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“THE TWENTY-FIRST CENTURY PATENT SYSTEM IMPROVEMENT ACT” mentioning the U.S. Dept. of Commerce was published in the Extensions of Remarks section on pages E76-E78 on Jan. 9, 1997.
The publication is reproduced in full below:
THE TWENTY-FIRST CENTURY PATENT SYSTEM IMPROVEMENT ACT
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HON. HOWARD COBLE
of north carolina
in the house of representatives
Thursday, January 9, 1997
Mr. COBLE. Mr. Speaker, today I am pleased to introduce an updated version of legislation originally drafted in the last Congress by two former members of the Judiciary Committee who have since retired, Carlos Moorhead and Pat Schroeder. Many of us were cosponsors in the 104th Congress, including our distinguished chairman, Mr. Hyde, and ranking member, Mr. Conyers. Original cosponsors of this bill include Mr. Goodlatte, a senior member of the Subcommittee on courts and Intellectual Property, Mr. Conyers, and Ms. Lofgren, also a member of the subcommittee.
This legislation is necessary to allow American businesses to compete effectively in markets today and into the 21st century. The United States is by far the world's largest producer of intellectual property. This success is of course due to the great creativity of our citizens, but this success is also the direct result of a rational and sound policy of protecting intellectual property--a system that encourages the development of new inventions and processes. However, America does not have a monopoly on creativity. Many other nations have learned from our success--America no longer stands alone in its commitment to a strong system of patent protection for its inventors, small businesses and industries. Consequently, it is more important now than ever that we adopt certain reforms that will ensure that America maintains its position as the world leader in the production of intellectual property.
Under current law, foreign companies enjoy certain benefits in America that American companies do not enjoy in their countries, like the advantages of publication and prior user rights; the changes proposed today are especially useful for small businesses--many of which simply will not survive if foreign competitors continue to operate on a tilted playing field in America.
This legislation will benefit American inventors and innovators and society at large. First, by providing more efficient and effective operation of the Patent and Trademark Office; second, by furthering the constitutional incentive to disseminate information regarding new technologies more rapidly; third, by guaranteeing that patent applicants will not lose patent term due to delays that are not their fault; fourth, by improving the procedures for reviewing the work product of patent examiners; fifth, by protecting earlier domestic commercial users of patented technologies; and sixth, by deterring invention promoters from defrauding unsuspecting inventors.
As I mentioned, this legislation is the successor to a bill 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 am introducing today is nearly identical to last year's bill, and 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 Secretary of Commerce,
Washington, DC, September 12, 1996.Hon. Carlos J. Moorhead,Chairman, Subcommittee on Courts and Intelligence Property,
Committee on the Judiciary, House of Representatives,
Washington, DC.
Dear Mr. Chairman: Thank you for your letter regarding Title I of H.R. 3460. The Department of Commerce is pleased that we have been able to work together in a truly bipartisan effort to ``reinvent'' the Patent and Trademark Office. We appreciate your staff's and Ranking Member Schroeder's staff's work to address the Administration's concerns with Title I. The Administration believes that the changes that we have crafted together in the en banc floor manager's amendment will create an organization consistent with the essential principles of the Vice President's vision for a Performance Based Organization, to further our mutual goal of creating a more efficient and effective patent and trademark office. In light of these changes, the Administration strongly supports House passage of H.R. 3460 with the en banc manager's amendment.
It is our joint vision to have a more business-like patent and trademark organization that can better serve the public and the innovators whose ideas are the engine of growth for our economy. By granting the new organization operational flexibility in exchange for greater accountability for achieving measurable goals, delineated in an annual performance agreement between the Secretary of Commerce and the Commissioner, the bill makes that vision a reality.
It is also our joint view that the Executive Branch must, as you put it, ``be able to establish an integrated policy on commercial and technology issues.'' By making clear that the bill does not alter the Secretary of Commerce's statutory responsibility for directing patent and trademark policy with respect to the duties of the Patent and Trademark Office, we have ensured the continuity of appropriate policy direction and oversight.
We also believe that other changes you have added to address Administration concerns, such as ensuring that there is independent Inspector General oversight and adequate personnel safeguards, will strengthen accountability mechanisms that we all endorse. The Administration is also pleased that the en banc manager's amendment addresses the central Constitutional and policy concerns of the Department of Justice with Title I.
We are committed to continuing to work together this year and in the future to perfect this bipartisan effort to invent anew the Patent and Trademark Office so that it will remain one of the Nation's most important resources for protecting and encouraging the preeminence of American innovation. We believe, for example, that there is still further work that we must do to address our concerns in the area of procurement, where we believe that the exemptions are broader than necessary to provide the flexibilities required.
H.R. 3460 contains five other titles that we believe will substantially improve the level of patent protection provided in the United States. These patent reforms are supported by the Administration and are of great importance to the Nation's economic competitiveness. We hope that they can be enacted in legislation this session.
Title II provides for the publication of patent applications eighteen months after the date on which they are filed or from the date on which the earliest referenced application was filed. This publication will help prevent economic disruption by those who now delay the grant of patents to extend their period of protection unfairly. It will also promote patent law harmonization that in the longer term will make it easier and cheaper for our small businesses and individual inventors to obtain protection abroad, as well as discouraging duplicative research. As a safeguard for those whose applications are published, it establishes a provisional patent right that allows a patent owner to obtain a reasonable royalty if, between the date of publication and the date of grant, another party infringes an invention substantially identically claimed in the published application and the patent. Also, it makes some administrative delays a basis for extension of the patent term, to ensure that diligent applicants are fully protected.
Title III creates a defense to an infringement action for parties that can establish prior use in commerce, including use in the design, testing, or production in the United States of a product or service before the date a patent application was filed in the United States or before the priority filing date. This ensures that inventors, who do not seek patent protection, will not be precluded unfairly from practicing their invention by other inventors who later obtain patent protection for the same invention.
Title IV is aimed at ensuring that inventors are fully informed prior to entering into a contract for invention development services. It also provides a cause of action if the service provider makes fraudulent claims or neglects to disclose material information to the inventor.
Title V amends the patent reexamination procedure to allow greater participation of their parties who request reexamination and expands the grounds for examination. Enhanced reexamination procedures will provide a less expensive and more timely alternative to costly patent litigation.
Lastly, Title VI contains several miscellaneous or
``housekeeping'' amendments, including one to ensure that our law provides priority consistent with our obligations to WTO countries and one to authorize submission of patent applications through electronic media. However, the Department of Justice opposes section 604 and the Administration urges that this provision be deleted. The recovery of attorneys' fees by individuals and small businesses from the Government in cases brought pursuant to 28 U.S.C. Sec. 1498(a) is already provided in the Equal Access to Justice Act (EAJA), 28 U.S.C. Sec. 2412(d). By contrast to EAJA, section 604 would provide for attorneys' fees even where the position taken by the Government is substantially justified by the law. This provision would, in fact, place the Government in a worse position than a private defendant in a patent infringement suit, against whom attorney fees can be awarded in ``exceptional'' cases. The provisions would discourage appropriate settlements and engender unnecessary litigation, by allowing private litigants to reject reasonable settlement offers safe in the knowledge that the Government will pay their attorneys' fees even if they are awarded damages less than the settlement offer. For these reasons, the Administration will continue to seek deletion of Section 604 before final Congressional action on this legislation.
Once again, we thank you for your commitment to working together in the spirit of bipartisan cooperation to craft legislation that provides for important patent reforms to help to ensure our nation's continued economic growth. The Administration strongly supports House passage of H.R. 3460 with the en banc manager's amendment.
Sincerely,
Michael Kantor.
My bill is 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, such as Microsoft Corp., Digital Equipment Corp., IBM Corp., Intel Corp., Caterpillar, Inc., Ford Motor Co., General Electric Co., Illinois Tool Works, and Procter & Gamble Co. The Biotechnology Industry Organization with over 560 members, has expressed its full support for this legislation. The White House Conference on Small Business supports this legislation. Independent inventors such as the inventor of the quartz technology used in watches support this legislation. 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.
Title I modernizes the U.S. Patent and Trademark Office by establishing it as a wholly owned government corporation--a government agency with operating and financial flexibility that will enable it to improve the services it offers to the public. The Office will remain under the policy direction of the Secretary of Commerce, but will not be subject to micromanagement by Commerce Department bureaucrats.
Because the Patent and Trademark Office is funded completely by user fees, and not by tax dollars, it is one of the few government entities recommended by the National Academy for Public Administration to operate under structure and oversight commanded in the Government Corporation Act, rather than the structure followed by taxpayer-funded agencies. The bill has a variety of provisions in title I that will free the Patent and Trademark Office from the bureaucratic redtape that impedes the Office's efforts to modernize and streamline its operations. For example, the bill provides that the Office shall not be subject to any administratively or statutorily imposed limitation on the number of positions or employees. This will exempt the Office from ceilings on the number of full-time equivalent employees, giving the Office flexibility to hire the number of employees it needs, based on its income from applications, to process the applications filed by and fully paid for by the users. The bill gives the Office greater flexibility with respect to management of its office space, procurement, and other matters. The users of the Patent and Trademark Office will be represented on a management advisory board that will advise the Director of the Patent and Trademark Office on the efficiency and effectiveness of the Office's operations. Making the Office accountable to its users through consultations with them is a significant step in improving its operations.
Title II improves the procedures for examining patent applications. It provides for the publication of most U.S.-origin applications 18 months after the date of application filing, unless a patent already has been granted by that time. It also requires publication of foreign-
origin applications in the English language generally within 6 months after they are filed in the United States--a full 12 months earlier than under current law. Unlike the situation today, the owner of the patent application will have a provisional right to a royalty from other parties who use the invention after publication and before patent grant. Publication of new technologies eliminates duplication of effort and accelerates technology licensing. Early publication is accompanied by a guarantee that U.S. inventors, especially independent inventors and small businesses, can receive an indication of their likelihood of obtaining a patent before their application is published. They will then be able to make an informed decision regarding whether they should withdraw the application before publication. Title II also makes some other improvements including the rules for extending the term of a patent when delays occur that are not the fault of the applicant.
Title III creates a defense against infringement charges for parties who have independently developed and used technology in the United States before a patent application was filed on that technology by another party. This will protect the investments of innovative American manufacturers who have built plants using technology later patented by their foreign competitors.
Title IV protects inventors from the fraudulent practices of invention development firms by requiring disclosure of a firm's track record and allowing the inventor to withdraw from a contract with a developer within a reasonable time.
Title V makes improvements in the procedures for reexamining a patent in the Patent and Trademark Office after it has been granted by the Office. The refined reexamination procedures in the bill will give the public a fairer opportunity than is presently allowed to have the Office consider information missed by the examiner. The revised procedures will better balance the interests of the patentee and the public and offer an effective alternative to expensive litigation in court.
Title VI provides a number of other improvements in our patent laws. It ensures that U.S. law provides priority consistent with our obligations to WTO countries and authorizes submission of patent applications through electronic media.
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.
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