[Congressional Record (Bound Edition), Volume 148 (2002), Part 9]
[Senate]
[Pages 11685-11686]
[From the U.S. Government Publishing Office, www.gpo.gov]




             PATENT AND TRADEMARK AUTHORIZATION ACT OF 2002

  Mr. LEAHY. Mr. President, I am pleased that the Senate passed a bill 
which I introduced, the Patent and Trademark Authorization Act of 2002, 
which was reported out of the Judiciary Committee last week without 
objection. I appreciate that Senators Hatch, Cantwell, Reid, Bennett 
and Carper joined with me in co-sponsoring this bill
  This bill, the Patent and Trademark Authorization Act of 2002, 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 from 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 patent 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.
  The House of Representatives has passed a bill, H.R. 2047, which 
contains some similar provisions but just for fiscal year 2002 
regarding the authorization of appropriations. That bill, H.R. 2047, 
was also passed by the Senate but amended to include the text of S. 
1754, as reported out of the Judiciary Committee. This will provide the 
Congress the greatest opportunity to get this reform on the President's 
desk for signature.
  Note that the Judiciary Committee reported out a substitute bill, 
with the assistance of Senator Hatch, which simply moved back some 
dates in S. 1754, as originally introduced. I am including a short 
explanation of S. 1754, as reported. This explanation also applies to 
the version of H.R. 2047 as passed by the Senate.
  Section 1 of the bill sets forth the title, ``The Patent and 
Trademark Office Authorization Act of 2002.''
  Section 2 authorizes Congress to appropriate to the PTO, in each of 
fiscal years 2003 through 2008, an amount equal to the fees estimated 
by the Secretary of Commerce to be collected in each of the next 5 
fiscal years. The Secretary shall make this report to the Congress by 
February 15 of each such fiscal year.
  This bill thus sets forth the goal, strongly supported by users of 
the patent system, that the PTO should have a budget equal to the fees 
collected for each year. In recent years, the appropriations' 
committees have not provided annual appropriations equal to the fees 
collected. This bill sets forth the wishes of the committee, and now 
the Senate as a whole, that the PTO be funded at levels determined by 
the anticipated fee collections.
  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 2003 and 2004 for the electronic filing system. 
The PTO is working on this electronic system.
  In section 4, the bill requires the Secretary of Commerce to annually 
report to the Judiciary Committees of the House of Representatives and 
the Senate on the progress made in implementing its strategic plan. The 
PTO issued a short version of its ``21st Century Strategic Plan'' on 
June 3, 2002, which is available on their website.
  The bill also contains two sections which will clarify two provisions 
of current law and thus provide certainty and guidance to the PTO as 
well as inventors and businesses.
  Section 5 of S. 1754 expands the scope of matters that may be raised 
during the reexamination process to a level which had been the case for 
many years. In 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 new 
language to current law 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. In a sense it deals with In re Portola 
Packaging, 110 F.3rd 786, Fed. Cir. 1997, in a manner which should 
reduce the number of cases which will be handled in Federal court in a 
manner that fully protects the rights of interested parties, and the 
public interest. Thus, section 5 does not change the basic approach of 
current law but rather eliminates a presumption which could be wrong, 
allowing for mistakes to be fixed without expensive litigation.
  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

[[Page 11686]]

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 look forward to working with the other body to assure that this 
bill becomes law as soon as possible. I appreciate the work of Herb 
Wamsley of the Intellectual Property Owners Association on this bill, 
and of Marla Grossman who worked with us in this effort. Also, I want 
to thank Mike Kirk of the American Intellectual Property Law 
Association for his help on these patent fee matters over the years.

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