William P. Outten, a part-time St. Louis inventor, was in town last month, so he decided to see whether anyone had beaten him to a couple of bright ideas he'd hoped to market.

Outten had never been through a patent search, and he went to the U.S. Patent and Trademark Office in Crystal City section of Arlington with no preconceptions. He came away, he says, "aghast."

"It was the damnedest thing I'd ever seen," say Outten. "You feel like you're just in the attic of the United States."

In two days, William Outten had learned what inventors, patent lawyers -- and patent commissioners -- have been worked up about for years: the Patent and Trademark Office is a mess.

The office operates as though the high-powered technology described in its files didn't exist. Its 24 million documents are kept not on microfilm or computer, but on millions of pieces of paper scattered through hundreds of small rooms in three separate buildings.

Last year, patent officials acknowlege, the office left thousands of approved patents sitting around for months because of a budget mixup that left no money to print them.

Patent examiners now send their preliminary rulings out in longhand because they have no secretaries to type them. "If you can't read the handwriting, you're out of luck," says Michael Blommer, executive director of the American Patent Law Association.

Patent applications have held steady since 1975, but because of budget restraints the office now has more than 150 fewer examiners to handle them. Less time is spent on each application, even though the collection of prior patents that must be studied has grown.

Many familiar with the situation believe the office, part of the Commerce Depatment, is the victim of neglect, a stepchild of a massive Cabinet agency. dThe key to upgrading the office, they say, is pending legislation to make the office independent, so it can communicate its needs directly to Congress. And they say something must be done fast.

The House Judiciary Committee is expected to vote sometime this week on a proposal to make the Patent Office independent.

"We are faced with a slowly but steadily declining Patent and Trademark Office," former patent commissioner Donald W. Banner said in a speech last year. "If we do not promptly reverse this direction of movement, it shall soon be infected with an administrative dry rot condition, rendering it moribund."

A system designed to spur innovation -- and thus, national growth and productivity -- is now stifling it, many say.

Once a simple process, obtaining a patent now takes an average of 21 months -- and sometimes years. Once a virtually guaranteed right to market an idea, a patent now guarantees almost nothing.

At the heart of the problem is what the office is missing -- between 2 and 28 percent of its patent files in every field are misplaced or stolen. Areas now receiving the largest number of patent applications have the most missing documents, and the records are the only way of determining whether an idea has been patented. Because only a tiny portion of the files are under any kind of security, more documents are disappearing every day, officials say.

As a result, the patents that are issued are increasingly unreliable; more than half of those challenged in court are ruled invalid.

Patent holders can also lose their shirts in challenges. The cost of such litigation -- $250,000, on average, to each side -- can easily run a small company out of business.

At the least it can force them to devote money and energy to legal battles, rather than innovation.

At the worst, it can discourage small companies from trying to develop new technology, since they may be unable to protect it in court.

"A big firm can infringe a patent, know that it can't win in the long run, and run the risk of litigation" because a small company can't survive a long court fight, says Milton Stewart, chief counsel for advocacy of the U.S. Small Business Administration. "This system is no damn good.

"The ancient doctrine in this country is that you've got a right to the fruit of your mind. The patent system no longer protects it adequately. It no longer provides enough motive or incentive."

"We don't have a whole lot of faith in the patent system doing much for us," says Mark Spencer, one of three young engineers who founded a small Massachusetts company a year ago.

Spencer and one of his partners flew to Detroit last spring to pitch their latest gadget to the big automakers. They arrived at one plant, and found research engineers there already had a copy of their device -- manufactured by someone else.

They have a patent application pending, and they're sure their competitor -- a large company -- copied their invention directly. But Spencer says he and his partners feel they can't do anything about it -- except "cuss a lot."

"It's frustrating," adds Spencer. "It's exactly the kind of product that you have all your hopes on, that has a lot of market potential, that the big guy's going to come after."

Some small companies have rejected the patent system altogether, opting instead to maintain "trade secrets." They are betting their competitors will take longer to notice and swipe such secret technology than to glean it from a publicly filed patent, which lays out the idea in extensive detail.

Trade secrets, however, do not permit other companies to build on their competitor's newly developed technology. As a result, future development in the field may suffer.

Donald Banner -- and six other former patent commissioners -- say the office will never get the attention it needs until it is out from under the shadow -- and interference -- of the Commerce Department.

"The commissioner is a bystander, not a participant, in many policy decisions directly connected with patents and trademarks," Banner told a Senate hearing in January.

"The Department of Commerce cannot and does not assist the [office] in carrying out its function . . . in any way which cannot be better done by the office itself," he added in a written statement.

Banner and the others note that the office, with its 2,700 employes and $104.8-million budget, is larger than both the Federal Trade Commission and the Federal Communications Commission.

But current Commissioner Sidney A. Diamond defends the Commerce Department's efforts to keep the patent office.

"It would be ridiculous to start a system of turning every little agency loose just because it wanted to be independent," he says. "An agency this size is better served by being part of a cabinet-level department."

Diamond says the Commerce Department is paying more attention to the patent office these days.

He now meets weekly with the Commerce official who oversees his office.

"The climate [the former commissioners] described has been improving steadily," says Diamond. "We've been getting great consideration for our problems."