[Congressional Record Volume 147, Number 164 (Friday, November 30, 2001)]
[Senate]
[Pages S12261-S12263]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEAHY (for himself, Mr. Hatch, Mr. Reid, and Mr. Bennett):
  S. 1754. A bill to authorize appropriations for the United States 
Patent and Trademark Office for fiscal years 2002 through 2007, and for 
other purposes; to the Committee on the Judiciary.
  Mr. LEAHY. Mr. President, I am pleased to join with Senators Hatch, 
Reid, and Bennett in the introduction of the Patent and Trademark 
Office

[[Page S12262]]

Authorization Act of 2002. Senator Hatch and I, as leaders of the 
Judiciary Committee, have had great success in working together to 
protect America's innovators and to protect our patent and trademark 
system.
  This bill is another example of our bipartisan effort to strengthen 
America's future. By joining with Senators Reid and Bennett, this bill 
will send a strong message to America's innovators and inventors that 
the Congress intends to protect and enhance our patent system. The PTO 
serves a critical role in the promotion and development of commercial 
activity in the United States by granting patents and trademark 
registrations to our nation's innovators and businesses.
  The costs of running the PTO are entirely paid for by fees collected 
by the PTO form users, individuals and companies that seek to benefit 
from patent and trademark protections. However, since 1992 Congress has 
diverted over $800 million of those fees for other government programs 
unrelated to the PTO.
  This bill sends a strong message that Congress should appropriate to 
the PTO a funding level equal to these fees. The reason for this is 
simple: the creation of intellectual property by Americans, individuals 
and businesses, is a massive positive driving force for our economy and 
is a huge plus for our trade balance with the rest of the world. In 
recent years, the number of patient applications has risen 
dramatically, and that trend is expected to continue. Our patent 
examiners are very overworked, and emerging areas such as biotechnology 
and business method patents may overwhelm the system.
  If fully implemented as intended, this bill can greatly assist the 
PTO in issuing quality patents more quickly which means more 
investment, more jobs and greater productivity for American businesses. 
Similarly, early federal registration of the name, logo, or symbol of a 
company or product is necessary to protect rights and avoid expensive 
litigation. Section 2 of the bill thus authorizes Congress to 
appropriate to the PTO, in fiscal years 2002 through 2007, an amount 
equal to the fees estimated by the Secretary of Commerce to be 
collected in each of the next five fiscal years. The Secretary shall 
make this report to the Congress by February 15 of each such fiscal 
year.
  Section 3 of the bill directs the PTO to develop, in the next three 
years, an electronic system for the filing and processing of all patent 
and trademark applications that is user friendly and that will allow 
the Office to process and maintain electronically the contents and 
history of all applications. Of the amount appropriated under section 
2, section 3 authorizes Congress to appropriate not more than $50 
million in fiscal years 2002 and 2003 for the electronic filing system.
  Third, the bill requires the PTO to develop a strategic plan to set 
forth for the methods by which the PTO will enhance patent and 
trademark quality, reduce pendency, and develop an effective electronic 
system for the benefit of filers, examiners, and the general public 
regarding patents and trademarks.
  I am pleased that my colleagues in the other body, Congressmen Coble 
and Berman, have introduced similar legislation. I am very concerned 
that the Bush Administration budget for FY 2002 planned to divert $207 
million in PTO fees to programs outside the PTO. This diversion takes 
fees paid by inventors and businesses to secure patents or trademarks 
and uses them to promote unrelated programs. It does this at a time 
when the number of patent and trademark applications has increased by 
50 percent since 1996, and while the ``waiting period,'' or pendency 
period, has increased 20 percent 1996. Even worse, the PTO estimates 
that the patent pendency period could increase to 38 months by 2006.

  The bill also contains two sections which will clarify two provisions 
of current law and thus provide certainty and guidance to the PTO and 
for inventors and businesses.
  Section 5 expands the scope of matters that may be raised during the 
reexamination process to a level which had been the case for many 
years. Let me explain the background. Congress established the patent 
reexamination system in 1980 for three purposes: to attempt to settle 
patent validity questions quickly and less expensively than litigation; 
to allow courts to rely on PTO expertise; and, third, to reinforce 
investor confidence in the certainty of patent rights by affording an 
opportunity to review patents of doubtful validity.
  This system of encouraging third parties to pursue reexamination as 
an efficient method of settling patent disputes is still a good idea. 
However, by clarifying current law this bill increases the discretion 
of the PTO and enhances the effectiveness of the reexamination process. 
It does this by permitting the use of relevant evidence that was 
considered by the PTO, but not necessarily cited. Thus, adding this 
sentence to current law, which only allows for reexaminations when 
``substantial new questions of patentability exist'', will help prevent 
the misuse of defective patents, especially those concerning business 
method patents.
  It permits a reexamination based on prior art cited by an applicant 
that the examiner failed to adequately consider. Thus, this change 
allows the PTO to correct some examiner errors that it would not 
otherwise be able to correct.
  Section 6 of the bill modestly improves the usefulness of inter 
partes reexamination procedures by enhancing the ability of third-party 
requesters to participate in that process by allowing such a third 
party to appeal an adverse reexamine decision in Federal court or to 
participate in the appeal brought by the patentee. This may make inter 
partes reexamination a somewhat more attractive option for challenging 
a patent in that a third party should feel more comfortable that the 
courts can be accessed to rectify a mistaken reexamination decision. 
This section should increase the use of the reexamine system and thus 
decrease the number of patent matters adjudicated in federal court.
  I again want to express my appreciation to the co-sponsors of this 
bill, Senators Hatch, Reid, and Bennett and look forward to working 
with other Senators on these matters.
  Mr. HATCH. Mr. President, I am pleased to join with Senators Leahy, 
Reid,  and Bennett in the introduction of the Patent and Trademark 
Office Authorization Act of 2002. As Senator Leahy mentioned, he and I, 
as leaders of the Judiciary Committee, have enjoyed a productive 
relationship working together to protect America's innovators, and to 
strengthen our intellectual property laws as well as the agencies that 
administer and enforce them.
  One of the issues we have long worked on is strengthening the ability 
of the United States Patent Office, ``USPTO'', to do its important work 
in reviewing and granting intellectual property rights to inventors 
seeking the patents that drive our high-tech economy or those 
businesses that seek to protect the trademarks that consumers rely on 
to find the goods and services they want. For those inventors and 
businesses to succeed in using those patent or trademark rights, the 
USPTO needs to do a quality and timely job in reviewing and granting 
those rights.
  However, over the past few years, the USPTO has been under mounting 
pressure on three fronts, increased filings, increased complexity in 
the filings, and increased difficulty retaining valuable and 
experienced examiners in the face of more lucrative offers in the 
private sector. These pressures, if unaddressed, can lead to delays for 
applicants of months or years, or to reduced quality and reliability of 
the determinations that issue from the USPTO. Indeed, the USPTO 
estimates that the patent pendency period could rise to 38 months by 
2006. I hate to think that innovative products could sit on the shelf 
for more than three years awaiting government review. This is 
especially troubling when we realize that in many high-tech sectors the 
shelf life of a product is often less than half that time. Such 
increased waiting periods and lower quality decision-making means 
slower innovation, less competitiveness, higher costs, and greater risk 
for those seeking patents or trademarks. And, consequently, the rest of 
us and our economy could see slower recovery and weaker growth. 
Addressing these challenges will require leadership, of course, which I 
believe can be provided by the President's nominee to head the USPTO, 
former Congressman Jim Rogan. But, to be realistic, we

[[Page S12263]]

must admit that surely it will also require resources.
  As many in this body know, the costs of running the USPTO are 
entirely paid for by fees collected from applicants, individuals and 
companies that seek to benefit from patent and trademark protection. 
However, since 1992 Congress has diverted an amount estimated at over 
$800 million from those fees for other government programs unrelated to 
the USPTO.
  At a time when our economy needs support, it seems doubly wrong to 
levy what amounts to a tax on innovation, a tax imposed by taking a 
portion of the fees America's innovators and businesses pay to secure 
protection for their economy-generating products and services and 
spending it on unrelated government programs. I believe that fees paid 
to secure patent and trademark rights should be used to process those 
applications faster with better reliability precisely because getting 
the products of American ingenuity to market faster helps grow 
our economy faster.

  That is why I am glad to join my colleagues in introducing this bill 
which takes the position that Congress should appropriate to the USPTO 
a funding level equal to the fees applicants pay. I agree with my 
colleagues that if fully implemented as intended, this bill can greatly 
assist the USPTO in issuing quality patents more quickly, which in turn 
can lead to more investment, job creation, and productivity for 
American businesses.
  In addition to establishing the principle that user fees collected by 
the USPTO should be used to serve those who pay them, the bill makes 
additional improvements to the way the USPTO does business, further 
enhancing its ability to serve American companies and inventors. Among 
these improvements are the requirement that the USPTO develop a user-
friendly electronic system for the filing and processing of all patent 
and trademark applications, and that the PTO to develop a strategic 
plan to enhance patent and trademark quality, reduce pendency, and 
otherwise improve their systems and services for the benefit of 
applicants, examiners, and the general public. The bill also contains 
two sections which will clarify two provisions of current law regarding 
reexamination of patents to provide greater guidance to the USPTO and 
its customers about the scope and availability of the reexamination 
process. Both of these changes should help streamline and reduce the 
costs of post-grant patent decisions.
  I again want to express my appreciation to Senator Leahy, the 
chairman of the Judiciary Committee, for this leadership, and to the 
other co-sponsors of this bill, Senators Reid and Bennett. I look 
forward to working with them and my other colleagues on this important 
legislation.

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