[Senate Hearing 108-557]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-557

CONFIRMATION HEARING ON THE NOMINATION OF JONATHAN W. DUDAS, NOMINEE TO 
 BE UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR 
            OF THE UNITED STATES PATENT AND TRADEMARK OFFICE

=======================================================================

                                HEARING

                               before the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 6, 2004

                               __________

                          Serial No. J-108-73

                               __________

         Printed for the use of the Committee on the Judiciary


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                       COMMITTEE ON THE JUDICIARY

                     ORRIN G. HATCH, Utah, Chairman
CHARLES E. GRASSLEY, Iowa            PATRICK J. LEAHY, Vermont
ARLEN SPECTER, Pennsylvania          EDWARD M. KENNEDY, Massachusetts
JON KYL, Arizona                     JOSEPH R. BIDEN, Jr., Delaware
MIKE DeWINE, Ohio                    HERBERT KOHL, Wisconsin
JEFF SESSIONS, Alabama               DIANNE FEINSTEIN, California
LINDSEY O. GRAHAM, South Carolina    RUSSELL D. FEINGOLD, Wisconsin
LARRY E. CRAIG, Idaho                CHARLES E. SCHUMER, New York
SAXBY CHAMBLISS, Georgia             RICHARD J. DURBIN, Illinois
JOHN CORNYN, Texas                   JOHN EDWARDS, North Carolina
             Bruce Artim, Chief Counsel and Staff Director
      Bruce A. Cohen, Democratic Chief Counsel and Staff Director


                            C O N T E N T S

                              ----------                              

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah......     3
    prepared statement...........................................    53
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont.     4
    prepared statement...........................................    58

                               PRESENTER

Hyde, Hon. Henry J., a Representative in Congress from the State 
  of Illinois presenting Jonathan W. Dudas, Nominee to be Under 
  Secretary of Commerce for Intellectual Property and Director of 
  the U.S. Patent and Trademark Office...........................     1

                        STATEMENT OF THE NOMINEE

Dudas, Jonathan W., to be Under Secretary of Commerce for 
  Intellectual Property and Director of the U.S. Patent and 
  Trademark Office...............................................     5
    Questionnaire................................................     8

                         QUESTIONS AND ANSWERS

Responses of Jonathan W. Dudas to questions submitted by Senators 
  Leahy and Durbin...............................................    26

                       SUBMISSION FOR THE RECORD

Hyde, Hon. Henry J., a Representative in Congress from the State 
  of Illinois, prepared statement................................    54

 
CONFIRMATION HEARING ON THE NOMINATION OF JONATHAN W. DUDAS, NOMINEE TO 
 BE UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR 
            OF THE UNITED STATES PATENT AND TRADEMARK OFFICE

                              ----------                              


                         THURSDAY, MAY 6, 2004

                              United States Senate,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:37 p.m., in 
Room SD-226, Dirksen Senate Office Building, Hon. Orrin G. 
Hatch, Chairman of the Committee, presiding.
    Present: Senators Hatch and Leahy.
    Chairman Hatch. Because the Chairman has a vote on over in 
the House, I will forgo my statement for now, and I hope 
Senator Leahy will forgive me for starting early, but I know 
you have to catch a vote.
    So we are honored to have you here. You have been one of my 
heroes for a long, long time, and I am just grateful to have 
you here, Henry, and we look forward to your testimony.

    PRESENTATION OF JONATHAN W. DUDAS, NOMINEE TO BE UNDER 
SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR OF 
THE UNITED STATES PATENT AND TRADEMARK OFFICE, BY HON. HENRY J. 
 HYDE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

    Representative Hyde. Thank you very much, Senator. It is a 
great honor to be in your chambers.
    It is a pleasure to be here today to support the 
President's excellent choice for the crucial position of Under 
Secretary of Commerce, Jon Dudas.
    I have known Jon for almost a decade. After he graduated 
from law school at the University of Chicago, he came to 
Capitol Hill and worked in my Congressional office as 
legislative counsel. When I first became Chairman of the House 
Judiciary Committee, Jon moved over as counsel to the 
Subcommittee on Courts and Intellectual Property, which has 
jurisdiction over the complex issues of patent law. Shortly 
thereafter, I named him staff director and deputy general 
counsel of the full Judiciary Committee. And during those 
extremely busy and trying years for Congress and the Committee, 
I came to know Jon very well, and I became personally 
acquainted with his strong leadership, tremendous loyalty, 
unwavering integrity and the ability to accomplish his assigned 
mission under tremendous pressure.
    When I first got to Congress, I learned a very important 
lesson. If you want something done, you talk to the Member and 
then you go to the staffer who makes the Member look good. 
During his service on Capitol Hill, Jon was one of the people 
who very often made me look good.
    In his position on the Judiciary Committee staff, Jon 
helped me manage the most productive Committee in the Congress, 
more than one out of five bills considered by the House during 
the 105th and 106th Congress went through the Judiciary 
Committee. Our Conference relied upon him to help achieve some 
of their most important goals during that period.
    So it is with mixed feelings that I encouraged Jon to leave 
the Committee staff when the Speaker asked him to serve as his 
chief floor manager and legal policy advisor to the House 
Leadership. Jon played a critical role in advancing legislation 
to support the war on terror.
    Jon left the Hill when our former colleague, Jim Rogan, was 
appointed to be Under Secretary of Commerce and Director of the 
U.S. Patent and Trademark Office. As the assistant secretary 
immediately under Jim Rogan, Jon played an integral part in 
implementing the President's management agenda and in 
developing the 21st Century Strategic Plan--a comprehensive map 
to move the Patent and Trademark Office from its crisis 
situation to one of improved quality, quicker issuance of 
patents and increased deficiency. His ability to relate and 
work well with others and his good relationship with Members of 
Congress will be critical in achieving the difficult task of 
passing the administration's fee bill that will implement the 
strategic plan. Just as important, because he has been serving 
as Under Secretary Rogan's right hand for the last 2 years and 
currently as Acting Under Secretary, Jon will provide the 
continuity that is necessary at the Patent and Trademark 
Office.
    The issue of this Government's position on patents is a 
critical one in this ever-expanding world of scientific 
progress. I can think of no one better qualified to lead the 
Patent and Trademark Office than Jon. I urge the Committee to 
confirm this fine public servant as Under Secretary of Commerce 
so that he may continue to serve the best interests of the 
American people.
    I thank you again, Senators, both Senators, two very good 
Senators, I might add--get a commercial in for both of you--but 
thank you for letting me be here today.
    Chairman Hatch. Thank you, Chairman Hyde. We are grateful 
that you took time to come over, and we all respect you over 
here. We have watched you through the years do so many good 
things and agree with you. When you were Chairman of the 
Judiciary Committee over there, they did a massive amount of 
work and very, very good work at that.
    So thank you for coming.
    Senator Leahy. I want to thank you for being here, too, Mr. 
Chairman. You and I have been friends for so long, probably 
back even to the days when our hair was dark and I actually had 
some.
    [Laughter.]
    Representative Hyde. You were rather bushy-haired, as I 
recall.
    Senator Leahy. Yes, rather.
    Chairman Hatch. I have been here 28 years, and I do not 
recall any hair, I will tell you.
    [Laughter.]
    Senator Leahy. Henry has been here a long time. But we have 
been dear friends throughout that time, and I did note one of 
the things you said about our staff make us look good. Here, in 
my office, I consider myself merely a constitutional impediment 
to the staff who really do all of the work and do it extremely 
well.
    You honor us by being here. Thank you for coming over.
    Representative Hyde. Thank you, Senator, and thank you, 
Senator.
    Chairman Hatch. We will let you get back to the House. We 
know how important it is for you.

 OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM 
                       THE STATE OF UTAH

    Chairman Hatch. Well, we will continue. We are grateful 
that we have had Chairman Hyde here. We all respect him and 
think so highly of him.
    Now, we welcome Jon Dudas to the Committee. I know him 
well, and I am impressed with his qualifications, and I commend 
the President for nominating such a fine individual to the post 
of Under Secretary of Commerce for Intellectual Property and of 
course Director of the United States Patent and Trademark 
Office. I also welcome his wife, and his children and family 
and friends here with us today as well and other guests.
    Before I continue, I would like to of course express again 
my regard for Chairman Hyde, and that he would take the time to 
come over here, that speaks well of you, Mr. Dudas. I know how 
busy his schedule is, and I know how difficult it is for him or 
for any Member of the House to come all the way over here. So 
we are grateful for that.
    I have reviewed the record of Mr. Dudas, and I find him to 
be an excellent choice for this position. Permit me just a 
moment to highlight his distinguished background.
    Upon graduation from the University of Chicago Law School 
in 1993, with honors, Mr. Dudas joined the law firm of Neal, 
Gerber & Eisenberg, LLP. In 1995, he joined the staff of 
Representative Henry J. Hyde as legislative counsel and then 
joined the staff of the United States House Judiciary 
Committee, Subcommittee on Courts and Intellectual Property as 
a counsel.
    From 1997 to 2001, he served as a staff director and deputy 
general counsel to the full United States House Committee on 
the Judiciary. He then joined Speaker J. Dennis Hastert's staff 
as counsel for legal policy and the senior floor assistant in 
2001.
    In 2002, he became Deputy Under Secretary of Commerce for 
Intellectual Property and Deputy Director of the United States 
Patent and Trademark Office. He has since served as the Acting 
Under Secretary since January 11th, 2004.
    Now, Mr. Dudas is taking on a very big assignment because 
intellectual property plays a key role, if sometimes an 
unappreciated role, in the United States economy. But those of 
us who deal with it on a daily basis--or at least very, very 
often--know what a key role this is and how important it is for 
the country, and we commend you for having the confidence of 
the President in receiving this nomination.
    The issuance of patents and trademarks reflect the creative 
genius of America's inventors. Our Nation is respected 
worldwide as the leader in technological innovation and product 
development. It is essential that the Patent and Trademark 
Office operate efficiently and fairly, and I commend the 7,000-
plus dedicated civil servants at USPTO for all of their hard 
work and valuable contribution. And that is why this Committee 
acted unanimously last week to pass legislation H.R. 1561 to 
stop the diversion of patent fees, which we think is very 
important.
    I know that Mr. Dudas is committed to make the USPTO run 
even more effectively than it has in the past, and I am 
confident that Jonathan W. Dudas will continue to serve this 
country and the Department of Commerce with distinction, and I 
certainly look forward to your speedy confirmation.
    Now, before we turn to Mr. Dudas, we will turn to our 
Democrat leader on the Committee, Senator Leahy, who I am sure 
will have some nice things to say.

  STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM THE 
                      STATE OF CONNECTICUT

    Senator Leahy. Thank you, Mr. Chairman.
    It is good to see you. We have known each other for a 
while, not as long as Chairman Hyde and I have known each 
other, but I have enjoyed working with you, and I am delighted 
to see your family here. You probably would sit here and think, 
with children this young, now, are they going to be able to 
survive all the way through a hearing, but for those of us who 
have had young children, and now grandchildren, we do not mind 
how much they act up. I do not want them to hear that.
    [Laughter.]
    Senator Leahy. The Patent and Trademark Office plays such 
an enormous role in the development of new technologies. It is 
the sort of thing that allows the United States to compete in 
what is very much an international market. It has to make sure 
that innovators can profit from what they have done, but it has 
to make sure those new ideas get deployed to the people who 
might use them.
    I think, to do that--it is entirely different than the 
days, I read an article recently that talked about the old days 
of the models of every new patent coming in. Well, that was 
easy, when you would get maybe three, five, six a month, at 
best. Now, of course, it is different, and you have got to 
modernize the process and the whole way it is done down at the 
office. The 21st Century Strategic Plan is a step forward, but 
of course now you have to implement it. And in that regard, we 
can either congratulate you or offer you condolences for your 
new position, but you are a graduate of the University of 
Illinois, the University of Chicago, practiced law in Chicago 
before you went with Congressman Hyde. You worked with him 
there with the Speaker. The last three and a half months, you 
have been acting director, and it is not as though you get 
confirmed, walk in the door and say, ``What is this place?'' 
You are going to have to implement the 21st Century Strategic 
Plan. I truly believe you can.
    We are in a situation today, as you know, American 
corporations are facing retaliatory sanctions. The World Trade 
Organization says we are discriminating against Cuba and Cuban 
trademarks through Section 211. There are a couple different 
bills, one by Senator Baucus, one by Senator Domenici, I 
believe it is, to address this. I would be anxious to hear what 
you have to say about that. You are going to be our leading 
voice on intellectual property policy and practice. Obviously, 
you have go to coordinate closely with our own Register of 
Copyrights with the U.S. Trade Representative, the Department 
of Justice and many others.
    You have an exciting time ahead of you, but it is more than 
just getting an appointment. A great deal of what we do in this 
country and a great deal of our ability to create jobs, to keep 
the innovative edge America has always been proud of, it is 
going to rest on your shoulders.
    Any other statement, I will put in the record, Mr. 
Chairman.
    [The prepared statement of Senator Leahy appears as a 
submission for the record.]
    Chairman Hatch. Well, thank you so much.
    Mr. Dudas, if you would stand and raise your right hand, do 
you swear to tell the truth on the testimony you are about to 
give, the truth, the whole truth and nothing but the truth so 
help you God?
    Mr. Dudas. I do.
    Chairman Hatch. Thank you.
    Mr. Dudas, do you have any statement you would care to 
make? We would like you to introduce your family and your 
friends who are here with you.

 STATEMENT OF JONATHAN W. DUDAS, NOMINEE TO BE UNDER SECRETARY 
   OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR OF THE 
           UNITED STATES PATENT AND TRADEMARK OFFICE

    Mr. Dudas. Absolutely. Thank you. Thank you, Mr. Chairman, 
Senator Leahy.
    Just a brief statement. For me, today is a day filled with 
blessings and responsibilities, as you mentioned, Senator 
Leahy. It is a great honor and privilege to be here today as 
President Bush's nominee as Under Secretary of Commerce for 
Intellectual Property and Director of the United States Patent 
and Trademark Office. I am very grateful to the President for 
nominating me to this important post and to Secretary Evans for 
his recommendation and support.
    Thank you, Chairman Hatch and Senator Leahy. I am honored 
by your scheduling of this hearing. I am especially thankful 
considering the substantial workload before this Committee and 
the demands placed on it.
    I am grateful to Chairman Hyde for his introduction. He is 
a man of great honor and a model of public service. he has my 
never-ending gratitude for his guidance and support.
    Finally, Mr. Chairman, I am honored today to have the 
support of many colleagues and friends here today, bosses, 
friends and mentors during my time in Washington. And most 
importantly I recognize the support today of my family, my wife 
Nicole, and our four children, Joshua, Caroline, Sarah and 
Caleb. Caleb did act up a little bit too much, so he left the 
room. He had responsibility for crying during the tough 
questions, but I think Sarah can step up for that.
    [Laughter.]
    Senator Leahy. No pinching her.
    [Laughter.]
    Mr. Dudas. In addition, my parents, Ron and Jan Dudas, are 
here from Phoenix, Arizona.
    Mr. Chairman, Senator Leahy, I cannot overstate the 
importance of intellectual property in today's global economy. 
For over 200 years, intellectual property has fueled our 
Nation's economic growth and will continue to do so. The United 
States needs to do all that it can at both the domestic and 
international levels to promote and protect intellectual 
property domestically and abroad so it will continue to drive 
economic growth.
    The Under Secretary for Intellectual Property plays a 
significant role in this effort. Not only does the Under 
Secretary oversee the issuance of patents and trademarks, but 
he or she also advises the President, through the Secretary of 
Commerce and other Federal agencies, on all national and 
international intellectual property issues.
    I came to the office a little over 2 years ago, then as 
Deputy Under Secretary, at an important time. Then-Under 
Secretary Rogan and I quickly realized that the USPTO was an 
agency that was on an impending crisis. A decade of rapid 
growth in its workload had overwhelmed the Agency and without 
decisive action, it would continue along a steady decline.
    On a relatively short basis, we performed a comprehensive 
review and developed a long-term strategic plan to stop the 
decline and stabilize the Agency. I am pleased to say that the 
legislation associated with that plan was recently approved by 
the House of Representatives by a vote of 379 to 28 and, as you 
mentioned, Mr. Chairman, unanimously approved by this Committee 
last week.
    This strategic plan and the resources to fund it will 
improve the quality of patents granted and the quality of 
trademarks registered and minimize their processing times. 
USPTO customers deserve a quality product delivered in the 
shortest possible time that will withstand legal challenge.
    On the international side, we need to continue to reach out 
to our foreign trading partners to encourage and, in some 
cases, to demand support for strong intellectual property laws 
and enforcement systems. U.S. industries suffer enormous 
financial losses overseas through piracy and counterfeiting due 
to an effective enforcement.
    So, Mr. Chairman and Senator Leahy, the United States does 
have the best intellectual property system in the world. I am 
grateful for the opportunity I have had thus far to improve our 
system as Acting Under Secretary and Deputy Under Secretary to 
work to improve our system and, if confirmed, I look forward to 
continuing to work with you to enhance our intellectual 
property system in the hopes of making it even better.
    Thank you for holding this hearing and for your 
consideration of my nomination, and I am certainly pleased to 
answer any questions you all have.
    [The biographical information of Mr. Dudas follows.] 

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    Chairman Hatch. Thank you so much. We ar grateful to have 
you here, and we are grateful you are willing to serve in this 
very important position.
    Now, the position for which you have been nominated is an 
extremely important one to the United State and of particular 
importance to Senator Leahy and me. We both work very closely 
together on virtually all intellectual property issues. As you 
know the Patent and Trademark Office is currently facing the 
heaviest workload and the longest pendency rate in its 200-year 
history. It is a time of great challenge, but also opportunity, 
for the PTO and American Congress. I, personally, feel very 
confident in your abilities, and I think you will make an 
excellent director.
    Just to highlight some of these experiences, you served as 
counsel to the House Judiciary Subcommittee on Courts and 
Intellectual Property and then spent 4 years as chief of staff 
and chief counsel to that Committee. You then went to the work 
for the Speaker of the House before you became deputy director 
at PTO, and for the past 4 months, you stepped in as Acting 
Under Secretary and Director. So I want to commend you for your 
dedication and service to the Agency.
    Now, how do you intend to bring your legislative and 
administrative experiences to bear as Director of PTO? And do 
you have any general comments regarding your qualifications and 
perhaps your experience that you would like to share with us?
    Mr. Dudas. Absolutely. Thank you for the question.
    I believe right now is a time that is critically important 
for the Patent and Trademark Office to understand all of 
Washington, to understand the administration, to understand 
Congress, and certainly for the intellectual property community 
to understand that as well. So the experience I have had thus 
far, in the 2 years I have been at the Patent and Trademark 
Office, what I found most important was to make certain that I 
help act with then-Under Secretary Rogan to translate what the 
intellectual property world is saying to Washington and 
translate what happens in Washington back to the intellectual 
property world. In that regard, coming to the Judiciary 
Committee in the Senate, the Judiciary Committees in the House 
and even the Appropriations Committees has certainly been very 
valuable.
    What I developed over the past 2 years, what I feel I have 
developed is a better understanding of the office and its 
processes, what exactly we need to do to implement the 
strategic plan. We live in a world right now in the Patent and 
Trademark Office, we live in really two worlds. One world is 
one where we presume and hope to have the funding that is 
necessary to run the office and implement the strategic plan in 
full, but what we have been living in day-to-day now is an 
office that is in a decline because of the lack of resources.
    So I think the most important thing I can bring to bear 
right now to the Patent and Trademark Office is to help pass 
the fee bill, to help make certain again that Washington 
understands the needs of the intellectual property community 
and work closely with all of you. I have found the experiences 
that have matched well for what I think the Patent and 
Trademark Office needs. But you put it very well, as did 
Senator Leahy. There are a great number of opportunities ahead, 
but there are also a great number of challenges.
    Chairman Hatch. Thank you. I have tremendous respect for 
your predecessor, for his character and vision, as he served 
there. But in the testimony you gave before the House of 
Representatives Subcommittee on Commerce, Justice, State and 
the Judiciary Committee on Appropriations in March of this 
year, you stated that without fundamental changes, the way the 
PTO operates, average pendency will likely double in certain 
areas by 2008, and the backlog of applications awaiting a first 
review by an examiner will grow from the current level of 
approximately 475,000 to over a million.
    Now, tell us how you plan to advance the various goals of 
the 21st Century Strategic Plan set out by the former Under 
Secretary Rogan in order to avert this escalation.
    Mr. Dudas. Absolutely. Thank you.
    The most critical element, the first thing that Under 
Secretary Rogan and I did was take a comprehensive look at the 
office from an administrative perspective. At that time, we 
talked to members of the Senate Judiciary Committee, 
Appropriations Committee, House Judiciary Committees and 
Appropriations Committees and folks in the administration, as 
well as the private sector.
    What we came to realize, that the first and most important 
goal is to make sure that quality is the primary goal at the 
Patent and Trademark Office.
    We also found, as you noted, that the office is one that, 
under the current funding levels and under current hiring 
levels that we have now is one where pendency will grow, 
timeliness will become almost unbearable in some technologies. 
As you mentioned, over the next 5 years, without the funding 
and the strategic plan in place, pendency will more than double 
in some areas. Some areas today, in some of the cutting-edge 
technologies, are already double our average pendency. So the 
question that some may ask in the private sector is at what 
point will it become meaningless or at what point does it 
become questionable whether or not you even want to file for 
patent protection.
    H.R. 1561, and the administration's solution, was to fully 
fund the office and involved a great deal of hiring and quality 
initiatives. So, first and foremost, we have already put in 
place a number of quality initiatives that we cannot afford 
under the current resources, and there will be more quality 
programs in place.
    How we hire people has changed, how we promote people has 
changed. There is more testing. There is more training. There 
is a second pair of eyes program that we have in place where we 
have examiners looking at examinations as they go out the door 
a second time. The number of ways we test through the process 
has more than tripled. So quality is going to come through a 
number of programs, as well as testing.
    Pendency, as you talked about, the most important element 
is passing H.R. 1561 and implementing 1561, which involves 
hiring and gaining other efficiencies as well. The most 
important thing I can say about that is, at the end of 5 years, 
the pendency will be stabilized and going downward. It will be 
at approximately 28.8 months, under current figures, 28.9 
months, excuse me, but it will be going downward. The pendency 
will be stabilized.
    In the absence of the fee bill and the strategic plan, it 
will be at 39 months and growing, and the evidence of that is 
the backlog, as you mentioned. Rather than controlling the 
backlog at the end of 5 years, we will have a backlog that 
could well exceed one million patents. So, to us in the office, 
it is very clear to the Commissioners, it is clear to all of 
our professional staff, what we need to do is get the 
appropriate resources and implement the plan.
    Chairman Hatch. Thank you. You testified before the 
Committee on the theft and counterfeiting of intellectual 
property. I think Senator Specter, I was grateful to him for 
conducting that particular hearing. But the piracy of global 
trademark counterfeiting has been estimated at $500 billion--
with a ``b''--billion dollars each year. So could you give us 
your general thoughts on what both Congress and the PTO should 
be doing to prevent the alarming costs of global piracy.
    Mr. Dudas. Absolutely. Thank you.
    Certainly, at the USPTO, we help coordinate intellectual 
property policy and enforcement programs. Throughout the world, 
we are seeing the result of TRIPS, we are seeing the result of 
WTO, and that is stronger, new intellectual property systems in 
other nations, but as nations are growing, the piracy and 
counterfeiting is reaching incredible levels.
    What we need to be doing is coordinating within the U.S. 
Government, making certain that we are addressing these issues, 
particularly at the USPTO. We have relationships with 
developing nations and developed nations as well with their 
Patent and Trademark Offices. We conduct training for Supreme 
Court justices, we conduct training for prosecutors that are 
from other nations, here in the United States. We travel to 
other nations and conduct training programs there as well.
    Much of what we need to do is in coordination with USTR and 
throughout the Department of Commerce. I can point to China as 
an example of growing theft, and piracy and counterfeiting. 
There recently was concluded, with the United States Trade 
Representative and Secretary of Commerce Don Evans, a Joint 
Commission on Commerce and Trade meeting, where we had Vice-
Premier Wu Yi here. The Chinese have promised, on a number of 
fronts, how they can improve their system and stop piracy and 
counterfeiting. What is most important now, from an 
administration perspective, and Secretary Evans has led the 
fight on this, is to make sure that we measure results, that we 
measure exactly how that is being done and how it is carried 
out.
    I think what the Judiciary Committee in the Senate is 
doing, watching the issue, there is legislation in place, 
continuing to have the U.S. be a model for the rest of the 
world, as far as piracy and counterfeiting, I think is one of 
the best things we can do when we travel internationally. When 
we had problems here in the United States with theft of 
intellectual property that were not based on financial thefts, 
this Committee passed the NET Act, which was a model for the 
world for intellectual property counterfeiting or opposition to 
that.
    So there is a great deal that we can do as USPTO within the 
administration, and there is a great deal still to be done in 
Congress. I think what is going on right now is exactly right, 
which is the monitor.
    Chairman Hatch. Thank you. I will submit any other 
questions I have in writing.
    Let us turn to Senator Leahy.
    Senator Leahy. Thank you, Mr. Chairman.
    I am just curious. I mentioned that dispute over the 
treatment of Cuban trademarks in this country. We have one 
possible solution that Senator Baucus has put forward in a 
larger bill, Senator Domenici in a stand-alone bill. USTR said 
they both would allow the U.S. to come into compliance with the 
recent World Trade Organization opinion against our current 
policy.
    What do you believe is the best way, aside from any 
question of being Cuba or anywhere else, just sound trademark 
policy, what is the best way for us to deal with this issue, 
thinking that 10 years from now some successor of yours may be 
looking at it and see what you did?
    Mr. Dudas. Well, I, specifically, with the issue of Section 
211, the Trade Representative has the lead on trade matters. I 
can speak briefly on what I understand of that, and then I can 
get to the heart of your question.
    My understanding is that the WTO appellate body decision 
was itself quite narrow and that, while complete repeal of 
Section 211, which is I think one of the options on the table, 
could be one response to the WTO's decision, that repeal is 
neither mandated nor suggested by the decision of the WTO 
appellate body. I, certainly, on the specifics of Section 211, 
can consult with the U.S. Trade Representative and give you 
more of an answer.
    From a strictly trademark perspective, I can tell you, and 
there have been cases before the office, and I can only speak 
in general terms because, in my current position, I operate as 
a statutory member of the Trademark Trial and Appeal Board, but 
in general thoughts, what we do at the Patent and Trademark 
Office, through our Appeal Boards, is really responsibility to 
apply the law as it has been applied through the court systems. 
So we look at it strictly on a case-by-case basis with each law 
as it comes through.
    Senator Leahy. Well, let me go to that a little bit because 
you are on that Appeals Board. Now, according to papers 
released by Governor Bush in Florida, he said you met with him, 
you were receptive, and responsive to his concerns on this. 
This has some political problems for him. You were responsive.
    What arguments did he make, and what did you say that was 
so responsive?
    Mr. Dudas. The issue I think you are talking about is a 
particular dispute between Bacardi and Cuba Export. That is an 
issue we have gotten letters from Governors, as you mentioned, 
and from Republican members of Congress, Democratic Senators, 
and others, all urging the Trademark Trial and Appeal Board to 
cancel the mark.
    Senator Leahy. What was it that you told the Governor that 
gave him such comfort?
    Mr. Dudas. I don't know that we gave comfort. We gave him 
the same response that we have given to Members and Senators, 
which was basically a procedural update. At that time, I was 
not a statutory member of the Trademark Trial and Appeal Board. 
So, when they requested the meeting, I took the meeting. What 
we sent along, and I am happy to provide copies of the letter, 
it was really a procedural update of what has gone on. In fact, 
I think what we had said was that this is pending before our 
Trademark Trial and Appeal Board, and there is not a whole lot 
to comment on that beyond that.
    It is a similar response we gave again, even in the 
previous administration when these issues came up.
    Senator Leahy. If I could have a copy of that letter, I 
would appreciate it.
    Mr. Dudas. Absolutely.
    Senator Leahy. Until a very short while ago, anyway, you 
had on the PTO website, you said, while you worked in the 
House, you guided the enactment of the Digital Millennium 
Copyright Act, the American Investors Protection Act, the 
Trademark Counterfeiting Consumer Act, and you point out that 
where you worked in the House, that is the birthplace of all 
Federal intellectual property statutory law.
    They do not need us any more, Orrin. I actually thought 
some of those came from over here.
    [Laughter.]
    Senator Leahy. But I would just note, for whatever it is 
worth, as recently as last week, this Committee reported out 
three important intellectual property bills, the PIRATE Act, 
the CREATE Act, the ART Act. We also reported the PTO Fee 
Modernization Act, which would increase the fee or Agency 
charges and then guarantee that those fees will either go to 
the PTO or they go right back to the people that paid them--
they cannot go to other Federal programs--and called on PTO to 
initiate a pilot program to test whether private contractors 
could do some of the searches necessary on patent applications 
now.
    Let me ask you a couple of things. The patent pendency 
times seem to get longer and longer, and I realize you are 
getting more and more things that are a lot more complex than 
some simple mechanical device. I would think that a great deal 
of the increased fee revenue from this ought to go to hiring 
and training patent examiners. You cannot hire them on Monday 
and have them working on Tuesday. It takes some work. But your 
budget does not do that. As I read it, as little of 10 percent 
of the revenue increases are going to new hires. Where will the 
rest of it go?
    Mr. Dudas. Most of the new money under the H.R. 1561, as it 
exists now and came through the Senate Judiciary Committee, 
will go into hiring, I think the majority. Much of it will also 
go into electronic processing.
    Senator Leahy. But not to examiners.
    Mr. Dudas. No, it will go to hiring examiners. In fact, the 
office, under that plan, intends to hire 900 additional 
examiners in the first year, which would be a record, both in 
terms of raw numbers and also a record in terms of 
percentagewise. Twenty-five percent of new--now, that doesn't 
include attrition.
    But a fair amount will also go to supporting our electronic 
processing. As you may know, as we move into the new building, 
we are not going in with new files, we are going in moving 
electronically. The Office and Trademarks now has over 60-
percent electronic filing and electronic processing. So much of 
what we are doing is updating the systems and preparing our 
systems for an environment that ultimately will save a great 
deal of money, but it requires infrastructure and information 
costs today.
    Senator Leahy. Let me ask some follow-up questions on the 
breakdown of the budget.
    In your pilot program to test outsourcing of certain PTO 
jobs, that is going to be evaluated by the Patent Public 
Advisory Committee. Could not a better, more independent one be 
done by GAO?
    Mr. Dudas. GAO, in my understanding, is coming down to look 
at the office under an inquiry from the House Appropriations 
and Judiciary Committee. Certainly, we welcome oversight from 
GAO and others as well. The Patent Public Advisory Committee is 
made up of a variety of folks who are temporary Government 
workers, but they are represented in the union, folks from the 
private sector, both in industry and legal arenas, are 
represented there. So I think either/or, as far as being able 
to give an outside view and give ideas to the office are both 
valuable.
    Senator Leahy. I understand that WIPO is going to look at a 
possible treaty regarding the rights of broadcasters since I 
think 1998. The next WIPO session on that is scheduled for the 
first week in June. Do you have a position with regard to these 
negotiations?
    Mr. Dudas. Yes. The United States' position has been one of 
a great deal of support for going forward with the 
Broadcasters' Treaty. We spent a great deal of time at the 
Patent and Trademark Office working with both the content 
owners, as well as the broadcasters, to try to come up with a 
unified position for the United States. So we go in with a 
position of wanting to get a treaty, but certainly any time, in 
doing treaty negotiations, being cautious of what is being put 
on the table.
    Senator Leahy. I can imagine.
    Mr. Chairman, I just wonder if we might have Mr. Dudas 
introduce his family who is here because some day when you go 
in the dusty archives of the Dudas Memorial Library--
    [Laughter.]
    Senator Leahy. --your kids might be glad to see, and I just 
realized I think your wife just left, and I apologize for that, 
but they might like the idea of being able to read in there, 
you know, that day that we had to sit there forever, and ever, 
and ever with daddy, we still got our names in there. Besides 
which, if they are missing school, they can show the teacher 
where they were.
    Mr. Dudas. Well, thank you very much.
    Let me introduce Joshua Matthew Dudas. Can you stand up, 
please. Thank you. Caroline Nicole Dudas, my father Ronald 
Edward Dudas. The other half of my family, Nicole Dudas, Sarah 
Dudas and Caleb Dudas are all gone.
    Chairman Hatch. We understand.
    [Laughter.]
    Senator Leahy. No, we understand.
    Mr. Dudas. Thank you.
    Senator Leahy. I just wanted to make sure, and you will get 
a copy of this to make sure that the names are all spelled 
right. But they have to be awfully proud of you in being here, 
and I just wanted to make sure somewhere in the record they had 
their names to show they were here.
    Mr. Dudas. Thank you very much. That was kind.
    Chairman Hatch. Well, thank you, Senator.
    Senator Leahy. We have the rest of the family or part of 
the rest of the family coming back in here, too.
    Chairman Hatch. There is your wife.
    Mr. Dudas. There is my wife, Nicole Dudas.
    Chairman Hatch. Well, we are glad to have you here, and 
your mother as well.
    Mr. Dudas. I am sorry--my mother, Janice Dudas.
    Chairman Hatch. That is all right. We are delighted to have 
you. This is a very, very important position. Both of us know 
that, and both of us work very closely with the office that you 
are about to take over. Frankly, we look forward to working 
with you, and I think we would like to have even more 
suggestions from you folks there as to how we might be able to 
do a better job up here because that is one thing that I think 
we find that we work on very well, in a bipartisan way, and I 
think we can get a lot done between now and the end of the 
year, if we can do that.
    So I intend to try and get you confirmed as soon as we 
possibly can, and hopefully that will be real soon.
    Mr. Dudas. Thanks very much. I look forward to continuing 
to work with you. Certainly, in my capacity as acting, I know 
there are challenges, and I know you will provide vigorous 
oversight. I think you can tell by the lack of crying that you 
were kind to me today, so I appreciate that.
    [Laughter.]
    Chairman Hatch. That is great. Well, with that, we 
compliment you for this job and look forward to your service. 
We will keep the record open for one week for additional 
statements and questions. If the questions come in, get your 
answers back as soon as you can, and we will try and get you up 
before the Committee and then up on the floor as soon as we 
possibly can.
    Mr. Dudas. I appreciate that. Thank you.
    Chairman Hatch. Thanks, Jon. Good to have you all here, and 
thanks to all of you for coming and supporting.
    Mr. Dudas. Thank you.
    Chairman Hatch. With that, we will recess until further 
notice.
    [Whereupon, at 3:14 p.m., the Committee was adjourned.]
    [Questions and answers and submissions for the record 
follow.]
    [Additional material is being retained in the Committee 
files.]

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