Mr. HUGHES. I want to thank the witnesses for their excellent testimony. Any of the members have any questions? If not, we thank you. Our next panel consists of the Honorable Bruce Lehman, Assistant Secretary and Commissioner, Patent and Trademark Office of the U.S. Department of Commerce; Ira Shapiro, General Counsel, Office of the U.S. Trade Representative; and Chris Schroeder, Counsel to the Assistant Attorney General, Office of Legal Counsel, U.S. Department of Justice. Bruce is a frequent, knowledgeable and valued witness. Mr. Shapiro has appeared before the subcommittee on one other occasion and we look forward to his testimony. And this is Mr. Schroeder's first appearance before the subcommittee. We have your statements. We would like you to summarize. Why don't we begin with you, Bruce. Welcome, today. STATEMENT OF BRUCE A. LEHMAN, ASSISTANT SECRETARY OF COMMERCE, AND COMMISSIONER OF PATENTS AND TRADEMARKS, U.S. DEPARTMENT OF COMMERCE Mr. LEHMAN. Thank you very much, Mr. Chairman. If it pleases the committee, I would like to ask that my statement be inserted into the record. Mr. HUGHES. All three statements are in the record. Mr. LEHMAN. Very briefly, I will make a few opening comments to hone in on what I think are some central issues, particularly those concerning the patent systems, and then leave it to the subcommittee members to ask me followup questions, if you have any. First of all, I would like to address the position that was expressed to you by the two previous witnesses and say that we realÎy don't have different objectives at all. The objective of the Clinton administration, and the objective of the Patent and Trademark Office in particular is not, in any way, to reduce or decrease the effectiveness of the patent system, or the intellectual property rights system, or to take any rights away from anybody. In fact, it is exactly the opposite. That is what the GATT TRIPS agreement is all about. With the stroke of a pen in Marrakech, the U.S. Trade Representative, Ambassador Kantor, has extended significant protection for U.S. inventors and the U.S. creative community on a global basis. For example, consider the so-called 20-year term issue. As a practical matter, with respect to present practices before the U.S. Patent Trademark Office, 20-year term means that the overwhelming majority of inventors will actually receive increased, not decreased, patent term. I would like to cite some statistics to you. In September 1994, the officewide average time to dispose of a patent application from when it was filed in the Patent Office was 19.6 months. Now, the GATT TRIPS agreement, and the administration's interpretive objective of it as contained in this legislation, would provide for a 20-year term from filing. At present, we have a 17-year term from the date of issuance of the patent. Now, by my count, that means that the average inventor, who gets his patent approved in 19.6 months, will actually get more patent term under this legislation than less. Let's look at some of the other technologies where, admittedly, we have a more difficult time in exam ining a patent application. I know there has been some concern about biotechnology applications, because the average processing time in the Patent and Trademark Office is 20.5 months. Now, the legislation before you adds an additional 36 months to the 17-year term which we now have. So even in this complicated area of biotechnology, the average inventor is still going to have a longer term. I would also like to specifically address the independent inventor issue because, generally speaking, independent inventors tend to have the kinds of inventions that get approved even faster in the Patent and Trademark Office. We have pendency times in many of our mechanical examining groups of 12 to 13 months, and those groups are where many of our independent inventors file applications. So we are going to see actual extension of patent terms for these people of, in many cases, 2 years over what they have presently. I think it is important to get the facts straight, and if we do that, we really don't have many disagreements. I would like to say a word about the situation with the Japanese, too, since it was raised. I think that everyone in this room is aware that one of the most serious problems facing the United States economy-and President Clinton has made this a centerpiece of his international trade strategy-is that we must reduce the trade deficit with Japan, which has been averaging over $60 billion a year for a long, long time. One of the reasons that we have a significant trade deficit with Japan is because Japan has not provided intellectual property protection for some of America's most valuable assets, such as patented and copyrighted high technology products. This agreement, though it only deals with part of the problem, will begin to address that difficulty. I entered into an understanding with my counterpart in Japan that we would press for the 20-year term here in the United States, and in return, the Japanese Patent Office would agree to accept applications filed in the English language. Now, some people have been told that this filing of Japanese applications in English would only give people 2 months additional time to file. That simply is not the case. Let's get back to the facts again. The General Accounting Office, I believe at either your request, Mr. Chairman, or Senator DeConcini's, did a study that was issued in July 1993 where they conducted an extensive survey of United States companies regarding problems that they had encountered in the Japanese patent system. The companies surveyed identified six different problem areas. Of United States companies surveyed, 70 percent said the most significant problem that they have in the Japanese patent system is the inability to file in the English language. So with a stroke of a pen here, we are actually giving our inventors, on average, more patent protection. We are solving a significant problem that 70 percent of our companies have identified as their most significant problem with the Japanese patent system. I think this is a win-win situation. Let me also say that our dealings with Japan are not finished. I expect that we will have some significant accomplishments to report in the not too distant future that will indicate that we have established an improved working relationship with the patent system in Japan, that will give United States inventors exclusivity in that market. That means that United States inventors will no longer have to license their inventions to Mitsubishi and Matsushita and settle for a little royalty. Rather, they will have exclusivity to market their inventions in Japan. They will be able to set up their own distribution systems, hire their own sales people, and market into Japan directly. We will reduce that $60 billion deficit because we will be opening up the Japanese market to United States products. There is one other positive point about the agreement with Japan. One of the major problems with the present system of having to file in Japanese is that when you have a translation done, it is usually very hurriedly done, and oftentimes there may be mistakes in the translation. Under the present Japanese procedures, you are stuck with these mistakes when you file the Japanese application. One of the very significant elements of our agreement, which again goes to this major concern of United States corporations, is that you will be able to correct the translation mistakes in the Japanese application up to the time of your reply to the first office action. As a practical matter, this means that inventors will have a couple of years to correct these mistakes-not merely a couple of months. This is an enormous advantage for American business, and you don't have to take my word for it, you can consult your own General Accounting Office study. So I think the important thing here, although we could probably go through some of the other objections that have been raised, is to recognize that as far as I am aware of, we don't have any disagreement with either the independent inventors or inventors' groups in this country, about what the patent system is all about. It is about providing them a strong and preventive protection for their inventions. We have some disagreements about the facts, and that is what this hearing is about to set those facts straight. I thank you. Mr. HUGHES. I thank you, Mr. Lehman. [The prepared statement of Mr. Lehman follows:] Statement of BRUCE A. LEHMAN ASSISTANT SECRETARY OF COMMERCE AND before the Subcommittee on Patents, Copyrights and Trademarks and Subcommittee on Intellectual Property and Judicial Administration Committee on the Judiciary House of Representatives August 12, 1994 Chairman DeConcini; Chairman Hughes: It is a pleasure to appear today to testify on S. 2368, the "Trade-Related Aspects of Intellectual Property Rights Implementation Act of 1994," H.R. the Trademark/Patent Provisions for GATT, and H.R. 4894, the "General Agreement on Tariffs and Trade Copyright Act of 1994." All three bills contain proposals to implement the Agreement on Trade-Related Aspects of Intellectual Property Rights that was concluded under the Uruguay Round of multilateral trade negotiations. This Agreement, referred to as TRIPs, represents a giant step forward in the protection of intellectual property for U.S. creators and innovators. With its signing in Marrakech, we established international standards for the protection and enforcement of intellectual property that were unthinkable only a decade ago. 2 A document prepared by the Secretariat of the General Agreement on Tariffs and Trade calls the TRIPS Agreement "the most important multilateral agreement on intellectual property rights negotiated in this century." We agree. The TRIPS Agreement covers all the main categories of intellectual property copyright and related rights; trademarks; geographical indications; industrial designs; patents; layout designs of integrated circuits; and trade secrets. It establishes high minimum standards of protection for each of these categories, standards which each Member of the World Trade Organization (WTO) will have to meet. It contains detailed commitments regarding procedures and remedies that Members will have to provide to ensure that the required rights can be enforced effectively. Finally, any disputes between governments regarding standards or enforcement of intellectual property will be handled under procedures that include the possibility of revocation of benefits outside the area of intellectual property, for example, in the sphere of trade in goods. The TRIPS Agreement builds upon existing international intellectual property conventions. Members will be required to comply with the substantive provisions of the Berne Convention for the Protection of Literary and Artistic Works (the Berne Convention) and the Paris Convention for the Protection of Industrial Property (the Paris Convention) and with the additional standards established by TRIPS. Let me quickly highlight some of the major benefits of the TRIPS Agreement. Computer programs must be protected as literary works under the Berne Convention. Compilations of data and other material in machine readable form which constitute intellectual creations must be protected. Rental rights must be |