down, not put on the shelf but to be studied a little more carefully. We've seen a lot of information that's hard to disseminate. It's hard to wade through. But we need a more informative study of where they're going and how they are going to get there. If we wait 6 months, maybe we'll have some of this equipment that Mr. Wegner is talking about at half price. it. Mr. HUGHES. That's how we shelve things around here. We study [Laughter.] Mr. HUGHES. Isn't that what we do? I thought we did. Well, if the long-term cost of automation of the PTO can only be funded by user fees, is it the position of the ABA that such costs should be postponed or delayed? Mr. SMEGAL. That's correct, Mr. Congressman. That's exactly what the ABA's position is. Those fees should not be placed upon the backs of present users. Mr. HUGHES. Do you think we ought to study it some more, Mr. Banner? Mr. BANNER. You know, sir, I'm always in favor of studying. Mr. HUGHES. Well, there's something that is academic and intelligent about studying something. Mr. BANNER. It makes us feel good to study it. But in the meantime, we have to do something. That's the main thing. We can't just stop and throw into the trash can all the money we've already spent. Sure, it probably can be done better, but most things can. Mr. HUGHES. For the panel, briefly, how important do you think it is to have a uniform international patent system? Mr. Smegal. Mr. SMEGAL. Well, I think it's very important for several reasons. One is that it certainly would reduce the cost, as Dr. Rabinow pointed out, of maintaining patent protection across the world. From my point of view, as a private practitioner, it would certainly simplify our lives. It would reduce the costs that we have to pass on to clients in obtaining protection for them across the world. I don't think we should do it at the sacrifice of our system, however. I think the U.S. patent system has a uniqueness to it that should be maintained, and certainly as part of the U.S. delegation to The Hague next month, I intend to continue to encourage our administration to maintain those standards that we have developed over 200 years. Mr. HUGHES. Mr. Wegner, briefly. Mr. WEGNER. I think it's absolutely vital that we have harmonization for the small inventor. The small inventor simply can't understand the myriad of foreign practices. Unless we harmonize, they are forfeiting their rights. Mr. HUGHES. Mr. Banner. Mr. BANNER. Well, like Mr. Smegal, I think harmonization would be a good idea. We don't want to lose, however, the benefits of our present system. It is necessary to define what you mean by harmonization. For example, one of the features of patent law in other countries is that there is compulsory licensing. Under no circumstances, should I be interpreted as being in favor of that. Mr. HUGHES. I understand. Assuming that taxpayer support for the Patent Office stays at the fiscal year 1991 level, which is, as you know, about $3 million, would you recommend that the com mittee authorize the administration's full funding request for fiscal year 1992? Mr. Banner. Mr. BANNER. Well, where would you get the money? Mr. HUGHES. I can think of a few alternatives. Mr. BANNER. You've got to remember 45 percent of the people are in that small entity group. So, when you say let's increase those fees, you'd better know the consequences. One of the things we've talked about today, too, is how important an aspect attorney's fees are. They can be important; no question about that. But let's not forget that a lot of patent applications are filed by attorneys who are in corporations. There are no attorney fees in that circumstance. That's a red herring that shouldn't be considered. The fact of the matter is, unless the laws of economics have changed recently, that when you increase the price of something, the demand for that service goes down. I don't think anybody has changed that, as far as I know. Mr. HUGHES. Does anybody disagree with that on the panel? Mr. BANNER. Do we want to cut back on ingenuity in the United States? That's what we are going to do if we adopt the administration's proposal. Mr. HUGHES. I, frankly, have some concerns about the tremendous increase in the process, including the maintenance fees. I'm looking at some numbers here in the rapid rise in patent fees by small entities over an 11-year period. A filing fee of $185 in November 1990, after basically 11.5 years, ends up as an $1,975 fee, including the two maintenance fees, one at 3.5 years and one at 7.5 years-by October of this year, you're up to $6,365. You're talking about a threefold increase over the total fee costs; a filing fee of $185, issuance fee of $310, maintenance fees of $245 and $495, respectively, and a third maintenance fee of $740 and you're up to $1,975. Mr. SMEGAL. Mr. Chairman, if you go back just a few more years, it's even more dramatic than that. In 1981, those total fees were less than $200. You asked the question of a prior panel--maybe can answer it-with respect to attorney fee increases during that same period of time. I looked back and in 1981, when the Government fees were $200, we were charging for a simple, mechanical case with what's called a couple of sheets of drawings probably in the neighborhood of $2,000 to $3,000 in attorney fees. In the 10-year period since 1981, the fees have now gone from $200 to $6,000-something, but our fees have not increased anywhere near even 100 percent. We are now at the point where when an inventor comes in, we have to tell him the Government fees are going to be greater than our fees. Mr. HUGHES. Yes, sir, Professor Wegner. Mr. WEGNER. Well, it's even more dramatic when you compare what we do in the United States with what the Japanese and the Europeans do. Whether we have our current system of first inventor or first-to-file, in each case it's important to get the earliest date in the Patent Office. This is very significant. If a Japanese inventor can pay a $100 filing fee and have no further fee required for 7 years, he can punch these cases in quickly so that the inventor in Kyoto, who may be a step behind in the research, if he gets to the patent office in Tokyo before our inventor gets to the Patent Office in Washington, DC, he wins by this fee hindrance, the Kyoto inventor wins everywhere outside of the United States and is presumptively the first inventor in this country. That's against American trade policies. Mr. HUGHES. There's no question that's unacceptable. Any further comment that you would have? [No response.] Mr. HUGHES. Well, you've been very helpful. There are some other questions that I have not asked but I have burdened you enough and that's a vote, so I will have to leave you anyway. Thank you for your contributions. I have some serious misgivings about what we're doing to ourselves with this so-called user fee. My daddy used to say, "If it walks like a duck and quacks like a duck, it's probably a duck." This is probably a tax that we call a user fee. It's a tax and I'm not so sure that it is promoting, as you suggest, science and the useful arts. Thank you very much, We appreciate your contributions today. The record will remain open for about 10 days, and we will get some questions to you, those that we didn't reach today, and we ask you to respond to them. That concludes the hearing for today and the subcommittee stands adjourned. [Whereupon, at 1 p.m., the subcommittee adjourned, to reconvene subject to the call of the Chair.] REAUTHORIZATION OF THE PATENT AND TRADEMARK OFFICE, U.S. DEPARTMENT OF COMMERCE THURSDAY, MAY 9, 1991 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON INTELLECTUAL PROPERTY AND JUDICIAL ADMINISTRATION, Washington, DC. The subcommittee met, pursuant to notice, at 10:10 a.m., in room 2237, Rayburn House Office Building, Hon. William J. Hughes (chairman of the subcommittee) presiding. Present: Representatives William J. Hughes, Mike Synar, Carlos J. Moorhead, Howard Coble, F. James Sensenbrenner, Jr., and Craig T. James. Also present: Hayden W. Gregory, counsel; Elizabeth R. Fine, assistant counsel; Veronica Eligan, staff assistant; Thomas E. Mooney, minority counsel; and James Quirk, intern. Mr. HUGHES. The Subcommittee on Intellectual Property and Judicial Administration will come to order. Good morning. Today the subcommittee is conducting the second day of oversight and reauthorization hearings on the Patent and Trademark Office in the U.S. Department of Commerce. Yesterday's hearing afforded the subcommittee the opportunity to hear testimony from a number of groups and individuals in the private sector. These witnesses expressed uniform admiration for the Patent and Trademark Office and its commitment to providing quality service to inventors and to the American public. I share the regard for the Patent and Trademark Office and for the dedicated public servants who are working so hard to promote the progress of science and the useful arts. Yet, the witnesses yesterday also expressed concerns and frustrations with the administration's proposal for reauthorization and, more particularly, with regard to the dramatic increase in user fees and the almost complete elimination of taxpayer support for the Patent and Trademark Office. I must tell you I share that concern. We will make certain that the Patent and Trademark Office has the resource and authority it needs to function effectively. We will, nevertheless, address concerns raised by small entities and other users of the Patent and Trademark Office about the proposed fee structure. In addition, we plan to explore the reinstatement of a higher level of taxpayer support for the Office and to take such steps as may be necessary to assure PTO's continued accountability to Congress and to the American public. The Chair recognizes the distinguished gentleman from North Carolina who is the acting ranking minority member. I am told that we have a very distinguished group with us this morning from Congressman Dickerson's district, the Air War College International Officers from Montgomery, AL, and we welcome our visitors. We are delighted to have you with us. We hope you will enjoy the hearing this morning. It is a very important hearing. It concerns the reauthorization of the Patent and Trademark Office, which I don't have to tell you is a very important endeavor for us, and I am sure it is of great interest to your country. We have with us this morning some distinguished guests. We are taking the testimony of the Commissioner of Patent and Trademark, and I would like to welcome once again the Assistant Secretary of the U.S. Department of Commerce and Commissioner of Patents and Trademarks, Mr. Harry F. Manbeck. He recently completed his first year of distinguished service as Commissioner. While the Government and the Patent and Trademark Office in particular struggle with the problems of losing talented and experienced employees to the private sector, Commissioner Manbeck offers an example for the contrary progression. He brings many years of experience practicing intellectual property law on behalf of the General Electric Co., to the Patent and Trademark Office. Commissioner Manbeck, thank you for appearing before the subcommittee this morning. We have your written statement which, without objection, will be made a part of the record. You are joined this morning by Brad. I wonder if you could introduce your colleague who heads up finance. STATEMENT OF HARRY F. MANBECK, JR., ASSISTANT SECRETARY AND COMMISSIONER OF PATENTS AND TRADEMARKS, U.S. DEPARTMENT OF COMMERCE, ACCOMPANIED BY BRADFORD R. HUTHER, ASSISTANT COMMISSIONER FOR FINANCE AND PLANNING, AND PEGGY REHDER, DEPUTY DIRECTOR, CONGRESSIONAL AFFAIRS Mr. MANBECK. Thank you, Mr. Chairman. I have here with me at the table Mr. Bradford Huther who is the Assistant Commissioner for Finance and Planning of the U.S. Patent and Trademark Office. Mr. HUGHES. Glad to have you with us this morning also. You may proceed as you see fit. Mr. MANBECK. Thank you, Mr. Chairman. Mr. Chairman, I would like to start out by correcting what I believe is a misapprehension which seems to be in a number of people's minds. At least we keep hearing this. Since it is totally not so, I would like to speak to that for just 1 minute in starting—that is the oversight of the U.S. Patent and Trademark Office as it would occur under the authorization bill which you have in front of you. We have heard it said that with this authorization bill, the Patent and Trademark Office would be placed almost like a government corporation so it would not have oversight. Nothing could be |