[Congressional Record Volume 143, Number 44 (Tuesday, April 15, 1997)]
[House]
[Pages H1511-H1512]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        H.R. 400 LEVELS THE PLAYING FIELD FOR AMERICAN INVENTORS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from North Carolina [Mr. Coble] is recognized for 5 minutes.
  Mr. COBLE. Mr. Speaker, there have been many accusations about H.R. 
400, popularly known as the patent bill, which will be on the floor 
this coming Thursday, allowing the Japanese and other foreign entities 
to steal our technology. The problem is that those making these 
accusations are disseminating misinformation, or inaccurate information 
to be more specific.
  This bill does not discriminate against American applicants. On the 
contrary, it levels the playing field so that Americans will stop being 
treated unfairly in our own country. It is the current system that 
protects what the gentleman from California [Mr. Rohrabacher] calls 
Japanese or Chinese interests.
  Under the abuses employed by foreign applicants today, which continue 
to be allowed under the bill of the gentleman from California, foreign 
applicants are laughing all the way to the bank.
  Get this: A foreign applicant can file a patent application in his 
own country, or anywhere other than the United States, while delaying 
his application in the United States; a practice, by the way, which 
H.R. 400 prevents. Consequently, the foreign applicant's patent issues 
quickly overseas and not in the United States until much later.
  Under the Rohrabacher system, as the foreign-issued patent is about 
to expire, the foreign company may then abandon its delay tactics in 
the United States and allow its U.S. patent to issue, ensuring years of 
monopoly protection in our country. So the foreign applicant initially 
prevents American companies from selling competing products abroad, and 
to make matters worse, when the foreign patent expires, the foreign 
applicant receives a U.S. patent, which then prevents American 
companies from selling competing products here.
  This encourages, by the way, Mr. Speaker, American companies to move 
overseas taking with them American jobs.
  Here is another example: Right now a foreign applicant can come into 
the United States, take a product which is being held as a trade secret 
by an American company, patent it, and make the American inventor pay 
royalty fees for its own invention. This actually occurs.
  Small businesses represented who testified in front of our 
subcommittee have shared their personal stories about this. The 
gentleman from California, Mr. Rohrabacher's bill allows this to 
continue. H.R. 400 allows the original American inventor to continue 
using his invention in the same way he was using it before he was sued 
by the foreign patent holder.
  Here is another abuse, committed by foreign and American applicants 
which the gentleman from California, [Mr. Rohrabacher] allows and which 
our bill, H.R. 400, stops; it is called submarine patenting.
  This procedure is a tool of self-serving predators who purposely 
delay their applications and keep them hidden under the water until 
someone else with no way to know of the hidden applications invests in 
the research and development to produce a new consumer product, only to 
have the submarine rise above the surface and sue them for their 
innovation.
  One recent suit earned a submariner $450 million at the expense of 
consumers. Submariners do not hire workers, do not invest in the 
economy, and they do not advance technology. They only live to sue 
others who do invest and contribute.
  The gentleman from California, [Mr. Rohrabacher] will tell you that 
there are hardly any submariners out there and that they constitute a 
minuscule amount. Of course, we all know that if you make your living 
suing American innovators, you sue as many as possible and hope to 
settle for nuisance value.
  That is why many cases initiated by submariners are not recorded. I 
urge everyone to take a look at the front page story of the Wall Street 
Journal about the problem which appeared on April 9. It is a great 
problem which my bill prevents. And it is these submariners, Mr. 
Speaker, who probably stand to benefit more than any other group if our 
bill is defeated.
  Some folks are confused about what this bill does and does not do in 
view of my previous illustrations. There have been some concerns that 
have arisen which have involved great discussion and significant 
negotiation. Those will form the basis of a floor manager's amendment 
which I will offer to this body on Thursday.
  Inventors have complained that the office has not been able to spend 
its valuable resources on the most important function of the office, 
that is the Patent and Trademark Office.
  Mr. Speaker, I appreciate the support of my colleagues on Thursday.
  Mr. Speaker, I want to take 5 minutes to address some of the scare 
tactics being employed by critics to a very important patent law reform 
bill coming to the floor and explain the contents of an important floor 
manager's amendment which will be offered to H.R. 400 on Thursday. 
After much negotiation with all interests involved with this bill, the 
Judiciary Committee will put forth a comprehensive amendment containing 
many improvements and alleviating many concerns, especially of the 
independent inventor and small business communities.
  There have been many accusations about H.R. 400 allowing the 
Japanese, or other foreign entities, to steal our technology. The 
problem is that those making the accusations don't understand the bill. 
This bill does not discriminate against American applicants, on the 
contrary, it levels the playing field so that Americans will stop being 
treated unfairly in our own country.
  It is the current system that protects what Mr. Rohrabacher calls 
Japanese or Chinese interests. Under the abuses employed by foreign 
applicants today, which continue to be allowed under Mr. Rohrabacher's 
bill, foreign

[[Page H1512]]

applicants are laughing all the way to the bank.
  Get this: a foreign applicant can file a patent application in his 
own country, or anywhere other than the United States, while delaying 
his application in the United States--a practice which H.R. 400 
prevents. Consequently, the foreign applicant's patent issues quickly 
overseas, and not in the United States until much later. Under the 
Rohrabacher system, as the foreign-issued patent is about to expire, 
the foreign company may then abandon its delay tactics in the United 
States and allow its U.S. patent to issue, ensuring years of monopoly 
protection in our country. So the foreign applicant initially prevents 
American companies from selling competing products abroad, and to make 
matters worse, when the foreign patent expires, the foreign applicant 
receives a U.S. patent which then prevents American companies from 
selling competing products here. This encourages American companies to 
move overseas, taking American jobs with them.
  Here's another example: right now a foreign applicant can come into 
the United States, take a product which is being held as a trade secret 
by an American company, patent it, and make the American inventory pay 
royalty fees for its own invention. This really happens. Small 
businesses who testified in front of our subcommittee have shared their 
personal stories about this. Mr. Rohrabacher's bill allows this to 
continue. H.R. 400 allows the original American inventor to continue 
using his invention in the same way he was using it before he was sued 
by the foreign patent holder.
  Here's another abuse, committed by foreign and American applicants, 
which Mr. Rohrabacher allows and H.R. 400 stops. It's called submarine 
patenting. This procedure is a tool of self-serving predators who 
purposely delay their applications and keep them ``hidden under the 
water'' until someone else, with no way to know of the hidden 
application, invests in the research and development to produce a new 
consumer product, only to have the submarine rise above the surface and 
sue them for their innovation. One recent suit earned a submariner $450 
million at the expense of consumers. Submariners do not hire workers, 
invest in the economy, or advance technology. They only live to sue 
others who do invest and contribute. Mr. Rohrabacher will tell you that 
there are hardly any submariners out there and that they constitute a 
minuscule amount. Of course, we all know that if you make your living 
suing American innovators, you sue as many as possible and hope to 
settle for nuisance value. That's why many cases brought by submariners 
are not recorded. I urge everyone to take a look at the front page 
story of the Wall Street Journal about this problem which appeared on 
April 9. It is a great problem which my bill prevents.
  So you see, Mr. Speaker, some folks are confused about what this bill 
does and what it doesn't do. There have been some concerns that have 
come up on which there has been great discussion and significant 
negotiation. Those will form the basis of a floor manager's amendment 
which I will offer on Thursday.
  Inventors have complained that the Office has not been able to spend 
its valuable resources on the most important function of the Office--
granting patents and issuing trademarks with quality review in the 
shortest time possible. The manager's amendment separates completely 
policy functions from operational functions. Policy functions are left 
to the Department of Commerce, while management and operational 
functions are vested completely in the PTO. This will allow the PTO to 
be led by a Director who will have only one mission: to process and 
adjudicate efficiently and fairly the important Government functions of 
granting patents and issuing trademarks.
  Independent inventors and small businesses have expressed concern 
over the publication requirement contained in the bill. While 
publication has many benefits for both of these groups, the manager's 
amendment will give them a choice over whether or not they wish to be 
published. It will effectively exempt independent inventors and small 
businesses from publication by deferring it until 3 months after they 
have received at least two determinations on the merits of each 
invention claimed on whether or not their patent will issue. At this 
stage, the applicant knows whether or not his patent will issue, in 
which case it would be published anyway under today's law. If it will 
not be granted, the applicant can withdraw its application and avoid 
publication and protect the invention by another means.
  Critics have been concerned about the language in the bill, taken 
from current applicable law, that allows the PTO to continue its 
current practice of accepting gifts in order to allow examiners to 
visit research sites to help them to a better job. In order to 
alleviate any concerns, founded or unfounded, the manager's amendment 
will explicitly subject the acceptance of any gifts to the provisions 
of the criminal code and require that written rules be promulgated to 
specifically ensure that the acceptance of any gifts are not only 
legal, but avoid any appearance of impropriety.
  The manager's amendment will also adopt two measures included in a 
bill introduced by my colleague, Mr. Hunter of California, which 
provide for an incentive program to better train examiners, and require 
publication for public inspection all solicitations made by the PTO for 
contracts. These are good ideas that make H.R. 400 an even better bill, 
and I thank the gentlemen for his contribution to this important 
debate.
  While the current bill ensures that the Advisory Board for the new 
PTO should be comprised of diverse users of the Office in order to help 
Congress conduct more effective oversight, the manager's amendment will 
explicitly require that inventors be included as members. While this 
was always the intent of the provision, it will be clarified.
  The Appropriations Committee has expressed concern over the borrowing 
authority in the bill, and critics, although many misunderstand how the 
authority works under the control of Congress, have made much ado about 
a procedure which would offer a small possibility for the new PTO to 
borrow money instead of having to raise fees on inventors to pay for 
any high technology future projects. Accordingly, the manager's 
amendment will strike the borrowing authority provisions from the bill.
  In further guaranteeing an inventor at least 17 years of patent term 
from the time of issuance, the manager's amendment will allow inventors 
adequate time to respond to inquiries from the PTO regarding their 
applications. The manager's amendment will also allow inventors who 
were adversely affected by the change in patent term in 1995 to receive 
a further limited examination to avoid losing term.
  Small businesses and independent inventors have been concerned that 
the new PTO may not recognize the longstanding reduction in fees 
applicable to these constituencies. The manager's amendment requires 
that the agency continue to provide that small businesses and 
independent inventors pay half-price for their patent applications.
  Independent inventors have claimed that the reexamination provisions 
contained in H.R. 400 are too broad, even though they simply offer an 
alternative to expensive Federal court litigation that occurs today at 
the expense of and sometimes leading to the bankruptcy of small 
businesses and independent inventors. To make reexamination an even 
more attractive and cheaper alternative, the manager's amendment will 
require all multiple requests for reexamination to be consolidated into 
a single proceeding.
  Importantly, reexamination is also limited to prior patents and 
publications and will not be expanded at all from the process as it is 
done today.
  As you can see, Mr. Speaker, the committee has been constructively 
engaged with the small business and independent inventor community for 
over 2 years. These final safeguards for those constituencies will be 
added to the numerous safeguards already contained in the bill, 
including special provisions for the university and research 
communities.

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