GOVERNMENT
Move To Revamp Patent Law, Patent Office Gains Momentum In House • With floor action on far-reaching legislation now imminent, opponents square off on proposed changes to current practices Linda Ross Raber
C&EN Washington
T
he House is nearing action on omnibus legislation that will profoundly affect patenting practice in the U.S. The bill (H.R. 3460) aims to modernize U.S. patent law and to change Patent & Trademark Office (PTO) operations. Over the past several weeks, the efforts of a powerful corporate lobby seem to have prevailed in the face of formidable opposition led by Rep. Dana Rohrabacher (R-Calif.). The legislation, which likely will reach the House floor shortly after the Fourth of July recess, is sponsored by Rep. Carlos J. Moorhead (R-Calif.), chairman of the House Judiciary Committee's Subcommittee on Courts & Intellectual Property, and ranking minority member Patricia Schroeder (D-Colo.). In addition to reaffirming the current term of a U.S. patent—which runs 20 years from application—by offering protection to those who could conceivably be hurt by it, Moorhead's patent package would institute a number of other changes. Among them are publication of patent applications 18 months after they are filed and conversion of PTO into a government corporation. Moorhead's bill is supported by five past PTO commissioners and a number of associations including the American Intellectual Property Law Association, the Electronic Industries Association, the Intellectual Property Owners, the Chemical Manufacturers Association, the National Association of Manufacturers, and many others. Many of these associations as well as 22
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per hand. Not only did it win unanimous approval in the subcommittee, but it also was approved without dissent on a June 11 voice vote by the full Judiciary Committee. In crafting this legislation, Moorhead attempted to address all the concerns put forth by Rohrabacher and others. Although the bill appears to make every allowance for protecting independent inventors, Rohrabacher calls H.R. 3460 "a highly dangerous piece of legislation . . . that should be called the Steal American Technology Act/' Michael K. Kirk, executive director of the American Intellectual Property Law Association, believes Moorhead's bill will answer the critics who prompted introduction of H.R. 359. "I really think that it is inconceivable that a patent applicant who is truly interested in getting his patent . . . couldn't do it in the requisite period of time," says Kirk, who spent 31 years in PTO, leaving in 1995 after serving as deputy assistant secretary of commerce and deputy commissioner of patents and trademarks. For example, under H.R. 3460, whenever the patent office fails to act on a patent application within the number of months specified by the "time clock" for a particular stage in processing, the excess time taken by the patent office is automatically added to the 20-year patent term. There have been a number of occasions whereby an inventor, after filing an original application, deliberately filed numerous continuation applications, effectively preventing an examiner from granting the patent. This was done in order to allow an industry to build up and begin using the technology claimed in the patent, so that when the patent was eventually granted— sometimes as much as 20, 30, or more years after filing—corporations were already using the technology and owed the patentee a royalty. These are called submarine patents. Moorhead says the existence of these Rohrabacher: dangerous piece of legislation submarine patents often comes as "a
industrial giants—for example, CocaCola, Air Products & Chemicals, AlliedSignal, Amoco, DuPont, Eastman Chemical, Hoechst Celanese, IBM, Merck, Phillips Petroleum, Praxair, Procter & Gamble, Rohm and Haas, and Union Carbide—have joined together in a lobbying group called the Coalition To Save Patent Term Reform. The coalition banded together in opposition to Rohrabacher's attempts to roll back the patent term to 17 years from patent grant—the way it was before legislation implementing the recent trade treaty negotiated under the auspices of the General Agreement on Tariffs & Trade became law. Claiming to champion the cause of the American independent inventor in the face of foreign interests and multinational corporations, Rohrabacher introduced legislation last year (H.R. 359) that would turn back the clock. He and Moorhead and their supporters have been trading charges and striving to outmaneuver the other side ever since. However, Rohrabacher's bill was rejected on a vote of 12 to 2 on May 15—the same day that the patent subcommittee approved Moorhead's bill. Today, Moorhead's bill has the up-
brutal surprise" to companies that have been using technology claimed in the patent for years. Submarine patents are often, but not exclusively, associated with independent inventor Jerome H. Lemelson. Lemelson, inventor of a bar code reader and the intermittent windshield wiper, has successfully extracted large royalty payments from established industries by letting his patents surface only after industries matured. In 1994, three of Lemelson's patents issued that had originally been filed in 1954, and two issued that had been filed in 1957. • Herbert C. Wamsley, executive director of the Intellectual Property Owners, Washington, D.C., is an enthusiastic supporter of Moorhead's bill. He says, "The bill completes the renovation of the American patent system by bringing in publication at 18 months after application, which couples nicely with the 20-year term." Under current law, all applications for patents in the U.S. are kept in confidence by PTO until a patent is granted. Only upon granting are the contents of the application published. In most countries, patent applications are published 18 months after the earliest effective filing date claimed by the patent applicant. H.R. 3460 "would put U.S. and foreign companies on a level playing field," he says. "Early information helps us to avoid duplicating research that has already been done," says Norman Balmer, chief patent counsel at Union Carbide. "It supplies U.S. industry with a higher level of certainty than it currently has." But 18-month publication has been criticized as requiring U.S. inventors to disclose secrets to their competitors— particularly foreign ones. This is irksome to Rohrabacher, who says, "This law is an open invitation to the thieves of the world to steal American technology from American business." "The so-called risk needs to be placed into context," says Kirk. "At least 45% of all U.S. patent applications are of foreign origin and are published in their home countries. Based on statistics published by the World Intellectual Property Organization, it is reasonable to speculate that at least half of the remaining 55% are also filed abroad and are published. A number of the remaining 27Vi% are disclosed in publications such as technical journals, especially those from universities.
Kirk: place risk into context
"Further," says Kirk, "based on information from [PTO], nearly 80% of this remainder should issue as U.S. patents within three years from initial U.S. filing. A large number of the remaining inventions will be disclosed through the sale of a product, test-marketing, etcetera. Therefore, only a very small percentage of applications cover inventions, primarily those relating to manufacturing processes, which can be commercially used in secret in one's plant and thus have any potential value as a trade secret. And for these few inventions, the bill contains a provision guaranteeing independent inventors no publication of their applications until three months after a first action on the merits." Balmer explains the benefits for the chemical industry: "Say we're going to
Balmer: greater certainty for industry
build a plant in the U.S. with new technology. We do a 'freedom to operate study' and look at all patents that have been issued to determine whether we run afoul of any of them. If we do this in the U.S., we know the search will be incomplete. We do not know what patents are in the pipeline in PTO until after they are issued, which may be years after the patent application is filed. With early publication, we can do an all-purpose search and we'll only have an 18-month information gap. When combined with other provisions of H.R. 3460, we can start substantial preparation for that plant and be assured that the plant can operate. So there is more incentive for investing in new technology in the U.S." H.R. 3460 also would turn PTO into a government corporation, and the time is ripe for it. Vice President Al Gore is focusing on reinventing government through the National Performance Review, and Congress and the Clinton Administration have both affirmed their desire to streamline government and bring it closer to those it serves. One way to do this would be to create a more efficient PTO. Moorhead's bill attempts to improve efficiency by transforming PTO into a semi-independent governmental organization within the Department of Commerce that will have greater operating and financial flexibility than regular government agencies. Key features include increased operating flexibility in employee compensation, number of employees hired, personnel policy, contracting, and management of office space. The bill also provides PTO with borrowing authority that would allow it to issue bonds or other debt instruments to finance capital improvements and cope with fluctuations in fee income. As with many of the ideas encompassed by the bill, the concept of a government corporation for an agency such as PTO is not new. Almost 50 years ago, President Harry Truman urged Congress to consider the corporate structure for programs that were self-sustaining, "business-type" programs and that had a large number of business-type transactions with the public. Many such programs since have been reincarnated as government corporations—such as the Tennessee Valley Authority, the Federal Housing Administration, Amtrak, and the U.S. Postal Service. JUNE 24, 1996 C&EN
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GOVERNMENT Rohrabacher says, "Under 'corporatization/ the patent examiners, on whom all American inventors rely for an honest evaluation, will lose the civil service protection they've enjoyed for more than 100 years. The exposure will undoubtedly lead to attempts to attack and influence this entire process, which until now has been considered a core government function." He also says that the redesigned PTO would "have an open call on the U.S. treasury for any money it wants."
"There are a lot of nice sound bites out there, and the only thing that we can fight sound bites with is facts," says Balmer. "That's what we're do ing." Under the proposed legislation, patent and trademark examiners will have the same protection against re moval from their jobs as under existing law, and the bill retains the existing procedure under which the main user fees are set by Congress and annual in flationary adjustments are made by the commissioner of patents and trade
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marks. In addition, the bill contains other significant controls, including provisions authorizing reviews and au dits by the General Accounting Office. And borrowing authority would be controlled by the appropriations com mittees of Congress. The next action for H.R. 3460 will be a Rules Committee hearing, fol lowed by a vote on the House floor. A fight on the floor is virtually guaran teed because Rohrabacher has a com mitment from House Speaker Newt Gingrich (R-Ga.) to allow a vote on his bill. Rohrabacher likely will move to substitute his bill for some or all of the provisions of H.R. 3460. Both sides are putting on a full-court press in preparation for the vote. Π
Delaney reform at heart of pesticide bill Legislation that would reform the con troversial 1958 Delaney clause and re place it with a negligible-risk standard for cancer-causing pesticides on pro cessed foods is once again moving in Congress. Although several other im portant pesticide issues need to be re solved this year, the Delaney clause was the main topic at a June 12 hearing of the Senate Committee on Agricul ture, Nutrition & Forestry. The Food Quality Protection Act (S. 1166) establishes a new negligible-risk standard for pesticide residues on food that would amend both the Federal Food, Drug & Cosmetic Act (FFDCA) and the Federal Insecticide, Fungicide & Rodenticide Act (FIFRA) with respect to pesticide residues. The Delaney clause to FFDCA states that no chemical may be added to a food if that chemical causes cancer in humans or animals. Under current enforcement, if a pesticide tests carcinogenic in the laboratory, then resi dues of that pesticide above certain lev els in processed foods can be in violation of the Delaney clause. Under FIFRA, the Environmental Protection Agency sets tolerance levels, or limits, on the amount of a pesticide that can be present on raw food. Thus, if that pesticide concentrates during processing to a level higher than the tolerance, EPA has no choice but to re move that product from use. Efforts to modify the Delaney clause have been slowly gaining mo-
