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LEGISLATIVE HEARING
ON
H.R. 400,
THE "21st CENTURY PATENT SYSTEM
IMPROVEMENT
ACT";
H.R. 673,
THE "PATENT AND TRADEMARK OFFICE
SURCHARGE
EXTENSION ACT OF 1997"; AND
H.R. ____,
THE "PATENT TERM RESTORATION ACT OF 1997"
Wednesday, February 26, 1997
The Subcommittee on Courts and Intellectual Property will come to order.
Today, the Subcommittee is conducting a hearing on H.R. 400, the "21st Century Patent System Improvement Act"; H.R. 673, The "Patent and Trademark Office Surcharge Extension Act of 1997"; and H.R. ____, the "Patent Term Restoration Act of 1997".
H.R. 400 is necessary legislation which will allow American businesses to compete effectively in markets today and into the 21st century. It will benefit American inventors and innovators and society at large (1) by providing more efficient and effective operation of the Patent and Trademark Office; (2) by furthering the constitutional incentive to disseminate information regarding new technologies more rapidly; (3) by guaranteeing that patent applicants will not lose patent term due to delays that are not their fault; (4) by improving the procedures for reviewing the work product of patent examiners; (5) by protecting earlier domestic commercial users of patented technologies; and (6) by deterring invention promoters from defrauding unsuspecting inventors.
This bill was developed by the Judiciary Subcommittee on Courts and Intellectual Property in the last Congress and reported by unanimous vote by the Judiciary Committee late in the second Session. The version of the bill that I have introduced is nearly identical to last year's bill, except that it includes the contents of a manager's amendment that was developed with the Senate, the Administration and the House Government Reform and Oversight Committee and which would have been offered if the bill had been scheduled for a vote in the House. This legislation was the subject of several days of hearings in the last Congress.
I would like to place in the record a letter written by the Secretary of Commerce on September 12, 1996, that expressed the strong support of the Clinton Administration for last year's bill, including the proposed manager's amendment. The provisions in this bill were also supported by the former Bush and Reagan Administrations.
This bill is also supported by an exceptionally large and diverse coalition of small and large companies, independent inventors and associations representing every type of U.S. industry and inventor that utilizes the patent system. The coalition includes companies that are responsible for large numbers of high wage manufacturing jobs in America. It also has the support of the Technology and Innovation Chairs of the White House Conference on Small Business, who were charged last year with analyzing these issues. I can proudly say that after many hearings and negotiating sessions, it now has the full and unqualified support of an overwhelming number of American industries that utilize our patent system.
I look forward to working with all interested parties as we prepare to move this important and necessary patent legislation through this Congress. The reforms contained in this bill are needed to make the patent system best serve the country now and into the next century.
The second bill on which this hearing will focus this morning is H.R. 673, which responds to an aspect of the budget proposed by the Administration on February 6 and to Congressional practice over the past six fiscal years. The Administration's budget proposal would divert $92 million in FY 1998 from the United States Patent and Trademark Office, which receives no taxpayer dollars, to other tax-funded areas of the government. In 1999, the Administration proposes that $119 million per year be diverted. In FY 1997, Congress diverted $54 million, a significant increase over previous diversions. This legislation would correct this serious and growing problem, without harming the budget, so that the PTO can continue to be the engine that fuels the creation of competitive American technology.
The legislation we are considering today is revenue neutral. It does not increase an expenditure of taxpayer revenues which would increase the deficit. It would merely permit the PTO to use all of the patent and trademark fees it receives to examine patent and trademark applications, to grant patents and to register trademarks. It does this by placing the fees generated by the surcharge mandated by the Omnibus Budget Reconciliation Act of 1990 into the same category as the other user fees paid by patent and trademark applicants. Specifically, it would characterize these fees as "offsetting collections" rather than "offsetting receipts" so that all of the fees collected could be used for the purposes for which they were paid.
We must stop an unwarranted tax on innovation. Our Patent and Trademark Office cannot operate effectively on 80% of its operating budget -- all of which is paid for not by you and me, but by the applicants who use it. I look forward to working with all interested parties to reverse this potential decline in the services offered by the PTO. In this increasingly competitive world, the economic survival of the United States will be dependent upon high technology products and services. We cannot allow the pillar upon which our competitiveness in the global economy rests to be destroyed.
Another issue noticed for this morning's hearing was introduced in the 104th Congress by Rep. Dana Rohrabacher as H.R. 359, titled "a bill to restore the term of patents." The Subcommittee heard testimony on the merits of H.R. 359 at hearings on June 8 and November 1, 1995; Mr. Rohrabacher testified at the latter hearing. On May 15, 1996, the Subcommittee overwhelmingly rejected H.R. 359 by a vote of 12-2. Although a bill has yet to be introduced in this Congress, Mr. Rohrabacher has indicated in speeches on the floor of the House and in Dear Colleague letters that he plans to introduce a bill that "is essentially the same as H.R. 359". This hearing will address again the provisions of Mr. Rohrabacher's bill and its potential effects on the patent system.
We have several very distinguished witnesses with us this morning and I look forward to their testimony on these important bills.
I now turn to the Ranking Democratic Member of this Subcommittee, Representative Barney Frank, for his opening statement.