit in any system of deferred examination is the mandatory publication of all applications before examination. For reasons explained above, the American Bar Association is opposed to such mandatory publication. Moreover, the American Bar Association has opposed proposals for deferred examination and has even opposed legislation proposing to grant the Commissioner of Patents standby authority to institute a system of deferred examination. This position is based on the assessment that it is unnecessary, would be counter-productive, and would needlessly force industry to evaluate hundreds of thousands of unexamined applications. Deferred examination was adopted by The Netherlands, Germany and Japan as the only solution to insurmountable backlogs of pending applications with resulting long pendency rates. In 1970 Great Britain rejected the deferred examination approach and the British lead has been followed in the current draft of the proposed European Patent. In the United States, average pendency of patent applications has been reduced from 36 months to 24 months in the last 10 years, and should reach 18 months by 1976. Backlog and long pendency are not problems in the United States, so deferred examination would not solve anything. Chapter 18 of S. 1321 would result in publication of over 100,000 applications every year. If applicants elect to defer examination, this would total 500,000 unexamined applications added to the search file without clues as to what if any new developments are in them. Each year about 35,000 applications would be added (the number now abandoned each year) which do not disclose any significant advance in the art. With the passage of time, these worthless documents would constitute one-third of the search file, increasing the search time and effort of both Examiners and the public, with a resulting decline in efficiency. Not only is such proliferation of the search file counter-productive and burdensome, but the Examiner will normally be five years behind the state of the art for which he is responsible. Currently, the Examiner studies new 23-932-74- -6 |