[Congressional Record Volume 142, Number 117 (Friday, August 2, 1996)]
[Extensions of Remarks]
[Pages E1465-E1466]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           INTERNATIONAL TRADE PATENT AND ROYALTY ENFORCEMENT

                                 ______
                                 

                          HON. ROBERT MENENDEZ

                             of new jersey

                    in the house of representatives

                         Friday, August 2, 1996

  Mr. MENENDEZ. Mr. Speaker, the current legal situation in the 
international trade arena, places small companies and American 
businesses in a position where they have little recourse against unfair 
trade acts, and where they are vulnerable to foreign predatory 
practices. The bill that I am introducing today would mandate that 
there be legislative change to enable small companies, who have endured 
unfair methods of competition by their foreign trading partners, to 
seek redress in a court of competent jurisdiction in the United States.
  This legislation will help small business owners like Mr. Salvatore 
Monte. Mr. Monte is the president of Kenrich Petrochemical Inc., and an 
inventor in the proud New Jersey tradition of Thomas Edison. Mr. Monte 
holds numerous patents for organo-metallic compounds, which are used in 
everything from rocket fuels, to ammunition, to tires, to cars, to 
printed circuit boards, to photocopiers. In 1976, Mr. Monte signed a 
contract with Ajinomote Co. [AJICO] of Japan to import, and later, gave 
license to manufacture, his chemical products. Since that time, Mr. 
Monte has experienced extensive violation of his intellectual property 
rights, and questionable business practices--robbing him of millions of 
dollars. Mr. Monte has been faced with such anticompetitive business 
practices as:
       Improper recordkeeping; so narrow an interpretation of 
     Japanese patents as to be considered infringement--to the 
     point that the Japanese manufacturer even copied his 
     technical literature; patent flooding; and unauthorized 
     sublicensing for the manufacture of his chemicals.
  I believe Mr. Monte is not alone in his dilemma. The U.S. Trade 
Representative received numerous complaints about Japanese narrow 
patent interpretation and patent flooding practices. As a result, Japan 
remains on the special 301 priority watch list. Absent legislative 
change which gives U.S. courts jurisdiction over the unfair acts and 
unfair methods of competition in which foreign companies are engaging 
under the protection of their government, there is little recourse 
under law for small business owners, like Mr. Monte. The WTO has no 
jurisdiction over private actions.

[[Page E1466]]

One cannot proceed before the WTO except against a government action. 
For Mr. Monte, he is essentially condemned to bring an action before a 
Japanese tribunal. This is absurd. Japanese courts have been accused by 
both the European Union and the United States for their lack of 
enforcement of intellectual property laws, and for supporting the 
Japanese unfair patent system. Government enforcement agencies are no 
better. The Japanese Federal Trade Commission is notorious for 
tolerating anticompetitive and unfair trade practices.
  Mr. Monte's situation raises fundamental questions about the role of 
our Federal Government in protecting the constitutional rights of our 
citizens in the context of international trade. Upholding the standard 
of free markets and free trade is not a license to do nothing. The 
price of freedom is not without cost for either personal liberties or 
economic freedom. It is a constitutional right under the first 
amendment that our citizens may petition the Government for redress of 
grievances. Also, it is a constitutional prerogative under article 1, 
section 8, clause 8 ``to promote the progress of science and useful 
arts, by securing for limited times to authors and inventors, the 
exclusive right of their respective writings and discoveries.''

  Mr. Monte's case shows how defenseless American small business is in 
international trade and how little the Federal Government does to 
protect fair trade. As we enter the globalized marketplace of the 21st 
century, the U.S. Government must take action to ensure that we have 
policies and laws that support and enhance the position of our 
businesses. Unfair trade affects everyone--businesses, consumers, and 
workers. Predatory practices are actionable under U.S. law and we must 
continue to require that the rights of U.S. citizens are freely and 
fairly insured. The bill I am introducing today will do just that. I 
urge my colleagues to join me in cosponsoring this important piece of 
legislation. Free trade is irrelevant if the trade is not fair.

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