cause it bears the name of Mr. Lawrence Kingsland, who was formerly commissioner of patents. The resolution reads as follows:

Resolved, That our section is unalterably opposed to Reorganization Plan No. 5 unless the Patent Office be specifically exempted therefrom, such opposition being predicated on the following major objections:

1. Perhaps more than any one other Federal bureau or administrative agency, excepting of course the courts, the functions of the patent office are judicial or quasijudicial. Its functions and duties are specified by statute. Its rules have the effect of law. Such legal effects are evident from the fact that no statutory provision is made for judicial review of the grant of a patent but only from its final refusal being subject to judicial review.

Mr. HOLIFIELD. May I ask you to pause there, Mr. Watson. Do you conceive that under this plan that procedure would be changed? Mr. WATSON. No.

Mr. HOLIFIELD. In other words, that rests upon statutory law in regard to the issuance of patents with the right of appeal and so forth?

Mr. WATSON. Yes.

Mr. HOLIFIELD. So that would not be changed, would it?

Mr. WATSON. No substantive statute would be changed in my opinion.

Mr. HOLIFIELD. That is right. Then in making your arguments, can you confine yourself to the area of dispute where you think this new plan would give the Secretary arbitrary power to overrule the existing set-up? Can you do that? I think we are in accord with most of this material and that is the reason I make that suggestion.

Mr. WATSON. The plan purports to transfer to the Secretary all of the functions of the Bureaus, agencies, offices and officials of the Department of Commerce. One of the agencies is the Patent Office. The Patent Office is operated by responsible officers comprising the Commissioner, the assistant commissioners, and the examining corps, Mr. HOLIFIELD. Twelve examiners?

Mr. WATSON. They are the examiners in chief.

Mr. HOLIFIELD. Yes.

Mr. WATSON. And a large number of others. The functions of all of that group would be transferred to the Secretary.

Mr. HOLIFIELD. Now let us explore that point. Those functions now as exercised, rest basically upon statutory law or upon regulations which have been promulgated by the Commissioner of Patents and approved by the Secretary, is that not true?

Mr. WATSON. The laws are always passed over here in Congress. Mr. HOLIFIELD. Yes. I say his authority for the functions, those functions of the Commissioner of the Patent Office and his 12 chief examiners?

Mr. WATSON. Are legal functions.

Mr. HOLIFIELD. Are legal functions prescribed by statutory law on the one instance and regulations of procedure on the other. In the first place, Congress passes the law. In the second place, the regulations for procedure are recommended by the Commissioner on Patents and approved by the Secretary of Commerce at the present time. Mr. WATSON. Yes.

Mr. HOLIFIELD. Now, wherein is that particular set-up changed? Does not that basic set-up carry over under the plan just as it is now? In other words, with this exception, that the Commissioner of Patents is directly responsible to the Secretary for the administration of those

functions under law and regulations and the Secretary in turn is responsible in the next instance to the President from the executive standpoint and on the other instance to the Congress, to this committee or any other committee having jurisdiction?

Mr. WATSON. Mr. Chairman, let us consider the present authority of the Commission-

Mr. HOLIFIELD. Can you answer my question?

Mr. WATSON. In his judicial capacity.

Mr. HOLIFIELD. Can you answer my question?

Mr. WATSON. I am trying to do so in my own words. The Secretary of Commerce has, at the present time, no authority over the Commissioner of Patents whatsoever insofar as a decision of the Commissioner goes on the merits of any patent matter. He has never had

such authority and it has been so ruled by the Supreme Court. Mr. HOLIFIELD. That is right.

Mr. WATSON. When you transfer all of the functions of the Commissioner to the Secretary you really put the Secretary in the Commissioner's shoes.

Mr. HOLIFIELD. From a structural organizational standpoint.

Mr. WATSON. Yes; and you permit the Secretary, for instance, to move down and sit as a member of the Board of Appeals. He can walk down personally and sit on the Board of Appeals.

Mr. HOLIFIELD. And how many are on the Board of Appeals?

Mr. WATSON. There are nine.

Mr. HOLIFIELD. How are they chosen at the present time?

Mr. WATSON. They are Presidential appointees.

Mr. HOLIFIELD. I will not concede the point, but you may be right, tha the Secretary becomes an ex officio member of the Board of Appeals.

Mr. WATSON. He becomes the Board of Appeals. They have lost their function if he so chooses. The functions of the Board, the Commissioner, and Assistant Commissioners can be taken away from them. All their functions are, by the plain wording of the plan, transferred to the Secretary. They cannot be discharged, they cannot be destroyed, and the Secretary so said. They are Presidential appointees and have the dignity that the Secretary has, but he can take their functions away from them.

Mr. HOLIFIELD. Let me ask you this: Is the Board of Appeals set up by the code?

Mr. WATSON. Yes; and I will give you the citation. By the way, copies of this memorandum prepared by the American Patent Law Association are before everyone here.

Mr. HOLIFIELD. Yes.

Mr. WATSON. The citation is 35 U. S. Code 7, on top of page 2 of the memorandum.

Mr. HOLIFIELD. Yes; I have that.

Mr. WATSON. The functions of the Commissioner over which the Secretary has no control are fully listed.

Mr. HOLIFIELD. Now the point of your argument at this point is that by arbitrary decision the Secretary can nullify all of these provisions which are set up by statutory law?

Mr. WATSON. No; he takes over the functions of every executive officer of the Patent Office and he can go down and influence by his

thinking the rank and file of the Patent Office from the Commissioner down.

Mr. HOLIFIELD. Now can he influence them in the field where their duties and responsibilities are set forth by statutory law?

Mr. WATSON. I think that is obvious.

Mr. HOLIFIELD. And your fear is that?

Mr. WATSON. He is the captain of the ship and when he sits down

Mr. HOLIFIELD. But he is subject to statutory law, in performing his functions, as well as the Commissioner of Patents.

Mr. WATSON. Yes.

Mr. HOLIFIELD. And let us assume that he could come down to the Board of Appeals who are independently appointed by the President and owe their allegiance as far as fair and impartial service is concerned to the President, and if he should impose his will upon them contrary to their functions as set forth in the law, do you not believe that there would be an immediate appeal on their part to the President and an immediate storm raised for such unwarranted and unfair interference?

Mr. WATSON. I quite agree that there would be an enormous reaction.

Mr. HOLIFIELD. Any self-respecting member of the Board of Appeals, if he were unfairly and unduly influenced, if an attempt were made to unfairly and unduly influence him in making quasi-judicial decisions-I am sure that you will agree with me that the type of men that would be approved by the Senate would then immediately assert their own independence?

Mr. WATSON. I would certainly hope so, but at this stage it would be just a hope because the Secretary would be a very powerful-he is a very powerful figure. If he were of the type of mind of some Secretaries whom we have had, there is no telling what might begin to come out of the Patent Office, and the public generally, the inventors and business would say, "Well, now, the Secretary is the man to see, not this examiner. How can we reach the Secretary politically?" "He can see to it that we get patents."

That is our thought. It may not eventuate and, with a man of the character of the present Secretary, it would not.

Mr. HOLIFIELD. Do you think that that is a condition that now exists in all of the different departments of Government which exercise quasi-judicial and quasi-legislative power under the supervision of the Department head?

Mr. WATSON. I am unable to answer that question because my experience is not wide enough.

Mr. HOLIFIELD. Take your Interstate Commerce Commission, there are many different types of quasi-judicial boards in that agency, I believe. Have you ever known of an attempt to influence those boards by the Chairman or the members of the Commission in the performance of their duty?

Mr. WATSON. I have no experience along those lines, I say this, that if we could be assured that the Secretary of Commerce hereafter was to be selected only from the ranks of the patent lawyers we would be content. But the Secretary of Commerce is not selected for his knowledge of patent law and never has been, and as far as I can see, never will be.

Mr. HOLIFIELD. But the Commissioner of Patents would continue to be?

Mr. WATSON. The Commissioner of Patents is, and always has been, selected, at least in part, for his knowledge of patents and patent law. Mr. HOLIFIELD. That is right.

Mr. WATSON. Now if we have a situation where the Commissioner is selected for his knowledge and ability to administrate the Patent Office, but the Secretary has no knowledge whatsoever of the subject matter and, nevertheless, is superior to the Commissioner in his judicial functions, the situation might develop into an impossible situation because, no matter how skilled and able the Commissioner of Patents might be in the patent law, the Secretary of Commerce is really his superior officer in an administrative way and, in fact, would be his substitute, his superior, in a judicial way.

Mr. HOLIFIELD. Only from the standpoint of the deposit of power to be delegated and the responsibility which would remain. He now has the responsibility to the Congress as the head of the Department of Commerce. As the head of the Department of Commerce, he has the responsibility of all of the subordinate agencies, and yet he is in the anomalous position of not being able to control that for which he is responsible. Our attempt is to place with the responsibility which we now place upon him the control as the head of the Department. It says here in recommendation 20 of the Commission on Organization as set out in the report on general management.

We recommend that the Department head should be given authority to determine the organization within his Department. He should be given authority to assign funds appropriated by the Congress for a given purpose to that agency in his Department which he believes can best effect the will of Congress.

After all, it is he who must appear before Congress and account for his stewardship.

That is what we are trying to do, to give him the power to express the will of Congress in an administrative way because we now hold him responsible for the functions of his subordinate departments and the Patent Office is a subordinate department of the Department of Commerce.

Mr. WATSON. That is true.

I would like to refer briefly to the memorandum presented by the Secretary this morning. There are a good many statements there with which we are in full accord. I can say that I have read it through during recess and I think that, generally speaking, his description of the operation of the Patent Office is quite correct. I quote a paragraph from his statement as follows:

Responsibility and accountability are impossible without authority-the power to direct.

In an executive fashion that is incontrovertible.

The exercise of authority is impossible without a clear line of command from the top to the bottom, and a return line of responsibility and accountability from the bottom to the top.

It is with general statements like that that we take no exception. He refers to the functions of the other agencies, the National Bureau of Standards, the Bureau of Foreign and Domestic Commerce, the Bureau of the Census, the Weather Bureau, the Coast and Geodetic Survey, the Bureau of Public Roads, and a good many of the other

agencies, and he goes on to say that he contemplates minor changes only. [Reading:]

For example, we may wish to require that the national airport plan be approved by the Secretary before it is formally transmitted to Congress as required by law. Basically, however, it is expected that the individual bureaus will continue to operate substantially as they are now.

The only immediate transfer which we are presently considering, if this plan becomes law, is that relating to the Division of Commercial Standards of the National Bureau of Standards.

He is going to consolidate pay-roll preparations.

Mr. HOLIFIELD. He is responsible now of course for the budgetary set-up of the Patent Office?

Mr. WATSON. Yes.

Mr. HOLIFIELD. He has to approve it at the present time so there is no difference there.

Mr. WATSON. And numerous suggestions relating to details, particularly pertaining to the other departments and Bureaus of the Department of Commerce. He, however, makes no statement in his entire brief as to why the Patent Office should not really be exempted in its judicial functions. He refers at one point to the hearing examiners as follows:

The functions of hearing examiners are exempted from transfer in recognition of the need of independence in any primarily judicial work handled by hearing examiners.

Now there you have his statement that those hearing examiners are primarily engaged in judicial work. Well, of course the Patent Office is. Why is the Patent Office not included in the exemption if the hearing examiners are included because they perform judicial functions? Certainly the entire rank and file of the Patent Office staff is performing judicial functions.

Mr. HOLIFIELD. Certainly you do not mean to say that every employee of the Patent Office exercises judicial function.

Mr. WATSON. No; stenographers and clerks, no; but all of the patent examiners do.

Mr. HOLIFIELD. They are under the Administrative Procedure Act; are they not? I am not talking about the 12 chief examiners but the 600 hearing examiners.

Mr. WATSON. The Administrative Procedure Act when enacted had no effect on the Patent Office.

Mr. HOLIFIELD. On the 12 examiners. But I believe you will find that the 600 hearing examiners were affected.

Could I ask a question at this time of the gentleman from the Commerce Department?

Mr. P. J. FEDERICO (Examiner in Chief, United States Patent Office). The Administrative Procedure Act does not apply to the Patent Office examiners in their functions in deciding patent applications; that the whole Patent Office operation in the judicial operation is not included in the scope of the section itself of the Administrative Procedure Act relating to hearing examiners and the method of hearing cases.

Mr. HOLIFIELD. That includes both the chief examiners, the 12 chief examiners and their subordinates?

Mr. FEDERICO. All of them.