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74–817 PDF 2012

INTERNATIONAL IP ENFORCEMENT: PROTECTING 

PATENTS, TRADE SECRETS AND MARKET ACCESS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

INTELLECTUAL PROPERTY, 

COMPETITION, AND THE INTERNET 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

JUNE 27, 2012 

Serial No. 112–119 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

LAMAR SMITH, Texas, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

DENNIS ROSS, Florida 

SANDY ADAMS, Florida 

BEN QUAYLE, Arizona 

MARK AMODEI, Nevada 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

TED DEUTCH, Florida 

LINDA T. SA ́ NCHEZ, California 

JARED POLIS, Colorado 

RICHARD HERTLING, Staff Director and Chief Counsel 

PERRY APELBAUM, Minority Staff Director and Chief Counsel 

SUBCOMMITTEE ON INTELLECTUAL PROPERTY, COMPETITION, AND THE INTERNET

BOB GOODLATTE, Virginia, Chairman 

BEN QUAYLE, Arizona, Vice-Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

MIKE PENCE, Indiana 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

SANDY ADAMS, Florida 

MARK AMODEI, Nevada 

MELVIN L. WATT, North Carolina 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

JUDY CHU, California 

TED DEUTCH, Florida 

LINDA T. SA ́ NCHEZ, California 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

BLAINE MERRITT, Chief Counsel 

STEPHANIE MOORE, Minority Counsel 

(III) 

C O N T E N T S 

JUNE 27, 2012 

Page 

OPENING STATEMENTS 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Subcommittee on Intellectual Property, Competition, and the Internet .................................................................................... 1 

The Honorable Melvin L. Watt, a Representative in Congress from the State 

of North Carolina, and Ranking Member, Subcommittee on Intellectual 

Property, Competition, and the Internet ............................................................ 3 

The Honorable Lamar Smith, a Representative in Congress from the State 

of Texas, and Chair, Committee on the Judiciary ............................................. 4 

WITNESS 

The Honorable Teresa Stanek Rea, Deputy Under Secretary of Commerce 

for Intellectual Property and Deputy Director of the United States Patent 

and Trademark Office, United States Department of Commerce 

Oral Testimony ..................................................................................................... 6 

Prepared Statement ............................................................................................. 9 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Prepared Statement of the Biotechnology Industry Organization ...................... 32 

(1) 

INTERNATIONAL IP ENFORCEMENT: PROTECTING PATENTS, TRADE SECRETS AND 

MARKET ACCESS 

WEDNESDAY, JUNE 27, 2012 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON INTELLECTUAL PROPERTY,

COMPETITION, AND THE INTERNET, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:06 a.m., in room 

2141, Rayburn Office Building, the Honorable Bob Goodlatte 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Goodlatte, Quayle, Smith, Sensenbrenner, Coble, Chabot, Jordan, Marino, Adams, Watt, Berman, 

Deutch, Lofgren, and Waters. 

Staff Present: (Majority) Vishal Amin, Counsel; Olivia Lee, Clerk; 

and (Minority) Stephanie Moore, Subcommittee Chief Counsel. 

Mr. GOODLATTE. Good morning. This hearing of the Subcommittee on Intellectual Property, Competition, and the Internet 

of the House Judiciary Committee will come to order. And I’ll recognize myself for an opening statement. 

Today, we are holding an oversight hearing on the Obama administration’s international IP enforcement efforts, focusing specifically on international patent, trade secret, and market access 

issues to raise the spotlight on the problems that American companies face when seeking, enforcing, and using patents overseas. 

This Subcommittee held a hearing in April with industry stakeholders to look at the patent systems in foreign countries and 

whether they meet global trading standards. The fundamental 

question we sought to answer was whether we have a level or an 

unlevel playing field abroad for American innovators. 

What we learned is that much work needs to be done to level the 

playing field for American innovators. 

When American businesses seek to sell their goods abroad, they 

must be able to compete fairly. Our trading partners must live up 

to their international obligations and not discriminate against U.S. 

companies or fields of technology when it comes to patentability 

and market access. 

When the latest patented chip design of a U.S. technology company is infringed, or a foreign government subjects an American 

patented pharmaceutical drug to a compulsory license or endless 

challenges to effectively block market access, the IP enforcement 

2 

issues implicated have a direct and negative impact on free markets and fair trade. 

World Trade Organization members are required to make patents available for inventions in all fields of technology. However, 

many countries discriminate based on the place of invention, field 

of technology, or whether products are imported or locally produced. 

For example, countries like Brazil and India limit the scope of 

patent-eligible subject matter in a way that makes it difficult, if 

not impossible, for a U.S. innovator to get patent protection. 

Another field where foreign competitors have engaged in protectionist practices is trade secrets. Certain foreign governments have 

begun adopting policies that undermine trade secrets and disadvantage American companies. These policies include, one, requiring companies to provide trade secret information to a local partner 

or a government agency as a condition of investment or market access; and, two, testing or certification programs that require companies to disclose confidential information in order to sell their product in the foreign market. 

When U.S. companies are forced to give their confidential business information to the government authority, there is usually a 

lack of adequate safeguards to protect it. Some U.S. companies 

have decided to avoid the Chinese and Indian markets altogether, 

rather than lose their trade secrets. 

Some countries, like South Korea, China, and India, are looking 

at using compulsory licensing in the trade secret space. The foreign 

regulators in these countries can potentially compel new licensing 

of a trade secret to a third party. This is done to help a local competitor that claims that it needs access to the trade secret in order 

to compete. 

All of these practices point to the fact that the U.S. needs to be 

more vigilant in ensuring an international market that is fair for 

U.S. companies looking to compete. 

Today, we will examine what the U.S. is doing to ensure this is 

indeed the case. 

Some have argued that the Obama administration has taken a 

narrow approach when it comes to the concerns of the American innovative companies in the patents, trade secrets, and market-access space. They point to the Administration’s lack of focus on 

international patent issues, generally, as well as the lack of a 

strong public response, when, in March, the Indian Government 

took the unprecedented step of issuing a compulsory license on a 

pharmaceutical patent. 

Trade agreements like the Trans-Pacific Partnership Agreement, 

or TPP, provide platforms for the U.S. to exert pressure on other 

countries to level the playing field when it comes to these issues. 

It has come to our attention that some provisions being discussed 

in the context of the TPP negotiations could weaken, rather than 

strengthen, certain intellectual property laws abroad, whether it be 

requirements for plain packaging of certain products or pharmaceutical test data protection issues. 

I look forward to continue to work to ensure that these negotiations result in stronger, not weaker, commitments by other countries to enhance their IP laws. 

3 

I want to commend the PTO for the work they have done in the 

context of their IP attache ́ program, their international policy advocacy, and the training and capacity-building programs they are conducting on the ground in targeted countries. 

Today, I hope to hear more about the USPTO’s plans to do more 

to expand the U.S. Government’s efforts to find real solutions to 

these unfair trade practices that distort free market trade and, in 

the end, hinder American job creation. 

I now am pleased to recognize the Ranking Member of the Subcommittee, the gentleman from North Carolina, Mr. Watt. 

Mr. WATT. Thank you, Chairman Goodlatte. And I also thank 

you publicly for accommodating some schedules of some other witnesses who we wanted to testify. And I’m sure we’ll get a chance 

to hear from them later on this important subject, which has continuing and important implications. 

I want to welcome our witness, Deputy Under Secretary Rea, to 

her first appearance before this Subcommittee, and what I understand is her first her appearance before any Committee of Congress. She brings an impressive body of work prior to joining the 

U.S. Patent and Trademark Office and will, no doubt, share with 

us today additional achievements in her current capacity. 

This hearing, as the Chairman has indicated, is a follow-up to a 

hearing we held in April, in which we heard from a number of witnesses from stakeholder industries and academia. 

Today, we pivot to look at developments in enforcement in the 

increasingly relevant and sometimes complex international patent 

arena. 

Just last month at the meeting of the G-8 at Camp David to address global, economic, and political challenges, the group emerged 

with a declaration that stated, in part, quote, ‘‘Given the importance of intellectual property rights to stimulating job and economic growth, we affirm the significance of high standards for intellectual property rights protection and enforcement,’’ close quote. 

While this commitment is welcomed, it must be embraced by the 

broader global community. And more importantly, it must be honored. 

The U.S. takes pride in our IP-intensive industries, which collectively produce 27.1 million jobs for our citizens. But we continue 

to hear that, for some of those industries, barriers to access to some 

of the world’s fastest growing markets is deliberately stymied by 

protectionist practices of foreign governments, lack of intellectual 

property enforcement, and other tactics that discourage and impede 

the ability of U.S. companies to compete on a level playing field. 

These practices may affect entire industries, like the information 

technology sector, which, according to a recent report by the Business Software Alliance, called, ‘‘Lockout: How a New Wave of Trade 

Protectionism Is Spreading through the World’s Fastest-Growing 

IT Markets—and What to Do about it,’’ may be required to provide 

local licensing of its intellectual property as a condition to entering 

the market. Or they may deny a valid trademark of a U.S. company, like True Religion, whose largest supplier, Cone Mills, is in 

my congressional district, forcing them to instead litigate, which, 

although successful, quite often results in an unenforceable judgment of millions of dollars. 

4 

In addition to these policy challenges, there are also practical administrative hurdles for American companies. Small American 

businesses and startups are often saddled with high application 

fees for patent protection in other countries, as was noted in the 

PTO report earlier this year. 

Although we provided some fee relief to micro-entities in the 

America Invents Act, lots of other countries do not have the same 

practices and policies. 

Similarly, despite our efforts at global harmonization, the absence of a grace period in many other patent-issuing countries continues to place our inventors at a disadvantage. Because the laws 

of many foreign countries prohibit the grant of a patent where an 

invention was disclosed prior to the date of the application, the 

grace period effectively limits the patent to within the borders of 

the United States. 

Finally, we must remain ever vigilant in our efforts to enhance 

America’s standing in the competitive international market and to 

guard against unfair foreign encroachments on our intellectual 

property rights. But we also have an obligation to be good global 

citizens, particularly where health and safety concerns are concerned, so that our enforcement policies do not unfairly disrupt, exploit, or decimate the economies of developing countries. 

Our colleague, Mr. Berman, has worked tirelessly over the years 

in his capacities both on the Judiciary Committee and on the Foreign Affairs Committee to promote and support a dynamic and 

nimble IP attache ́ corps, which through diplomacy, negotiation, and 

relationship-building may well be suited to helping achieve those 

dual goals. 

This is an important hearing, Mr. Chairman. I thank the Chairman for convening it. And again, I thank him for accommodating 

our other witnesses. That means we’ll be having some more hearings on this issue, so I appreciate it and yield back. 

Mr. GOODLATTE. I thank the gentleman. 

And it’s now my pleasure to recognize the Chairman of the Judiciary Committee, the gentleman from Texas, Mr. Smith. 

Mr. SMITH. Thank you, Mr. Chairman. 

America’s economic success has been built on innovation. But as 

we develop new technologies and products, foreign governments 

have disadvantaged American companies by imposing barriers to 

market access. 

During the Bush administration, intellectual property enforcement involved patents, trademarks, copyrights, trade secrets, and 

market access. 

The Bush administration established an IP attache ́ program in 

2006 and a Global IP Academy at the Patent and Trademark Office. These work directly with trading partners to promote IP protection and enforcement, and to advance U.S. economic and political interests. 

It elevated important IP enforcement cases, so that they could be 

raised at the Cabinet level with foreign governments. And President Bush appointed the first IP coordinator, which was housed at 

the Department of Commerce. 

During those years, China joined the World Trade Organization, 

India passed a patent law, and other countries in Asia and Latin 

5 

America began to modernize their IP systems. Many of the IP enforcement issues of today were just starting to arise back then. 

The Bush administration had the foresight to establish new programs, hold our trading partners accountable by filing IP cases at 

the WTO, and use all of our trade tools to promote effective IP enforcement in all areas of intellectual property, including patents 

and trade secrets. 

So it is disappointing that the IP enforcement coordinator is not 

here today, even though we had informed her office of this hearing 

in early May. 

I understand that the coordinator chose to travel to Oregon instead of appear before this Committee. I had hoped to get better 

cooperation from an office that this Committee established 4 years 

ago. 

This Administration’s approach to international IP enforcement 

issues has been too weak. But it is not too late for it to take a more 

comprehensive approach to IP enforcement. 

As the Administration develops their next joint strategic plan, 

they must expand their approach. The Administration should ensure that a significant part of IP enforcement includes the issues 

around patents, trade secrets, and market access. 

When foreign governments engage in practices that devalue the 

IP of American innovators, Federal officials need to respond strongly and swiftly. Appropriate responses should include filing IP cases 

at the WTO, something that we haven’t seen in the last 3 years. 

Under President Bush, the U.S. filed 24 WTO cases, which included two IP cases. Under President Obama, the U.S. has filed 

eight cases and none on IP. 

In the absence of WTO IP enforcement actions, many foreign 

countries will continue to ignore legal reforms and create major 

barriers to trade for U.S. companies. Many of these patent-specific 

problems have intensified over the past 3 years. 

These global problems require real-world solutions that go beyond simply being listed in the annual United States Trade Representative’s Special 301 watch list or a government report. They 

go to the very heart of our innovative companies’ ability to compete 

on the global playing field. 

The U.S. patent system is designed to be fair. It meets our international obligations and does not discriminate against any field of 

technology. 

The same cannot be said of the patent systems around the world. 

When American companies seek protection in foreign markets, they 

see their patent applications being held up, as patent approval 

times approach a decade in some countries. 

They see their patents subject to lengthy pre-grant and postgrant challenges that further reduce their patent term. And they 

continue to face obstruction by foreign courts and administrative 

agencies when trying to bring their product into the local market. 

Those foreign countries not only violate their international commitments, but also create a significant negative economic impact 

that hits the U.S. economy and domestic jobs. 

I plan to introduce the Promoting a Level Playing Field for 

American Industry, Innovators, and Job Creators Act. This IP 

6 

attache ́ training and capacity-building bill is based on concepts developed at the PTO. 

It will improve the IP attache ́ program and U.S. Government IP 

training as it aligns policy priorities and brings them under the 

U.S. Patent and Trademark Office. It ensures that our IP efforts 

abroad are in line with compelling U.S. economic interests. 

The goal is to focus our efforts to deal with IP issues at their 

source and use all of our trading tools as we work with other countries. 

As the U.S. Government works with our trading partners to find 

solutions, we can ensure that the solutions reached are in line with 

compelling U.S. economic interests and job creation. 

Thank you, Mr. Chairman. I yield back. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

Without objection, other Members’ opening statements will be 

made a part of the record. 

Ms. Rea, we are delighted to have you with us today as our distinguished witness, and your written statement will be entered into 

the record in its entirety. And we ask that you summarize your testimony in about 5 minutes. 

As is the custom of this Committee, before we formally introduce 

you, we’d ask that you stand and be sworn. 

[Witness sworn.] 

Mr. GOODLATTE. Thank you very much. 

Our witness today is the Honorable Teresa Stanek Rea, the Deputy Under Secretary of Commerce for Intellectual Property and 

Deputy Director of the U.S. Patent and Trademark Office. 

Deputy Under Secretary Rea joined the USPTO in 2011 and had 

previously served as a partner in Crowell & Moring’s D.C. office, 

where she focused on IP and dispute resolution related to pharmaceutical, biotechnology, and other life-science issues. She also 

served as a past president of the American Intellectual Property 

Law Association. 

Earlier in her career, she worked for Ethyl Corporation and at 

a boutique law firm in Alexandria, Virginia. 

Ms. Rea received her law degree from Wayne State University 

and a Bachelor of Science Degree in Pharmacy from the University 

of Michigan. 

Welcome, Deputy Director Rea. 

Ms. REA. Thank you so much. 

Mr. GOODLATTE. You may want to pull that microphone close to 

you. 

TESTIMONY OF THE HONORABLE TERESA STANEK REA, DEPUTY UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DEPUTY DIRECTOR OF THE UNITED 

STATES PATENT AND TRADEMARK OFFICE, UNITED STATES 

DEPARTMENT OF COMMERCE 

Ms. REA. Chairman Goodlatte, Ranking Member Watt, Chairman 

Smith, and distinguished Members of the Subcommittee, thank you 

so much for inviting me to be here with you today. And thank you 

for this opportunity to discuss the United States Patent and Trademark Office’s efforts toward improving the international enforcement of intellectual property rights held by U.S. innovators. 

7 

Mr. Chairman, while I’ve been at the USPTO for just over 16 

months, I have spent a good portion of my legal career, as you 

know, working in the field of biotechnology and pharmaceutical 

patents. I am a registered pharmacist in the State of Michigan, and 

I have worked for many years in a hospital setting. And this experience has provided me with a unique perspective from which I approach my job. 

It is absolutely clear to me that we cannot overstate the importance of IP to our economy. The recent Department of Commerce 

report, as was indicated earlier, found that IP-intensive industries 

support at least 40 million jobs and contribute more than $5 trillion, or 35 percent of U.S. gross domestic product. 

And as stated by the Commerce Department’s Acting Secretary 

Blank, she indicated strong intellectual property protections encourage our businesses to pursue the next great idea, which is vital 

to maintaining America’s competitive edge and driving overall prosperity. 

Mr. Chairman, we are proud of the array of programs and initiatives we have at the USPTO that benefit American innovators 

doing business in the global marketplace. 

A significant problem with overseas IP enforcement is the lack 

of training available to responsible foreign officials. Many foreign 

legal systems have minimal experience in enforcing IP laws and 

adjudicating IP disputes. 

The U.S. Patent and Trademark Office has developed and conducted rigorous capacity-building programs in key countries and regions, focusing on training foreign enforcement officials, including 

police, prosecutors, customs officials, as well as the judiciary themselves. Also, we continue to provide training and resources that 

help guide U.S. companies as they enter into global markets, especially when they face particular challenges to enforcing their rights. 

Through our Global Intellectual Property Academy, also known 

as GIPA, we have greatly expanded IP rights training, capacitybuilding, and technical assistance offerings to promote improved IP 

protection and enforcement. 

Over the last year and a half, our Global Intellectual Property 

Academy has conducted almost 200 training programs, both domestically and abroad, reaching more than 6,000 foreign government 

officials, representing approximately 140 countries. Now, during 

that same period, we also trained more than 2,000 representatives 

of small- and medium-sized U.S. enterprises at programs throughout the United States to help them navigate that terrain. 

GIPA has also produced seven e-learning modules on IP protection and enforcement, several of which are actually available in 

languages other than English. And those modules have received 

more than 20,000 hits since they were first placed on the USPTO 

website. 

Now, Mr. Chairman, we are particularly proud of the important 

work done by our IP attache ́s, and they’re stationed at U.S. Embassies and missions around the world. These IP experts are dedicated 

to promoting high standards of IP protection and enforcement 

internationally for the benefit of U.S. rights-holders. 

They are frequently called on to play two significant roles. First, 

they coordinate and identify ways to effectively address the chalVerDate Aug 31 2005 10:08 Aug 23, 2012 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6601 H:\WORK\IP\062712\74817.000 HJUD1 PsN: DOUGA
8 

lenges faced by U.S. companies. And second, they work with the 

host government to consider changes that improve the effectiveness 

of their IP systems. 

In addition to our attache ́ postings, we also have two USPTO employees on detail to the USTR and the U.S. Permanent Mission to 

the U.N. office in Geneva, supporting U.S. objectives relating to IP 

matters that arise in the course of the World Trade Organization, 

the World Intellectual Property Organization, and other international organizations. 

Now, since entering this position, Mr. Chairman, I have had the 

opportunity to meet many of the USPTO IP attache ́s currently 

serving in our Embassies throughout the world, and I can attest to 

the valuable role that they play in facilitating informed discussions 

related to the creation of effective IP laws and the challenges U.S. 

companies face in enforcing their rights. I know that their work 

has also received very favorable reviews by the business community. 

Mr. Chairman, in light of the increasing concerns by U.S. rightsholders on the importance of protecting their trade secrets from 

misappropriation, the USPTO is emphasizing this area in our domestic and foreign policy objectives, particularly as they relate to 

China. USPTO attorneys are undertaking a comprehensive study of 

Chinese laws and other legal measures governing trade secrets, 

and are discussing with Chinese Government officials changes that 

can facilitate a more effective protection regime in China. 

Mr. Chairman, my written statement provides more detailed information on our initiatives and programs, all with the goal of 

achieving effective IP protection and enforcement for U.S. 

innovators doing business in the global marketplace. 

Mr. Chairman, we look forward to continuing to work with the 

Committee, the leadership at the Department of Commerce, our 

colleagues within the Administration, and our stakeholders, toward 

that goal. And we do appreciate your continued support for all 

10,000 employees at the U.S. Patent and Trademark Office. Thank 

you. 

[The prepared statement of Ms. Rea follows:] 

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Rea-1.eps
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Mr. GOODLATTE. Well, thank you, Deputy Director Rea. I’ll begin 

the questioning. 

In the patent world, there are many hurdles that a foreign country can raise to prevent a company from selling a product based on 

a lawfully granted patent. But in recent years, we’ve seen countries 


Rea-7.eps
16 

like Brazil, Thailand, and India using the threat of a compulsory 

license as a negotiating strategy to those American companies to 

manufacture or license their products to local companies at government-mandated prices. 

Recently, India took the unprecedented step of issuing a compulsory license against a Bayer oncology drug, stating, among other 

reasons, that the patented drug was not being sufficiently worked 

in India, because it was not locally manufactured. 

What steps did the Administration take and should be doing now 

to ensure that countries think twice about using a compulsory license simply as a negotiating strategy or to facilitate their budget 

planning? 

Ms. REA. Thank you, Mr. Chairman. 

Actually, on that particular issue, I can pretty much speak from 

the heart. 

As a pharmacist, as someone who has worked in both a drug 

store and a hospital setting, I can tell you that pharmaceuticals are 

something that we all need and that there is a global need for 

those. Unfortunately, compulsory licenses dissuade pharmaceutical 

and biotech companies from innovating or from bringing their product into countries that grant compulsory licenses. 

In the case of India, I have to tell you, I was quite dismayed and 

surprised when they did indeed decide to grant that compulsory license for a reason that I think did not meet international standards and was not due to, for instance, a national crisis. 

What we do at the USPTO, is we have somebody on the ground 

right now in India, in the Embassy in Delhi, who constantly engages with all of the respective offices in India to discuss with 

them the importance of not granting a compulsory license in a situation where it is not warranted. 

Unfortunately, our education efforts on that issue to date have 

not yet been successful. I’m not sure if you were aware of it, but 

that compulsory license was granted by Commissioner Kurian on 

the very last day he left the Indian Patent Office as Commissioner. 

Mr. GOODLATTE. Was that granting appealed? 

Ms. REA. I’m sorry? 

Mr. GOODLATTE. Was it appealed? 

Ms. REA. Yes. It’s currently being ongoing discussed and appealed at this time legally. But we’re also working with trying to 

continue our discussions with their equivalent of the U.S. FDA and 

their regulatory authorities. 

We’re engaging in as many discussions as we can with them, outside of just the Indian Patent Office context. But we are doing everything we can to respect the rights of U.S. innovators. 

Unfortunately, from my perspective, I think that perhaps the 

loser in all of this will actually be the Indian people, the Indian patients, where major pharmaceutical companies will actually delay 

bringing pharmaceuticals into those countries. 

Mr. GOODLATTE. Well, let me just say that I appreciate that concern, but here’s the problem: Whenever you have a country that 

doesn’t treat our pharmaceutical manufacturers fairly in the process and they both issue compulsory licenses or threaten to do so, 

and have mandated prices—price controls, if you will—that’s an 

untenable combination, because the fact of the matter is, if the 

17 

company refuses to offer the drug in India, they simply acquire the 

drug, reverse engineer it, and compulsory license it to a local Indian company. How do we stop that? 

Ms. REA. I can tell you that reverse-engineering some of these 

very sophisticated anti-cancer or chemotherapy drugs is actually 

exceedingly complex. If it was a small molecule or something that 

someone took orally, those can be more easily reverse-engineered 

and identified. 

For the country of India to gear up and to make some of these 

very sophisticated biotech molecules, it takes really quite a long 

time. 

Mr. GOODLATTE. But they’ve done it in this instance? 

Ms. REA. That’s what I understand. But perhaps they started a 

bit earlier than I would’ve anticipated, but it takes a very long time 

for them to gear up and do that. 

From the USPTO perspective, education, IP awareness, teaming 

with them, constantly being there on the ground, is perhaps the 

best weapon that we have. Because we think that, in the long term, 

they do indeed want to be a good player in the international community. And so I think education and our efforts out front in trying 

to stop this in the future—— 

Mr. GOODLATTE. Let me ask you another question before my time 

expires. 

As opposed to criminal activity, these international patent and 

trade secret problems in the civil law space seem to be driven directly by foreign governments to benefit their domestic industries. 

And it seems like they’ve been getting a free pass as they devalue 

the patented innovations of American companies. If there was one 

thing that we could do immediately to improve this global situation, what would it be? 

Ms. REA. I think get a little bit more on track, both procedurally 

and substantively, with patent harmonization issues. 

As you know, because of your great efforts—— 

Mr. GOODLATTE. And I would think that making the compulsory 

license issue a part of those international intellectual property negotiations would be critical part of that. 

In other words, I understand why countries want to have a compulsory license. If they have a life-saving drug and a company 

chooses not to sell it in a particular market, they’re going to use 

their compulsory license. 

On the other hand, if they’re going to make it unattractive to sell 

the drug in the market by forcing the company to manufacture it 

locally or by mandating price controls that are unfair—and unfair, 

by the way, to U.S. consumers, who wind up subsidizing the cost 

of developing the drug at the same time that the country that compulsory licenses it gets to not only do that, but also sell it at a 

lower price, again, unfair to U.S. consumers. 

So, to me, this needs to be front and center a priority issue. It’s 

not new to the current Administration. It’s been a problem for 

quite awhile now. That needs to be injected into that process, and 

I hope very aggressively. 

Ms. REA. We do. I, personally, have engaged in discussions with 

various agencies of the Indian Government on this issue. And it 

continues to be part of the ongoing effort within the U.S. Patent 

18 

and Trademark Office with our external affairs division, which sort 

of oversees our IP attache ́s. 

So this is front and center, and we are consistent in trying to 

stop those efforts and in trying to stop the granting of further compulsory licenses. 

Mr. GOODLATTE. Can a WTO case be brought on this dispute 

with India if the appeal does not succeed? 

Ms. REA. That is actually an appropriate question. Since I work 

with a different agency, based on my limited knowledge, I think 

that that would be one of the tools in our toolkit that perhaps 

should be considered. 

Mr. GOODLATTE. Thank you very much. 

The gentleman from North Carolina, Mr. Watt, is recognized. 

Mr. WATT. Thank you, Mr. Chairman. 

And I’m happy to see that the Chairman is coming to our position that a number of issues need to be included in discussions in 

these trade agreements. Not only does not negotiating about compulsory licenses have an adverse impact on businesses, but not negotiating about labor conditions and employment conditions in 

those countries have an adverse impact on our workers. 

So we seem to be coming closer together on some of these issues. 

And I’m happy to see that. 

Mr. GOODLATTE. If the gentleman would yield? 

Mr. WATT. Yes, sir. 

Mr. GOODLATTE. I’d say that the former is true, but not the latter, I think the compulsory license used in conjunction with other 

issues directly related to trade. 

But I certainly appreciate the gentleman—— 

Mr. WATT. And employment conditions is directly related to 

trade, I would assure the gentleman. 

But, you know, I thought that we were getting closer together, 

but maybe I misread what the Chairman was saying. 

But there are some interesting challenges in negotiating, formally or informally, respect for intellectual property in developing 

countries. 

And, Ms. Rea, maybe you could tell us or just list some of those 

challenges that the United States encounters in these negotiations. 

Ms. REA. Culturally, a lot of countries come from a different perspective from what we do. They have different legal systems. They 

have different issues that they’re struggling with. 

One thing that we all have in common is we all have the need 

for vibrant economies, and we all have the need for jobs. So when 

we discuss with people, even with individuals from other countries, 

even on intellectual property issues, we try and establish things as 

if they’re a global playing field and that we all have the very same 

interests and concerns. 

Some countries have not had an intellectual property system or 

a patent system in place for very long, so they’re getting familiar 

with how things are working. Their judiciary sometimes needs to 

be brought up to speed. 

So with our educational efforts through that Global Intellectual 

Property Academy of ours, we actually also train judges from various countries. Director Kappos, about 3 or 4 weeks ago, attended 

a program in Beijing that brought together, I believe it was eight 

19 

of the judges from our Court of Appeals for the Federal Circuit, 

which we think of as our own patent court. And he brought together individuals from the supreme court of China. There were 

over 1,000 attendees, and they were able to observe the interaction 

between the judiciary in contrasting things in the context of IP. 

So I think that getting everyone, when we sit down at these negotiations, down to actually making positive progress, we’ve got to 

realize what our differences are, try and develop more similarities, 

and then negotiations get a little bit more efficient. 

Mr. WATT. I thank you for that response. And that leads me actually to a second question that I had, because some people have 

raised questions about whether our officials should be talking to 

the whole range of players in these discussions. 

I presume that Director Kappos met with stakeholders in the 

tech and pharmaceutical industries to discuss the impact of various 

proposals on these sectors domestically and internationally during 

the America Invents Act. Is that the case, that you’re aware of? 

Ms. REA. Most of our interaction that I’m aware of occurred after 

the America Invents Act actually went into place. 

We do reach out to our stakeholders. We do have ongoing discussions, but it’s important for them to align us with their industries 

to make sure that, for instance, our implementing legislation for 

the America Invents Act, that we are on target and that it is going 

to work as intended. 

So having discussions with stakeholders—whether they’re small, 

medium, large corporations; whether they’re universities; whether 

they’re the independent inventor community—it is essential that 

we speak to our constituencies so we do not remain out of touch. 

So we do have discussions. I wouldn’t say they’re ongoing discussions. But from time-to-time, we do discuss with them. 

Whenever we publish something in the Federal Register, we 

have a Notice of Proposed Rulemaking, we do get a vibrant variety 

of responses from small, medium, large businesses; universities; 

and independent inventors. 

Mr. WATT. All right, thank you. 

I see my time has expired, Mr. Chairman. I yield back. 

Mr. GOODLATTE. I thank the gentleman. 

The Chair is now pleased to recognize the gentleman from Arizona, Mr. Quayle, the Vice Chairwman of the Subcommittee. 

Mr. QUAYLE. Thank you, Mr. Chairman. 

Thank you, Ms. Rea, for being here today. 

China has indicated that they plan to increase the amount that 

they spend on R&D to about 2.5 percent of their GDP and double 

the number of patents that they grant by 2015. And they’ll expect 

that their patents will be enforced around the world, yet they fail 

to protect the patents of U.S. researchers that they have spent 

years developing. 

To what extent do you think it is a problem for the U.S. and 

global economy if countries like China don’t reciprocate in protecting our IP and the jobs, exports, and other contributions they 

create? 

Ms. REA. Thank you. That’s a good question. 

20 

I actually am pleased that China is going to spend that much effort in innovating, because I think getting everybody to innovate is 

exactly what we want to do. 

And you’re correct that, in the coming years ahead, there will be 

a surge of patents that will go through every country of the world, 

including the United States. 

Now enforcement of those patents is indeed critical. And seeing 

how their legal system handles them, it has to be done correctly. 

Right now, China’s legal system, with respect to IP, doesn’t yet 

have the years of experience that our country has had, because patents and copyrights were the foundation of this country. So we 

have a lot more experience in how to handle them. 

I can tell you from personal on-the-ground experience, I met with 

stakeholders in three different cities in China in 2011, and I got 

to hear the on-the-ground frustrations and difficulties that companies were having in China. And the judicial system was frequently 

mentioned. 

I must tell you that within certain courts, in certain areas of 

China, there are some what I consider best practices. And so what 

we’re trying to do is to identify where there’s a best practice, where 

is the introduction of evidence, for instance, being done in what we 

consider to be a fair and proper manner, and to get those best practices and to piecemeal come up with the best way for the judiciary 

to handle these enforcement issues. 

I think that Chief Judge Rader of the Court of Appeals for the 

Federal Circuit, the program that he had in Beijing last month, 

getting judges together to talk about common issues and how IP 

should be handled, and for the judges to understand how our 

judges think about IP and how they approach it, helps. 

Mr. QUAYLE. But one of the things that I’m just worried about 

is that, as they continue to grow and expand the number of patents 

that they provide, and there’s no reciprocity with the patents that 

our inventors and our innovators are developing, the danger that 

it poses to people and companies here in the United States, when 

they have patents that are violated on a regular basis by China, 

and if they’re increasing the number of patents, how are we going 

to be able to best protect our own IP from the United States in 

China, whether they’re going through the patent process there and 

violating a patent that is already in place in the United States? 

Ms. REA. Just as China is new and has put an increased emphasis on innovation, China’s patent office—it’s called SIPO—is also 

undergoing dramatic change with how they’re handling patent applications. And we have one-on-one discussions—I have one-on-one 

discussions with individuals in the Chinese intellectual property office, talking about the patent procedure and any frustrations that 

U.S. innovators have felt. 

I can also tell you, on the judicial side, their courts are dramatically changing. So with our on-the-ground attache ́s, our constant 

communication with our counterparts in China, the increase in innovation, the increased number of Chinese patents will change 

their system to the benefit of not just U.S. innovators but also Chinese innovators. 

Mr. QUAYLE. Okay. 

21 

Ms. REA. Because much to your surprise, you’re probably going 

to find that Chinese innovators themselves do occasionally have 

frustrations with their legal system, and so that this is a common 

problem. And I think that we are in a dramatic place of change 

right now. 

Mr. QUAYLE. Okay, thank you. 

Now the Administration is currently negotiating a wide-range 

trade agreement with 10 other countries in the Asia Pacific known 

as the Trans-Pacific Partnership. This agreement will serve as a 

docking station for other countries to join in the future, including 

possibly China. 

To that point, just last week, Canada and Mexico were invited 

to join. 

Given the scale of this agreement, it is critical that we propose 

and secure IP protections that reflect U.S. law. With respect to 

pharmaceutical IP protections, is the Administration doing everything it can to ensure the strongest protections, including 12 years 

of data protection for biologics? 

Ms. REA. We are. We are doing exactly that right now. We view 

that the Trans-Pacific Partnership provides a good venue to make 

sure that we get appropriate data protection, and that that 12 

years of data exclusivity is something that we are definitely trying 

to negotiate for right now. 

I understand that the TPP will be meeting in San Diego next 

week. It is indeed one of their issues. 

Now, I don’t know if that specific issue is on their agenda for 

next week, because there are many issues that are being gone 

through with the TPP, the Trans-Pacific Partnership, but it is on 

their agenda. 

We are constantly pushing to make sure that data protection remains as high on their list as possible. 

We don’t just use TPP as the venue. We approach data protection 

from a wide variety of directions to make sure we have a consistent 

story, and everybody understands our position and the needs of 

U.S. innovators. 

Mr. QUAYLE. Okay, great. Thank you. 

Thank you, Mr. Chairman. I yield back. 

Mr. GOODLATTE. I thank the gentleman. 

The gentleman from California, Mr. Berman, is recognized for 5 

minutes. 

Mr. BERMAN. Well, thank you very much, Mr. Chairman. 

And I take it, Ms. Rea, from your answer to the Ranking Member’s questions, that, in fact, you and other PTO officials meet regularly with high-tech companies that hold patents and trademarks 

and otherwise utilize PTO services. And that these meetings not 

only occur in PTO offices in Virginia, but at the headquarters of 

these companies. I think that makes sense. I think that’s the smart 

and the right thing to do. 

And just to add to this, if you could just quickly tell me whether 

you think you could do the job, and the office could do the job it 

has to do, without such meetings? 

Ms. REA. We need input from the user and shareholder and innovator community. And in order to best serve the American public, 

22 

we have to know how business operates and what they need. So 

communicating with them is critical. 

I wouldn’t say we talk to them a lot, because we are really busy 

in the USPTO. But we talk to them when appropriate. 

It is actually rare when we actually have the luxury of time to 

go visit somebody directly. Usually, we try and get groups of people 

together, if convenient, for very brief meetings. And sometimes it’s 

a spinoff from another meeting. 

But I think that to maintain the best system that we can—and 

right now we are in the midst of an awful lot of rulemaking with 

the America Invents Act. And in particular, with that new interparties review, post-grant review, where we’ve issued a U.S. patent 

that comes back to us, we want to make sure we’re designing that 

as good as possible. 

Mr. BERMAN. Great. Let me turn to a different subject. 

You mentioned WIPO at the end of your testimony. Actually, in 

large part, because of my colleague Ms. Lofgren I have been closely 

following reports that WIPO officials have been transferring computers, firewalls, and other technological devices to the governments of North Korea and Iran. 

Needless to say, we find this highly distressing, not only because 

it potentially violates a slew of U.N. Security Council resolutions, 

and, very possibly, our country’s policies on internet freedom, but 

also because these technology transfers were carried out by an organization largely funded by U.S. inventors. 

What actions is the PTO taking to ensure an independent external investigation into why and how this happened? And has the 

WIPO director general agreed to requests by the U.S. for such an 

investigation? 

Ms. REA. I have to tell you that the leadership that the U.S. Patent and Trademark Office was disappointed when they got, to say 

the least, that information. 

We are not taking the lead in the investigation right now. There 

is an active, ongoing investigation. The Department of State is handling that at this time. 

From what I understand, Director General Francis Gurry has not 

yet been fully open as to all of the issues and that more information will likely be forthcoming. 

So we are processing and handling all of our clients’ PCT applications as usual. The World Intellectual Property Organization is operating in our U.S. innovators’ and stakeholders’ best interest. 

But this issue is something that’s particularly distressing to us 

at the U.S. Patent and Trademark Office. And then, in collaboration with other U.S. Government agencies, we will do and handle 

it in the way that’s appropriate. 

Mr. BERMAN. Well, and I certainly think particularly the State 

Department has to be aggressive in getting to the bottom of this 

and making sure it doesn’t recur. 

Thank you. I yield back, Mr. Chairman. 

Mr. GOODLATTE. I thank the gentleman. 

The gentleman from Pennsylvania, Mr. Marino, is recognized for 

5 minutes. 

Mr. MARINO. Thank you, Chairman. 

Good morning. 

23 

Ms. REA. Good morning. 

Mr. MARINO. It’s a pleasure to talk with you. 

You touched on this issue a little bit, but perhaps you can expand on it a little more for me. 

China, the most blatant IP thief, along with Russia, has implemented barriers that have a severe negative impact on U.S. trade 

and patent protections. Can you explain what and how these barriers or compulsory licenses negatively impact our economy? 

And equally important, what are we doing to seriously address 

and counter—other than meetings—what I consider criminal activity on the Chinese part? 

Ms. REA. Thank you, Congressman Marino. That’s actually a 

good question. 

The U.S. Patent and Trademark Office is collaborating with 

other U.S. Government agencies to try and minimize or totally remove these biases that occur right now with certain countries. 

China is just a very large country undergoing a great deal of 

change right now, so it is truly taking a lot of our resources in external affairs right now. 

What we’re doing is we’re collaborating with other U.S. Government agencies. Having our IP attache ́s on the ground in seven different countries has been actually—or six different countries—has 

been very efficient. And we’re able to talk one-on-one having boots 

on the ground to try and move things along. 

I do think that there has been positive movement and that communicating and having discussions works. And our training and 

education programs are also very good. 

Participating and making sure the right language is in these 

international trade agreements is also something that’s first and 

foremost. 

Mr. MARINO. May I stop you there, please. 

Are we collaborating with any other countries in conjunction? 

Ms. REA. Well, that’s actually a good question, because we do collaborate with other countries in what I consider the most productive sense—is that the five biggest patent offices in the world, 

where I believe 74 percent of all patent applications are filed, is the 

USPTO, the European Patent Office, Japan, Korea, and China. 

And these five patent offices, we all get together and we talk 

about practices, problems, issues. It’s existed for 5 years so far. 

And we are making what I consider to be significant progress. 

Mr. MARINO. One of my areas of study is China, in general. I’ve 

been studying China for 20 years. And China reminds me a little 

bit like my 8-year-old, who, when dad says, ‘‘Don’t do this.’’ He 

says, ‘‘Okay, dad, I won’t,’’ and then continues to do it. 

Is China taking us seriously? And are we doing anything to, I 

guess for a lack of a better term, threaten China to the extent that 

we’re going to have a negative impact on your trade with the 

United States? 

Ms. REA. I do think China does take us seriously. They have 

modified some things, how they’re handled, and what their behavior is. 

I think China is trying to be a proper global player right now. 

So I do think that we are in the middle of a lot of change right 

24 

now with China. I hope that they continue in this positive direction. 

And so, actually, communicating with them has been effective so 

far. 

Mr. MARINO. Thank you, Madam Secretary. Good answers. 

And I yield back my time. 

Ms. REA. Thank you so much. 

Mr. GOODLATTE. I thank the gentleman. 

The gentlewoman from California, Ms. Lofgren, is recognized for 

5 minutes. 

Ms. LOFGREN. Thank you, Mr. Chairman. 

And before asking my questions, since I represent Silicon Valley, 

it would not be right for me to address anybody from the PTO 

without saying: How’s it going on the selection of our next patent 

office? 

Ms. REA. We are actively working on the identification of our additional satellite offices. 

Ms. LOFGREN. As you know, a quarter of all the patents in the 

country come from Silicon Valley. 

Ms. REA. And they have great weather. 

Ms. LOFGREN. They do have. It’s 71 degrees in San Jose today. 

I just wanted to, first, thank you for being here, and express a 

couple of concerns and then really get into a question. 

We’ve seen ACTA kind of explode over in Europe. I don’t think 

it’s going to go anywhere. And I think one of the reasons why is 

the perceived lack of transparency in the negotiation of that matter. Whether or not that’s correct, that’s the perception. 

And I think the TPP is also being negotiated confidentially. And 

my belief is that because of the lack of transparency, TPP is quite 

likely to suffer the same fate as ACTA. 

And so here’s the question: We have a leaked version of the TPP 

in May. And it seemed to indicate, if that was accurate, I don’t 

know; I really should sit down in a closed session and find out that 

the U.S. is really seeking to transport enforcement of our IP laws. 

But I didn’t find the exceptions and safeguard, like fair use, that 

we enjoy in this country. 

So the concern and question is whether, under the treaty, people 

would have the same freedom as they would in the United States 

vis-a`-vis copyright. 

And going to the WIPO issue, and I know that you’ve taken an 

important role. And that’s proper that the U.S. should play an important role with WIPO. The moral rights issue that has been extended does not appear to have the same kind of fair use exceptions that we find in U.S. Copyright Law. And as you’re aware, it’s 

quite common now, especially for young people, to do mashups and 

other manipulations of other documents that has generally been 

seen as protected under U.S. law. 

So here’s the question: In both the TPP as well as the WIPO provisions, are we just exporting enforcement and not rights? 

And what can we do to make this a more transparent process? 

Because to work hard, and I know you do work hard, and have a 

measure that may have merit in some regards absolutely just blow 

up because of suspicion is really not a positive thing. 

Ms. REA. Okay, thank you. 

25 

I can tell you I have not seen the most recent TPP draft, because 

I do a great deal of reading. But that one didn’t make it to the top 

of my pile. 

Ms. LOFGREN. Okay. 

Ms. REA. But I can tell you that we do look at rights, as well as 

enforcement. And as to the transparency issue, I can get back to 

my colleagues and get back to you on that, because I don’t know 

why things mechanistically or procedurally were handled that way, 

if it’s just tradition or in the past. Maybe we should reconsider or 

relook at it. I’m not familiar with why it’s handled in a certain 

way. So maybe we can get back to you on that issue. 

Ms. LOFGREN. Could we do that? And maybe I could make an appointment with you offline and talk about this issue. I know it’s not 

entirely up to you. It’s the trade representative. Maybe we should 

pull him into this discussion as well, because I think it’s a severe 

concern in the United States and, really, internationally. 

Just a final note on the issue raised by Mr. Berman, I want to 

give him tremendous credit for his position, not only in this Committee, but also Foreign Affairs, for leading up an investigation on 

the WIPO. I just think it’s an outrage. Really, it’s an outrage that 

WIPO would be transferring material, violating the sanctions that 

we have, to North Korea and Iran. 

And this stuff, I mean, basically, it’s funded by U.S. inventors. 

So, yes, you’re right. It’s the State Department, but I think if 

American inventors knew that their funding was being used to 

send firewalls and other material to Iran and to North Korea, 

they’d be furious. And I’d like to say I’m furious. 

So I hope that the PTO will be more vigorous publicly in the concern about this. Certainly, I intend to be. And Mr. Berman has 

shown tremendous leadership in this. 

But I think it’s something that merits our loud objection and insistence on correction. 

With that, my time is up. And I yield back, Mr. Chairman. 

Mr. GOODLATTE. I thank the gentlewoman. 

The gentlewoman from Florida, Ms. Adams, is recognized for 5 

minutes. 

Ms. ADAMS. Thank you, Mr. Chairman. I’ve been sitting here, 

and I’ve heard a lot about a lot of talking, significant progress. 

Can you expound on that just a little bit? Like what kind of 

progress? 

Ms. REA. How about if I take it down to a very granular level? 

Ms. ADAMS. Okay. 

Ms. REA. We have an IP attache ́ in Guangzhou in southern 

China. And there was a U.S. rights-holder that had a lot of difficulties with somebody allegedly infringing his patents in China. And 

there’s something that I’ve never been to, but it’s huge and so I’d 

like to go there someday, it’s called the Canton trade fair or trade 

show. It’s like the biggest in the world. Perhaps Congressman 

Marino is aware of it. 

But it’s huge. It’s supposed to be a giant event. 

Ms. ADAMS. Can we kind of—— 

Ms. REA. An individual at a booth who actually was the culprit 

who was infringing a U.S. company, our IP attache ́ from 

Guangzhou brought the U.S. rights-holder there, along with enVerDate Aug 31 2005 10:08 Aug 23, 2012 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6601 H:\WORK\IP\062712\74817.000 HJUD1 PsN: DOUGA
26 

forcement personnel, and that individual who was doing the infringement was kicked out of the Canton trade show. 

So that was one very granular detail on something that we did. 

Ms. ADAMS. So he was kicked out? 

Ms. REA. Pardon me? 

Ms. ADAMS. He was kicked out? 

Ms. REA. Yes. 

Ms. ADAMS. Any other enforcement action taken on this person 

or just allowed to leave? 

Ms. REA. You know, I don’t know about the follow-up. 

Ms. ADAMS. Okay. 

Ms. REA. I just happened to hear it, because it had just happened 

when I had been there. 

Ms. ADAMS. All right. Well, that’s what I’m trying to get to, is 

what kind of follow-up do we have. And I’d be interested in hearing 

that. 

You know, foreign countries have already used compulsory licensing in the pharmaceutical space, but what about clean energy 

technologies? Do you know if any foreign governments are raising 

this as an option instead of paying for environmental technologies? 

Ms. REA. Off the top of my head, I’m not aware of anything in 

the green technology area, but I know that that’s a very sensitive 

area at this time. Perhaps some of my colleagues back at the PTO 

are working on that. But that has—— 

Ms. ADAMS. Can you get us the answer to that question? 

Ms. REA. Yes. We’ll get back to you. 

Ms. ADAMS. All countries that have signed onto the TRIPS 

Agreement have committed to not discriminate against any field of 

technology when it comes to patenting. What types of restrictions 

have you seen in some of these foreign markets that go directly 

against this commitment? 

Ms. REA. I think that the compulsory license that was recently 

granted in India on the anti-cancer drug I think was anti-TRIPS 

type behavior. Some of the behaviors in patent offices, even with 

getting patents granted, the requirements, some of that could be 

considered to be anti-TRIPS, but I’m not certain. 

But I think the compulsory license, unfortunately, does not comply with the TRIPS Agreement. That’s probably the most egregious 

that I could think about right now. 

Ms. ADAMS. In tying patent rights to domestic manufacture and 

actual use in country appears to be the new trick that countries are 

employing to nullify legally granted patent rights. Brazil and India 

are countries that require a patentee to make use of a patent in 

the country, basically forcing a domestic manufacturing requirement on foreign companies. 

The Chinese Patent Office has made a ‘‘Made in China’’ requirement, requiring inventions that have a tangential link—I hate that 

word—to China to be filed in China, first, or risk losing patent protection. 

What is the next threat or legal trick that you are just starting 

to see coming up on the horizon? 

Ms. REA. I can’t think of anything new that I’ve seen recently. 

I think that we’ve just made progress on some well-identified 

issues. I can’t think of anything I’ve seen recently. 

27 

Ms. ADAMS. And progress, can you give us some of that progress? 

You say you’ve made progress. What type of progress? 

Ms. REA. Actually, if I can digress one moment to our IP attache ́s 

on the ground in China. They actually attend court hearings. They 

actually participate. They actually provide input. I think of it as 

handholding the U.S. innovator, if they’re having difficulty in 

China. 

They will take them to agencies and navigate things. There have 

been positive outcomes. 

I can’t name one specifically right now. I can’t think of a name 

of a company, so I do apologize. 

Ms. ADAMS. Well, I like the fact that you’re giving us some kind 

of, you know—— 

Ms. REA. Something tangible. 

Ms. ADAMS. Yes. 

Ms. REA. Okay. 

Ms. ADAMS. Because, you know, we keep talking and talking and 

talking. What I’d like to hear is what you just said, is that you do 

have your attache ́s working with our patent-holders when the infringements happen in the courts in these other countries. 

And I yield back. 

Ms. REA. Thank you. 

Mr. GOODLATTE. I thank the gentlewoman. 

The gentlewoman from California, Ms. Waters, is recognized for 

5 minutes. 

Ms. WATERS. Thank you very much, Mr. Chairman and Members. 

A lot of the questions today have centered around the same kind 

of issues that I am concerned with. The scope of the IP theft in 

China imposes massive harm on U.S. companies and the U.S. economy. China is not only a worldwide leader in piracy, but it is also 

a worldwide leader in creating IP-related market barriers for foreign countries. 

Losses to IP-intensive industries from IP infringement in China 

was estimated at about $48 billion in 2009. 

And even though, Ms. Rea, you have indicated steps that are 

being taken, one of the reasons I suppose so many Members of this 

Committee are concerned about the IP theft is that China’s reputation, not only in the IP area but in pharmaceuticals and other 

areas does not appear to have improved substantially, that we have 

pharmaceutical products that are still coming out that are fake. 

And I have been concerned for a long time about baby food that’s 

coming out of China. 

So you’re in a position where, you know, you’re trying to explain 

the improvements that you’re making, but because we hold such 

suspicion about China in so many other areas, it does not help you 

in talking about improvement. 

And while I appreciate the discussion that you had about having 

kicked out this particular business from the Canton Trade Fair, 

that’s one instance of what appears to be an effort to clean this piracy up. 

I’m really looking for substantial public policy. I’m really, you 

know, wondering what our trade office is doing. And I’m looking 

28 

for, I guess, significant changes or improvements or ways by which 

we can penalize. 

So aside from what you have described, can you think of anything else that would make us feel better about China and this IP 

theft? 

Ms. REA. Congresswoman Waters, China is undergoing so much 

change right now, that this communication, education, and training 

that we provide to China I happen to think is invaluable. Right 

now, they are in the midst of a major change to their copyright law, 

as well as a major change to their trademark law. 

We are constantly providing input and discussing with them at 

different agencies, different levels, what changes we would like to 

see. Because especially in the area of counterfeiting, when it comes 

to trademarks, we want to make sure that the U.S. consumer and 

the U.S. innovator is adequately protected. I believe in the Trademark Act, they’re in their third draft right now. They make substantive changes to their draft trademark law based on input that 

they have received from the United States and perhaps other countries. 

So those communications and talk and change actually are beneficial, because that’s the foundation for how they’re going to handle 

things. 

In terms of any substantive change, I don’t have anything more 

specific than that at this time. And if we think of something, I will 

get back to you. 

Ms. WATERS. Thank you very much. I yield back. 

Mr. GOODLATTE. I thank the gentlewoman. 

And I have an additional question, which may prompt an additional question by the Ranking Member or Ms. Waters, if they 

would like to pursue further questions. 

Ms. Rea, the U.S. Government used to have in place a China 

case referral mechanism process, whereby companies could bring 

specific issues or cases to the Commerce Department. And after an 

interagency review, particularly egregious or unique cases would be 

raised to the Cabinet level for direct engagement with their Chinese counterparts. 

Do you think that a case referral mechanism process should be 

reestablished and possibly expanded beyond just China to include 

other key countries in Asia and Latin America as well? 

Ms. REA. It’s hard, Chairman Goodlatte, for me to address that, 

because we get so many of our stakeholders and so many individuals in our user community already come to the USPTO with what 

their issues are, and so we are already holding their banner and 

being their advocate. And we are working with countries such as 

China with the JCCT, the Joint Commission on Commerce and 

Trade. And we’re going through these issues right now. 

I think that perhaps a mechanism such as that would be helpful. 

I just need a clearer idea of how it would operate, because right 

now I think that the business community might be frustrated with 

how business is oftentimes handled in countries such as China. 

But I think that we try and balance things out and get our user 

community, our stakeholders, what they need, so they can get efficient operation of business. 

29 

So I’m not familiar with the earlier program that the U.S. Government had. And I can’t envision how it would operate. If it goes 

up to the Cabinet level, they’re pretty busy right now. 

Mr. GOODLATTE. I have no doubt they’re busy. But certainly raising trade issues to the highest level possible would be, certainly, 

an important undertaking for job creation in the United States. 

And I would ask that you take that back and discuss that with 

Director Kappos. And maybe you could respond or he could respond, either one, to the Committee and let us know whether you 

think this is something that you could recommend that the Administration take to a higher level. 

Ms. REA. We would be pleased to do that. Thank you. 

Mr. GOODLATTE. Thank you. 

Does the gentleman from North Carolina have any additional 

questions? 

Mr. WATT. No, Mr. Chairman. I appreciate it. 

Ms. REA. Thank you. 

Mr. GOODLATTE. I thank you. 

And, Ms. Rea, this has been a very helpful hearing, and we appreciate your participation today. And we thank you very much for 

that. 

Without objection, all Members will have 5 legislative days to 

submit to the Chair additional written questions for the witness, 

which we will forward and ask the witness to respond as promptly 

as she can, so that her answers may be made a part of the record. 

And without objection, all Members will have 5 legislative days 

to submit any additional materials for inclusion in the record. 

And with that, I would like to, again, thank Deputy Director Rea. 

And this hearing is adjourned. 

[Whereupon, at 11:15 a.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

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Prepared Statement of the Biotechnology Industry Organization 


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