It also begets the cost of litigation, which in patent cases may be typified at a half million dollars to try a patent infringement suit to conclusion including appeal.

That is not an unlikely figure to pay these days. A million dollars is not rare. It also means delay, like 8 or 10 years.

I hazard a guess that in the last 10 years, there has never been a single exclusive right actually granted by the entry of an injunction within 10 years of the time that the invention was reduced to practice.

And, of course, those first 10 years are at least not uncommonly the important years of market development, technical development, potential licensing.

Those are the years when the exclusive would have been important, but we don't get any exclusive in those years because we have several years of delay in getting through the Patent Office and several years of delay in getting through the court.

So we end up with a long period of time, 8 to 10 years before we can ever have any hope of getting the exclusive, and then we find the uncertainty that half of the patents are held invalid, as a result of some of the things that I have already alluded to.

Then there is the point of what inventions should be patentable-only the once-in-a-generation breakthrough invention or all inventions which give to the public an enjoyment they did not before have access to? If we protect only the once-in-a-generation invention, the system provides no economic incentive to R. & D., provides no return on investment in the research lab month in and month out, where it costs over $100,000 per year to keep a researcher working. Only if the courts follow the statutory scheme by which all inventions which an R. & D. buck will buy, that are new to pubic enjoyment and not truly within the prior reach of the public to enjoy, can we expect to provide enough return on investment on R. & D. investment for the system to be an incentive to innovation. In perhaps half of our country today, the present statutory scheme is simply not what the courts enforce; in perhaps half of our country, only the once-in-a-generation invention is offered any hope of protection.

Well, these things will move an investor away from investing in R. & D. and encourage him to invest rather in real estate or some other more certain investment where he can be sure of his title to his property and be sure of it now instead of having to wait 8 or 10 years to find out whether he has title to the property he wants to do business with.

Then there's the confusion of the law as to a bunch of areas, and I will mention only one-the law of license.

The Department of Justice man in charge of this subject matter a year or so ago said, "There are no per se legalities" for the licensor. "There are no safe harbors" for the licensor.

A law with that degree of uncertainty is obviously a discouragement to the transfer of technology and to the licensing of technology and we need some address to it.

So then, in summary, about the subject matter, I would say it this way. Innovation, by its nature, is a very high risk investment with cost overruns as certain as death and taxes, and with techni

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If in that discouraging context the investor in innovation cannot be confident of the protection that his R. & D. buck will buy, if the investor in innovation likely must spend hundreds of thousands of dollars in litigation costs just to find out whether he's got title to the invention, if the investor cannot know for years and years whether anyone has title to the invention—that is, if the patent system functions as, in fact, it does now function to a very substantial degree, then there is no wonder that the investor is off spending his money somewhere else rather than in R. & D. and no wonder that we suffer a decline in innovation in our country. Most commonly, therefore, the patent owner compromises against these pressures of cost, time, delay, and uncertainty, and he grants licenses rather than asking for the exclusive that the Constitution and the statute and the patent all guaranteed him. And he gets those licenses typically at royalties that are low enough to reflect the compromise of the circumstance that he cannot afford the costs in time and money of litigation.

So this uncertainty and this cost is a tool of extortion to bring the owner of the intellectual property of the patent of the technology to license at a low royalty fee. The promise of the system is in large part modified from the grant of the exclusive right that the Constitution and the statute speak of, to the right to solicit the license. This is the dominant function of the patent system today. The system still functions and functions effectively to induce a substantial amount of progress of the useful arts. But it functions oh so inelegantly. The system plan is guaranteed exclusive property right in an invention not previously obvious to those of ordinary skill in art. That is, the system plan is a guaranteed property right as to inventions not currently within the reach of public enjoyment. That plan specs out as a powerful V-8 engine, a powerful powerplant for innovation.

Unfortunately, we are coughing along on only five cylinders. What a tremendous important blessing it is that we have the patent system; what a pity that we do not service it into full function.

So I say to you the increasing deficiencies in the patent system is one of the substantial contributors to the decline in innovation. What are the performance specifications for a properly functioning patent system?

They may be expressed as seven in number. I won't take time for all of those seven. They are in the written paper. But let me mention a few.

First, a standard of patentability which will protect the regular new and nonobvious product that is not currently in public use and that an R. & D. invested buck normally will buy. In some courts, the patent law as they interpret it will protect only the once-in-ageneration invention.

Well, if we protect only the electric light and the laser and one other invention between the two, we will not be providing return on investment, on R. & D. investment, for the thousands of companies that we want to be spending research and development money day by day and week by week, month in and month out.

We must provide a protection for the kind of research and development that can ordinarily be produced by the ordinary research buck, or otherwise, we do not provide an inducement to invest in R. & D.

If we are only protecting that once-in-a-lifetime invention, we are giving a valuable award to the once-in-a-lifetime inventor. But we are not encouraging all of our industry to spend money in R. & D. by that kind of a standard of patentability which is applied by some of our courts.

The second of our performance specifications, the availability of a search of the prior art by, let us say, the attorney for the investor in innovation, wherein the innovation investor can 80 percent rely upon the attorney having found the best references.

Now an 80-percent reliability does not sound like too much, perhaps, but we don't get anything close to that now. The effort to have an 80-percent reliable search of the prior art that the attorney needs to have access to means that he needs to have access not just to a technology search facility but to an excellent technology search facility, one the likes of which you would have expected Vince Lombardi to produce if the patent system had been his game instead of football. And we don't have anything close to that. And the personnel in the Patent Office have in significant degree learned to live with the bureaucratic system that is forced upon them and with the funding that has been forced upon them and they don't recognize, really they don't feel in terms of their stomach ulcers, the degree by which the present search facility is deficient.

Next, I will skip over to the fifth of my performance specifications.

The availability of a final determination of the right to an exclusive in the invention-that is, the final determination of title, a judicial quieting of title, this invention I own. The availability of a final determination of title to the invention that can absolutely be relied upon, this means a substantially in rem judgment of a property right against all the world, just as my title to my car I can reasonably rely upon as against all the world.

Under the present system, the patent owner gets his patent and then litigates against the first infringer. And often, the second infringer. And often, the third infringer.

I, myself, have taken a patent back to the same court the third time. A patent owner is drained several hundred thousand dollars a crack at this repetitive litigation.

He needs to be able to say at some time, "I've got title, I really do." So he can commit his investor's $30 million to a plant or whatever it may be.

He needs to be able to quiet that title for some reasonable sum of money like $100,000 and in a time period like 2 years. Isn't $100,000 enough to pay for an examination of title to your invention? A patent owner can't get that now, at least only rarely. He only rarely can. He needs to be able to get an examination of title that industry will honor for $100,000.

This is essentially not available to him now.

Isn't 2 years long enough to decide title to a property. No way to quiet title in 2 years now.

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