Riley & Associates, Inc.
1323 West Cook Road - Grand Blanc, Michigan 48439
Phone (810) 655-8830 - Fax (810) 655-8832
Internet rjriley@sun.tir.com

9-16-95.

Stephen G. Kunin
Deputy Assistant Commissioner for Patent Policy and,
Projects Washington, DC 20231

(703) 305-8850 Fax (703) 305-8825

Subject: The following is my testimony concerning HR.1659

The Patent and Trademark Office is asking to have it's
status changed to a corporation. I have serious reservations
about this. PTO upper management has consistently operated
against the interests of independent and small business
inventors for a number of years.

The PTO and their allies have systematically attempted to
keep persons who oppose their agenda from participating in
the democratic process by severely limiting the number of
persons who are allowed to give oral testimony. They have
used every bureaucratic trick possible to accomplish this
including scheduling some hearings with only one weeks
notice.

Our PTO has systematically slandered several of our
countries most prolific inventors in an attempt to shift
blame for their failure to prosecute all patents in a
reasonable time frame. The PTO's claims that these inventors
intentionally delay their patents to create "Submarine
patents" have not been backed with proof.

In America a person is innocent until proven guilty but PTO
management has intentionally tarnished a number of inventors
reputations with out presenting any credible evidence to
back up those claims. Many inventors and patent attorneys
have been intimidated against speaking out against the PTO
by the threat of delays in patent actions or other
retaliation.

The words: abuses have been perpetuated by the PTO and none
of the proposed changes address the PTO's abuses. The PTO is
a bureaucracy whose upper management is willing to
compromise the source of our prosperity to cover-up it's own
failures, justify burdensome fees to increase its size and
budget, and to give it more power over its clients.

I believe that the upper management of our PTO has
systematically and intentionally misled Congress us to the
causes and nature of problem in our patent system. It
appears that some PTO management have lied in both their
testimony and in routine contacts with both the media and
Congress.

Making the PTO a Private corporation will lead to even less
accountability then we have now. I urge that Congress not
compound existing problems by changing the status Of our
Patent and Trademark Office. Further, I hope that Congress
will investigate the problems and make changes in PTO
management to stop our patent system from being dismantled.

I am attaching an article that examines in moderate detail
the practical implications of changes that are being
advocated by those who want to copy inventions without
compensating the inventor. They are for capitalism when they
are selling products but feel inventors work should be
socialized. If we allow that to happen independent
innovation will cease in America.

Please consider that America's prosperity has been driven by
innovation. Our culture is unique in that it produces more
independent thinkers and inventors then any other country.
American innovation is no different than other natural
resources such as minerals or oil, we must preserve
Innovations benefits for the benefit of our citizens.

Sincerely,
Ronald J. Riley
President

PATENT & TRADEMARK OFFICE AND MULTINATIONALS HAVE SIMILAR
GOALS AMERICAN PATENT SYSTEM ABOUT TO BE CRIPPLED

As an inventor, I must speak out about multi-pronged attacks
against our patent system by foreign paid lobbyists and
multinational corporations. Americas founding fathers
recognized that innovation is crucial to a free enterprise
system. Foreign governments and multinational corporations
have found allies in Patent and Trademark Office, both are
spending large sums of money to change American patent law.
Japan is one of the leaders but by no means is it the only
foreign government trying to influence our lawmakers to make
changes that are not in America's best interest. It is
important that we not compromise our country's prosperity by
allowing foreign interests to weaken our patent laws.

A bargain was made during the "Mutual Understanding" of
January 1994 between the US and Japan to make a number of
changes to our patent system. Some of those changes have
been buried in GATT. This deal is a result of a trade with
Japanese negotiators who offered the right to file American
patents in English and a limited right to correct
translation errors in exchange for the 20 year from date of
filing language.

Results of deals with Japan over many years should have
taught the United States that we never get what we bargained
for. I see no benefit for Americans in this deal. Most
American invcntors can not afford to file foreign patents.
American inventors who do file foreign patents find that it
is almost impossible to enforce them.

Jack Kilby is one recent example of Japan's unfair treatment
of American inventors. He invented the monolithic integrated
circuit The Japanese patent office held up the issuance of
his patent for 29 years and after its release Japanese
courts ruled that the patent does not apply to current chip
design.

The Japanese have been studying America's educational system
for years attempting to understand what makes Americans so
much more creative than the Japanese. American's make many
breakthrough inventions. Japanese inventions are usually
incremental or small improvements in existing technology.

Japan has demonstrated the ability to successfidly
commercialize concepts that the U.S. and other western
cultures create with breakthrough inventions. So, their
solution to the problem is to weaken our patent laws so they
can take advantage of our creativity.

There is a concerted attempt to weaken US patents by
multinational companies and by foreign governments. The
Japanese are especially active in this attack. A recent
article in Japan Times Weekly tilted. "Intellectual property
rights accord with U.S. said necessary" made it clear that
changes to the U.S. patent system are important to
"facilitate transfers of technology and related investments
from advanced economics to the Asian nations, which would
help their economic dcvelopment". The 20 year change that
has been hidden in GATT enabling legislation is very
detrimental to small business and individual inventors.
There may also be other harmful provisions In GATT-TRIPS
that have escaped notice. The document is over thirty pages.

CHANUES UNDER GATT

Change of patent law from 17 years from date of issuance to
20 years from date of filing. The net effect of this change
is to shorten the usable life of a patent. That is
especially true of the most significant patents that often
take a decade or more to issue. The twenty year language is
also included in 1994 S. 1954, H.R. 4307, S. 2369, and H.R.
5110.

Currently foreign proof of inventorship within the United
States is not allowed except where a patent has been
published. GATT changed our laws (Section 104) to allow
worldwide proof of inventorship. Ibis is going to create
many more interference's which will be extremely difficult
to investigate. It will be much easier for multinational
companies to avoid compensating American Inventors by citing
obscure evidence. It also opens the door for large scale
fraud by Multinationals which will be next to impossible to
prove.

OTHER PENDING CHANGES

Other changcs to our patent law have also been proposed in
several other pending bills. These changes in  their
totality will cause far greater damage then the threat
represented by each alone.

Publish the patent application 18 months after filing. This
will encourage interference with a patent by giving
potential infringers access to the information before the
patent issues and will make it much easier for an infringcr
to fraudulently claim prior user rights. 1994 S. 1854, H.R.
4307, 1995 H.R. 1733.

"Prior User Rights" which says that anyone who claims that
they have secretly developed an idea can use it royalty
free. This will prevent someone who obtains a patent
covering the idea from collecting royalties from any prior
user. Since there is no requirement that they publish to
establish the right this will encourage large scale fraud by
infringers who want to establish their right to use the idea
to avoid compensating the Inventor. 1994 S. 2272.

A bill is pending that would allow third parties an active
roll in reexamination of patents. Currently a third party
can request a reexamination but only the inventor and patent
examiner are activc in the Process. This change would allow
third parties an active roll. Large businesses could mount a
series of attacks through fourth parties and tie the
invention up for many years, 1994 S. 2341, 1995 H.R. 1732.

All of the changes cited tilt the playing field in favor Of
those who copy. The Japanese have always been very good at
copying and I believe that is why they are lobbying so hard
for these changes. The United States has always been good at
making major technological breakthroughs and breakthrough
Patents Protection is going to be disproportionately
weakened.

These changes will favor those who make small incremental
improvements in technology at the expense of those who make
more significant breakthroughs. Tbey will favor large
companies over startup companies and favor companies with
short term management goals over companies that plan for
long term goals.

One example of how insidious the foreign interference is how
they managed to get the patent offices backing for changes
that will undermine the patent system. Proponents of
weakening our patent system argue that it is being abused by
inventors. They usually site "submarine patents" as an
example of misuse. The term submarine patent first appeared
in a Japanese publication and it is used to describe a
patent which is issued after a long delay in the patent
office that catches everyone in industry by surprise. Some
pawns claim that inventors intentionally delay their
patents. There are no proven cases of intentional delay
being used to create a submarine patent.

There is considerable evidence that delayed patents are the
fault of inefficient bureaucrats at the patent office. When
they were confronted by powerfull interests over the
problems created by patents that were issued after lengthy
delays of up to forty years they picked individual inventors
to be the scapegoat.

The patent office is specifically mandated to aid
individuals who are filing for patents. The patent office's
claim that submarine patents are caused by individual
inventors is proof that they are not adequately aiding
Inventors as mandated by law.

There is a great deal of evidence that the PTO is in fact
the cause of excessive patent delays. When an examiner
receives an unusually complex or in some cases a poorly
drafted patent (as can happen with pro se applications) they
tend to work on it after they have processed other patents
to keep their productivity evaluations favorable. The patent
may go one or more years between office actions and I have
heard of four and five years in extreme cases.

The examiner may leave the PTO, causing the file to be
passed to another examiner. The new examiner is faced with
even more work to become familiar with the patent and sticks
the file on the bottom of their pile.

The application languishes and soon ten or twenty years, or
in the worst case forty years have elapsed. This is not
inventors fault and the solution is to enforce the mandate
that the PTO prosecute all patents, especially pro se
patents in a timely manner.

Another aspact of this problem is allowance of claims.
Currently the inventor or their representative and the
examiner interact to determine appropriate claim language.
The examiner has an incentive to complete the patent because
they look bad if the case drags on. The inventor has an
incentive because they rarely derive income from a patent
before it issues.

Many persons who have a vested interest in a weaker patent
system have claimed that inventors have a motive to delay
patents until a technology is well established. It is
illogical to believe that an inventor would intentionally
delay his patent for forty years. Compounded interest on
money earned earlier far exceeds the potential for a bigger
market which is cited as a motive to delay patents and the
fact is that an inventor would have to be clairvoyant to see
twenty, thirty, or forty years ahead.

Prolific inventors would be foolish to defer income when
cash flow stops them from filing additional patents, patents
whose financial return is likely to far exceed the value of
compounded interest on invested funds. It follows that
prolific inventors want income as soon as possible on
existing patents to fund developing their most current
ideas.

The 20 year from filing provision is a PTO bureaucrats dream
because it gives them a huge lever to make an inventor
accept whatever the PTO dictates. The five year extension
they have offered is a Band-Aid applied to a change that is
not justified by the evidence or in Americas interests.
Obtaining the extension is dependent on the whims of a
bureaucrat. The PTO gets more power and eliminates industry
criticism over delayed patents.

Administrative solutions such as the five year extension are
not acceptable, I would entertain the possibility of other
Administrative solutions to our concerns such as replacement
of several of the PTOs upper Administrators.

I suggest the following issues must be examined as a group
while carefully considering what the practical implications
are. 

1) 20 year from filing.
2) World wide proof of inventorship, section 104.
3) 18 month publication.
4) Prior user rights.

There are often huge disparities between theory and real
world application of principals. Look at capitalism verses
socialism. One encourages hard work and the other doesn't.
Multinationals will use the proposed changes to crush small
business and independent inventors.

18 month disclosure will be used by dishonest entities to
erode the patent term by third parties challenging pending
patents, claiming prior user rights, and use of fraudulent
evidence from difficult to investigate foreign sources. It
will make our patent system subject to "flooding" as is
common in Japan. Flooding is where hundreds of narrow and
often questionable improvement patents are filed concerning
a fundamental patent to limit the ability of the original
inventor to collect royalties.

Important patents that are not stopped outright will be tied
up with interference's and other delaying  tactics that will
eat up half or more of the 20 term.

Patents will be unenforceable for anyone except the largest
companies. Inventors such as I will abandon innovation.
America's declining standard of living will accelerate. I
suspect that America will stop being the beneficiary of the
brain drain and that we could even end up being an exporter.

The PTO has repeatedly claimed that the vast majority of
inventors will enjoy a longer term of patent protection.
This is another example of the PTO misrepresenting the
facts. They claim the average pendency is 19.5 months based
on the most current continuation. Their statistics do not
take into account the previous applications that led to the
last application from which the patent issues.

USTR and the PTO both claim the proposed changes address
abuses of our patent system. The worst abuses have been
perpetuated by the PTO and none of the proposed changes
address abuses of the system that have been perpetuated by
the PTO. The PTO is a bureaucracy whose upper management is
willing to compromise the source of our prosperity to
cover-up it's own failures justify burdensome fees to
increase its size and budget and to give it more power.

The end result of the patent offices attempt to lay blame
for submarine patents on inventors is that they have been
maneuvered by the foreign multinationals into a position
where they had to back measures that are contrary to
America's interests. I am not sure at this time rather the
patent office has been duped into backing destruction of
innovation or if other incentives have been offered by
multinationals to key persons.

While inventors still face many obstacles in defending their
intellectual property rights, they have made progress during
the past ten years. That progress is alarming to those
multinational businesses and foreign governments that had
become accustomed to unlawfully appropriating individual's
and small business's intellectual property. They are
spending large sums of money attempting to gut our patent
system so that they can take the benefits of American
ingenuity and the jobs for their profit.

This is not an abstract problem that only affects inventors.
The issue affects every citizen of our country. Loss of the
economic benefits of Yankee ingenuity will cost Americans
decent paying jobs and will doom our children to a much
lower standard of living.

America's economic might is a direct result of our producing
more inventors per capita then any other country in the
world. Our culture is known for producing independent
thinkers. Other cultures bove studied our educational system
in the hope of learning how to produce inventors.

A healthy economy is dependent on a diverse mix of both
startup companies and large businesses. lf we allow laws to
be changed that benefit large companies at the expense of
small companies who are the source of 75% of innovation we
will have far fewer startups and fewer inventions.

Large companies have become very short sighted in the last
ten to fifteen years. Their quest for ever higher short term
gains has radically altered business practices. All of us
have known persons who have been displaced from jobs by
down-sizing. Many people are not aware that Research and
Development staff persons are being let go in greater
numbers then many other groups. This iss a result of large
companies only finding small improvements that will give
them an immediate return on their investment.

These trends are causing many inventors to form small
companies to develop ideas for which large companies are not
willing to make a long term investment to commercialize. The
problem is that the large companies want to be able to take
advantage of the small companies work without fairly
compensating them.

Everyone understands that a farmer who consumes his seed
corn is foolish. Small companies seed the market. If
multinational companies are successful in crippling the
patent system all Americans will suffer a decreased standard
of living.

I have been an Inventor for ten years, the last five full
time. I am appalled by the actions of the current
Administration and the Patent amd Trademark Office (PTO).
The PTO is a classic example of a bureaucracy that is out of
touch with the realities of the marketplace and the needs of
inventors.

Their actions during the last few years have been extremely
damaging to Innovators. The PTO has been convinced by
lobbyists that are paid by multinational corporations and
foreign governments to back measures that will allow the
foreign interests to take our inventions and the jobs and
profits that those inventions represent.

Both the Alliance for American Innovation located in
Washington, DC, founded by Steven Shore and Intellectual
Property Creators. organized by Paul Heckel and located in
Los Altos, CA. are vigorously opposing the Japanese led
attack on our patent system. Those changes are being
promoted by multi-national corporations, foreign
governments, and their lobbyists or agents. Membership of
the Intellectual Property Creators coalition includes
fifteen members of the National inventors Hall of Fame,
seven members of the American College of Physician Inventors
Hall of Fame, and three Nobel Laureates. Several members of
the coalition have attended GATT hearings and numerous
members, including myself have lobbied in Washington against
changes to American patent law that will damage American
innovation.

I urge all inventors to contact both the Alliance for
American Innovation and Intellectual Property Creators.
Please start encouraging family, friends, and business
associates to call and write their representatives. It is
especially important that inventors and companies that
depend on innovation personally contact their
representatives.

All concerned parties should write President Clinton and
their congressional representatives to support proposed
Rohrabacher bill HR 359 and Dole bill S. 284, as they are
designed to repair the damage caused by the unnecessary
provisions in GATT's enabling legislation that harm our
ability to create desperately needed new jobs.

Ronald J. Riley, President
Riley & Associates
Grand Blanc, Michigan

Word count=2643

Steven Shore
Alliance for American Innovation
1100 Connecticut Ave. NW, Suite 1200
Suite 404 Washington, DC 20036-4101
Voice (202) 293-1414
Fax (202) 467-5591

Paul Heckel
Intellectual Property Creators
146 Main Street
Los Altos, ca. 94022
Voice (415) 948-8350
Fax (415) 948-7319

Ronald J. Riley is president of Riley and Associates, Inc.,
a Grand Blanc, Michigan based company and is an inventor
that specializes in industrial controls and product
development. He is President of the advisory boards of the
Alliance for American Innovation.