[Congressional Record Volume 141, Number 81 (Tuesday, May 16, 1995)]
[Extensions of Remarks]
[Page E1053]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                    ABOLISHING THE SUBMARINE PATENT

                                 ______


                        HON. CARLOS J. MOORHEAD

                             of california

                    in the house of representatives

                         Tuesday, May 16, 1995
  Mr. MOORHEAD. Mr. Speaker, recently, advertisements appeared in most 
of the newspapers in my 27th Congressional District, including the 
entire back page of the L.A. Times. These advertisements were purchased 
by a newly created group calling themselves Intellectual Property 
Creators. The adds were supporting the passage of H.R. 359, a bill 
introduced by my friend and colleague from California [Mr. Rohrabacher] 
. The purpose of this type of lobbying is to bring pressure on me and 
the subcommittee I chair, to process this bill immediately. The bill, 
H.R. 359, is very controversial and of dubious merit. However, I have 
indicated that the subcommittee will hold a hearing on this issue next 
year.
  The issue is the change in the U.S. patent law that occurred last 
year with the enactment of the GATT implementing legislation which 
[[Page E1052]] will change current patent law by adopting a 20-year 
patent term measured from the application filing date to replace the 
current term of 17 years measured from the date of the issuance of the 
patent.
  That commitment was made in substance in the GATT Uruguay round TRIPs 
agreement, as well as in 1994 bilateral executive agreement with Japan. 
A 20-year term has been an agreed-upon point in GATT for at least the 
past 4 years through Republican and Democratic administrations alike. 
This is common knowledge. The idea of the 20-year term is not new. A 
20-year proposal almost identical to the present law was recommended 
for the United States by President Lyndon Johnson's Commission on the 
Patent System in 1966 and Secretary of Commerce Mosbacher's Commission 
on Patent Law Reform in 1992.
  I did not vote in favor of the GATT implementing legislation for a 
number of reasons, none of which concerned the intellectual property 
provisions of GATT. To the contrary, I do know that the copyright and 
patent provisions of GATT are good for the United States and supported 
by every major national copyright, patent, and bar association that 
takes an interest in patent and copyright law, as well as the National 
Association of Manufacturers and the Pharmaceutical Research and 
Manufacturers of America.
  Present law provides 17 years of protection for a patent upon the 
issuance of that patent. The new law provides 20 years of protection 
for a patent upon filing of a patent application. The average time to 
examine and issue a patent by the U.S. Patent Office in 1993 was 19.5 
months. This is expected to be reduced further in 1995 to 18.9 months. 
As of this past September the time to dispose of a biotechnology 
application is 20.5 months. GATT will add an additional 36 months to 
cover this examination period.
  The American Intellectual Property Law Association and the 
Intellectual Property Owners, both watchdogs over the U.S. Patent 
Office, agree with the Patent Office that the vast numbers of patent 
applicants will gain 1 to 1\1/2\ years under GATT.
  The Judiciary Committee Subcommittee on Intellectual Property on 
which I have served for 18 years, has jurisdiction over the patent law 
and the Patent Office. Has the Judiciary Committee been asleep at the 
switch so that Japan and certain multinational companies could damage 
the U.S. patent system through the GATT Uruguay round agreement? The 
exact opposite is true. We have closely monitored the intellectual 
property negotiations contained in GATT since 1987. This past January, 
the Japanese Patent Commissioner agreed to make substantive changes in 
their law to benefit United States inventors in exchange for the Patent 
and Trademark Office recommending the 20-year term from filing--a 
change the United States wanted to make anyway.
  The features of the Japanese patent system that create problems for 
United States businesses are:
  One, they do not permit filing applications in the English-language;
  Two, the time it takes to obtain a patent is much too long--5 to 7 
years;
  Three, they permit competitors to oppose the issuance of a patent 
before the patent grant. Thus, delaying the rights of U.S. businesses;
  Four, they permit competitors who develop minor improvements to 
obtain compulsory licenses for basic technologies developed by U.S. 
businesses.
  These are the Japanese practices that they have agreed to change to 
make it easier and more economical for United States investors to file 
in that country.
  To further protect patent applicants the new law legislation would 
extend the 20-year term of a patent for up to 5 additional years to 
compensate when an applicant is involved in a proceeding to determine 
who is the first to invent or an appeal of an examiner's decision in a 
court proceeding. This protection will further ensure that the 
applicant will not suffer any loss of term.
  In addition to these protections the new law adds an additional year 
for what is called a provisional patent application. This adds an 
additional year during which the applicant can develop claims and 
potentially seek investment for development of the invention. During 
this provisional year the inventor retains his right to an early filing 
date, but the 20-year terms doesn't start to run until the application 
is filed, which amounts to 21 years of effective patent term.
  Our present term of 17 years measured from patent grant is being 
abused by a few inventors and is interfering with the patent system's 
objective of stimulating progress in technology. By filing successive 
continuing applications on the same invention, the original 
applications remain submerged in the Patent and Trademark Office in 
secrecy year after year. It's a legal means of intentional delays 
perpetrated by the inventor, until a company has grown up around or an 
existing company begins using the inventor's original idea. Once the 
patent is granted, sometimes as much as 20 years after filing, the 
inventor can demand significant licensing fees for continued use of the 
now patented process. This usually comes as a brutal surprise to 
companies who manufacturer in the United States both foreign and 
domestic. This is the practice that H.R. 359 would protect.
  The longer an applicant can delay, the further into the future the 
patent monopoly will extend because the United States measures the term 
from date of grant rather than date of filing. All foreign countries 
have the safeguard of measuring the term from filing date.
  The most extreme and successful abuse of our current patent system 
terms involves a fairly well-known U.S. inventor who may have helped 
pay for full page advertisements in leading U.S. newspapers in recent 
months opposing changes in U.S. patent law particularly the 20-year 
patent term in order to try and preserve this abusive practice. In 
other words, he supports the passage of H.R. 359.
  The American Lawyer, May 1993, contained an article which explains 
how this inventor made millions of dollars by the use of a submarine 
patent. This is how it works:
  In December 1956, the inventor files a patent application on a 
machine vision device.
  Through a series of continuations he keeps his 1956 patent 
application, now divided into a number of separate applications, 
pending in secret in the Patent Office for decades.
  Bar code scanning technology is developed throughout the world by 
many different inventors between 1956 and 1989. The uses of the 
technology run the gamut from supermarket checkout counters to 
automated automobile assembly lines.
  As the technology is developed by others, he can amend his machine 
vision patent applications to bring them up-to-date with bar code 
scanning.
  In 1989, his patents begin to issue. To the amazement of whole 
industries, these newly issued patents cover bar code scanning in 
widespread use throughout the United States. His patents will last into 
the next century.
  In 1992, he collected $450 million in royalties from the Japanese and 
European automobile industries and in return he allows them to continue 
to operate their factories.
  In 1992, Ford, general Motors, and Chrysler refuse to pay him a 
royalty so that their assembly lines can remain open. The Big three 
U.S. auto-makers have used bar code scanners extensively since 1960. 
The inventor has filed a patent infringement suit against all three 
companies.
  The U.S. patent system is designed to cause inventors to disclose 
inventions to, as the U.S. Constitution says, ``promote science and the 
useful arts.'' in return, patents provide inventors with a 17-year 
monopoly.
  Submarien patent abusers do not disclose anything. Just the opposite. 
They deliberately keep their inventions secret. Then, after decades of 
delay, they cause the patients to issue so that can collect royalties 
from existing businesses. These submarine patents are intended to be a 
weapon against legitimate businesses.
  In 1966 President Johnson's Commission on the Patent System 
recommended the 20-year patent term. Judge Simon Rifkind was the 
cochairman of that Commission and in 1967 he testified in the Senate in 
favor of the 20-year term and said:

       By this simple change, all of the motivations which today 
     are organized in the direction of delay are redirected toward 
     speed * * *. The harm that comes from our present system is 
     very great. As long as that patent application lies in the 
     Patent Office in secret it fails to make its contribution to 
     the body of technological information that our society ought 
     to have.

  That criticism of our patent system was made over 25 years ago, it is 
still valid today. The 20-year term measured from filing would end this 
abuse.
  The 20-year term in the GATT implementing legislation could reduce 
patent protection in a very small number of cases but in the vast 
majority of cases patent would be lengthened and in some cases as much 
as 2 years beyond the 17 years. The term for the rest of the cases 
would be around 17 years. The advantage of the 20-year term will be a 
longer patent term for most inventors, the abolition of the submarine 
patent, U.S. compliance with GATT and improvement of U.S. inventor 
rights in over 100 member countries.
  The Subcommittee on Courts and Intellectual Property is faced with 
other pressing proposals that offer more promise for improving American 
patent, trademark and copyright laws to protect creativity and the 
genius of the American people. The patent term law taking effect on 
June 8, 1995 does not apply to any patents that have been granted in 
the past. Patent applications filed under the new law for the most part 
will not expire before the year 2015. So we have time to correct by 
legislation any injustice that may occur under the new law. The new law 
was promptly enacted by the Congress and signed by the President. 
[[Page E1053]] I did not vote for it but I believe it should be given a 
chance to take effect.
  When the subcommittee reaches H.R. 359 for a hearing next year, we 
will investigate whether anyone besides deliberate abusers of the 
patent system is likely to obtain shorter patent life under the new 
law. If any inventors are losing patent life through no fault of their 
own, we will consider appropriate corrective action.
Vol. 141


WASHINGTON, TUESDAY, MAY 16, 1995

No. 81


House of Representatives