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in America; foreign companies are also subject to American patent laws when making, using, or selling in America. Hence, there is no competitive disadvantage between American companies and foreign companies as a result of the differences in the patent term.

The International Patent Owners association (IPO) identified what they consider to be a submarine patent. This is U.S. Patent No. 4,076,698 (the '698 patent) which was pending in the Patent Office for 21 years. However, any delays were under control of the Patent Office and were caused by or at least condoned by the Patent Office. There is no need to change the patent term to prevent unnecessary delays because the Patent Office presently has total control over such delays.

An inventor cannot delay the prosecution of a patent application. The Patent Office controls all of the time delays within the Patent Office. The inventor must comply with very strict Patent Office rules, otherwise his patent application is abandoned and he looses any possibility of getting a patent on that patent application.

The Patent Office operates under a rule known as second Action final. This means that the inventor has a right to two Actions from the patent examiner, each Action having a 3 month response time. The inventor has the right to appeal and is given a two month period for an Appeal Brief and sometimes a one month period for a Reply Brief. The inventor can buy extensions of time which extend the period for each Action and each brief to a maximum of six months. Hence, an inventor has a right to file four documents and is given a total of 9 months to file these documents. Also, an inventor can buy an extension of time for each of the four documents totaling another 15 months, but only at significant expense to the inventor.

All other delays are on the part of or at the discretion of the Patent Office. The inventor has no time-related rights in the Patent Office beyond the above mentioned 24 months. Sometimes the patent examiner will generate extra Actions, but this is for the convenience of the examiner, often because the examiner wants to change his position or because he wants to redo a prior art search. On rare occasions, the Patent Office will declare an interference. The Patent Judge, not the inventor, schedules the interference proceedings.

An inventor can also appeal to the Court of Appeals and to the Supreme Court. Such appeals are infrequent and have short times for filing documents.

The '698 patent is a good example of the detrimental effects of delays on an inventor. After 21 years, the licensing rewards of any R&D effort is of little consequence. The value of money 21 years in the future has diminished to a very small amount, possibly 10% because of the time value of money. Legal expenses for 21 years can exceed the R&D expenses and further reduces the significance of any reward. Loss of opportunity, not being able to protect the technology when it is fresh and when the company is trying to penetrate the market, is another important loss. Risk of obsolesce is paramount because technology is often obsolete after a few years and usually is of little, if any value after 21 years. Also, inventors have grown much older, company management has changed, stockholders have invested in other companies, and many participants have retired or died. Those who facilitated the original R&D and the patent filing and prosecution are most certainly not in a position with the company to reap any rewards after 21 years. Those who say that delay helps the inventor are plain wrong. Delay hurts the inventor. Who would invest in technology if they could predict that the expenses would continue for 21 years and that the reward was highly speculative?

If the proposed patent term (20 years from the filing date) was in effect, a patent delayed by administrative procedures for 21 years would have expired before it was issued. This would add insult to the injury of the delay and would further reduce the incentive for companies to invest in R&D.

It is necessary to identify and to limit submarine patents, but it is also necessary to protect innocent inventors that are victims of administrative delays.

THE DEMOCRATIC PROCESS SHOULD NOT BE CIRCUMVENTED BY THE GATT IMPLEMENTING LEGISLATION

The GATT implementing legislation includes unnecessary and inappropriate changes to our historical patent term. For over 200 years (from the first patent law in 1790), American patents have had a term measured from the issue date of the patent. Now, acquiescing to the demands of the Japanese and some multinational corporations, the Administration is attempting to change this term to be measured from the filing date of the patent. Because a more important patent and a more complex patent takes a relatively long time to issue, such patents will have a significantly reduced term under the proposed change in the patent law. Because University researchers publish their work early, the law requires them to file patent applications early to protect their rights followed by continuing applications as their work progresses. As a result, University patents will have a significantly reduced term under the proposed change in the patent law. Because cutting edge technologies, such as biotechnology, complex and competitive there are many delays in the Patent Office that will cause a significantly reduced patent term under the proposed change in the patent

law.

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This patent term change (and other changes) to the patent system were piggybacked onto GATT without advanced public disclosure and without proper hearings. Now; as a result of the opposition of inventor groups, biotechnology groups, and pharmaceutical groups; a last minute hearing was scheduled on only one week notice. The legislation, which had been withheld from Congress and from the public for months was first made available only one week prior to the hearing. The panels of witnesses pitted seasoned attorneys on the PRO side (for the patent changes) against lay persons on the CON side (against the patent changes). The organizers of the current Commissioner of Patents, Mr. Commissioner of Patents, Mr. Mossinghoff, to testify for the PRO side yet they refuse to permit a former Commissioner of Patents, Mr. Banner, to testify for the CON side.

the hearing selected Lehman, and a former

This is not the American way. This is not Democracy. This should not be permitted.

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Mr. HUGHES. Mr. Muir, welcome.

STATEMENT OF ROBERT E. MUIR, GENERAL PATENT COUNSEL, CATERPILLAR INC., ON BEHALF OF THE NATIONAL ASSOCIATION OF MANUFACTURERS

Mr. MUIR. Thank you.

Among other things, Mr. Chairman, perhaps it wasn't noted that I, too, am an inventor, but not quite as successful because I never received a patent, only inventions, so maybe I am only a frustrated inventor.

You might also want to note that in the decade that I was in private practice, my largest client was a firm of about 200 employees, and I remember well in 1974 when 13 of my clients went bankrupt and it wasn't because they did not have good patent protection.

I am going to be very brief in summarizing the written testimony, and then if I may, give you one example from my personal experience.

Speaking on behalf of the National Association of Manufacturers, NAM strongly supports the GATT Uruguay round and urges timely passage of legislation to implement this historic agreement. NAM supports the Trade-Related Aspects of Intellectual Property provisions. We believe that bringing intellectual property protection under GATT will significantly benefit U.S. inventors.

The NAM recognizes that the TRIPS provisions are not perfect and urges the U.S. Government to pursue improvements in intellectual property protection on both bilateral and multilateral bases. The NAM also recognizes that 35 U.S.C. 104 must be amended to permit foreign invention date proofs but recommends language that is somewhat different than that proposed by the legislation and, specifically, we believe a change to section 102(g) is also necessary. Let me switch to the patent term.

The NAM supports adoption of a 20-year patent term measured from the date of filing in lieu of our current 17-year term from the date of grant. We believe the 20-year term from filing provides a term similar to present law, and further, we believe the 20-year term from filing more effectively balances the individual's reward of limited exclusivity and the public's benefit from disclosure of new technology and does so with far less potential for abuse.

Let me give an example from my personal experience. Turning back the clock to 1986, I have here three patents, none of which are mine, none of which are Caterpillar's, none of which relate to a U.S. inventor. These patents were made by a British gentleman and was assigned to his employer, Molins, Ltd., of London, England. And Molins is not a small company.

The original patent application was filed in 1966, this one issued in 1986. Let me count with you, if you would, the how this history went. I am not making this up, but I will paraphrase it because otherwise it is boring as heck. This patent issued in 1986 all from an application filed in 1982, which was a division of an application filed in 1970, which was a continuation of an application filed in 1967, which was a continuation in part of another application filed earlier in 1967 and another one filed in 1966. And if you wish for the record, this is patent number 4,621,410.

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