United States. Congress. House. Committee on the J.

Patent and Trademark Office government corporation : hearings before the Subcommittee on Courts and Intellectual Property of the Committee on the Judiciary, House of Representatives, One Hundred Fourth Congress, first and second sessions, on H.R. 1659, H.R. 1756, and H.R. 2533, September 14, 1995, a online

. (page 1 of 31)
Online LibraryUnited States. Congress. House. Committee on the JPatent and Trademark Office government corporation : hearings before the Subcommittee on Courts and Intellectual Property of the Committee on the Judiciary, House of Representatives, One Hundred Fourth Congress, first and second sessions, on H.R. 1659, H.R. 1756, and H.R. 2533, September 14, 1995, a → online text (page 1 of 31)
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?mm AND IMDEMARK OFTICE GOVERNMENT
CORPORAnON

Y 4. J 89/1: 104/63 — — — =_

Patent and Tradenark Office Covernn... AVa-lNLtO

ORE THE

SUBCOMMITTEE ON
COURTS AND INTELLECTUAL PROPERTY

OF THE

COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS

FIRST AND SECOND SESSIONS

ON

H.R. 1659, H.R 1756, and H.R. 2533



SEPTEMBER 14. 1995, AND MARCH 8, 1996



Serial No. 63







rtf-



Printed for the use of the Committee on the Judiciary




U.S. GOVERNMENT PRINTING OFFICE
25-138 CC WASHINGTON : 1996

For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-052813-5



•AUNT AND TOADEMARK OFHCE GOVERNMENT
CORPORAnON



Y 4. J 89/1:104/63



RINGS



Patent and Tradenark Dffice Governn. . .

ORE THE

SUBCOMMITTEE ON
COURTS AND INTELLECTUAL PROPERTY

OF THE

COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS

FIRST AND SECOND SESSIONS
ON

H.R. 1659, H.R 1756, and H.R. 2533



SEPTEMBER 14, 1995, AND MARCH 8, 1996



Serial No. 63




•'/J/7P'







Printed for the use of the Committee on the Judiciary



2&-138 CC



U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 1996



For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-052813-5



COMMITTEE ON THE JUDICIARY



HENRY J. HYDE. Illinois, Chairman



CARLOS J. MOORHEAD, California
F. JAMES SENSENBRENNER. Jr.,

Wisconsin
BILL McCOLLUM, Florida
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE. North Carolina
LAMAR SMITH, Texas
STEVEN SCHIFF, New Mexico
ELTON GALLEGLY, California
CHARLES T. CANADY, Florida
BOB INGLIS, South Carolina
BOB GOODLATTE, Vir^nia
STEPHEN E. BUYER, Indiana
MARTIN R. HOKE, Ohio
SONNY BONO, California
FRED HEINEMAN, North Carohna
ED BRYANT, Tennessee
STEVE CHABOT, Ohio
MICHAEL PATRICK FLANAGAN, lUinois
BOB BARR, Georgia



JOHN CONYERS, Jr., Michigan
PATRICIA SCHROEDER, Colorado
BARNEY FRANK, Massachusetts
CHARLES E. SCHUMER, New York
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JOHN BRYANT, Texas
JACK REED, Rhode Island
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
XAVIER BECERRA, Cahfomia
JOSE E. SERRANO, New York
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas



ALAN F. Coffey, Jr., General Counsel/ Staff Director
JUUAN Epstein, Minority Staff Director



SUBCOMMnTEE ON COURTS AND INTELLECTUAL PROPERTY
CARLOS J. MOORHEAD, California, Chairman



F. JAMES SENSENBRENNER, JR.,

Wisconsin
HOWARD COBLE, North Carolina
BOB GOODLATTE, Virginia
SONNY BONO, California
GEORGE W. GEKAS, Pennsylvania
ELTON GALLEGLY, California
CHARLES T. CANADY, Florida
MARTIN R. HOKE, Ohio



PATRICIA SCHROEDER, Colorado
JOHN CONYERS, Jr., Michigan
HOWARD L. BERMAN, California
XAVIER BECERRA, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York



Thomas E. Mooney, Chier Counsel

Joseph v. Wolfe, Counsel
Mitch Glazier. Assistant Counsel

Jon DUDAS, Assistant Counsel
Betty Wheeler, Minority Counsel



(II)



IV

Page

Reardon, Timothy, cong^ssional liaison, Patent and Trademark Office Soci-
ety: Prepared statement 241

Rohrabacner, Hon. Dana, a Representative in Congress from the State of
California: Prepared statement 230

Schroeder, Hon. Patricia, a Representative in Congress from the State of
Colorado: Prepared statements 102, 228

Seidman, Harold, senior fellow. National Academy of Public Administration:
Prepared statement 134

Simmons-Gill, Catherine, president. International Trademark Association:
Prepared statement 273

Stem, Ronald J., president. Patent Oflice Professional Association: Prepared
statement 257

Tobias, Robert M., national president. National Treasuiy Employees Union:
Prepared statement 249

Wamsley, Herbert C, executive director, Intellectual Property Owners: Pre-
pared statement 155

APPENDIX
Material submitted for the hearings 285



CONTENTS



HEARINGS DATES

Page

September 14, 1995 1

March 8, 1996 171

TEXTS OF BILLS

H.R. 1659 3

H.R. 1756 41

H.R. 2533 174

OPENING STATEMENT

Moorhead, Hon. Carlos J., a Representative in Congress from the State of
California, and chairman, Subcommittee on Courts and Intellectual Prop-
erty 1

WITNESSES

Dunner, Donald R., chair, Section of Intellectual Property, American Bar
Association 159

Friedman, Howard, president, the Trademark Society, National Treasury Em-
ployees Union, Chapter 245 264

Hunter, Hon. Duncan, a Representative in Congress from the State of Califor-
nia 232

Kirk, Michael K., executive director, American Intellectual Property Law

Association 140

Lehman, Bruce A., Assistant Secretary of Commerce and Commissioner of
Patents and Trademarks, Patent and Trademark Oflice, U.S. Department
of Commerce 103

Reardon, Timothy, congressional liaison, Patent and Trademark Oflice Soci-
ety 238

Rohrabacher, Hon. Dana, a Representative in Congress from the State of
California 228

Seidman, Harold, senior fellow, National Academy of Public Administration,
accompanied by Alan L. Dean, senior fellow. National Academy of Public
Administration 130

Simmons-Gill, Catherine, president. International Trademark Association 270

Stem, Ronald J., president, Patent Office Professional Association 253

Tobias, Robert M., national president, National Treasury Employees Union .... 248

Wamsley, Herbert C, executive director, Intellectual Property Owners 152

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARINGS

Dunner, Donald R., chair. Section of Intellectual Property, American Bar
Association: Prepared statement 163

Friedman, Howara, president, the Trademark Society, National Treasury Em-
ployees Union, Chapter 245: Prepared statement 267

Hunter, Hon. Duncan, a Representative in Congress from the State of Califor-
nia: Prepared statement 233

Kirk, Micnael K., executive director, American Intellectual Property Law

Association: Prepared statement 144

Lehman, Bruce A., Assistant Secretary of Commerce and Commissioner of
Patents and Trademarks, Patent and Trademark Oflice, U.S. Department
of Commerce: Prepared statement 107

(HI)



PATENT AND TRADEMARK OFFICE
GOVERNMENT CORPORATION



THURSDAY, SEPTEMBER 14, 1995

House of Representatives,
Subcommittee on Courts and

Intellectual Property,
Committee on the Judiciary,

Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in room
2237, Raybum House Office Building, Hon. Carlos J. Moorhead
(chairman of the subcommittee) presidmg.

Present: Representatives Carlos J. Moorhead, Bob Goodlatte,
Sonny Bono, Martin R. Hoke, Patricia Schroeder, Howard L.
Berman, and Xavier Becerra.

Also present: Thomas E. Mooney, chief counsel; Mitch Glazier,
assistant coimsel; Veronica Eligan, secretary; and Betty Wheeler,
minority counsel.

OPENING STATEMENT OF CHAIRMAN MOORHEAD

Mr. Moorhead. The Subcommittee on Courts and Intellectual
Property will come to order. Today the subcommittee is holding the
first of 2 days of hearings on H.R. 1659, the Patent and Trademark
Office Corporation Act of 1995, H.R. 1756, the Commerce Depart-
ment Dismantling Act, and on the Patent and Trademark Corpora-
tion Act of 1995, which we plan to introduce by request on behalf
of the administration.

The thrust of these bills is to enable the U.S. Patent and Trade-
mark Office to improve the services it provides to the public. I am
pleased to have as an original cosponsor of H.R. 1659 the ranking
member of this subcommittee, Mrs. Schroeder. Our legislation will
convert the Patent and Trademark Office to a freestanding Govern-
ment Corporation, giving it the operating and financial flexibility
it lacks today as a bureau in the Department of Commerce. This
added flexibility will allow the PTO to operate more like a business
and provide better service to its customers at a lower cost.

The PTO is a perfect candidate for conversion to a Government
Corporation because it does not use any general tax revenues to
support its operations. Its entire operational costs come from the
sale of products and services to inventors, companies, and other
customers. The legislation before us would allow the Commissioner
of Patents and Trademarks to head the Government Corporation in
a businesslike manner while providing necessary congressional and
independent oversight. H.R. 1659 establishes a Management Advi-

(1)



sory Committee that will afford users a voice in how the PTO is
operated.

The fiscal year budget resolution assumes the elimination of the
Department of Commerce, which could have a substantial impact
on the future of the Patent and Trademark Office. H.R. 1756, the
Department of Commerce Dismantling Act, as originally intro-
duced, transfers the PTO to the Department of Justice. I have re-
ceived a letter from Representative Chrysler, the author of the bill,
asserting that he is in support of replacmg that provision of the bill
with language providing that the PTO become an independent Gov-
ernment Corporation as it is reported out by the subcommittee.

It is important that this subcommittee act to protect the oper-
ations of the PTO and to provide the flexibility necessary to better
serve its users and the public. To that end, H.R. 1659 provides spe-
cific authority for the PTO to purchase, lease, construct and man-
age property, the power to award contracts for facilities, services
and printing, the power to use its revenues without apportionment
by the Office of Management and Budget, the power to invest and
earn interest on its money, and the power to issue bonds to finance
its activities. These provisions will allow the PTO to pursue expen-
sive automation activities without placing those costs exclusively
on the backs of our country's innovators.

Our bill would further eliminate the practice of withholding sev-
eral million dollars from the PTO each year that users have paid
into the patent surcharge fund. It gives the PTO access to all its
revenues.

Officers and employees of today's PTO would continue to be em-
ployees of the PTO Corporation and the Federal Government.

If this legislation is to achieve its objectives, it must be crafted
very carefully, to ensure the necessary checks and balances. A
great public interest is involved — this Office is the only place the
public can go to obtain a patent or register a trademark. Because
the PTO is not subject to the performance pressure that arises out
of corporate competition, the bills considered today do not "pri-
vatize" the PTO by giving it all the freedom to become a private
company. It would continue to be a part of the Federal Government
under the direction and oversight of the President and the Con-
gress. However, the added flexibility on the bill should improve the
PTO's efficiency and responsiveness to the public. I look forward to
working with all interested parties as we move this legislation
through the Congress.

[The bills, H.R. 1659 and H.R. 1756, follow:]



104th congress
1st Session



H. R. 1659



To amend titlt 35, United States Code, to establish the Patent and
Trademark Office as a Government corporation, and for other purposes.



IN THE HOUSE OF REPRESENTATIVES

May 17, 1995

ilr. MOORHELVD (for himself and Mrs. SCHROEDER) introduced tlie following

bill; which was referred to the Committee on the Judiciarj'



A BILL

To amend title 35, United States Code, to establish the
Patent and Trademark Office as a Government corpora-
tion, and for other purposes.

1 Be it enacted by the Senate and House of Representa-

2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the "Patent and Trademark

5 Office Corporation Act of 1995".



2

1 TITLE I— PATENT AND

2 TRADEMARK OFFICE

3 SEC. 101. ESTABUSHMENT OF PATENT AND TRADEMARK

4 OFFICE AS A CORPORATION.

5 Section 1 of title 35, United States Code, is amended

6 to read as follows:

7 *"§ 1. Establishment

8 "(a) EST^VBLISILMENT. — The Patent and Trademark

9 Office is established as a wholly owned Government cor-

10 poration subject to chapter 91 of title 31, except as other-

1 1 ^ise provided in this title.

12 "(b) Offices. — The Patent and Trademark Office

13 shall maintain an office in the District of Columbia, or

14 the metropolitan area thereof, for the service of process

15 and papers and shall be deemed, for purposes of venue

16 in civil actions, to be a resident of the District of Colum-

17 bia. The Patent and Trademark Office may establish of-

18 fices in such other places as it considers necessary or ap-

19 propriate in the conduct of its business.

20 "(c) Reference. — For purposes of this title, the

21 Patent and Trademark Office shall also be referred to as

22 the 'Office'.".

23 SEC. 102. powers and duties.

24 Section 2 of title 35, United States C-ode, is amended

25 to read as follows:

•HR 1669 IH



5

3

1 **§ 2. Powers and Duties

2 "(a) In General. — The Patent and Trademark Of-

3 fice shall be responsible for-—

4 "(1) the |;''anting and issuing of patents and

5 the registration of trademarks;

6 "(2) conducting studies, programs, or ex-

7 changes of items or services regarding domestic and

8 international patent and trademark law or the ad-

9 ministration of the Office, including programs to

10 recognize, identify, assess, and forecast the tech-

1 1 nology of patented inventions and their utility to in-

12 dustry;

13 "(3) authorizing or conducting studies and pro-

14 grams cooperatively with foreign patent and trade-

15 mark offices and international organizations, in con-

16 nection with the granting and issuing of patents and

17 the registration of trademarks; and

18 "(4) disseminating to the public information

19 with respect to patents and trademarks.

20 "(b) Spectfic Powers.— The Office—

21 "(1) shall have perpetual succession;

22 "(2) shall adopt and use a corporate seal, which

23 shall be judicially noticed and with which letters pat-

24 ent, certificates of trademark registrations, and pa-

25 pers issued by the Office shall be authenticated;

•HR 1659 IH



6

4

1 "(3) may sue and be sued in its corporate name

2 and be represented by its own attorneys in all judi-

3 eial and administrative proceedings;

4 "(4) may indemnify the Commissioner of Pat-

5 ents and Trademarks, and other officers, attorney's,

6 agents, and employees (including members of the

7 Management Advisory- Board established in section

8 5), of the Office for liabilities and expenses incun-ed

9 ^vithin the scope of their employment;

10 "(5) may adopt, amend, and repeal bylaws,

11 rules, and regulations, governing the manner in

12 which its business Avill be conducted and the powers

13 granted to it by law will be exercised, ^^^thout regard

14 to chapter 35 of title 44;

15 "(6) may acquire, construct, purchase, lease,

16 hold, manage, operate, improve, alter, and renovate

17 any real, personal, or mixed property, or any interest

18 therein, as it considers necessary' to carrj' out its

19 functions, \vithout regard to the pro\isions of the

20 Federal Property and Administrative Services Act of

21 1949;

22 "(7)(A) may make such purchases, contracts

23 for the construction, maintenance, or management

24 and operation of facilities, and contracts for supplies

25 or services, after advertising, in such manner and at

•HR 1689 IH



7
5

1 such times sufficiently in advance of opening bids, as

2 the Office determines is adequate to ensure notice

3 and an opportunity for competition, except that ad-

4 vertising shall not be required when the Office deter-
■ 5 mines that the making of any such purchase or con-

6 tract without advertising is necessary, or that adver-

7 tising is not reasonably practicable;

8 "(B) may enter into and perform such pur-

9 chases and contracts for printing services, including

10 the process of composition, platemaking, presswork,

11 silk screen processes, binding, microform, and the

12 products of such processes, as it considers necessary

13 to carry out the functions of the Office, without re-

14 gard to sections 501 through 517 and 1101 through

15 1123 of title 44; and

16 "(C) may enter into and perform such other

17 contracts, leases, cooperative agreements, or other

18 transactions with international, foreign, and domes-

19 tic public agencies and private organizations, and

20 persons as is necessary in the conduct of its business

21 and on such terms as it considers appropriate;

22 "(8) may use, with their consent, services,

23 equipment, personnel, and facilities of other depart-

24 ments, agencies, and instrumentalities of the Fed-

25 eral Government, on a reimbursable basis, and to co-

•HR 16S9 ra



8

6

1 operate with such other departments, agencies, and

2 instrumentalities in the estabhshment and use of

3 services, equipment, and facihties of the Office;

4 "(9) may obtain from the Administrator of

5 General Services such services as the Administrator

6 is authorized to provide to other ag:encies of the

7 United States, on the same basis as those services

8 are provided to other agencies of the United States;

9 "(10) may use, with the consent of the agency,

10 government, or international organization concerned,

1 1 the services, records, facilities, or personnel of any

12 State or local government agency or instrumentality

13 or foreign government or international organization

14 to perform functions on its behalf;

15 "(11) maj^ determine the character of and the

16 necessity for its obligations and exj^enditures and

17 the manner in which they shall be incurred, allowed,

18 and paid, subject to the provisions of this title and

19 the Act of July 5, 1946 (commonly referred to as

20 the 'Trademark Act of 1946');

21 "(12) may retain and use all of its revenues

22 and receipts, including revenues from the sale, lease,

23 or disposal of any real, personal, or mixed property,

24 or any interest therein, of the Office, in carninp- out

25 the functions of the Office, including for research

•HR 1659 IH



9

7

1 and development and capital investment, without ap-

2 portionment under the provisions of subchapter II of

3 chapter 15 of title 31;

4 "(13) shall have the priority of the United
- 5 States with respect to the payment of debts from

6 bankrupt, insolvent, and decedents' estates;

7 "(14) may accept monetary gifts or donations

8 of services, or of real, personal, or mixed property,

9 in order to carry out the functions of the Office;

10 "(15) may execute, in accordance with its by-

11 laws, rules, and regulations, all instruments nec-

12 essaiy and appropriate in the exercise of any of its

13 powers;

14 "(16) may provide for liability insurance and

15 insurance against any loss in connection with its

16 property, other assets, or operations either by con-

1 7 tract or by self-insurance; and

18 "(17) shall pay any settlement or judgment en-

19 tered against it from the funds of the Office and not

20 from amounts available under section 1304 of title

21 31.".

22 SEC. 103. ORGANIZATION AND MANAGEMENT.

23 Section 3 of title 35, United States Code, is amended

24 to read as follows:



•HR 1659 IH



10
8

1 "§ 3. Officers and employees

2 "(a) Commissioner. —

3 "(1) In GENEK.VL. — The management of the

4 Patent and Trademark Office shall be vested in

5 Commissioner of Patents and Trademarks (hereafter

6 in this title referred to as the 'Commissioner'), who

7 shall be a citizen of the United States and who shall

8 be appointed by the President, by and %\ith the ad-

9 \ice and consent of the Senate. The Commissioner

10 shall be a person who, by reason of professional

1 1 background and experience in patent and trademark

12 law, is especially qualified to manage the Office.

13 "(2) Duties.—

14 "(A) In general. — The Commissioner

15 shall be responsible for the management and di-

16 rection of the Office, including the issuance of

17 patents and the registration of trademarks.

18 "(B) Advising the preside.nt. — The

19 Commissioner shall advise the President of all

20 activities of the Patent and Trademark Office

21 undertaken in response to obligations of the

22 United States under treaties and executive

23 agreements, or which relate to cooperative pro-

24 grams vvith those authorities of foreign govem-

25 ments that are responsible for gi*anting patents

26 or regi.stering trademarks. The Commissioner

•HR leSA IH



11

9

1 shall also recommend to the President changes

2 in law or policy which may improve the ability

3 of U.S. citizens to secure and enforce patent

4 rights or trademark rights in the United States

5 or in foreign countries.

6 "(C) Consulting with the manage-

7 MENT ADVISORY BOARD. — The Commissioner

8 shall consult with the Management Advisory

9 Board established in section 5 on a regular

10 basis on matters relating to the operation of the

1 1 Patent and Trademark Office, and shall consult

12 with the Board before submitting budgetary

13 proposals to the Office of Management and

14 Budget or changing or proposing to change pat-

15 ent or trademark user fees or patent or trade-

16 mark regulations.

17 "(3) Term. — The Commissioner shall serve a

18 term of six years, and may continue to serve until

19 a successor is appointed and assumes office. The

20 Commissioner may be reappointed to subsequent

21 terms.

22 "(4) Oath. — The Commissioner shall, before

23 taking office, take an oath to discharge faithfully the

24 duties of the Office.



12
10

1 "(5) COMPEX&fVTiox. — The Commissioner shall

2 receive compensation at the rate of pay in effect for

3 Level II of the Executive Schedule under section

4 5313 of title 5.

5 "(6) Remov^Uj. — The Commissioner may be re-

6 moved from office by the President only for cause.

7 "(7) Designee op commissioner. — The Com-

8 missioner shall designate an officer of the Office who

9 shall be vested Avith the authority to act in the ca-

10 pacity of the Commissioner in the event of the ab-

1 1 sence or incapacity of the Commissioner.

12 "(b) Officers and Employees of the Office. —

13 "(1) Deputy commissioners. — The Commis-

14 sioner shall appoint a Deputy Commissioner for Pat-

15 ents and a Deputy Commissioner for Trademarks

16 for terms that shall expire on the date on which the

17 Commissioner's term expires. The Deputy Commis-

18 sioner for Patents shall be a person with dem-

19 onstrated experience in patent law and the Deputy

20 Commissioner for Trademarks shall be a person with

21 demonstrated exi)erienee in trademark law. The

22 Deputy Commissioner for Patents and the Deputy

23 Commissioner for Trademarks shall be the principal

24 policy ad\isors to the Commis.sioner on all aspects of

25 the acti\ities of the Office that affect the adminis-

•HR 1669 IH



13

11

1 tration of patent and trademark operations, respee-

2 tively.

3 "(2) Other officers and employees. — The

4 Commissioner shall —

.. 5 "(A) appoint an Inspector General and

6 such other officers, employees (including attor-

7 neys), and agents of the Office as the Commis-

8 sioner considers necessary to carry out its func-

9 tions;

10 "(B) fix the compensation of such officers

1 1 and employees in accordance with the policy set

12 forth in section 5301 of title 5, including com-

13 pensation based on performance; and

14 "(C) define the authority and duties of

15 such officers and employees and delegate to

16 them such of the powers vested in the Office as

17 the Commissioner may determine.

18 The Office shall not be subject to any administratively or

19 statutorily imposed Umitation on positions or personnel,

20 and no positions or personnel of the Office shall be taken

21 into account for purposes of applying any such limitation,

22 except to the extent otherwise specifically pro\ided by stat-

23 ute \vith respect to the Office.

24 "(c) Limits ox Compensation. — Except as other-

25 wise provided in this title or any other pro\ision of law,

•HR 1659 IH



14
12

1 the basic pay of an officer or employee of the Office for

2 any calendar year may not exceed the annual rate of basic

3 pay in effect for level III of the Executive Schedule under

4 section 5314 of title 5. The Commissioner shall by regula-

5 tion establish a limitation on the total compensation pay-



Online LibraryUnited States. Congress. House. Committee on the JPatent and Trademark Office government corporation : hearings before the Subcommittee on Courts and Intellectual Property of the Committee on the Judiciary, House of Representatives, One Hundred Fourth Congress, first and second sessions, on H.R. 1659, H.R. 1756, and H.R. 2533, September 14, 1995, a → online text (page 1 of 31)