THE INSTITUTE OF ENGINEERS, INC. May 14, 1981 The Honorable Charles McC. Mathias, Jr. 1981 Vice President - Professional Activities Criminal Law Subcommittee Richard J. Gowen Vice President & Dean of Eng. 605-394-2256 office 605-341-5842 residence 1981 United States Activities Board Richard J. Gowen, Chairman Robert A. Barden Merrill W. Buckley, Jr. Hans C. Cherney Arwin A. Dougal Edward J. Doyle Allan C. Schell John M. Thorson, Jr. *USAB OpCom Members Staff Director: Leo Fanning IEEE, Suite 608 1111 19th Street, NW Washington, DC 20036 202-785-0017 162 Russell Senate Office Building Founded in 1884, the Institute of Electrical and Electronics Engineers, Inc.(IEEE) is today the world's largest technical professional society with more than 206,000 members worldwide. Since 1972, through a mandate by IEEE's members, the Institute has concerned itself with social, political and economic problems of engineers. The United States Activities Board (USAB) was created to provide a mechanism through which the IEEE could provide its perspectives to the Executive and Legislative Branches of Government on professional and technical matters of concern to the U.S. members of IEEE. In an The IEEE/USAB is troubled with the continued decline of productivity and innovation in the United States. effort to reverse this decline of innovation and productivity, we have tried to identify and eliminate barriers that may exist between sectors of our present "system". One of our areas of interest has been inequities that exist in our patent system. In this context we support your efforts and those of Senators Byrd, Thurmond, Percy and DeConcini aimed at relieving problems in the patent system. We agree that the existing regulations affecting the patent term on a product requiring regulatory review are a deterrent to innovation and productivity and should be modified; S.255 would help rectify this inequity by allowing an extension of up to seven (7) years in the patent term for those products subject to regulatory review. The IEEE/USAB therefore supports enactment of S.255 aimed at elimination of hinderances to productivity and innovation in the patent system. On behalf of the IEEE United States Activities Board, I respectfully request that this letter of endorsement be included in the Senate Judiciary Committee printed hearing record for S.255, the Patent Term Restoration Act of 1981. Thank you for your contined efforts toward encouragment of innovation and productivity. If we can be of assistance to you and your staff, please do not hesitate to contact Tom Suttle or Edith Carper in the IEEE Washington Office. naca NATIONAL AGRICULTURAL CHEMICALS ASSOCIATION THE MADISON BUILDING 1155 Fifteenth Street, N.W., Washington, D. C. 20005 202 296-1585 Cable: NAGRCHEM May 14, 1981 The Honorable Charles McC. Mathias United States Senate Washington, D. C. 20510 Dear Senator Mathias: During the April 30, 1981, Senate Judiciary Committee hearing on S. 255, someone suggested that a patent holder is at liberty to indiscriminately establish the market price for his patented product. On behalf of the National Agricultural Chemicals Association, I hasten to clarify the record insofar as pesticides are concerned. Today's farmers are sophisticated, highly cost-conscious businesspeople. Many manage numerous cash crops on thousands of acres of farmland often valued in the millions. Many rely upon their own computers to reach cost-effective decisions. Like any other business-person, the farmer must realize a profit on his investment. When it comes to pesticides, the farmer is looking for two things: (1) a product that will control his specific insect, weed or disease problem; and (2) one that will provide him with a return of $3 to $4 for every dollar invested. If a pesticide product falls short of either goal, he will choose competitive chemicals or nonchemical methods to control pests. Rarely, if ever, is a farmer limited to the choice of a single control option. Whether a particular pesticide happens to enjoy patent protection is not nearly so critical to the farmer as its cost in relation to competitive chemicals or less expensive non-chemical pest controls. In short, pesticide manufacturers cannot price their products so high that the benefit to growers is ultimately erased by forced uncompetitive pricing of their food and fiber commodities in the marketplace. The competitive pricing which occurs in the agricultural chemical industry is illustrated by Table 649 of Agricultural Statistics, 1980, published by the U. S. Department of Agriculture (copy attached) which shows that since 1967 the price of agricultural chemicals has increased only 50%, while the prices of other farm necessities such as seed and fertilizer, have increased 186% and 96%, respectively. Yours truly, ML Reding Nicholas L. Reding, Chairman 454 FARM RESOURCES, INCOME, AND EXPENSES, 1980 Table 649.-Prices paid by farmers: Index numbers, by groups of commodities, United States, 1965-19791 1Index values for 1965 through 1975 were revised and published in May 1976 using 1971-78 weights. Indexes were reordered and several new indexes introduced. Revised monthly indexes for January 1966-April 1975 are available upon request. Based on Consumer Price Indexes of Bureau of Labor Statistics. Beginning 1977, based on Consumer Price Indexes of Bureau of Labor Statistics. •Discontinued. New index; values for years prior to 1971 are not available. Simple average of seasonally adjusted quarterly indexes. Economics, Statistics, and Cooperatives Service-Crop Reporting Board [Excerpt from AGRICULTURAL STATISTICS 1980, U. S. Department of Agriculture] V.P.-CENTRAL REGION Mr. H. William Trease University of Iowa Research Fdn. 203 Gilmore Hall lowa City, IA 52242 V.P.-WESTERN REGION Mr. Roger G. Ditzel Patent Administrator University of Californial Office of the Board of Patents 491 University Hall 2200 University Avenue Berkeley, CA 94720 SECRETARY-TREASURER Ms. Mary Spores Assistant to Director Research Services Administration Northwestern University Rebecca Crown Center Arthur A. Smith, Jr. Massachusetts Institute of Technology 77 Massachusetts Avenue E19-722 Cambridge, MA 02139 E. L. MacCordy Lindell & Skinker Blvds. Sponsored Programs Division 28 Coburn Hall Dr. William H. Honstead Kansas State University Research Fdn. 150 Seaton Hall Manhattan, KS 66506 Senator Charles McC. Mathias, Jr. 162 Russell Senate Office Building Dear Senator Mathias May 15, 1981 I am writing on behalf of the Society of University Patent SUPA is a national organization which is largely representative of universities having patent programs, and which are interested in licensing of inventions that are developed by faculty and staff. Its members are heavily involved in developing university-industry cooperative efforts. In fact, some industrial concerns also hold membership in the organization. We appreciate the efforts to introduce S.255. The life of any patent is limited when time must be expended in having an invention cleared by regulatory agencies before it becomes marketable. This creates a problem for licensees, since it reduces the time potential for recovering costs of such clearances, and for experiencing a profit on their investment. The cost of obtaining clearances can also be prohibitive and, unless the life of the patent can be extended, industry may be reluctant to enter into licensing agreements. me. If you need further information, please feel free to contact Very truly yours Clark A. McCartney Clark A. McCartney /fs STATEMENT OF CHARLES A. HUGGETT, GENERAL PATENT COUNSEL, MOBIL OIL CORPORATION My name is Charles A. Huggett. As General Patent Counsel of Mobil Oil Corporation, responsible for intellectual property matters throughout the Mobil Corporation, I am pleased to present our views on S-255. The Patent Term Restoration Act of 1981, if passed, would restore the term of the patent grant for the period of time, not exceeding seven (7) years, that nonpatent regulatory requirements prevent the marketing of the patented product or a method for using a product. While we support the principle of restoring the seventeen year period of exclusivity to patent owners, we believe the legislation should not be limited only to product and method of use patents, but should also extend to patents covering a process for making a product. This change was suggested by Thomas D. Kiley, Jr., Esquire, Vice President and General Counsel of Genentech, Inc., on April 30, 1981, during the Senate Judiciary Committee Hearing on S-255. During his testimony, Mr. Kiley pointed out that in genetic engineering industry (of which Genentech, Inc. is one of the most prominent members), process patent protection is often the only available route for obtaining patent protection for ongoing research, because both the products of the genetic engineering research and the methods of use thereof are widely known in the art. Similarly, in the area of synthetic fuels, patent protection is often limited to the processes for making a product because the product itself and the method of its use are conventional. At the same time, commercial implementation of patented processes is also subjected to nonpatent regulatory delays very similar to those experienced by owners of patents directed to products and to methods of use thereof. For example, under Section 111 of the Clean Air Act, standards of performance have been proposed or promulgated for various new stationary sources. One may not construct such a new stationary source, such as a new synthetic fuels plant based on a patented process, unless the emission standards are met. These standards are generally applied as of the date of proposal, not promulgation. The delay caused by meeting these standards may be as long as two (2) to four (4) years. Many similar environmental and other nonpatent regulatory delays can postpone commercial implementation of patented processes for similar periods of time. Any one and/or any combination of such regulatory delays effectively decreases the life of the patent to less than the seventeen years envisioned by Congress. In addition, we believe the bill should explicitly state that its provisions are directed to all patents, regardless of the technology involved, in spite of the exemplification of only four (4) specific technological areas in Section 155 (c)(1), viz., (A) drugs, devices, etc.; (B) biological products; (C) pesticides; and, (D) chemicals subject to regulation under Toxic Substances Control Act. We would be pleased to answer any questions, and offer our assistance for any specific amendments to the bill which the Committee may desire. |