[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
  DRIVING AMERICAN INNOVATION: CREATING JOBS AND BOOSTING OUR ECONOMY

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



                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         INTELLECTUAL PROPERTY,
                     COMPETITION, AND THE INTERNET

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 9, 2011

                               __________

                           Serial No. 112-19

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov



                  U.S. GOVERNMENT PRINTING OFFICE
65-075                    WASHINGTON : 2011
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001



                       COMMITTEE ON THE JUDICIARY

                      LAMAR SMITH, Texas, Chairman
F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
    Wisconsin                        HOWARD L. BERMAN, California
HOWARD COBLE, North Carolina         JERROLD NADLER, New York
ELTON GALLEGLY, California           ROBERT C. ``BOBBY'' SCOTT, 
BOB GOODLATTE, Virginia                  Virginia
DANIEL E. LUNGREN, California        MELVIN L. WATT, North Carolina
STEVE CHABOT, Ohio                   ZOE LOFGREN, California
DARRELL E. ISSA, California          SHEILA JACKSON LEE, Texas
MIKE PENCE, Indiana                  MAXINE WATERS, California
J. RANDY FORBES, Virginia            STEVE COHEN, Tennessee
STEVE KING, Iowa                     HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona                  Georgia
LOUIE GOHMERT, Texas                 PEDRO PIERLUISI, Puerto Rico
JIM JORDAN, Ohio                     MIKE QUIGLEY, Illinois
TED POE, Texas                       JUDY CHU, California
JASON CHAFFETZ, Utah                 TED DEUTCH, Florida
TOM REED, New York                   LINDA T. SANCHEZ, California
TIM GRIFFIN, Arkansas                DEBBIE WASSERMAN SCHULTZ, Florida
TOM MARINO, Pennsylvania
TREY GOWDY, South Carolina
DENNIS ROSS, Florida
SANDY ADAMS, Florida
BEN QUAYLE, Arizona

      Sean McLaughlin, Majority Chief of Staff and General Counsel
       Perry Apelbaum, Minority Staff Director and Chief Counsel
                                 ------                                

  Subcommittee on Intellectual Property, Competition, and the Internet

                   BOB GOODLATTE, Virginia, Chairman

              HOWARD COBLE, North Carolina, Vice-Chairman

F. JAMES SENSENBRENNER, Jr.,         MELVIN L. WATT, North Carolina
Wisconsin                            JOHN CONYERS, Jr., Michigan
STEVE CHABOT, Ohio                   HOWARD L. BERMAN, California
DARRELL E. ISSA, California          JUDY CHU, California
MIKE PENCE, Indiana                  TED DEUTCH, Florida
JIM JORDAN, Ohio                     LINDA T. SANCHEZ, California
TED POE, Texas                       DEBBIE WASSERMAN SCHULTZ, Florida
JASON CHAFFETZ, Utah                 JERROLD NADLER, New York
TOM REED, New York                   ZOE LOFGREN, California
TIM GRIFFIN, Arkansas                SHEILA JACKSON LEE, Texas
TOM MARINO, Pennsylvania             MAXINE WATERS, California
SANDY ADAMS, Florida
BEN QUAYLE, Arizona

                     Blaine Merritt, Chief Counsel

                   Stephanie Moore, Minority Counsel



                            C O N T E N T S

                              ----------                              

                             MARCH 9, 2011

                                                                   Page

                           OPENING STATEMENTS

The Honorable Bob Goodlatte, a Representative in Congress from 
  the State of Virginia, and Chairman, Subcommittee on 
  Intellectual Property, Competition, and the Internet...........     1
The Honorable Melvin L. Watt, a Representative in Congress from 
  the State of North Carolina, and Ranking Member, Subcommittee 
  on Intellectual Property, Competition, and the Internet........     3
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, Ranking Member, Committee on the 
  Judiciary, and Member, Subcommittee on Intellectual Property, 
  Competition, and the Internet..................................     3

                               WITNESSES

Anthony Atala, M.D., Director, Wake Forest Institute for 
  Regenerative Medicine, W.H. Boyce Professor and Chair, 
  Department of Urology, Wake Forest University School of 
  Medicine
  Oral Testimony.................................................     6
  Prepared Statement.............................................     8
Michael S. Fulkerson, Ph.D., Chief Technology Officer, Rosetta 
  Stone, Inc.
  Oral Testimony.................................................    14
  Prepared Statement.............................................    16
Scott Smith, Ph.D., Professor and Chair, Department of Mechanical 
  Engineering and Engineering Science, University of North 
  Carolina at Charlotte
  Oral Testimony.................................................    25
  Prepared Statement.............................................    28


  DRIVING AMERICAN INNOVATION: CREATING JOBS AND BOOSTING OUR ECONOMY

                              ----------                              


                        WEDNESDAY, MARCH 9, 2011

              House of Representatives,    
         Subcommittee on Intellectual Property,    
                     Competition, and the Internet,
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 10:05 a.m., in 
room 2141, Rayburn Office Building, the Honorable Bob Goodlatte 
(Chairman of the Subcommittee) presiding.
    Present: Representatives Goodlatte, Coble, Sensenbrenner, 
Chabot, Poe, Chaffetz, Reed, Marino, Adams, Quayle, Watt, 
Conyers, Berman, Chu, Deutch, Wasserman Schultz, and Jackson 
Lee.
    Staff present: (Majority) Vishal Amin, Counsel; Olivia Lee, 
Clerk; and Stephanie Moore, Minority Counsel.
    Mr. Goodlatte. Good morning. This hearing of the 
Subcommittee on Intellectual Property, Competition, and the 
Internet will come to order.
    Given the subject of this hearing, I think it is noteworthy 
that we mention that the United States Senate passed the patent 
reform bill by a vote of 95 to 5 yesterday. So we will look 
forward to introduction of a House bill and action on this side 
of the Capitol very soon.
    This hearing is on driving American innovation, creating 
jobs, and growing the economy.
    I will recognize myself for an opening statement.
    The American experience has been shaped not just by who we 
are but by the things that we have done, and as a Nation, we 
have accomplished a lot. America owes much to the genius of 
inventors like Thomas Edison, the Wright Brothers, Alexander 
Graham Bell, Samuel Morse, and many of the Nation's Founding 
Fathers. Indeed, many of our Nation's Founders were also 
inventors and authors. Perhaps that is one of the reasons they 
had the incredible foresight to include protections for 
intellectual property in the U.S. Constitution.
    Article I, section 8 of our Constitution lays the framework 
for our Nation's patent and copyright laws. It grants Congress 
the power to award inventors and creators for limited amounts 
of time exclusive rights to their inventions and works. The 
Founders realized that this type of incentive was crucial to 
ensure that America would become the world's leader in 
innovation and creativity.
    Almost 225 years later, this incentive is still producing 
dramatic results for our Nation. The American innovative spirit 
continues to thrive based on our Nation's strong intellectual 
property laws. We are seeing entirely new industries and 
economic sectors springing to life from high technology to 
biotech to aerospace and defense.
    It is true that our Nation is weathering a very difficult 
storm right now, one that has left many people out of work and 
has stalled business development. Our goals need to be squarely 
focused on reducing unemployment, helping get businesses 
growing again, and moving our economy back into gear.
    I believe American innovation and creativity will lead us 
out of this storm and back to strong economic growth. However, 
to encourage this result, it is crucial that we have strong and 
effective laws in place that protect inventions and creative 
works. This will send the message that innovators can feel 
secure in dedicating precious resources to a new product or 
idea. It will also continue to bring predictability to the 
values of intellectual property which will, in turn, encourage 
banks, venture capitalists, and others to invest in America's 
ideas.
    Today's hearing, ``Driving American Innovation: Creating 
Jobs and Boosting Our Economy,'' will focus on how our Nation's 
intellectual property laws encourage innovation and how 
innovation then creates jobs and spurs our economy. In 
addition, this hearing will show how intellectual property 
plays such a strong role in our daily lives, from advancing 
education and health care to helping keep us safe and improving 
the lives of people throughout the globe through science and 
technology. This showcase hearing will also be an opportunity 
for us to see and hear about some of the latest and exciting 
inventions and innovations being developed by our witnesses, 
which I am really looking forward to.
    One is an exciting new idea of science called 
``regenerative medicine'' that seems to verge on science 
fiction but is indeed a reality. Technologies are being 
developed that can create organs and tissues using 3D printing 
technology, and in the near future, we may even see these 
technologies help in the regeneration of actual limbs. This 
groundbreaking work is also being done in partnership with the 
U.S. military through the Armed Forces Institute for 
Regenerative Medicine established under President Bush, known 
as AFIRM. AFIRM is a partnership between universities and the 
Defense Department that is yielding real-world benefits to both 
our wounded warriors and civilian patients.
    We are also pleased to have Rosetta Stone here, a Virginia-
based company which started in a seed warehouse in my district 
whose story embodies the American dream. Having gone from a 
small start-up to a global success, they now bring their 
educational software to individual students and teachers, the 
military, and our diplomatic corps around the world.
    And finally, we have the Mechanical Engineering Department 
chair from the University of North Carolina at Charlotte. He is 
an inventor and holds several patents and has begun the process 
of commercializing his inventions through his own start-up 
company.
    By highlighting the real-world implications of IP and 
innovation outside the legislative arena, we will see these 
issues come to life and demonstrate the tangible link between 
invention and job creation.
    In addition, we will see that inventors and businesses in 
all stages of development rely on strong intellectual property 
laws to succeed.
    I look forward to hearing from our distinguished panel 
today. They represent a variety of perspectives and industries, 
and I look forward to working with my fellow colleagues and the 
stakeholder community as we work to ensure that America's 
innovative industries remain strong and vibrant.
    It is now my pleasure to recognize the Ranking Member, the 
gentleman from North Carolina, Mr. Watt?
    Mr. Watt. Thank you, Mr. Chairman.
    I want to rush to our witnesses to hear what they have to 
say, so I will be brief.
    Over the past few hearings, we have heard about the 
connection between innovation and American job growth. 
Innovation in businesses with path-breaking technology and high 
growth potential can jump start the economy, make America more 
competitive, and accelerate job creation.
    Public/private partnerships with universities all across 
the country advance revolutionary research and development 
efforts. Copyrights, patents, trademarks, industrial design 
rights, trade secrets, and other forms of intellectual property 
incentivize America's inventors and facilitate the 
commercialization of their talent which in turn results in 
substantial benefit to society.
    Greater and deserved recognition of the importance of these 
intangible assets to our country's future has increased over 
the past months, with this Administration shining the spotlight 
on intellectual property-intensive industries and education. 
This is a unique moment in time to leverage this opportunity to 
sustain and build upon America's role in the global economy.
    Today's witnesses are examples of the ingenuity and 
creativity that will keep us moving forward. I am happy to say 
that two of them--not only one of them--two of them--are from 
my congressional district, and I have had the pleasure of 
working with and knowing both of them. Dr. Smith, welcome. Dr. 
Atala--I have been in his laboratory--made an ear. So I can 
attest to how cutting edge what he will be talking about is 
today. So I am looking forward to their testimony and I welcome 
all of the witnesses.
    I will yield back the balance of my time. I think Mr. 
Conyers wanted to make a statement too.
    Mr. Goodlatte. I thank the gentleman.
    Yes. It is my pleasure to recognize the Ranking Member of 
the full Committee, the gentleman from Michigan, Mr. Conyers?
    Mr. Conyers. Thank you, Chairman Bob Goodlatte, Ranking 
Member Mel Watt.
    This is a hearing that I can fully embrace and endorse. I 
want to congratulate the new leaders of the Committee because 
we all start out with the premise and agreement that innovation 
creates jobs and boosts the economy. And I think this gets us 
off to a very good start. The whole idea of regenerative--what 
Dr. Fulkerson will be talking about is extremely important. And 
I have talked to some doctors about this before the hearing. I 
do not know if you know Dr. Samuel Epstein or the Physicians 
for a National Health Plan in Chicago, Dr. Clinton Young. They 
all are enthusiastic about it.
    Now, Rosetta Stone is, of course, by their own admission 
the most popular learning process for languages. What I think 
may be important to the Committee this morning is how do we get 
immigrants into English fast and easy. Watt and I are studying 
Spanish at a furious rate. You will not know which is our first 
language pretty soon. We will become so articulate.
    And, of course, we welcome Dr. Smith for where we are 
going.
    Now, here is the challenge that the Committee faces. We 
have an intellectual property office--how long does it take to 
process? Years. So we are going to hear a lot of good things 
this morning, but behind the scenes--I hope it will be brought 
out in our discussion--we have got to get the office--all this 
innovation and wonderful inventions are really going to be on a 
totally different track from reality because it takes up to 
years to get anything through. And that is why I applauded the 
creation of this kind of subcommittee so that we can really 
focus in on that.
    Then, of course, now we have a lot of the issues from the 
Senate side coming in. We have a lot of work to do.
    Now, there are two things that we can do here, and we will 
appreciate your guidance. One, we can ratify the Senate bill 
and say, hey, let us move it on. Let us get going. But I am not 
so sure because locked up in that are some huge issues around 
``first to file'' and other things that I think have to be 
carefully examined.
    Now, all those who have been following the Senate and their 
actions on the patent bill, fine. This is one Member that has 
not had that opportunity, and I think all these issues converge 
at the hearing this morning.
    So, Chairman Goodlatte, I congratulate you and the Ranking 
Member again, and I look forward to a great hearing.
    Mr. Goodlatte. Well, I thank the gentleman, and I can 
assure you that we will work in a bipartisan fashion to 
construct our own patent reform legislation and certainly 
appreciate what the Senate has done, but do our own thing even 
without the benefit of 3D printing technology or some other new 
invention that would make the Congress more efficient in 
creating legislation.
    It is now my pleasure to introduce our very distinguished 
panel of witnesses. Each of the witnesses' written statements 
will be entered into the record in its entirety, and I ask each 
witness to summarize their testimony in 5 minutes or less. To 
help you stay within that time, there is a timing light on your 
table, and when the light switches from green to yellow, you 
will have 1 minute to conclude your testimony. When the light 
turns red, it signals that the witness' 5 minutes have expired.
    And before I introduce each of you, I would like you to 
stand and be sworn.
    [Witnesses sworn.]
    Mr. Goodlatte. Thank you very much and be seated.
    Our first witness is Dr. Anthony Atala, Director of the 
Wake Forest Institute for Regenerative Medicine and the W.H. 
Boyce Professor and Chair of the Wake Forest University Medical 
School's Department of Urology. Dr. Atala is an internationally 
recognized expert in tissue engineering and through his 
research, he has applied for or received over 200 national and 
international patents and helped create several spinoff 
companies. Dr. Atala heads a team of over 270 physicians and 
researchers, and in 2007 his work was ranked as one of Time 
Magazine's top 10 medical breakthroughs of the year.
    Dr. Atala has successfully created fully functioning 
bladders in the lab from patient's cells, and his team is 
currently working on regrowing over 30 other organs and 
tissues, including the liver, bone, corneas, heart, and 
kidneys. His team is developing new technology that can print 
human tissue on demand, and at least week's TED conference, it 
was reported that Dr. Atala literally printed a fresh kidney on 
stage.
    Dr. Atala received his bachelor of arts from the University 
of Miami and his M.D. from the University of Louisville School 
of Medicine and did his fellowship at Harvard Medical School.
    Our next witness is Dr. Michael Fulkerson, the chief 
technology officer of Rosetta Stone. Rosetta Stone, founded in 
1992 as a family business in Harrisonburg, Virginia is now a 
global software company that currently employs about 2,000 
people. Dr. Fulkerson is in charge of developing Rosetta 
Stone's innovative products and solutions to help people unlock 
their natural language learning ability. Previously he headed 
the company's advanced research and development group which was 
tasked with developing Rosetta Stone's future products. He 
started his career as a surface warfare officer in the United 
States Navy.
    Dr. Fulkerson received his doctorate in computer science 
from Duke University where he did his dissertation work on 
techniques for building voice-enabled software systems. He 
received his bachelor's and master's degrees in computer 
science from Villanova University.
    And I yield to the gentleman from North Carolina to 
introduce our third witness.
    Mr. Watt. Thank you, Mr. Chairman.
    I want to welcome the Duke graduate and the Wake Forest----
    Mr. Goodlatte. Now you are claiming all three. [Laughter.]
    Mr. Watt. I am claiming all three of them today. So, hey, I 
am doing all right.
    Mr. Goodlatte. You will recognize the bipartisanship on 
this Committee.
    Mr. Watt. Part of Wake Forest University is in my 
congressional district and all of the Center for Regenerative 
Medicine is in my district.
    But I am here to introduce Dr. Scott Smith who is presently 
the professor and chair of mechanical engineering and 
engineering science at the University of North Carolina at 
Charlotte, which is also in my district.
    Dr. Smith received his B.S. degree in mechanical 
engineering from Tennessee Technological University and his 
master's degree and Ph.D. from the University of Florida. His 
research areas include high-speed machining, process 
optimization, and machine dynamics.
    Dr. Smith joined the faculty at the University of North 
Carolina at Charlotte in 1997 and became the deputy director of 
the Center for Precision Metrology. He assumed the role of 
department chair in July of 2009. He is a member of a number of 
prestigious organizations and has co-authored the book 
``Machining Dynamics: Frequency Response to Improved 
Productivity.''
    He has a distinguished career, having received several 
awards. Most recently he became the recipient of the 2010 
Research and Development 100 Award. He holds five patents and 
has served as a consultant to a variety of companies and 
organizations, including Alcoa, Apple, Bell Helicopter, Boeing, 
Caterpillar, and General Motors. The list goes on and on.
    So we welcome you and look forward to each of your 
testimonies.
    Mr. Goodlatte. I thank the gentleman.
    Mr. Conyers. Mr. Chairman?
    Mr. Goodlatte. Yes?
    Mr. Conyers. Before we begin, could I recommend that we 
hold a hearing in North Carolina so that it would save us a lot 
of money. [Laughter.]
    Mr. Goodlatte. Maybe right on the border between Virginia 
and North Carolina.
    Mr. Conyers. All right.
    Mr. Goodlatte. I thank the gentleman for his suggestion.
    We will turn now to Dr. Atala. Welcome.

    TESTIMONY OF ANTHONY ATALA, M.D., DIRECTOR, WAKE FOREST 
 INSTITUTE FOR REGENERATIVE MEDICINE, W.H. BOYCE PROFESSOR AND 
CHAIR, DEPARTMENT OF UROLOGY, WAKE FOREST UNIVERSITY SCHOOL OF 
                            MEDICINE

    Dr. Atala. Thank you, Chairman Goodlatte, Ranking Member 
Watt, Vice Chairman Coble, and Members of the Committee. It is 
a pleasure to be here to talk to you today about the field of 
regenerative medicine.
    Regenerative medicine is basically a field that aims to 
replace or repair damaged tissues and organs in the body. It is 
actually a field that uses three different areas. You can 
actually use either biomaterials alone or small molecules to 
actually regenerate your body's own organs at the time of 
healing, or we can actually use cells for therapy, or we can 
actually use cells and biomaterials together to try to engineer 
tissues and organs for your body.
    I do work at the Wake Forest Institute for Regenerative 
Medicine, a center that actually involves the work of about 300 
scientists, all working together to bring these technologies 
from the bench to the bedside.
    In our area, inventions and disclosures are extremely 
important, as you can imagine. We actually over the last 7 
years have submitted or filed over 260 invention or patent 
applications from our team.
    We at the institute work in over 30 different types of 
tissues and organs. We also are part of the Armed Forces 
Institute for Regenerative Medicine, a partnership that was 
built between Government and academia to actually try to 
overcome some of the challenges of organ disease and injury by 
focusing on basically five specific areas: burns, craniofacial 
injuries, limb and digit injuries, accelerating wound healing, 
and another injury that is called compartment syndrome that 
occurs when tissues are actually compressed and lead to tissue 
loss.
    What are the potential benefits of regenerative medicine? I 
would like to define for you four benefits of the field of 
regenerative medicine.
    The first one is basically the one which is most obvious 
which is the patient's own benefit because regenerative 
medicine, as opposed to other areas, has the potential to not 
just help to manage disease but it also has the potential to 
cure. So that is a very important difference between this field 
and the potential that it can achieve for our patients in the 
future.
    The second benefit involves health care costs. Basically 
just imagine that instead of managing diabetes, you could 
actually cure it. Or imagine that instead of just managing 
heart disease, you could cure it. So basically it is estimated 
by very carefully performed studies that the health care costs 
that could be saved through regenerative medicine is around 
$250 billion per year if we were able to achieve a lot of these 
technologies for just the major disease areas that we deal 
with.
    The third advantage involves economic advantages. It is 
estimated that the global market by 2013, just 2 years from 
now, will approach $118 billion. So there is a major economic 
benefit that can result through these technologies.
    And finally, the fourth benefit is job creation. If we are 
able to create these technologies here and retain them here in 
the U.S., we would then be able to establish our manufacturing 
and commercial facilities right here by preserving the 
scientific lead in this area, and by allowing these 
technologies to be produced, we could generate more jobs. And 
in the biotechnology industry, there is a multiplier effect. 
For every job that you create in the biotechnology sector, 
there are approximately 5.7 jobs that are also created.
    So to summarize then, our goal is to improve innovation 
through these technologies, and we are able to improve 
innovation but we do need several things to happen to make sure 
that we can do this in the field of regenerative medicine. This 
includes increased funding to this area.
    It includes ensuring intellectual property protection for 
everything we do and to accelerate the process by which we can 
do that. That is critical for the commercial strategies that 
lay ahead for this field. This field is at risk of not 
accomplishing its goals if we cannot retain the leadership we 
need worldwide for these areas and these technologies.
    And finally, to be able to expand our commercial 
strategies. And of course, that also depends on our innovative 
strategies that we can perform.
    Thank you, Mr. Chairman and Members of the Committee.
    [The prepared statement of Dr. Atala follows:]
    
    
    
    
    
    
    
    
    
    
    
    


                               __________
    Mr. Goodlatte. Thank you, Dr. Atala.
    Dr. Fulkerson, welcome.

           TESTIMONY OF MICHAEL S. FULKERSON, Ph.D., 
         CHIEF TECHNOLOGY OFFICER, ROSETTA STONE, INC.

    Mr. Fulkerson. Thank you, Chairman Goodlatte, Ranking 
Member Watt, and honorable Members of the Subcommittee. I 
appreciate the opportunity to appear before you today and want 
to thank you and your colleagues for recognizing the important 
role that innovation in private industry plays in job creation 
and the growth of the American economy.
    Rosetta Stone epitomizes the critical role that investment 
in product innovation and development can play in the growth of 
jobs and business expansion. Innovative product development has 
enabled Rosetta Stone to grow from a small family-owned 
business founded in the heart of the Shenandoah Valley in 
Harrisonburg, Virginia to approximately 2000 employees, most of 
whom are based in our headquarters in Arlington, Virginia, our 
main operational facilities in Harrisonburg, Virginia, and a 
research center in Boulder, Colorado.
    Our company was founded on the innovative idea of using 
computer technology to teach a new language by simulating the 
way people learn their native language, through the use of 
visual and audio context, without translation from another 
language. Our founder's original idea is much older than our 
company. The advent of CD-ROM and multimedia technologies in 
the early 1990's gave him a practical means of converting his 
innovative idea into a viable product. Through continued 
investment and research and development, Rosetta Stone has 
utilized technological and pedagogical innovations to create an 
effective way to learn languages in a convenient and engaging 
manner. Now available in 34 languages, Rosetta Stone solutions 
are used by schools, our armed forces, Government agencies, 
corporations, and millions of individuals in over 150 countries 
throughout the world. Every day our innovations in language 
learning help people improve their lives and make the world a 
better place by improving our ability to communicate.
    Rosetta Stone's investments in product innovation and 
development have dramatically accelerated our growth. Our 
employee base has grown from less than 300 in 2004 to 
approximately 2,000 employees today, and our revenues have 
grown 10-fold from roughly $25 million in 2004 to approximately 
$259 million in 2010. In addition, revenues generated from our 
international business has grown from a negligible percentage 
in 2004 to 18 percent of our revenues in 2010. Our company's 
growth demonstrates the important impact of investment and 
technology and product innovation on the American economy.
    Rosetta Stone's latest major innovation was the 
introduction of Rosetta Stone Version 4 TOTALe which augments 
our self-study computer software with live, over-the-Internet 
conversations with native speakers. We call this future Rosetta 
Studio. We all recognize that speaking with a native speaker is 
truly invaluable to learning a new language, and our failure to 
do so or have the access to do so is one of the reasons many of 
us have been frustrated with previous language learning 
attempts.
    The problem that faced us in developing Studio is that 
early learners have a very limited vocabulary, say, 25 words. 
You would not think you could interact in a language for very 
long or say anything interesting with so few words. However, 
the innovations in Rosetta Studio have solved this problem. Our 
learners get the same sense of accomplishment that our children 
get early in their development when they first successfully 
accomplish a goal using language, something as simple as asking 
for a glass of milk.
    It is worth noting since the introduction of TOTALe, our 
company has hired approximately 250 U.S.-based language coaches 
to conduct these online conversation sessions with our 
customers. In doing so, we are exporting the services of these 
and many other U.S.-based employees to countries around the 
world as we expand the availability of our product overseas. As 
TOTALe becomes available in schools, its online features will 
enable children learning Mandarin to interact online with 
school children in Shanghai or children learning Spanish to 
interact with a school in Costa Rica, thereby enhancing not 
only their language learning experience but also their 
awareness of other cultures.
    In addition to contributing to the growth of our own 
company, our investments in innovation and development are 
enabling our customers to take advantage of our products to 
contribute to their own success. From supporting English as a 
second language programs in school systems, supporting the U.S. 
military, preserving endangered languages, to assisting in 
speech therapy, our customers are finding innovative and often 
unforeseen ways to benefit from our products.
    At Rosetta Stone, we are committed to developing the best 
commercial language learning solutions through continued 
investment in innovation to meet our customers' widely diverse 
needs. At the same time, however, we need to protect our 
investments from criminals who seek a free ride on the back of 
Rosetta Stone's innovations and profit from the illicit 
counterfeiting of our products. Criminals, often operating out 
of China, Russia, or other foreign countries, routinely offer 
pirated copies of our products over the Internet. This illicit 
activity substantially weakens our ability to create jobs and 
to continue to invest in innovative products. It also tarnishes 
our brand and harms U.S. consumers. Therefore, Rosetta Stone 
welcomes any legislative initiatives that the subcommittee may 
consider to effectively combat the threat posed by online 
piracy so that criminals cannot continue to harm consumers, 
innovation, and the growth of the U.S. economy.
    Thank you very much.
    [The prepared statement of Mr. Fulkerson follows:]
    
    
    
    
    
    
    
    
    
    
    
    
                               ATTACHMENT








                               __________

    Mr. Goodlatte. Thank you, Dr. Fulkerson.
    And Dr. Smith, we are pleased to have your testimony.

     TESTIMONY OF SCOTT SMITH, Ph.D., PROFESSOR AND CHAIR, 
 DEPARTMENT OF MECHANICAL ENGINEERING AND ENGINEERING SCIENCE, 
           UNIVERSITY OF NORTH CAROLINA AT CHARLOTTE

    Mr. Smith. Chairman Goodlatte, Ranking Member Watt, full 
Committee Ranking Member Conyers, Vice Chair Coble, it is a 
great honor for me to testify before you today.
    Innovation is the foundation of our modern society and the 
continuing source of strength in our economy. To ensure 
continued prosperity in the United States, we must continue to 
innovate and such innovation requires that we have laws, 
regulations, and policies that foster innovation.
    During my introduction, you heard that I am chair of 
mechanical engineering at the University of North Carolina at 
Charlotte. UNC Charlotte is a relatively new university founded 
after World War II. Our annual research budget is small 
compared to many other universities, on the order of $35 
million annually. We have particular expertise in optics, 
bioinformatics, and precision metrology and manufacturing which 
is my area.
    While we are young, we have some impressive distinctions. 
UNC Charlotte has consistently ranked in the top five of all 
universities for number of inventions created, number of 
patents issued, number of new companies created per research 
dollar spent. Over the past 10 years at UNC Charlotte, we have 
created 541 new inventions, received 67 issued patents, and 
formed 38 new start-up companies. Innovation is important in 
North Carolina generally and at UNC Charlotte especially.
    Our department houses one of the best dimensional metrology 
laboratories in the world and one of the highest concentrations 
of faculty researchers in manufacturing.
    The prestigious International Academy for Production 
Engineering allows no more than 20 fellows per country. Of the 
16 current U.S. fellows, four are in our department. All of 
them have strong industry research partners. Faculty and 
students in our department have founded more than 10 start-up 
companies in recent years.
    I was personally instrumental in the development of 
technologies used to stop vibrations in machine tools and to 
replace sheet metal assemblies by monolithic machining. These 
technologies have saved billions of dollars in the aerospace 
industry. I am an inventor on 15 UNC Charlotte patent 
applications, one of which was recognized as one of R&D 
Magazine's top 100 inventions of 2010. I am working with 
industry to help bring this invention to the marketplace.
    UNC Charlotte has a history of working closely with 
industry and commercializing innovation. On average, about 20 
percent of our research funding comes through industry. By 
comparison, the average amount of industrially sponsored 
research for American universities is only about 5 percent.
    University research can take innovation only so far. 
Innovations often need substantial additional investment and 
development for successful commercialization, and patents do 
three principal things that promote commercialization. They 
decrease risk by ensuring that if research leads to innovation, 
the effort can be protected. Because the risk is reduced, 
patents induce investments. Patents allow for an innovation to 
be quantified. Intellectual property is often the only tangible 
asset that a new company has.
    Collaboration between universities and industry is 
certainly important for our country. Even in a supportive 
environment, few patents become products. By some estimates, 
less than 2 percent of all patents that are issued are ever 
embodied in a commercial product.
    Nevertheless, patents are a necessary tool for turning many 
types of ideas into products. What company would fund research 
work at a university like mine if the results could not be 
protected by a patent? Who would make the investment required 
to turn an innovation into a product if others could easily 
copy that product after the expensive work was done?
    While virtually every industrialized country has its own 
patent office, the U.S. Patent and Trademark Office was one of 
the first and is one of the most developed. Both foreign and 
domestic inventors apply for patents in the U.S. Many of the 
inventions are patented only in the U.S. because the U.S. 
market alone is often large enough to justify the costs of 
commercialization.
    To maintain and grow the U.S. economy, we need a strong 
patent system that encourages investment and innovation and 
rewards inventors and risk-takers. Specifically, inventors, 
particularly university inventors, need the 12-month grace 
period to file the patent after a publication or presentation. 
Universities, small businesses, and independent inventors 
benefit from ``first to invent'' over ``first to file.'' A 
three-tier fee system could make it more affordable for small 
companies and independent inventors to obtain patents.
    Better quality patent reviews could be achieved by allowing 
third parties to submit printed references to the patent office 
for a pending patent, and by allowing the patent office to 
retain more of its fees for their own operations.
    This concludes my oral testimony, Mr. Chairman. I am happy 
to answer any questions you may have. Thank you.
    [The prepared statement of Mr. Smith follows:]
    
    
    
    
    
    
    
    
                               ATTACHMENT














                               __________

    Mr. Goodlatte. Thank you, Dr. Smith.
    Before we go to our usual round of questioning, each of our 
witnesses has a presentation. So we will start with you, Dr. 
Atala. I understand you brought some visuals and items from the 
lab of actual organs and tissues that you have created and I 
would like you to share with us how far regenerative medicine 
has come and what the future may hold.
    Dr. Atala. Thank you, Mr. Chairman.
    [Video shown.]
    Dr. Atala. I want to just give you a few examples of 
regenerative medicine and just to remind everybody why we are 
doing this. The fact is that every 30 seconds, a patient dies 
from diseases that could be treated with tissue replacement. 
That is why we are relying on your own ability to regenerate, 
the patient's own ability to regenerate.
    So what you see here on the left is actually an injured 
organ, and what you see in the center is actually a smart 
biomaterial that we developed. And we then use this biomaterial 
alone to actually replace your tissue. So we replace the top 
portion of that injured area that you see here, and by 
replacing that top portion with a scaffold, the cells are 
actually able to walk on that smart biomaterial and fully 
regenerate. And when you take a tissue biopsy from this 
patient, you actually can see the full organ regenerated just 
using these smart biomaterials. And that actually has been used 
now in patients. This was the first demonstration of this 
technology back in 1996 in patients, and that is now being 
done.
    The strategy here for all of regenerative medicine is that 
for larger defects, you absolutely need the patient's own cells 
because you can only use smart biomaterials for short 
distances. For larger distances, you do need the patient's own 
cells. So the concept is you take a small biopsy from the 
diseased tissue or organ, less than one-half the size of a 
postage stamp. We then are able to take those cells, expand 
them outside the body, create these three dimensional 
biomaterials, and then place the cells on those biomaterials to 
replace the tissue.
    You are seeing a bioreactor with muscle, engineered muscle. 
The same concept here. We take the biomaterial. We take a very 
small piece of the patient's muscle. We grow the cells outside, 
place those cells on these scaffolds, and then we start 
stretching that engineered muscle so we can exercise it before 
implanting them.
    Here is another strategy that we use to create blood 
vessels. This is actually an engineered blood vessel. What you 
see here is a scaffold that was tubularized. We place the 
patient's muscle cells on the outside of that tube, the blood 
vessel lining cells on the inside, and to the right you see a 
carotid artery that was replaced using these techniques 
experimentally. That is the vessel that goes from the neck to 
the brain.
    This is actually a bladder, a more complex organ. This is 
actually showing you the engineered organ in a patient, and 
this is actually showing you the scaffold and how we seed those 
in patients.
    This actually is another hollow organ which is a little bit 
more complex. This is an engineered heart valve that we are 
creating. You can see here the heart valve itself that has been 
now coated with the cells, and we are exercising the heart 
valve so it knows what to do. You can see here the leaflets 
opening and closing from the structure so that we can implant 
these. This is still also experimental.
    This is actually work that we are doing with the Armed 
Forces Institute for Regenerative Medicine where we are 
creating engineered ears, and this is actually showing you how 
we seed those and place them in this oven-like device that 
actually has the conditions of the human body.
    Another project also for the DOD is engineering these 
digits. You can see here we are actually placing the bone cells 
in the central portions. We would place the cartilage and then 
we would use those muscle strips I showed you in that first 
slide to actually finish off the digit. This is still, of 
course, experimental.
    Solid organs are by far the most complex, and this shows 
you a strategy that we used early on. This is actually a 
desktop inkjet printer. We just showed you the inkjet 
cartridge, but instead of using ink in the cartridge, we use 
cells. You can see the desktop inkjet printer going back and 
forth actually printing this two-chamber heart. It takes about 
40 minutes to print a two-chamber heart. About 4 to 6 hours 
later, you can actually start to see the little heart beating. 
You can see the heart structure is beating away, and this is, 
of course, also experimental for solid organs which are more 
complex.
    Another strategy for solid organs includes more 
sophisticated printers where we actually use x-rays. We are 
able to go down three-dimensionally in these x-rays and we are 
able to get right down to the organ. And by looking at the 
organ itself--in this case, it is a kidney--we are able to 
three-dimensionally rotate the image of this patient's x-ray 
and take the information necessary to actually create the CAd 
printing that goes on. We take this information down for the 
CAd printing into the computer three-dimensionally. We then 
place the cells on these cartridges and this actually shows the 
printer actually being initiated printing this three-
dimensional kidney structure, this construct that you see here, 
one layer at a time. These are actually, of course, still 
experimental where we are using these for implantation 
purposes.
    And then I am just going to share briefly with you now for 
30 seconds this brief clip of a patient who received an 
engineered bladder. So you can see firsthand from this patient 
what he is thinking. This was just recently recorded.
    [Video shown.]
    Dr. Atala. That was Lucas Masella. He is now 10 years out 
from having received his engineered organ. So you see for us 
the promise of regenerative medicine is not about the 
technologies we choose. It is about the ability for us to help 
our patients, and having innovation, the patent on intellectual 
property is an important part of this process.
    Thank you, Mr. Chairman, Members of the Committee.
    Mr. Goodlatte. Thank you, Dr. Atala.
    Dr. Fulkerson, I understand you have a demonstration for us 
of Rosetta Stone's latest language learning program. If you 
could take a moment to show us and I believe introduce us to 
your language coach.
    Mr. Fulkerson. Thank you, Mr. Chairman.
    So what I am going to show you is a quick introductory 
video that is the first exposure that our customers have when 
using Rosetta Stone v4 TOTALe to introduce the product to them. 
And then I will make a few comments at the end.
    [Video shown.]
    Mr. Fulkerson. As a technologist, this is embarrassing. 
[Laughter.]
    Since we don't get to hear it, I will pause it and talk 
through the main part of our product.
    The way Rosetta Stone works is we use pictures, sound, and 
text to convey meaning. So most language learning systems that 
you have used, going back to school, have always relied on 
translation where someone teaches you in the language that you 
already know about the language that you are trying to learn. 
At Rosetta Stone, we feel strongly that that just is not the 
right method. The right method is to try to immerse people in 
the language they are trying to learn and use those same 
cognitive processes that our children use to learn language as 
adults learning.
    So we have set up situations, almost little puzzles, that 
give you a situation that you can start to see differences 
between pictures or hear differences between sounds, the same 
challenge that our kids do when they learn a language to try to 
figure out what is that new thing that mommy or daddy just 
said. My 5-year-old probably doesn't know what a microphone is, 
but if I were to say I'm talking in a microphone, he could 
figure out that this thing in front of me is probably a 
microphone and from context start learning. And that is exactly 
how Rosetta Stone works. So we don't rely on the crutch of 
translation. We rely on your own ability reason and to think 
and solve those sort of small, little micro puzzles, but as you 
do, you start feeling much more confident in your own ability 
to learn as opposed to memorizing things that are hard for us, 
even in our native languages, like grammar. Most of us probably 
don't look fondly on the days of learning English grammar, but 
that is how we try to teach people their second language or 
their third language. So the idea of immersing you in a way 
that feels fun and light and engaging is how Rosetta Stone 
works.
    Our newest innovation that we call Studio is the idea that 
just using interactive software is better than most other 
methods to learn the language. You can start speaking. We have 
proprietary speech recognition that you can speak a substantial 
amount of time in our product. But talking to a native speaker 
is still invaluable. Having the opportunity--again just like 
our kids have the opportunity to talk to their parents and 
listen to their parents, that interaction with a native speaker 
is a critical piece.
    But when you are very early in your language learning 
journey and you only know a small number of words, you know, 
10, 20, 100 words, it is very hard to be successful. If I were 
to teach you 10 words of Portuguese and send you to San Paolo, 
you wouldn't think you could be very successful. But kids with 
a very small number of words can be successful. They can ask 
for something and get a response from their parent that starts 
making them feel confident and gain the confidence to try to 
use that language. And that is exactly what we have captured in 
Rosetta Studio. Rather than try to get you to finish your 
language learning journey, get you to the point that you know 
2,000 words and can actually go to San Paolo.
    We want you to feel successful very, very early, that sense 
that I can do it, I can learn a language because, to be honest, 
that has been the impediment for many of us learning a language 
is you feel you can't do it. You don't have a means to 
practice. You don't have a means to be successful. So the 
advent of Rosetta Studio and the ability from a business 
perspective to affordably provide native speakers to language 
learners around the world via the Internet is an innovation 
that we rolled out in 2009 and then mass rolled out just last 
September across the U.S. to our consumer business and are in 
the process now of rolling out around the world. By the end of 
this year, it will be live in all of the Rosetta Stone offices 
in Japan, Korea, Germany, the United Kingdom, and hopefully by 
the end of the year China and Brazil.
    Sorry about the technical problem.
    Mr. Goodlatte. Thank you very much.
    We are going to have to recess in a moment to attend a 
joint session of Congress where the Prime Minister of Australia 
will address the Congress. We are required by our House rules 
to do so.
    But you might use that opportunity to see if you can get 
that to work.
    Dr. Smith, we will try to get your presentation in before 
we go.
    Mr. Smith. Okay.
    [Video shown.]
    Mr. Smith. I am going to show you three different things. 
These are innovations that came out of my work at the 
University of North Carolina at Charlotte.
    The first one is the technology that was used to replace 
sheet metal assemblies in aerospace applications with 
monolithic machinings. So in the top left, you can see an 
avionics tray that came out of the F-18. And on the left part 
of that figure, you can see the pieces that used to be 
assembled together from folded sheet metal components. And on 
the right, is the monolithic piece that was cut down from a 
solid. Now, you might think that we are throwing away a lot of 
aluminum, and that is true, but that is not where the cost was. 
The cost was in the hand labor and all the special fixtures and 
tooling that were required to do the assembly. The end result 
of this kind of a switch was huge. On the little avionics tray, 
it was a 73 percent reduction in cost. But all over the F18, 
Boeing estimates more than $1 billion in savings in that 
program. Between the C/D model and the E/F model of the F-18, 
the plane got lighter and less expensive and cheaper, and 
getting all three of those together is really unusual.
    So now the technology has spread over into commercial 
aerospace. So there are lots of parts like this on jumbo jets, 
for example. And you can see in the bottom picture this person 
is machining a cargo deck floor for the 777, and this thing is 
10 feet by 5 and a half feet. It is about 5 inches thick. It 
starts out as a 2,500 kilogram slab of aluminum, and by the 
time the machining is all done, it is down 113 kilograms. The 
parts continue to get bigger and bigger because there is cost 
savings every time that happens.
    Additionally, there are weight reductions because of the 
assembly. When you put together the sheet metal pieces, you 
have to have two layers of sheet metal and a fastener that goes 
between them. If it is monolithic, you don't have that. If the 
sheet metal pieces don't quite fit, then you have to put a shim 
into the space between them to make the fit tight. A typical 
jumbo jet has something on the order of 2,000 pounds of shims, 
and you carry those shims through the whole life of the 
aircraft. You pay a weight penalty, a fuel penalty the whole 
life of the aircraft. So we have a technology to make the 
machining of these monolithic components more accurate.
    This one shows a concept. After the machining of something 
that is thin, we switch to a different tool which we use to 
push the thin parts around into a different configuration. So 
this part is about the size of my hand, and it is a heat sink. 
So a heat sink means that it dissipates the heat that something 
else produces, an electronic component, for example. So this 
has a lot of surface area, not much mass. It means it can 
dissipate a lot of heat.
    Now, ordinarily something like this is relatively expensive 
and difficult to make. We made this in about 10 minutes on a 
relatively simple three-axis machine that most shops have 
commercially.
    The last one that I will show you here is a technology that 
we developed for the breaking of chips. There are a lot of 
manufacturing operations that produce long, stringy chips in 
the cutting operation. We are shaping the metal from one size 
to another. As the metal peals off, it makes a long, stringy 
chip that gets tangled up on itself. And you can see in the 
pictures on the top left, the top right, the bottom left, these 
things often make a big snarl. They call it a bird's nest. 
Sometimes the operator is injured in trying to remove this. 
Sometimes the work piece is damaged. The sponsor for this was 
Oak Ridge Y-12, and their material is pyrophoric. It means it 
can catch on fire from the heat of the cutting. So the snarl is 
very dangerous.
    What we did was to use the axes of the machine tool, the 
motion of the machine itself, to cause the chips to break, and 
this makes the chips break all the time. That is the photograph 
on the bottom left, just above the picture of the team. So this 
has applications across a wide variety of industries, including 
biomedical and plastics, in addition to the metal ones that I 
have shown you.
    Mr. Goodlatte. Thank you very much.
    The Committee will stand in recess. We anticipate that we 
will reconvene at about 11:45 or sometime hopefully not too 
long thereafter. And we will take questions from the Members of 
the Committee at that time.
    [Recess.]
    Mr. Goodlatte. The subcommittee will reconvene.
    We will go now to our questions, and I will begin with a 
question for Dr. Fulkerson.
    How important is brand protection and copyright enforcement 
to Rosetta Stone's business, and what proactive steps has your 
company taken to protect their products overseas and online?
    Mr. Fulkerson. Thank you for that question, Mr. Chairman.
    Obviously, in the technology world, especially in the 
consumer technology world, the power of your brand is in some 
ways as important as the quality of your product. It sets the 
initial expectation with customers of what they expect and what 
they are buying. So the power of Rosetta Stone as a brand is 
tremendously important. We spend a considerable amount of time 
protecting, both actively and sort of defensively, our product 
from both copyrighted type infringement where people would take 
our content, repurpose it in their own version of a software 
application. We also work very hard to protect just the 
software itself, in some cases actually to the detriment of our 
customers because we do things like put in additional 
safeguards to lock the software, which is sort of a nuisance to 
customers, but we have to do it to make it harder for pirates 
to copy it and sell it.
    And then I think the most egregious form that we see is 
people who just flat out pirate our software, who take the code 
that we have written, put it on their own CD's or DVD's, 
advertise it on search engines, and then sell it in some cases 
as our product even as Rosetta Stone. So it is not uncommon to 
find pirates often overseas who have taken our exact website, 
replicated it 100 percent, sitting on servers in a place where 
it is hard for us to reach them, and then selling what looks to 
be Rosetta Stone software, taking unexpecting folks credit 
cards, sometimes delivering software, sometimes not delivering 
the software. But what we often find out when we get copies of 
that in, it is often not only a pirated copy but a copy that 
actually doesn't even work. So they are seriously hurting our 
brand from folks who get software that is actually broken.
    I would say the amount of money that we spend to defend 
against that is money that we could be spending on other 
things. We could be spending that same money--the millions of 
dollars we are spending to protect that we should be spending 
on innovation and the next generation products, but instead we 
are spending that money on defense.
    Mr. Goodlatte. Taking that a step further, there is a 
general shift in the software industry from packaged software 
to cloud computing. Do you see the future of the software 
industry in cloud computing as a way to clamp down on piracy 
and push innovation to consumers at a much faster pace, or do 
you see it as a problem?
    Mr. Fulkerson. As in everything, there is a little of both. 
I think in the enterprise computing space, people who are 
selling software to companies, cloud computing is sort of an 
immediate answer to provide better service. In the consumer 
space--and we are split. We have, obviously, customers that are 
large enterprises and customers that are consumers. Some of the 
cloud computing and the online and streamed kind of products 
are slower to be adopted by consumers. Consumers like the idea 
of buying it and having it, knowing they own it, and knowing if 
they change computers, they can reinstall it. But I think, as 
you point out, the trend is increasingly toward those kind of 
cloud computing initiatives.
    I think the free services that we see in cloud computing, 
obviously, with explosive growth are a different case, but when 
you are actually trying to sell a product or sort of lease a 
product for a certain amount of time in a cloud environment, 
that is something that consumers, as of today, are not 
comfortable with. But as you also point out, it is a place 
where it is safer for us because when we control the servers 
and when it is very clear that we can sign those in a way that 
we can sort of validate that this is Rosetta Stone and our 
customers can come to our servers, it is much harder for folks 
to just flat out copy it. People will and there are famous 
examples of where people have copied and cloned cloud services 
also, but I think it is a much safer place and a place where if 
the consumers would appreciate it more and value that kind of 
service more, we would love to move in that direction.
    Mr. Goodlatte. Dr. Atala, you described this new field of 
regenerative medicine that uses a person's own reprogrammed 
stem cells. You mentioned in your remarks about how this could 
impact health care costs. What kind of new industries can you 
see developing around this field, and what steps have you taken 
toward commercializing your patents?
    Dr. Atala. So there are many areas that you can actually 
direct these therapies for. For example, a lot of these cells 
can actually be used to help with diagnostic tests. So you can 
actually use a patient's own cells with specific disease 
states. For example, you can take patients who have congenital 
disorders who have a gene-specific disease and pull cells and 
actually use those cells to help with diagnostic kits.
    Another area where these cells can help is not just to use 
the cells to engineer organs, but actually just to inject them 
for therapy in the same patients. And there are many ways to do 
this. Some of the steps that we have taken to actually get this 
in the path is to actually get these technologies to patients. 
That is really the first step. How do we get these technologies 
to patients? Of course, we have to work very closely to go 
through the typical phase I, phase II, and phase III clinical 
trials that we need to go through with regulatory oversight by 
the FDA. After those clinical trials are done, then you can 
actually start to make that technology available to many other 
patients through industry. That is where these two factors come 
into play.
    One is to make sure that we have the intellectual property 
necessary so that we can protect these technologies and to make 
sure that those patents are strong, that people can't contest 
those patents.
    Second is to make sure that we get those technologies 
early, that we can assure that we have protection early with 
these technologies so we can go forward. And that is important 
because otherwise it is hard to get that kind of investment, 
especially when it is so costly.
    And third, once we actually go through that process, the 
regulatory process is extremely important. And that is also 
something that really needs to be dealt with. We need to 
somehow help to streamline that process and then finally get 
those technologies out. I must comment, though, that the 
typical technology right now that goes through the FDA takes 
about 14 years, over $1 billion.
    Mr. Goodlatte. So given that this work started in the mid-
1990's, do you have developed technologies that are 
commercially available now, or are you still waiting on FDA 
approval? Or are you not to the point of even requesting FDA 
approval?
    Dr. Atala. Yes, we are through the FDA process now 
actually. We are currently involved with the FDA process in 
some of these technologies. Some are already commercial. Some 
of these regenerative medicine technologies are already 
commercially available, but some of them are still in the 
regulatory process, and that has been actually for two reasons.
    One of them is that we did that on purpose to go slow. We 
have to go slow at first. So the patient that you saw, the clip 
that you saw earlier today, for example--we actually waited 
until we had an experience of up to 8 years of follow-up before 
we actually even published the study. And the reason we did it 
slowly and carefully was because it was a new technology, and 
we really did not know what to expect long-term. There were 
many unknowns, but that was now in 1998 when we put that first 
technology in.
    So now we can afford to accelerate the technology. We do 
not need to wait--to have a 5-year follow-up in all our 
patients like we did before. We can now afford to do this in a 
quicker manner and to actually translate these technologies in 
a more accelerated fashion because now we have tissues in 
patients, and there are many different clinical trials for over 
14 years in some cases.
    Mr. Goodlatte. One more question. I will start with Dr. 
Smith and then turn to you, Dr. Atala.
    As you have worked to commercialize your research, how 
important has the patent process been in securing funding and 
partnerships with larger companies and other entities?
    Dr. Atala. Extremely important, extremely important. Of 
course, one of the challenges that we have right now is the 
major backlog of the patents. So we have a lot of intellectual 
property that we are waiting to get a final result on. So that 
has actually been a challenge for us in the more recent years. 
All these applications that we have in, but not going through 
in an expedient manner.
    Mr. Goodlatte. Can you do the patent process and the FDA 
approval process at the same time, or does one have to begin 
before the other? How does that----
    Dr. Atala. Well, the challenge for us is that if you don't 
have intellectual property secured, it is very hard for 
investments to come in. So we need intellectual property so 
industry can trust that they will have something that will 
really give them the protection they need to go and make those 
large investments. So basically you can't have one without the 
other, which means that you really can't go and start treating 
patients necessarily through industry unless you have that 
protection.
    Mr. Goodlatte. Dr. Smith, what has been your experience?
    Mr. Smith. Well, certainly there is a lot of work that has 
to happen between the time that an idea has been shown as proof 
of concept, something that could be patented, and when a 
commercial product is created. There is a lot of work. There is 
a lot of expense that comes after the invention and before the 
commercialization. And the patent provides the protection to 
those investors. It draws the money to the idea because you 
know that you have protection for that hard work.
    Now, certainly I will concur that the backlog in the patent 
office makes this difficult. But it is critical, especially to 
a startup company where the intellectual property is often the 
only tangible asset that the company has. The company is formed 
based on an idea, and it needs to draw the investment. And the 
patents are what makes that possible.
    Mr. Goodlatte. Thank you.
    I will now turn to the gentleman from North Carolina.
    Mr. Watt. I guess this is a variation or an extension of 
Chairman Goodlatte's question because I was going to ask you 
about your experiences with the patent office. Have they been 
good? I guess both of you all--all three of you possibly--have 
suffered the delay process. Is that correct? Is that true of 
all three of you?
    Dr. Atala. Yes.
    Mr. Fulkerson. Yes.
    Mr. Smith. Yes.
    Mr. Watt. Except for that, how have your experiences with 
the patent office been? Do you find them competent, I mean, 
well prepared to do it once they get to it?
    Mr. Smith. I will say in my experience the eventual outcome 
was often quite good. But the backlog is high. So the time to 
get to the outcome was long. And often the first review that we 
got was relatively perfunctory. It was more or less like a 
keyword search. And I think that this is because of the 
backlog. So the eventual result, after some responses from us 
to their reviews, was usually quite good, but the initial 
response that we got from them was often not satisfactory.
    Mr. Watt. I guess if I followed Mr. Conyers' entreat, I 
should have been asking these questions in Spanish. [Laughter.]
    So hablo espanol un poquito, muy poquito. So I am not going 
there. But that was for Chairman Conyer's benefit when he looks 
at the record. I did want him to know that if he were here and 
he were challenging me, I would compete with him. Gracias.
    Dr. Smith, we have been hurtling down the road toward doing 
converting from a ``first to invent'' to a ``first to file'' 
system. I am led to believe that you have some wisdom to share 
with us on that. So let me allow you to get that wisdom into 
the record, and if either of the other two witnesses have 
either pros or cons to say about ``first to file'' versus 
``first to invent,'' I would like to hear whatever comments you 
have on that.
    Mr. Smith. Okay. I know that this is a somewhat 
controversial issue at the moment.
    I will start by saying I think that the Constitution talks 
about protecting the rights of the inventors, and it seems to 
me hard to argue that the inventor is the one who filed first. 
I think the inventor is the one who made the invention. So that 
seems clear to me.
    But beyond that, I would say that ``first to file'' tends 
to favor those organizations that have large patent staff on 
board, a large funding base and a large number of people to 
help prepare the patents because the motivation is to file 
quickly and often. So you file, file, file, file, file. I think 
it is disadvantageous to small companies, small universities, 
small inventors. I think particularly at the university level, 
I said that we need the protection of the 12-month grace 
period, and it seems difficult to reconcile the 12-month grace 
period with ``first to file.''
    Mr. Watt. Any other comments?
    Dr. Atala. Yes. One of the challenges so that we can face 
with our patent system is that when you look at the patent 
system internationally, it goes through a ``first to file.'' So 
in a way, we are not consistent with that system, and that 
becomes a little bit problematic when we go to the 
international arena because a lot of the patents that we file 
we are not filing just for U.S. protection but also for 
European protection and Asian, basically all over the world for 
the most part, and that in a way may put us at a disadvantage 
not to be in the same system of ``first to file,'' which is the 
current system that is used pretty much internationally.
    Mr. Fulkerson. I would add in the technology world I think 
things may be different than in manufacturing and biomedical 
where someone can grow a multibillion corporation that was 
started in the dorm room. That person sitting in their dorm 
room isn't thinking about the 5-year or the 6-year process and 
the tens of thousands of dollars to get a patent. They are 
trying to get their product to market. And so I think the 
initial Rosetta Stone innovations don't have adequate 
intellectual property protections in some ways. At this point, 
it is moot. But at the time, our Founders were trying to get 
products to market and were trying to raise capital by selling 
and raise revenue by selling products. So I think in that 
situation, clearly we would not have had a filing advantage.
    I believe there is a problem right now with our patent 
system with the concept of trolls, folks who aren't making 
products. They are trying to generate revenue through the 
courts with patents. I think ``first to file'' makes that 
worse. You will have folks that are trolling to file first, not 
innovators, not product companies. So I am envisioning what 
could happen, but to me that is a dangerous situation.
    Mr. Watt. Except for shortening the backlog and speeding up 
the process, are there any other specific procedural changes 
that either of the three of you would suggest to improve the 
patent process?
    Mr. Smith. Okay, I will go.
    Mr. Watt. All right.
    Mr. Smith. Certainly there is an issue that in the current 
law it is one-size-fits-all, and yet there is a range of 
different kinds of products which are being patented. So some 
of them like software have relatively short lifetimes, and some 
of them like medical products have relatively long development 
cycles. So in one case the lifetime of the product expires 
before the patent is even examined, and in another case the 
patent protection expires before the product comes to market. 
And so certainly some kind of a recognition of this variation 
in the products which are being patented might be useful.
    I would also say in the current fee structure, there is a 
two-tier system. So even the lower tier is still prohibitive 
for many small entities. Maybe there is a possibility for a 
third tier, a micro-sized company.
    Dr. Atala. I would have to agree with Dr. Smith that in 
terms of biotechnology, it does take longer to develop these 
technologies, and it does take longer to go through the process 
of trials. So I do agree with the statement that Dr. Smith made 
in terms of the length of the patents.
    One of the challenges is to be sure that one's patents do 
get issued, that one is certain that we can assure the inventor 
that the invention is actually true, that we can actually 
retain that patent as being one that is solid in terms of its 
claims. And that is certainly a challenge these days in many 
areas that we experience where patents are being challenged and 
other types of procedures are being done. So it would help us 
tremendously to assure that the patents that in fact are issued 
are solid and true to what they represent.
    Mr. Watt. Dr. Smith, it seems to me that in--well, even I 
guess all three of you--possibly there would be some 
consideration of prior art, if you are basing what you have 
done on somebody else's invention, research. How has that been 
a factor in the way you have proceeded?
    Mr. Smith. Certainly when we prepare a patent application, 
we try to disclose the prior art. We disclose everything of 
which we are aware. And when the examiner examines the patent, 
they look for additional prior art that we might not have been 
aware of. Yet, this is a really tall order for the examiner. 
How can they be aware of all of the trade journals, all of the 
publications, all of the places where the prior art might have 
appeared? It is a demanding task. And I think giving third 
parties the ability to submit written documentation about a 
patent which has been published but not yet granted would be 
useful. Essentially you get interested parties assisting the 
patent office in finding the relevant prior art.
    Mr. Watt. Finally, I don't see lights up there, so I am 
kind of wondering here.
    The technology transfer from the research to the 
commercialization of it is always a challenge there for 
universities in particular. Is there some way we can streamline 
that to make it clearer, or is it just a different case for 
every technology commercialization and just too hard to develop 
a set of rules for?
    Mr. Smith. Well, certainly I will say that it is helpful 
that the university can own the intellectual property even 
though the research might have been funded by an agency of the 
Federal Government, for example. The tech transfer office at 
our university is motivated to try to get those technologies 
commercialized. We view that as one of our key missions at the 
university to get the research work out into commercial 
practice.
    Dr. Atala. In terms of the technologies that we develop, it 
is very important that we continue with the protection from the 
Bayh-Dole Act. It is critical because that actually allows us 
to do the research with national initiatives, programs which 
are designated by the Nation to be of great need. And if we 
didn't have that ability, we would then be relying mainly on 
just special interest of specific groups to actually pursue 
that research.
    Mr. Watt. The Senate has passed a bill, and we may be 
calling on you all's technology transfer people to take a 
closer look at what they have proposed and what may or may not 
be in the House version of the bill. So I may be calling on--it 
is nice to have experts I can call on, though. So I appreciate 
you being here.
    Mr. Chairman, I will yield back the balance of my time.
    Mr. Goodlatte. I thank the gentleman.
    It is my pleasure to recognize the Ranking Member of the 
full Committee, Mr. Conyers from Michigan.
    Mr. Conyers. Thank you, Chairman Goodlatte.
    Can we get a credit for medical school for the performance 
and the work that was offered here today?
    Mr. Goodlatte. It will be part medical and part law school. 
[Laughter.]
    Mr. Smith. Some engineering.
    Mr. Conyers. Dr. Atala----
    Mr. Watt. I wanted you to know that I challenge you to do 
your questioning in Spanish.
    Mr. Goodlatte. Right and your tests will be in Spanish too.
    Mr. Watt. I did mine in Spanish.
    Mr. Conyers. I should have expected----
    Mr. Watt. You issued the challenge. I rose to the occasion 
in your absence.
    Mr. Conyers. Thank you.
    You mentioned heart disease and diabetes as things that we 
need to pay more attention to, but what about cancer where 
treatment is given more attention than prevention?
    Dr. Atala. Absolutely. Well, I think that is where 
regenerative medicine really has a role, a very special role, 
because currently if you think about disease, most of the time 
you are not aware that you have that problem until your organ 
is very far gone. I will give you an example. You may be 
playing tennis once a week, and you have never experienced any 
problem. Yet, one day you play tennis and right after you get 
chest pain. You go to the doctor's office. They do an 
arteriogram and they find out that your vessel is now over 90 
percent occluded. Interestingly, that is when you start having 
symptoms, once you are over the 90 percent range. You didn't 
have that pain when your vessel was 70 percent occluded or even 
80 percent occluded. So regenerative medicine has the ability 
to actually start treating you much earlier. By prevention, by 
you being more aware of your body's functionality over time, 
you may be able to prevent that end stage part of your disease 
by picking up these diseases early and addressing them earlier.
    Mr. Conyers. Now, what about the annual checkup? Does that 
give us any consolation?
    Dr. Atala. Well, you know, the annual checkups that you go 
through are good and they are certainly something that should 
be done, but the challenge is that doing a 360 analysis of your 
body currently is not necessarily economically feasible or 
possible because it is so complex. And so I think a lot of the 
work that is being done currently with genetics where we will 
be aware of what your genetic predisposition is based on your 
genome so we can actually take a small sample of your saliva, 
for example, and do a genome analysis where we know what your 
traits are, what genes are you expressing. We can then take 
those genes and start correlating to disease, and we will know 
what you are prone to get. And now we can start focusing in 
those specific areas based on your family history and your own 
genetic code and start preventing diseases that you are more 
prone to have.
    Mr. Conyers. Well, I don't want to get too personal but Mel 
Watt and I both try to play tennis at this stage of our life, 
and what I am interested in is that at the 90 percentile, 
before we get a little heartburn after tennis, you are telling 
me, in effect, that the annual checkup will not have us 
discover that before we get to this very advanced circumstance.
    Dr. Atala. Yes, that is correct. Not all the time. that is 
the challenge and that is why people come with a chest pain 
when they do with heart disease. I mean, that is the challenge. 
And really, the only way to do that--let us say we want to look 
at your blood vessels. I mean, you have to go through an 
arteriogram. So your heart disease and your symptoms is what 
really prompts the physician to do that.
    So that is why prevention is so important, and regenerative 
medicine really does play a major role in that because you have 
the capacity to actually hold off disease when you first detect 
it. And so better detection and better prevention are totally 
part of what regular health care should be.
    Mr. Conyers. Could I get a couple minutes more, Mr. 
Chairman?
    Mr. Goodlatte. Without objection.
    Mr. Conyers. Thank you.
    Dr. Fulkerson, we will be holding a hearing Monday on rogue 
websites and the piracy and so forth. I hope that you will be 
able to follow that along with us and give us your subsequent 
comments and recommendations as a result.
    Now, we have got some legislation called ``Combating Online 
Infringement and Counterfeits,'' and we are trying to get that 
through to stop pirates from getting payment. Your comments?
    Mr. Fulkerson. I am not familiar with that exact piece of 
legislation. But the problem of rogue websites--both their 
existence and the ease that they are found are things that I 
think that your subcommittee--we would welcome you to think 
about those problems.
    Related to the intellectual property side, the patent 
reforming law gets a lot of attention. The trademark law and 
policy, which ends up making it easier for these rogue websites 
to be discovered through search engines, is something that we 
would also love the subcommittee to think about, which is all 
terms in a search engine aren't equal. Some of those terms are 
trademarks. And when someone types in a trademark's term, 
that's not just like typing anything else. It has special 
protections in most cases under our laws. But trademark law and 
policy hasn't caught up in my opinion to the modern use of 
search engines and trademarks. That makes it easy for consumers 
to both find and to be duped by those rogue websites. It makes 
it very easy to type in a term and, bang, you are on a site 
which you may think is the owner of that trademark where in 
fact it is a bunch of people in the back of an alley in a place 
that isn't Harrisonburg, Virginia. So that is something that we 
would love to see legislative action and investigation from 
your Committee.
    Mr. Conyers. Dr. Smith, ``first to file'' is something that 
businesses and foreign companies recommend, but universities 
and small businesses and garage-type inventors are less 
enthusiastic about it. What are your comments?
    Mr. Smith. Well, certainly ``first to file'' provides 
clarity, and clarity is useful in drawing investment to a 
company. I understand that. I also hear the argument that 
``first to file'' would harmonize our patent law with the laws 
of other countries. I don't find that argument particularly 
compelling. Certainly there are countries that don't respect 
intellectual property at all, and we don't want to harmonize 
our law with them. So I think the issue is protecting the 
rights of the inventor, and clearly the inventor is the one who 
created the invention.
    I will say I think there is also an issue that ``first to 
file'' encourages frequent filing of patents that may be of 
lower quality than if you have time to develop the idea more 
fully. So I think it makes the problem of the backlog at the 
patent office worse.
    Mr. Conyers. Is there anybody here more enthusiastic about 
``first to file'' among the witnesses?
    Dr. Atala. Well, I mentioned that one of the challenges 
that we have is that if we are not consistent with the 
international system, that may place us at a disadvantage.
    Mr. Conyers. Thank you very much, Mr. Chairman.
    Mr. Chaffetz [presiding]. Thank you.
    I want to talk, Dr. Atala, about--can you walk us through 
the Armed Forces Institute of Regenerative Medicine's most 
immediate research goals, and are there companies that you are 
currently partnering with?
    Dr. Atala. Yes. The Armed Forces Institute of Regenerative 
Medicine is really an effort to bring together the best 
technologies that we have for our wounded warriors, and this is 
in one of four major categories, five areas but four major 
categories, which include burns, craniofacial injuries, limb 
and digit injuries, including compartment syndrome, and 
scarless wound healing. And it really brings together over 30 
institutions with every branch of the military supporting this 
effort to bring these technologies faster. And we are 
developing technologies right now for our wounded warriors. The 
goal of AFIRM was to actually have one technology ready for our 
patient before the 5 years of the initial program were 
completed. We are now basically just starting year 3, and we 
have 15 clinical trials currently at some stage of development.
    Mr. Chaffetz. What do you see happening with jobs? Assuming 
that everything continues to progress to the optimism that we 
all hope that this happens, what is going to happen to the job 
market in this sector, if you are able to have that success?
    Dr. Atala. Hopefully that will increase markedly. And so by 
having all these technologies at the clinical trial level, we 
already have many commercial partners which we are bringing 
into the Armed Forces Institute for Regenerative Medicine, and 
these commercial partners together with AFIRM investigators 
being able to bring these technologies to industry so that 
these products can be manufactured here in the U.S. and thus 
increase jobs and create jobs for our citizens.
    Mr. Chaffetz. Dr. Fulkerson, your company, Rosetta Stone, 
is truly a global company. Tell me about your experience 
internationally, what market access problem/challenges that you 
face, the competitive markets that you are feeling, and how 
that relates to what we are talking about here today.
    Mr. Fulkerson. Thank you. Sir, right now we have offices in 
four countries internationally and are considering expanding in 
others. Unfortunately right now, some of the world's largest 
language learning markets are countries that do have 
notoriously high piracy rates and, in some cases, as we just 
talked about, disrespect for intellectual property. And so even 
though those are tremendously very large markets for us, the 
risk and the burden of trying to enter those markets such as 
China is one that--we would love to have been there already, 
but those obstacles have kept us from going.
    Mr. Chaffetz. But are you selling any product in China?
    Mr. Fulkerson. We say we are huge in China but we don't 
generate any revenue in China.
    Mr. Chaffetz. Do you have anything to quantify the 
pervasiveness of the problem in China?
    Mr. Fulkerson. It is hard to quantify. We could certainly 
send you photographs of Rosetta Stone-looking kiosks in 
Shanghai that aren't run by Rosetta Stone, and it is not 
Rosetta Stone----
    Mr. Chaffetz. So how do you follow through on that to make 
sure--I mean, you are a company. You got employees. You are 
trying to do the right thing and somebody is taking your brand, 
your product, selling it in China. What do you do? Who do you 
call?
    Mr. Fulkerson. It is a great question. In China, there is 
very little that we can do. Working with U.S. Customs and ICE 
here in the United States--and they have been very helpful in 
helping us intercept pirated goods coming in.
    Mr. Chaffetz. So what do they tell you when you say, hey, 
look we got a problem in China? What do they say?
    Mr. Fulkerson. I am on the technology side. I should get 
someone else to answer the specific question of what kind of 
responses we get. But my impression, my layman's impression, is 
that they basically say there is not much they can do, but they 
will petition the Chinese Government. They will send letters, 
but my belief is that those are just ignored.
    Mr. Chaffetz. Well, that would be interesting. I would love 
to follow up how a company who is starting to be successful--
how they follow up with the enforcement side of things, not 
just for the importation but what is happening in other 
markets, China and others. It is not just China, but certainly 
that is the one that you continue to hear time and time again.
    We have just a few seconds. Dr. Smith, tell us just in the 
briefest words--we always talk about getting more kids engaged 
and interested in engineering. How do we do that?
    Mr. Smith. I think you have to show them something 
exciting. There are plenty of exciting activities at our 
university. We have a big tour program. We bring students 
through a lot. Motor sports, for example, is a big draw in 
North Carolina, and a lot of students come through our motor 
sports shop. I think you have to show them something exciting, 
a real, tangible product.
    Mr. Chaffetz. Thank you.
    My time has expired.
    We will now recognize the gentlewoman from Texas, Ms. 
Jackson Lee, for 5 minutes.
    Ms. Jackson Lee. Let me thank the Committee very much for 
this hearing.
    Let me just, across the board, ask Dr. Fulkerson, Dr. 
Atala, Dr. Smith, how many jobs can this kind of technology 
create in America. Just give me a wide range. And do you 
consider this kind of technology or technology, period, sort of 
the work generator of the 21st century?
    Mr. Fulkerson. I think the easy answer is it is unbounded. 
I think as we become more and more an information society and 
we grow more and more information workers, all Americans at 
some level are potentially engaged in information work. I think 
we have specific numbers in my written testimony from the 
Business Software Alliance of exactly how many jobs in which 
type of industries. But I believe from a growth perspective, 
technology has been a major driver of growth, obviously, in the 
last 30 years, but whether that is just pure information, 
computer technology, or any of the other----
    Ms. Jackson Lee. But jobs could grow every year. You can 
see jobs growing every year with technology inventions.
    Mr. Fulkerson. Oh, yes, ma'am.
    Ms. Jackson Lee. Dr. Atala?
    Dr. Atala. The same. In the field of regenerative medicine, 
basically you have an increasing number of technologies that 
are being used in terms of experimentally, a large number of 
companies which are currently formed for the field. And we do 
expect--as I had mentioned earlier, the current global market 
for this field is estimated to be in the vicinity of $118 
billion just by 2013.
    Ms. Jackson Lee. And you are an American-based company. So 
you are generating $118 billion that would impact creation of 
American jobs and investment in America. Is that correct?
    Dr. Atala. Well, I am actually at the Wake Forest Institute 
for Regenerative Medicine which is a nonprofit part of Wake 
Forest University in Winston-Salem, North Carolina.
    Ms. Jackson Lee. Right. I am aware of that, but out of that 
would come enormous amount of commercial or private sector jobs 
or investment.
    Dr. Atala. That is right. One of the major benefits is to 
be able to keep these technologies here, keep the innovation 
here in the U.S., manufacture the technologies here, and create 
jobs here.
    Ms. Jackson Lee. Thank you. I want to hear more, but my 
time is short.
    Dr. Smith, how many jobs do you think out of this kind of 
arena could one create in the 21st century?
    Mr. Smith. Well, for the technologies that I showed, the 
number of jobs that were directly created are at the moment 
small. These are start-up companies. But because the 
technologies that I showed are directed specifically at 
productivity, the number of jobs that are created is quite 
large.
    There is a lot of talk about the manufacturing sector in 
the United States having trouble competing internationally with 
the wage difference. And I think that is the wrong question. I 
think the right question is given that there is a wage 
difference, how do you remain competitive, and I think the ways 
that you remain competitive are you innovate, you make things 
that other people can't make, you improve your productivity. If 
you want to maintain a wage difference, you have to maintain a 
productivity difference. I think if we get it right, what would 
matter is proximity to market more than the cost of the labor.
    Ms. Jackson Lee. We need to market what our best talents 
are.
    Let me ask my two questions so that you can be in the 
middle of answering if my time runs out.
    First of all, we all know as kids, when you heard a shriek 
on the playground, it was somebody saying you are not playing 
fair, or maybe when you heard a little rumble in the back yard 
somebody was not playing fair. I abhor an uneven playing field. 
I think it is just ludicrous.
    So I need you to tell me with your greatest passion, even 
though, Dr. Fulkerson, you said that is not your area, what 
Congress can do to stop this piracy and this stealing of 
intellectual property. Just give it to us from your gut.
    Dr. Fulkerson, I just want to know can I learn Spanish, 
French, and anything else. How long will it take me on the 
Rosetta Stone? [Laughter.]
    Ms. Jackson Lee. But my last point, Dr. Atala, if you could 
tell me whether or not you have got any partnerships or are 
working with any minority and women doctors, researchers, and 
scientists and cultivating any small businesses from the 
minority and women-owned business community.
    But if you could quickly go on what Congress can do to stop 
this.
    Mr. Fulkerson. We obviously have to continue enforcement of 
the folks who are actually doing the piracy. But I continue to 
believe that the single biggest thing we can do is make it 
harder to find the pirates.
    Ms. Jackson Lee. Make it?
    Mr. Fulkerson. Make it harder for consumers to find the 
pirates. If a pawn shop was selling pirated goods, local police 
will shut that down. If an international search engine is 
making it easy to find pirated sites, there is no way to shut 
that down. They will cooperate at times, but it is just too 
easy for pirates to get into our living rooms, to get into our 
laptops, and sell us stuff. I believe in a free Internet, but 
there are things we need to do around trademark enforcement and 
protection to make that harder.
    Also, I would like to just add--I can get you the job 
number. The Business Software Alliance, of which we are a 
member--and we can provide you this information--estimates that 
in the U.S. over the next 2 years, we will create 282,000 jobs 
in information technology.
    Ms. Jackson Lee. Excellent.
    Dr. Atala?
    Dr. Atala. Yes. As part of the institute, we are proud to 
report that we have people that come with us from 23 different 
countries and many nationalities and many different minority 
groups. So that has been a good thing for us.
    When we do the clinical trials actually, we have to abide 
by all the regulations in terms of making sure that all 
patients also participate in the clinical trials.
    And when it comes to industry, of course, again we are not 
connected at that level with industry as part of my role at the 
institute, but when we do commercialize these technologies and 
we do bring these technologies to a commercial venue, we 
certainly make sure that all of the appropriate rules are 
followed in that direction.
    Ms. Jackson Lee. Dr. Smith? Stop piracy.
    Mr. Smith. Stop piracy. This is difficult. I mean, I think 
it is even difficult inside of the U.S. If you are a small 
company and you believe that you are being infringed, it is 
often difficult to prevail because you don't have the funds 
that are required to last long enough in court. And I think 
overseas this is even a more complicated problem.
    In regard to your question about minorities, one of the 
most successful start-ups spun out of UNC Charlotte by my 
graduate student actually is a female-owned company.
    Ms. Jackson Lee. Excellent.
    Thank you, Mr. Chairman. I thank all of you.
    Mr. Chaffetz. Thank you.
    At this time, we are going to draw a conclusion to this 
hearing. We appreciate all the time, effort, and resources that 
you take to be here. We truly do appreciate your making time 
for the Committee and offering your expertise. And at this 
time, the Committee stands adjourned.
    Oh, yes. I would make a note for the record that all 
Members will have 5 legislative days to enter information into 
the record, and we also extend that to you. If you have 
additional comments or things that you would like to see 
inserted into the record, we allow for 5 additional days.
    And with that, I thank the witnesses and the Committee will 
stand adjourned.
    [Whereupon, at 12:48 p.m., the subcommittee was adjourned.]

                                 
