Mr. HUGHES. I see. How does the Patent and Trademark Office propose to spend moneys on automation the next 2 fiscal years? That is, how much would it cost for expansion of the Patent and Trademark automation system as opposed to the cost of operating the existing system? Do you have that breakout? Mr. MANBECK. Yes, sir, we do. Just a moment. Mr. HUTHER. Mr. Chairman, in 1992 to give you a frame of reference, we break out our automated patent system costs separately from trademark automation and separately from our administrative systems. But if I can give you an example. The automated patent system of the $57 million that would comprise its share of the automation budget, $25 million of it would go to support what we call baseline operations. That is, what is in place today. No system enhancements, no further systems improvement. Roughly $17 million of it would go to support enhanced operations which are principally in the area of hardware distribution; that is, putting more powerful mainframe computers into the network down to the personal computer attached to the mainframe. Then another $15 million would go into fundamentally what is software development. To take what we have learned over the last several years and begin refining the software to do more and more functional things than had been done before and also to do new things, such as providing public access to the computer system so that the public can use it for whatever purposes they have. Going back to your earlier question if I may just for a moment about the benefits Mr. HUGHES. I am interested in finding out what percentage of the expenditures for automation present users benefit from. Mr. HUTHER. There are a number of features of the system that I think we could identify for you specifically. Mr. MANBECK. May I interrupt just 1 minute to answer this, sir? I will ask Mr. Huther to correct me if I make a mistake. The present system and the system we want to implement all across the Office consists of two parts, one of which is known as a text search system. This is a system where with key words you can go in and search the text of patents. We have that system up and running today for all U.S. patents back, I believe, to 1971. That system is available to our examiners. It is available in the public search room today for anyone who wishes to use it. Mr. HUGHES. So that is a benefit. Mr. MANBECK. We are also this year going out with a pilot program to take that text search system to 14 of our patent deposit libraries around the country. If that test is a success, we will then take the text search system to all 70 patent deposit libraries. Now, whether we can take it beyond that under an administration policy, I do not know; but we want to have success there before we move on. Now, besides the text search system, there is also the system of bringing up the images; in other words, the drawings. Now, this is what is being worked on today. We have it up and running in two of our examining groups so that they can do their total searching on the computer. They still have to search some paper, but not a great portion of it. We are going to, I believe, this year and next get it up and running in a third system. Now, when I say up and running, the data base that these groups use will be totally automated. Our next move-and this is the one we are soliciting the money for-will be to take this image searching system with the text all the way across the Patent and Trademark Office; make it available to all the examiners. Now, as we do that, at the same time we will put terminals in the public search room so that the public can come in and search that same total data base. To the extent that that image data base is up and running today for the two groups, it is available Mr. HUGHES. Mr. Commissioner, is the answer that the userspresent-day users are advantaged by all the expenditure for automation? Is that your answer? Mr. MANBECK. Yes. They are advantaged and they are going to be advantaged even more. Mr. HUGHES. I see. I have a number of other questions, but Ron Wyden has been waiting very patiently; Congressman Wyden of Oregon. With the exception of one additional question which I am interested in, I am going to see if my colleague from Florida has anything else and then we will take Mr. Wyden's testimony. Mr. JAMES. I have a couple of questions, but I will submit them in writing if I decide I cannot find the answer otherwise, because the Congressman is waiting to testify. Mr. HUGHES. I will do the same thing about all of my questions including the question of backloading of fees which was suggested yesterday as one possibility to deal with the present concern over the cost of fees up front. We will submit those in writing. [The information appears in the appendixes.] Mr. JAMES. I want to thank you so much for your testimony. I, for one, do not see how we can vary our system from our user system simply because of the international scenario or situation. I can empathize with the business policy or perhaps the overall policy of considering giving encouragement to business for patents, and I understand that. I would otherwise have a tendency to agree to some extent with the chairman's concern about discouraging the recording of patents. What really bothers me, though, is the international scene of how they file and can take advantage of any subsidy we give. Mr. HUGHES. I share that concern. He has a concern I think a lot of us share. We thank you very much, Commissioner, and look forward to working with you to deal with what obviously is quite a dilemma upon yourselves, a straitjacket more to the point; and it puts us perhaps working at cross purposes with the Appropriations Committee, but I am sure we will find a way to deal with some of the mine fields that lie ahead. Anyway, thank you very much for your testimony, and we appreciate your contributions and look forward to working with you. Mr. MANBECK. Thank you, sir. Mr. HUGHES. I welcome Congressman Wyden who has been very patiently waiting in the wings for us. Mr. Wyden is our distinguished colleague from Oregon. He Chairs the Small Business Subcommittee on Regulation Business Opportunities and Energy. Mr. Wyden has devoted time and energy to improving the patent application for high technology innovations. He commissioned a General Accounting Office study on the backlog and biotechnology patents which we will make part of the record of today's hearings, and he has made many, many suggested improvements to the Patent and Trademark Office. Ron, we are delighted to have you with us. Your statement will be made a part of the record without objection, and we appreciate your patience. STATEMENT OF HON. RON WYDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON Mr. WYDEN. Thank you very much, Mr. Chairman. I would in the interest of time make just a few comments and leave some time for questions. I would appreciate my statement and the GAO report going into the record. My subcommittee on regulation, for more than 3 years, has focused on the question of biotechnology and the question of how the Patent Office processes biotechnology applications. The reason we have done so, Mr. Chairman and colleagues, is that I think we all agree that biotechnology is our future. This is on the cutting edge of some of the most exciting work that is being done in Americahealth care, agriculture, environment, a cross-section of the most important scientific fields. Unfortunately, I think it is quite clear that the Patent Office is still holding back this innovative sector. We still are not making the kind of progress that I think the American people want. I very much admire you and Mr. James for spending all this time at it. Let's face it, questions of patents are not exactly the world's sexiest issues. They are not going to be on the front page of every paper or People magazine or something like that. But the fact of the matter is is that this is essential if you are going to protect particularly small investors in these new high-tech businesses against what we call technothieves and those who would basically take away their innovation. What I thought I might do, Mr. Chairman, is just summarize a couple of the key concerns that the General Accounting Office has made, and then a point or two about some of the possibilities in terms of where we go from here. I very much share your view about this matter of more Appropriations Committee funding, because it is going to take considerable wrestling to try to address the issue financially. With respect to this General Accounting Office report, this was a report that was done in September 1990. The highlight of it is that not only are we not making the progress that we need, but in some respects we are actually stepping backwards in the biotechnology area. I did not think it was possible to step backwards because I could tell you when my investigators started more than 3 years ago and they went down to the biotech office, they actually saw shopping carts filled with applications where the checks were on the applications and had not even been opened. So I did not think it was possible to go backwards in some respects, but here are some of the summarized conclusions that the General Accounting Office made. During the calendar year 1989 and through the first half of 1990 according to GAO, the inventory of unexamined biotechnology patent applications increased by 33 percent-from 6,200 to 8,200. The Patent Office efforts to accelerate the award of biotechnology patents has been less effective than anticipated. The average processing time for the application, 36 months. In some of the most important subgroups it was even longer. For example, to process biochemicals it took 38 months, 44 months to do immunological invention, and more than 47 months for the especially important area of genetic engineering. The other point that I am concerned about is that I think that the Patent Office is to some extent fudging this question of the actual pendency period. This use of the so-called continuation by the Patent Office tends to cloud and shorten what is the actual pendency period. The Office has-heard a bit of the testimony today that the average pendency length is only about 26 months. But according to the GAO, this figure results from essentially resetting the clock on almost one-third of all biotech applications through this process of continuation. I would very much like to work with you, Mr. Chairman and our colleague Mr. James, to really get at the bottom of exactly what this pendency period is because certainly the GAO report suggests that they really are to some extent fudging the length of time involved in the pendency period trying to make it look shorter than the General Accounting Office warrants. if So it seems to me the name of the game is to hire good examiners, train them, and then keep them. That is really what the agenda is really all about. Particularly we have to have some system for increasing salary ranges for the highest skilled people because you do not, just as sure as the night follows the day, they are going to be lured off to the private sector. The Office of Personnel Management has approved some increases, but I am not aware that the Patent Office hasn't exercised the authority to actually grant the increase. Finally, I would say that I think it is especially important to try to keep this discounted patent application fee for small business. To eliminate this 50-percent differential would generate a very small amount of revenue overall; but basically what you are saying to the really small biotech companies, not only are you not very interested in them, but that would really come close to smothering some of these folks that are just trying to get off the ground. Let me break my filibustering off right at this point, Mr. Chairman. I appreciate the chance to come, and you and I have had a chance to team up on career criminals and lots of other good causes. I would like to pursue this with you as well. Mr. HUGHES. Thank you. [The GAO study appears in the appendixes.] [The prepared statement of Mr. Wyden follows:] HEARING STATEMENT PATENT OFFICE REAUTHORIZATION HEARING BIOTECH BACKLOGS AT THE U.S. PATENT AND TRADEMARK OFFICE BEFORE THE SUBCOMMITTEE ON INTELLECTUAL PROPERTY MAY 9, 1991 REP. RON WYDEN Mr. Chairman, I want to thank you and the subcommittee staff for inviting me to testify on the subject of high technology patent application processing problems, and backlogs, at the U.S. Patent and Trademark Office. This is an issue of shared concern between this subcommittee and the Small Business Subcommittee on Regulation and Business Opportunities, which I chair. This crucial management problem facing the patent office. It has a broad reach. This agency has an extraordinary impact on the competitiveness of technology-driven, U.S. industries. Patent protection is absolutely necessary for companies to capitalize on technological breakthroughs. Moving patent applications with speed and quality, and protecting inventions against theft, separate the winners and losers in the global marketplace. I think our domestic companies and employers ought to be among the winners. My interest arises from the clear and present danger now facing one of our most promising, domestic high-tech industries: biotechnology. In short, it is the continuing and in some ways worsening backlog in processing the thousands of biotechnology applications flooding the patent office. Before I came up here, today, I looked at testimony I submitted to this subcommittee, on this very same issue, in July 1988. In the intervening years, and despite all the best efforts of my colleagues, I have to say that the problems at the patent office have not improved. And in some cases, they are worse. The logjam in processing biotech applications still exists. In too many cases, patent protection takes years to achieve. Turnover in trained examiners remains high. And the resulting delays are hamstringing small U.S. biotech firms who rely on patent protection to discourage the techno-thieves and encourage their investors. |