Judiciary HomepageI would like to take this chance to thank Chairman Howard Coble for giving me the opportunity to testify on this very important topic: the U.S. Patent System.
As you all know, our Founding Fathers knew the importance of establishing a system that would protect ideas, inventions, and writings as the personal property of their originator, thereby ensuring that the flow of inventions and innovations continue to energize our great country. In fact, Article 1, Section 8 of the Constitution gave this task to the Congress when it stated: "To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." From this original directive, we have developed the most successful patent system in the world, with over 100,000 patents issued each year.
Patents, while complicated, are a vital force in our economy. New inventions and innovations in engineering, bio-technology and manufacturing create jobs in America, while at the same time, a secure our economic growth for the future. The 105th Congress will take up the debate on how to improve our Founding Fathers' original efforts. While some reforms may improve the system, we must act carefully in order to protect the integrity of the system and maintain the core of our patent system, which is the best in the world.
Mr. Chairman, I am concerned by recent reports indicating that the current Patent and Trademark Office (PTO) Commissioner, Bruce Lehman, is promoting efforts to create a "world patent system." On June 6, 1994, Commissioner Lehman stated, "I envision a world in which any inventor can go to any major patent office for examination and then [receive] world-wide protection. This will not be possible until we bring together [the] two greatest systems in the world, the U.S. and Japan." This unilateral decision by the Commissioner to harmonize our patent system with that of other countries who do not provide the same level of protections for inventors, and therefore do not encourage the same level of innovation, essentially results in a dumbing down of our patent system. Instead of encouraging other countries to reach our high standards, we are accepting the lowest common denominator, and this will have serious negative consequences to our economy.
Last year, when I testified on this subject before the subcommittee, I mentioned my strong concerns that the Title 5 protections for federal workers, specifically the patent examiners, were being eliminated through the proposal to corporatize the office. While I appreciate the Chairman for including the Title 5 protections for the employees of the office, I remain concerned. If H.R. 400 is enacted in its current form and the PTO becomes a government corporation, it will become exempt from adhering to 10 of the 11 prohibited personnel practices [Title 5; sec. 2302].
As a result of this provision in Title 5, patent examiners, who act as judges in cases of intellectual property, could be subject to undue influence. Among these 10 prohibited personnel practices that would be exempted are: (1) To coerce the political activity of any person; (2) To provide protection for an employee who files any appeal, complaint, grievance or for cooperating with the Inspector General of an agency; and (3) To protect an employee from reprisal due to refusing to obey an order that would require the individual to violate a law. Given the importance and sensitivity of the task these examiners are required to accomplish, refusing them these key protections places our entire patent system at risk.
Like many of my colleagues, I am supportive of efforts to identify federal agencies that would operate more efficiently through corporatization; however, the Patent and Trademark Office is not such an agency. Would any of us seriously consider a proposal to corporatize the U.S. Court system, where money could be used to influence the outcome of a particular dispute? Of course not. We should use that same guiding principle when examining reform of the PTO office. Patent examiners grant personal property rights. They perform a function similar to that of a judge and, as a result, should receive the same protections. If this is not done, our patent system will be placed at great risk.
Other provisions of H.R. 400 concern me as well. Specifically, the allowance of third party participation in re-examination challenges, publication of patent applications prior to their official grant and the impact this has on small inventors. I understand industry concerns about the threat of so-called "submarine patents." I believe, however, that we can address this problem without dismantling a patent system which has served us so well for nearly two hundred years.
Mr. Rohrbacher recently introduced legislation, H.R. 811, that addresses the problem of submarine patents. The legislation also reinstates the patent term to 17 years from date of patent grant, as it was before Congress passed the GATT enabling legislation in 1995. Under the actual GATT treaty, the agreement set 20 years from file as a minimum, not a maximum. Therefore, the Rohrabacher bill is GATT consistent. The Rohrbacher bill also acknowledges a difference between small inventors who want to protect their inventions until the patent is issued and companies that choose to foreign -file. Mr. Chairman, as you know, if an inventor files in another country, their application will be published 18 months after the earliest filing date.
H.R. 811 also calls for the publication of patent applications of filers that are not diligently moving forward on their patent and are thereby gaming the system. This language will effectively end the threat of submarine patents and their negative impacts on our economy. I am an original cosponsor of Mr. Rohrbacher's bill because I believe it will improve and strengthen our patent system, without dismantling the protections that our current system offers inventors.
As I have already mentioned, I believe that our patent examiners are a national asset and an imperative component of the patent system. I recently introduced legislation, the Patent Sovereignty Act of 1997 (H.R. 812), that recognizes the important contributions of patent examiners and incorporates administrative changes that will strengthen the office. My bill requires that patent examiners spend at least five percent of their duty time in training. Issuing good and defendable patents requires that patent examiners remain aware of any technological advances worldwide. Administration efforts to cut back on training opportunities for examiners have placed the quality of issued patents at risk. With my bill, examiners will routinely receive technical and legal training to promote the efficiency of the office.
In addition, incentives should be put in place to retain experienced and long serving examiners. Having experienced examiners on staff will provide the institutional knowledge necessary in an agency that is plagued with a high turnover rate, historically between 15 and 25 percent. Experienced staff members are uniquely able to improve the efficiency of the office through advice, direction, and continued work on formal examinations.
The Patent Sovereignty Act will also require that all search and examination duties be performed by U.S. citizens who are federal employees. Current trends to out source the search duties of the examination, and thereby separating those two functions, threatens patent integrity. Given the sensitive material contained within a patent application, information should not be provided to any persons or groups that are not sworn to protect and uphold the Constitution, as are examiners. Most certainly, non-citizens, either located in the U.S. or abroad, should not be hired for this important and sensitive duty. Under H.R. 400, these important services could be contracted out, yet there do not appear to be any security measures in place to protect the secrecy of patent applications. I am particularly concerned about the national security implications of this practice.
My bill also lifts the full-time employee (FTE) requirement for the PTO. In the past, the PTO Commissioner cited a lack of hiring flexibility as the reason for corporatization. I do not believe it is necessary to completely change the PTO, when the flexibility to improve pendency can be attained through this regulatory change. Though the PTO is fully funded through fees, current regulations do not allow it to hire more examining professionals as needed if the number of patent applications increases dramatically. As a result, pendency is increased; this is the case even on the more routine patent applications. My bill will give the PTO the flexibility to meet its obligations without the need to corporitize.
Over the last two years, a number of small inventors have visited me in my office and listed their four major concerns. Mr. Rohrbacher's bill addresses two of these: protection for the small inventor against early publication and the reinstatement of the 17 year guaranteed patent term. My bill addresses their two remaining concerns: qualified examiners, as I have already mentioned, and retaining patent fees in the office.
Approximately 16 percent of the fees collected by the PTO are sent directly to the Treasury for deficit reduction, and this money is routinely appropriated back to the office for their use. Last year, however, $54 million of the approximately $106 million contribution by the PTO was used to fund other programs. Most inventors object to this practice because they believe that their fees should be used to run the office, and fees not used for this purpose are merely additional taxes they pay. Patent fees should remain within the office to improve its performance, or they should be lowered.
I believe that if we lift the FTE requirement and retain the fees within the PTO, we can provide the office with the flexibility to meet its mission without corporatizing this important federal function.
Mr. Chairman, patents are our economic drivers. Millions of jobs across the country are dependent on the inventions and innovations of our great minds and their patents. It is my sincere hope the committee will take the time to address this issue carefully. Any decisions made in the 105th Congress regarding patent reform will have long reaching effects on our economy and the future of our children. Thank you again for allowing me to testify before the subcommittee and I would be happy to answer any questions you may have.