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PATENT HARMONIZATION

HEARING

BEFORE THE

SUBCOMMITTEE ON COURTS, THE INTERNET, 

AND INTELLECTUAL PROPERTY

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

APRIL 27, 2006

Serial No. 109–100

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 

F. JAMES SENSENBRENNER, JR., Wisconsin, Chairman 

HENRY J. HYDE, Illinois 

HOWARD COBLE, North Carolina 

LAMAR SMITH, Texas 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

WILLIAM L. JENKINS, Tennessee 

CHRIS CANNON, Utah 

SPENCER BACHUS, Alabama 

BOB INGLIS, South Carolina 

JOHN N. HOSTETTLER, Indiana 

MARK GREEN, Wisconsin 

RIC KELLER, Florida 

DARRELL ISSA, California 

JEFF FLAKE, Arizona 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

MARTIN T. MEEHAN, Massachusetts 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California 

CHRIS VAN HOLLEN, Maryland 

DEBBIE WASSERMAN SCHULTZ, Florida

PHILIP G. KIKO, General Counsel-Chief of Staff 

PERRY H. APELBAUM, Minority Chief Counsel 

SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

LAMAR SMITH, Texas, Chairman

HENRY J. HYDE, Illinois 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

WILLIAM L. JENKINS, Tennessee 

SPENCER BACHUS, Alabama 

BOB INGLIS, South Carolina 

RIC KELLER, Florida 

DARRELL ISSA, California 

CHRIS CANNON, Utah 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

HOWARD L. BERMAN, California 

JOHN CONYERS, JR., Michigan 

RICK BOUCHER, Virginia 

ZOE LOFGREN, California 

MAXINE WATERS, California 

MARTIN T. MEEHAN, Massachusetts 

ROBERT WEXLER, Florida 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California

BLAINE MERRITT, Chief Counsel 

DAVID WHITNEY, Counsel 

JOE KEELEY, Counsel 

RYAN VISCO, Counsel 

SHANNA WINTERS, Minority Counsel 

(III)

C O N T E N T S 

APRIL 27, 2006

OPENING STATEMENT 

Page 

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

of Texas, and Chairman, Subcommittee on Courts, the Internet, and Intellectual Property .................................................................................................... 1

WITNESSES 

Mr. Q. Todd Dickinson, Vice President and Chief Intellectual Property Counsel, General Electric Company 

Oral Testimony ..................................................................................................... 4

Prepared Statement ............................................................................................. 6

Mr. Robert A. Armitage, Senior Vice President and General Counsel, Eli 

Lilly and Company 

Oral Testimony ..................................................................................................... 11

Prepared Statement ............................................................................................. 14

Mr. Gary Mueller, President and Chief Executive Officer, Digital Now, Inc. 

Oral Testimony ..................................................................................................... 35

Prepared Statement ............................................................................................. 38

Mr. Pat Choate, Political Economist and Author of ‘‘Hot Property: The Stealing of Ideas in an Age of Globalization’’

Oral Testimony ..................................................................................................... 53

Prepared Statement ............................................................................................. 55

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Prepared Statement of the Honorable Howard L. Berman, a Representative 

in Congress from the State of California, and Ranking Member, Subcommittee on Courts, the Internet, and Intellectual Property ......................... 73

Copy of the Coalition Bill from Q. Todd Dickinson, Vice President and Chief 

Intellectual Property Counsel, General Electric Company ............................... 74

(1)

PATENT HARMONIZATION 

THURSDAY, APRIL 27, 2006

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON COURTS, THE INTERNET,

AND INTELLECTUAL PROPERTY, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC.

The Subcommittee met, pursuant to notice, at 9:09 a.m., in Room 

2141, Rayburn House Office Building, the Honorable Lamar Smith 

(Chairman of the Subcommittee) presiding. 

Mr. SMITH. The Subcommittee on Courts, the Internet, and Intellectual Property will come to order. 

Good morning to you all. Appreciate the interest in such an important subject. 

And let me explain that we’re going to proceed. The Ranking 

Member, Howard Berman of California, is at a mandatory party 

meeting and will be here, he hopes, in time for questions. And 

other friends to my left will be here about approximately the same 

time. 

But I think it will be good to get our testimony on the record and 

go on and get off to a timely start. 

I’m going to recognize myself for an opening statement. And then 

we’ll, as I say, swear in the witnesses and begin the testimony. 

Also let me say that I appreciate the gentleman from Tennessee, 

Mr. Jenkins, being here this morning and helping us get off to this 

good start. We need two Members here at least. And so, Mr. Jenkins is the indispensable Member this morning. 

Today, the Subcommittee conducts its sixth hearing in the 109th 

Congress on patent reform. We’re going to explore the merits of 

promoting global harmonization within the patent system. Inventors and the public are better served when patent systems world 

wide share the same basic components or framework. 

For example, a harmonized patent system reduces legal fees associated with filing and prosecuting the applications in several 

countries. Harmonization also inhibits forum shopping across national boundaries during patent disputes involving scope, viability, 

and ownership. Perhaps most importantly, a harmonized system 

creates greater certainty regarding patent rights internationally, 

which enhances the value of those rights for the affected owners 

world wide. 

As our previous hearings on patent reform have demonstrated, it 

is imperative that we improve the quality of issued patents that 

circulate in the economy here and overseas. Patents of acceptable 

integrity attract investors who commercialize inventions. This 

2

leads to the creation of wealth, new jobs, and enhanced living 

standards for patent owners and their employees. 

Better still, it means the public derives enormous health and lifestyle benefits that flow from the development of new products that 

incorporate patented inventions. This is why harmonization was 

one of the principles that animated the Subcommittee’s work on 

patent reform this Congress. 

In terms of the hearing scope, harmonization is a large thematic 

umbrella. It potentially invites discussion, of course, of many other 

issues. That said, certain issues that are incorporated in H.R. 2795 

and related substitute drafts are fair game for consideration, including the following topics. 

For starters, H.R. 2795 changes the U.S. system from one that 

protects an individual who invents first—who invents first to one 

that protects an individual who invents and files first. The current 

U.S. system leads to uncertain and expensive patent disputes and 

is at odds with the international first to file standard. 

Most of the witnesses who testified at our previous hearings support a first to file system, although we may encounter opposition 

from some independent inventors. 

Second, H.R. 2795 deletes the best mode requirement from section 112 of the patent act that sets forth the requirements for the 

contents of a patent application. The National Academy of Sciences 

report recommended the deletion of the best mode requirement, 

which requires the description of the best mode the inventor contemplated for carrying out the invention at the time the application 

is filed as one of the subjective elements in the patent law that 

adds unnecessarily to the cost of patent litigation. 

Other industrialized nations have not adopted a best mode requirement, and I believe we are better served without it as well. 

Third, H.R. 2795 and subsequent drafts require all U.S. filed applications to be published within 18 months of filing. The last comprehensive patent law that Congress passed adopted this standard, 

but with a major exception. The provision does not apply to applications that are not filed in a third country that also requires publication. 

Publishing an application after 18 months places a company on 

notice that a patent relevant to its business may issue, which allows the company greater opportunity to revise its operations and 

rethink investment strategies. The bill eliminates the existing loophole and extends the 18-month publication feature to all applications. 

And fourth, H.R. 2795 creates a new post grant opposition system that allows patent disputes to be resolved in a less expensive 

administrative forum compared to District Court litigation. This 

permits any member of the public to request that the PTO review 

the scope and validity of a patent within 9 months from the date 

of its issuance, a time limit intended to encourage early weeding 

out of questionable patents and to prevent harassment. 

The system provides full rights of appeal to the Federal circuit 

by an opposer of any adverse decision in the proceeding. 

While these subjects are fair game for discussion today, I encourage the witnesses and Members to broach other harmonization 

issues as well. For example, what are the major impediments overVerDate 0ct 09 2002 13:14 Jun 27, 2006 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6601 G:\WORK\COURTS\042706\27224.000 HJUD2 PsN: 27224
3

seas to harmonizing the world’s patent systems? Does harmonization serve the interest of independent inventors as well as big 

businesses? 

We have a good panel of witnesses who can speak to these matters, and I look forward to their testimony. That concludes my 

opening statement. Without objection, all Members’ opening statements will be made a part of the record. 

Mr. SMITH. At this point, I’d like to ask the witnesses to stand 

to be sworn in. 

[Witnesses sworn.] 

Mr. SMITH. I thank you. Please be seated. 

Our first witness—oh, excuse me. I wanted to recognize Adam 

Schiff to my left, the gentleman from California, and I didn’t look 

to my left. 

Do you have an opening statement or any comments to make? 

Mr. SCHIFF. No, Mr. Chairman. I’m just glad to join you. I look 

forward to hearing the testimony of the witnesses. 

Mr. SMITH. Thank you, Mr. Schiff. 

Our first witness is Todd Dickinson, vice president and chief intellectual property counsel for General Electric. Mr. Dickinson previously served as the under secretary of commerce for intellectual 

property and the director of the U.S. Patent and Trademark Office. 

He is a graduate of Allegheny College and the University of Pittsburgh School of Law. 

Our next witness is Robert Armitage, senior vice president and 

general counsel for Eli Lilly and Company. He also serves as a 

member of Lilly’s policy and strategy committee. Mr. Armitage received a bachelor’s degree in physics and mathematics from Albion 

College and a master’s degree in physics from the University of 

Michigan and a law degree from the Michigan law school as well. 

The next witness, Mr. Mueller, is president and CEO of Digital 

Now. His company develops digital imaging technology for the 

photo processing industry and other consumer software products. 

He earned his bachelor and master of science degrees from the 

Rochester Institute of Technology and his MBA from Marymount 

University. 

Our final witness is Pat Choate, a political economist who served 

as Ross Perot’s vice presidential running mate on the Reform Party 

ticket in 1996. Dr. Choate is also a policy analyst, public speaker, 

and the author of six books, including most recently ‘‘Hot Property: 

The Stealing of Ideas in an Age of Globalization.’’

He teaches advanced issues management at George Washington 

University and serves as the director of the Manufacturing Policy 

Project in Washington. Dr. Choate performed his undergraduate 

work at the University of Texas at Austin—institution I represent—and earned his doctorate at the University of Oklahoma. 

We won’t talk about the OU-University of Texas games. [Laughter.] 

Mr. SMITH. Welcome to you all. Again, we have your complete 

statements, which will be made a part of the record, and please 

limit your testimony to 5 minutes. 

Mr. Dickinson, we’ll begin with you. 

4

TESTIMONY OF Q. TODD DICKINSON, VICE PRESIDENT AND 

CHIEF INTELLECTUAL PROPERTY COUNSEL, GENERAL 

ELECTRIC COMPANY 

Mr. DICKINSON. Thank you, Mr. Chairman, Ranking Member 

Berman who was here a bit ago, and other Members of the Subcommittee. 

As the Chairman indicated, my name is Todd Dickinson. I’m honored to be here today. I presently serve as the corporate vice president and chief counsel for intellectual property for GE and was formerly the under secretary of commerce for IP. 

In that role, I enjoyed particularly working with this Committee 

on the American Inventors Protection Act, which was a successful 

opportunity to move a number of these issues forward, though 

there is still some more work to be done. 

At GE, I am fortunate to manage one of the largest IP portfolios 

in the world with one of the broadest ranges of technologies and 

issues. We have content-based issues in our film and television 

business, NBCU. We have genomics and proteomics issues in our 

biosciences group. We have aircraft engine technology and lighting 

technology, plastics technology. We like to say we may be the only 

company that’s won both a Nobel Prize and an Academy Award. 

Because of the breadth of those issues and perhaps the past experiences, it gives us, I think—it gives me an opportunity to comment broadly, but also to focus in particular on some consensus approaches, which I think might be helpful to this Committee on a 

number of the patent reform issues that we’ve talked about. 

As the Chairman alluded to, both the Federal Trade Commission 

and the National Academies of Sciences dealt very in depth with 

a number of these issues, produced very extensive and important 

reports and recommendations, and a number of those recommendations have found their way into 2795 and other legislation and I 

think have served as the primary impetus for that. 

But also as a part of that process, Mr. Chairman, you asked that 

a number of members of the intellectual property community— trade associations, companies, and others—come together and try 

to have a consensus approach to this—to this extremely important 

topic. We worked very hard last summer, and a group that came 

from that, named the—called ‘‘the coalition’’—and I think my colleague Mr. Armitage may refer to it as well—developed a so-called ‘‘coalition text,’’ which I think the Committee may be familiar with, 

which of—includes a number of the issues in an actual text of a 

bill. 

And I’d request, if it was possible, to have that text entered into 

the record. I’m not here representing the coalition today. 

Mr. SMITH. Let me interrupt you. Without objection, that text 

will be made a part of the record. 

[The information referred to follows in the Appendix] 

Mr. DICKINSON. Thank you. 

Patent harmonization, as you’ve alluded to, is probably one of the 

most important issues facing both the patent system today and, 

frankly, the global economy today. The fact that we have territorially based administration and maintenance and enforcement regimes for patents around the world make—foster extraordinary 

redundancies in cost and in time and in resources. 

5

GE spends something like $32 million a year on patent prosecution and maintenance of our foreign portfolio. And a significant 

portion of that is a function of this multiplicity of systems. 

We’re trying—we’re working very hard, for example, to see if we 

can get Europe to pass—to ratify the London agreement, which 

would simply allow for English language prosecution in many countries in Europe. That would save us over a million and a half dollars a year alone. 

So patent reform around the world, not only here in the United 

States, is extremely, extremely important. 

Let me touch on a couple—I’ve been a participant in WIPO, the 

World Intellectual Property Organization, on a number of these 

issues. That process, candidly, Mr. Chairman, is stalled, and that’s 

unfortunate. 

I represent the American Bar Association at the Standing Committee on Patents. And for a variety of reasons, issues in developing countries around genetic resources and the so-called development agenda, issues around patentable subject matter, that effort 

is, frankly, just sitting dead in the water at the moment, and that’s 

unfortunate. 

The current Administration chose to develop a group of countries, 

brought a group of countries together recently at the Patent and 

Trademark Office, the so-called Alexandria Group, which has been 

a good attempt—a very good attempt, and we should applaud them 

for that—to try to deal with harmonization among just one set of 

countries, developed countries who have, I think, the bulk of the 

interest in this regard and whose—and may be able to multilaterally and outside of the WIPO framework develop a program which 

will get us further down the road. So I would hope that this Committee would look into that and applaud those efforts. 

As far as the best practices that this bill contains, and I think 

one of the goals of global harmonization in WIPO and in the Alexandria Group has been to identify best practices. A number of them 

have found their way into 2795, and I’d like to comment briefly on 

those best practices. 

First and foremost is the one which you mentioned, which is the 

first inventor to file. We are alone in the world among countries 

having—retaining the so-called first to invent system. It’s a costly 

system. With all due respect to my good friends in the independent 

inventor community—and as director and commissioner, I don’t 

think anyone else was closer to that independent inventor community—the first to invent system is a failed promise. 

The way we resolve the disputes in that area is through a process I think you know called interference. It can cost hundreds of 

thousands of dollars to resolve that. A study that was done by my 

good friend and colleague former commissioner Mossinghoff shows 

that even when the small inventors enter that system, they are disadvantaged by that system disproportionately, and it’s a system 

that’s crying out for change. 

The change would be to move to the first inventor to file system, 

which is captured in the bill as it currently stands. And I would 

hope that any version of that bill that comes forth from this Committee would include first inventor to file. 

6

Several other things, you did mention particularly the elimination of the best mode. That always seems like a good idea because it seems to foster the idea of greater disclosure. What is the 

best mode of your invention? 

What happens and has happened in reality and in practice is 

that it’s become a trap for the unwary. In litigation, it’s a defense 

that gets interposed on occasion, and it’s kind of a ‘‘gotcha’’ in litigation and does not really satisfy the goal, I think, for which it was 

originally intended. 

Eighteen-month publication, complete 18-month publication. 

Again, an excellent goal. One of the disappointments of the AIPA 

was that we did not have full and universal 18-month publication. 

It has proved successful. 

The folks who opposed it, primarily again, and our independent 

inventor community have disproportionately not used the opt-out 

provision. It’s used by some particularly important technologies, 

frankly, in my opinion, to try to game the system a little bit, to buy 

a little more time, to keep their disclosures from being made. And 

it undermines, I think, confidence in the system as a whole. 

You mentioned externally around the world where there needs to 

be other reforms and the grace period. I think in terms of best 

practices, the U.S. grace period is, indeed, a global best practice. 

And we need to make sure that we bring the grace period to other 

countries around the world, and I’m pleased that those discussions 

are underway. 

I think one additional topic, which I think may get touched on 

and is in the current draft of the legislation—and my good friend 

Mr. Armitage will probably touch on it as well—is what is the definition of prior art? 

We should eliminate secret prior art, which is currently available 

around the world, to undermine I think the value and virtue of a 

number of the patents in the United States. We should also make 

sure that we—and I think it’s appropriate to redefine the availability—redefine prior art as that which is reasonably accessible. 

Given the global nature of our information systems now, reasonable accessibility is an appropriate standard. 

And finally, I wouldn’t be—I would be remiss, Mr. Chairman, if 

I didn’t touch on what is for many of us in the community, and certainly as a former director, maybe the most important recommendation in both of the reports that we mentioned, and that’s 

continuing to end the diversion of patent office fees to other governmental purposes. 

Mr. SMITH. Mr. Dickinson, you know I agree with you on that. 

But I think we need to move on. 

Mr. DICKINSON. I thank you very much, Mr. Chairman. 

[The prepared statement of Mr. Dickinson follows:]

PREPARED STATEMENT OF Q. TODD DICKINSON

INTRODUCTION

Chairman Smith, Ranking Member Berman, and Members of the Subcommittee: 

My name is Todd Dickinson and I am honored to appear before the Subcommittee 

on an issue that critical to our Nation’s economic growth and prosperity: patent reform. I presently serve as the Corporate Vice President for Intellectual Property of 

the General Electric Company, and was formerly Under Secretary of Commerce for 

Intellectual Property and Director of the United States Patent and Trademark OfVerDate 0ct 09 2002 13:14 Jun 27, 2006 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6621 G:\WORK\COURTS\042706\27224.000 HJUD2 PsN: 27224
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1 ‘‘Intellectual Property for the Technological Age’’, R.A. Epstein, University of Chicago, April 

2006, Executive Summary and p. 7.

fice. I hope that these experiences may offer a valuable perspective on some of the 

issues facing us in this area, in particular the impact of patent reform legislation 

on issues of international harmonization. 

As Director, I enjoyed working on the cause of adapting our patent system to the 

needs of the 21st Century. I was particularly proud that the Congress passed and 

President Clinton signed the American Inventor’s Protection Act of 1999, during the 

time I lead the USPTO, and that we had the opportunity to work together on the 

implementation of that Act, leading to many vital and important changes in how 

the USPTO operated and was organized. 

At General Electric, I am fortunate to help manage the intellectual property assets of one of the world’s largest corporations. GE’s IP holdings and concerns are 

extraordinarily broad, ranging from content-based copyright issues in our film and 

television organization, NBC Universal, to genomics and proteomics patenting in GE 

Healthcare, with everything else in between from aircraft engines to engineered 

polymers. We may be the only company that has won both a Nobel Prize and an 

Academy Award(r). 

Because of that breadth of IP issues and concerns, we are uniquely positioned to 

participate in this debate about patent reform. With such an extraordinary investment in technology, the need to protect that investment and the shareholder value 

it represents, makes the U.S patent system and its global analogues, more important than ever to us at GE. While our system is one of the greatest and most productive in the world, as with all systems, evolving needs require a regular review 

and reform in order to ensure the promise of the system is fully realized. 

In my previous role as USPTO Director and now at GE, I have followed with keen 

interest the two studies of the U.S. patent system undertaken by the Federal Trade 

Commission/Department of Justice and the National Research Council of the National Academy of Sciences and the resulting reports. I was a witness several times 

before both bodies and was a reviewer of the NAS report. In general, both reports 

were thorough, well-thought out, and made recommendations the majority of which 

were highly appropriate to advancing the cause of patent reform in positive ways. 

I am heartened that the reports have served as a motivation for the cause of patent 

reform, and congratulate this Committee for its hearings on this topic. 

Towards that end, and in the interest of attempting to find a consensus position 

on a number of the important patent reform issues currently under consideration, 

GE has also actively participated in a coalition of some 30 of the most recognized 

and well-respected companies in the world, representing a wide array of our most 

important technologies, including Eli Lilly, whose General Counsel, Robert Armitage 

is testifying here today as well. This Coalition, which also includes the American 

Intellectual Property Law Association and the Intellectual Property Owners Association, has worked hard to find common ground and our proposals represent some of 

industries best thinking on how to deal with the specifics of the patent reform agenda. 

We do not undertake this effort lightly, however. As one of the leading academic 

economists recently noted with some concern in his extensive review of these issues:

‘‘Social progress in our technological age is intimately bound up with the creation and protection of intellectual property.’’ . . . ‘‘[But j]ust when intellectual 

property (IP) has made its greatest contributions to this nation’s technological 

growth, many critics on all sides of the political spectrum have assailed the 

soundness of the underlying legal structures.’’ 1

As stewards of this system, and the benefits it brings the world, we must resolve 

to make sure that whatever reforms or changes come forth are ones which serve 

the public’s interest, and encourage the economic development which that public deserves. 

PATENT HARMONIZATION

One of the most critical issues facing the patent system today, globally, is the 

need for harmonization of patent laws and procedures. With their territorially-based 

administration, maintenance, and enforcement regimes, the current systems foster 

extraordinary redundancies in cost, time, and resources. These inefficiencies inhibit 

the ability of inventors, large and small, to obtain and maintain the protection they 

deserve, and encourage the innovation so vital to global economic development. GE 

innovation has resulted in an active global portfolio that comprises over 38,000 patents and this number includes over 5,700 global patent applications in 2005. We 

8

also filed over 2700 U.S. patent applications in 2005. The cost to obtain and maintain this portfolio is not trivial. In 2005, GE spent in excess of $32,000,000 on the 

patent prosecution and maintenance of the foreign portfolio, a significant portion of 

which is a function of the multiplicity of world systems. 

Efforts at greater harmonization have been debated for years, with only modest 

success. As a negotiator of intellectual property issues on behalf of the U.S. government, and now as a delegate to the World Intellectual Property Organization, I have 

witnessed the frustrations in this area first hand. While we have succeeded in negotiating new treaties in many other areas of intellectual property over the last decade 

to deal with rapidly evolving changes in the technology and content worlds, substantive patent harmonization has proven difficult and challenging for a variety of 

reasons. I would like to first address the current state of play on international harmonization and some of the concerns we have on that current status. 

STANDING COMMITTEE ON THE LAW OF PATENTS

Substantive patent law harmonization has been a topic of discussion in the World 

Intellectual Property Organization (WIPO) since at least the mid-1980s in response 

to increasing calls for harmonization of national and regional patent laws. 

Following the last major, but unsuccessful, effort to advance substantive harmonization in 1991 at the WIPO, and the completion of the Patent Law Treaty of 2000, 

dealing with procedural matters, renewed discussions on a draft Substantive Patent 

Law Treaty (SPLT) began again in earnest in May 2001 in the Standing Committee 

on Patent Law. Only limited progress has been made in WIPO, the discussions, especially those over the past few years, having been marked by attempts on the part 

of a coalition of developing countries to inject a number of highly sensitive political 

issues into the discussions and to introduce other proposals that seek to undermine 

the goals of patent law harmonization or generally weaken patent rights. These 

have primarily involved issues regarding patent application disclosures of the source 

of origin of genetic resources/traditional knowledge and exceptions to patentability 

or patentable subject matter. 

As a way of moving forward, the U.S. delegation has actively supported a compromise proposal to limit the scope of work of the Standing Committee on the Law 

of Patents (SCP) to discussions regarding a limited number of issues, the so-called 

‘‘mini-basket’’, which includes the issues of the definition of prior art, priority of invention to be awarded to the first inventor to file the patent application, a grace 

period for filing after the public disclosure of the invention, and issues relating to 

novelty and inventive step. 

Unfortunately, efforts to reach a specific work plan for the SCP thus far have 

been unsuccessful. In fact, the most recent attempt to define the work plan, the informal meeting of the SCP held from April 10–12, 2006, failed to reach agreement 

on such a plan for harmonization talks. 

GROUP B+ CONSULTATIONS

While in the past efforts focused around the original work plan of the SCP in 

WIPO, it is becoming increasingly apparent that success in the near term at WIPO 

is not likely. For this reason, new avenues and strategies for attaining progress on 

substantive patent law harmonization have been explored. 

In February of 2005, the USPTO was instrumental in setting up the ‘‘Alexandria’’ group or ‘‘Group B+’’ comprised of members of like-minded countries interested in 

harmonization. The inaugural meeting was attended by 20 nations, the European 

Union, and the European Patent Office and resulted in the unanimous decision to 

establish a technical working group for the express purpose of discussing certain 

areas of patent law harmonization. 

Since its inception, the Group B+ , or ‘‘Alexandria Group’’, has been meeting biannually and been working toward harmonization on this a limited number of issues. 

While significant progress has been made, certain sensitive issues remain, however, 

such as first-to-file, grace period, and secret prior art treatment and effect. Also, 

some of the European delegations have expressed reservations over proceeding with 

harmonization discussions outside of WIPO, if WIPO will not be the forum where 

an agreement is ultimately reached. The USPTO and the Bush Administration 

should be congratulated for taking the initiative on this effort to establish the Alexandria Group and to move its agenda forward, and we look forward to additional 

engagement and progress in the future. 

BEST PRACTICES AND PATENT HARMONIZATION

High among the principals underlying the work of the SCOP and of the Alexandria Group’s efforts has been a desire for so-called ‘‘deep harmonization’’ resulting 

9

2 ‘‘A Patent System for the 21st Century, National Research Council of the National Academies, June 2004, pp. 11–12. 3 Interestingly, it should also be noted that, in testimony before this Subcommittee’s predecessor, a representative of small inventors once stated, ‘‘[W]e endorse a first-to-file rule.’’ Statement of Burke E. Wilford, National Director, the American Society of Inventors, Exhibit D, 

Hearings before the Subcommittee on Patents, Copyrights and Trademarks of the Committee 

on the Judiciary, United States Senate, 90th Congress, May 17–18, 1967, p.291. 4 It is often estimated that the cost of an interference from declaration to resolution is routinely in the hundreds of thousands of dollars. 

from an understanding of what are the best practices among the world’s patent systems. This identification of best practices also underlay in many ways the study and 

reports of both the Federal Trade Commission/Department of Justice and the National Academies studies and reports. In particular, it is important to note that the 

comprehensive National Academies of Science report, among its recommendations 

for patent reform, addresses broadly the importance of reducing the redundancies 

and inconsistencies among national patent systems. They specifically recommend 

reconciling application priority, i.e. first-inventor-to-file, elimination of the best 

mode requirement and universal publication of all patent applications.2

I have been asked to comment specifically on certain issues in H.R. 2795 and various other draft bills which have discussed, which relate in particular to harmonization such as those identified above, and am pleased to do so. 

RESOURCE ALLOCATION AND THE USPTO: PERMANENTLY END DIVERSION

Before delving into the patent reform issues, however, I want to briefly address 

another issue that probably most significantly affects the successful functioning of 

our patent system. As both the NAS and FTC reports highlighted, the USPTO must 

have sufficient resources to perform its critical role in administering the patent system. For years, the USPTO was denied these resources as patent and trademark 

fees, paid to the USPTO in return for specific services, were diverted to unrelated 

government agencies and activities. As a former Director, I have seen and had to 

manage first-hand the problems this denial of funds causes in the USPTO. While 

Congress and the current Administration are to be commended for fully funding the 

USPTO during the current fiscal year, fee diversion from prior years has left the 

USPTO with a tremendous work backlog, obsolete systems, and an inability to restructure. As contemplated in H.R. 2791, recently introduced here in the House, the 

USPTO would be given authority to raise its fees, but also gives statutory assurance 

that those fees will not be diverted to unrelated programs. 

Too often we regard this issue as ‘‘Mom and Apple Pie’’ in the mix of patent reform issues. It would be tragic to have it be overlooked in the debate over more procedural reforms, and remains probably the single most important reform to our system this Congress could and should make. This Subcommittee, and you Mr. Chairman, should be commended for the support they are giving, and have consistently 

given, over the years to a permanent solution to the diversion problem. 

In the event that additional resources are provided, we would submit that attention should be focused on using those funds to provide additional examination time 

for examiners, continuing to increase the searching resources and databases available to examiners, and training and other means to continue to develop the technical and legal expertise of our examining corps. 

FIRST-INVENTOR-TO-FILE

One of the major obstacles to global harmonization has traditionally been resolution of the basic question of who is entitled to priority of invention. Alone now 

among the world’s countries, the U.S. has maintained a system awarding priority 

of inventorship to the so-called ‘‘first inventor’’. This seemingly innocent characterization has become fraught with difficulties of definition, proof and cost. The rest 

of the world awards priority to the first inventor to file their patent application. 

While this debate has been ongoing for decades, the time appears to be at hand for 

the U.S. to join the rest of the world in implementing this simpler, fairer and less 

burdensome means for awarding priority. 

As the groundbreaking study by my colleague and friend, former PTO Commissioner Gerry Mossinghoff, has shown, the very individuals who in recent tradition 

have been most concerned about this change, the individual or small inventors, have 

actually been disadvantaged by our current system.3 The primary means for determining inventorship when there is a contest is a process in the USPTO known as 

interference. Costly,4 rule-bound, and time-consuming, the interference process is a 

failed promise for individual inventors, as well as small and medium size enterVerDate 0ct 09 2002 13:14 Jun 27, 2006 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6621 G:\WORK\COURTS\042706\27224.000 HJUD2 PsN: 27224
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5The applicant must still be the true inventor. Inventions derived or stolen by others would 

not permit that deriver or thief to be considered the true inventor. For this reason, the term 

of art used to describe the new system is ‘‘first-inventor-to-file’’. 

prises, universities and non-profit organizations, who also have sometimes opposed 

such a change. 

Moreover, since this was last seriously debated at the international level, during 

the first Bush Administration, many other structural and systemic changes have 

helped level the playing field relative to concerns previously expressed. The adoption 

of provisional applications, the availability of technical and legal resources on the 

internet, and electronic searching and filing capabilities on-line have made the application process more accessible and timely to all Americans. 

This past year, both the NAS report and the American Bar Association’s House 

of Delegates urged the U.S. to change to a ‘‘first-inventor-to-file’’ (FITF) system as 

a best practice.5 While it has sometimes been suggested that the U.S. should not 

unilaterally move to this FITF system, and should only consider it as part of an 

overall package of international harmonization treaty obligations, the advantages of 

this system in terms of simplicity, cost, and a serious reduction in uncertainty about 

priority, argue strongly in favor of making such a change now. It may also be that 

such a good faith move on the part of the U.S. will reinvigorate the stalled negotiations at the WIPO, an important and valuable goal in itself, and will help facilitate 

possible agreement in the Alexandria Group’s work. 

Therefore, I would like to strongly support Section 3 of H.R. 2795 which would 

change the U.S. patent system from a first-to-invent system to a first-inventor-tofile system. Often known as just first-to-file, the bill calls the new system ‘‘first-INVENTOR-to-file’’ to make clear that an individual cannot obtain a valid patent if 

he is not an inventor, i.e., if the individual derived the invention from someone else 

and then file, or as some small Inventors are concerned surreptitiously learn of their 

invention and beat them to the USPTO. Under the new system, among two or more 

competing inventors the patent would go to the inventor with the earliest ‘‘effective’’ patent filing date. 

With the switch to first-inventor-to-file by the U.S., no country in the world would 

have a first-to-invent system. I join with my colleagues in support of proposed 

changes that would amend Title 35 to award priority to the first inventor to file a 

patent application, and urge this subcommittee to include language to that effect 

in any patent reform statute under consideration. 

DEFINITION OF PRIOR ART AND GRACE PERIOD AS ‘‘BEST PRACTICES’’

We also support the propose redefinition of prior art to that which consists of information that is available to the public anywhere in the world. Public availability 

requires reasonable accessibility and includes all types of communications as well 

as public display and uses. This may directly impact patent examination and, by 

extension, overall quality, and will also hopefully be available in a post-grant review 

procedure, also currently under consideration and a major recommendation of the 

NAS and FTC/DOJ reports. It also consistent with the currently-considered harmonization proposals and, thereby advances that goal, as well. This is additionally true 

in its removal of the ‘‘in this country’’ limitation on the use of such prior art. In 

today’s globalized trade environment, with significantly easier access to data from 

around the world, the anachronistic limitation to domestic art has little place in our 

patent regime. 

Along with this, a ‘‘grace period’’ would apply to all publications of the inventor 

including earlier published patent applications. This grace period would arise by operation of law without any requirement for the filing of a declaration. The Coalition 

text supports a more extensive grace period than the one contained in the Chairman’s July 26th substitute text, and was the work product of on on-going dialogue 

with the university community for whom this issue is particularly resonant. 

We also support the elimination of so-called ‘‘secret prior art’’ which might also 

be available to avoid art which would other invalidate inventions. This elimination 

is also a major discussion issue in the ‘‘mini basket’’ of harmonization issues currently under discussion. Permitting secret prior art, creates uncertainty and frustrates the goal of searching for prior art for the purpose of improving patent quality. 

REPEAL OF THE ‘‘BEST MODE’’ REQUIREMENT

The best mode requirement of 35 U.S.C. § 112 requires patent applicants to disclose what they consider to be the best way of carrying out their claimed invention. 

HR 2795 proposes eliminating this requirement. This change would accomplish two 

purposes. First, it would bring the US patent system into conformance with many 

11

6 And, interestingly, apparently not often by independent inventors, who lobbied strongly and 

successfully for inclusion of the opt-out language in the American Inventors Protection Act. 

other jurisdictions throughout the world, which lack such a requirement. Second, 

this change would eliminate a point of subjectivity in order to make patent validity 

more predictable. Repeal of the ‘‘best mode’’ requirement would remove another barrier to global harmonization. 

Furthermore, while this has often been portrayed as a positive, in that it seems 

to encourage greater public disclosure, in practice, it has more often resulted in a 

trap for the unwary or a ‘‘gotcha’’ in patent litigation, further undermining confidence in the system. 

18 MONTH PUBLICATION

Universal publication of patent applications after 18 months is the norm in the 

rest of the world. However, in the U.S. patentees who do not wish to file for a foreign patent can opt for non-publication of their patent application, so long as they 

give up their right to file on that invention outside of the U.S. Section 9 of HR 2795 

would eliminate this anomaly of the U.S. patent law. This change would also lead 

to greater disclosure and sharing of information and, of course, remove another barrier to harmonization. 

It also prevents entities from making important and expensive investments of research dollars, unaware that that research may at some point infringe an issued 

patent. This is not a wise use of limited research dollars. This also, by extension, 

encourages additional research, which is all to the public good. In any event, it is 

my understanding that USPTO statistics show that there is only a minor ‘‘opting 

out’’ that is occurring, but it may be in important technologies,6 where the applicant 

may be using the opt-out provisions initially to avoid exposing their technology publicly for a period, while opting in later. Such gamesmanship should not be encouraged, especially when the public policy grounds for publication are so strong in the 

first place. 18 months is enough time for inventors to determine whether or not to 

proceed with the publication and prosecution or to abandon the application and keep 

it a trade secret. We support universal publication. 

CONCLUSION

In conclusion, while a member of the Coalition, and supportive of that text, GE 

supports much that it in HR 2795, in particular in the areas of harmonization which 

I have identified, and applaud the continuing efforts of this subcommittee to improve the patent system, globally, by updating U.S. law and practice to permit a 

more globally harmonized system. Intellectual property protection on an international level is a critical element of GE’s research and development cycle and to 

our continued introduction of innovative products and services to global markets. 

I would be pleased to respond to questions from the Subcommittee.

Mr. SMITH. Thank you, Mr. Dickinson. 

Mr. Armitage. 

TESTIMONY OF ROBERT A. ARMITAGE, SENIOR VICE PRESIDENT AND GENERAL COUNSEL, ELI LILLY AND COMPANY 

Mr. ARMITAGE. Yes, thank you, Chairman Smith, for the opportunity to be here this morning. 

I’ll begin. Thank you, Chairman Smith, for the opportunity to be 

here this morning to speak on the topic of patent harmonization 

and its relationship to broader issues of patent reform. 

I, frankly, am most appreciative of the efforts that you and other 

Members of your Subcommittee have undertaken to advance the 

cause of patent reform in this Congress, including the development 

of legislative proposals that would advance harmonization along 

with broader patent reforms. 

In my written testimony, I attempted to set out at some length 

how patent harmonization efforts have been and remain inherently 

intertwined with broader efforts at patent reform. My written testimony offered a fairly detailed tour of the three major reform efforts 

12

over the past 40 years—the 1966 President’s Commission, the 1992 

DOC Advisory Commission, and, as Mr. Dickinson referenced, the 

more recent National Academies report. 

Remarkably, whether these efforts were undertaken in the ’60’s 

or the ’90’s or at the start of this century, they consistently reached 

many of the same conclusions. Significant and some might say radical measures must be undertaken by Congress to elevate patent 

quality. Improving patent quality, however, is only one aspect of 

measures that must be undertaken to ensure civil justice for patent 

litigants. 

Like many others whose businesses are greatly impacted by the 

U.S. patent system, my company supports a fair, balanced, and 

comprehensive patent reform bill to both elevate patent quality and 

advance civil justice for patent litigants. 

Indeed, as Mr. Dickinson said, the reforms that we seek are now 

supported by three dozen major companies and leading IP associations. These reforms would result in greater harmonization with 

patent systems outside the United States, but harmonization for its 

own sake is not really the driver behind these reforms. 

In our view, we agree with Mr. Dickinson that the National 

Academies recommendations should represent the template for designing patent reform in this Congress. We believe first inventor to 

file, elimination of the best mode requirement, publication of all applications at 18 months, and introducing a new 9-month window 

for post grant oppositions that would be open to all issues of the 

validity of a patent ought to be enacted into law. 

First inventor to file, by itself, would remarkably simplify our 

patent system and simplify the work of the Patent and Trademark 

Office. It would also, frankly, be a necessary predicate for conducting a post grant opposition that would be open to all issues of 

whether a patent was valid or not. 

Perhaps the most important benefits from making harmonizing 

changes to the U.S. patent system would be the objectivity and 

transparency that it would introduce into the patent law. The reforms in 2795 in a few words would allow someone with sufficient 

knowledge and skill to pick up any U.S. patent, read it, reference 

only publicly accessible information, and be able to make a full and 

complete determination of whether the patent is valid or not. 

And as we well know, today’s patent system, even after millions 

of dollars of discovery of issues that are sometimes based on secret 

prior art, sometimes based on subjective impressions of the inventor in what was or was not the best mode always leaves uncertainty and doubt in whether a patented invention is, indeed, validly patented. 

Also, adopting a full set of reforms would facilitate the initiative 

that Director Dudas at the United States Patent and Trademark 

Officer has been championing to increase responsibility of applicants. It would do so by creating a safe harbor for inventors who 

obtain fully valid patents, so that those fully valid patents couldn’t 

later be challenged in court on the basis that the patent was procured through inequitable conduct. 

Finally, as Mr. Dickinson noted, the patent reform process in this 

Congress appears to have slowed because of controversies over a 

few issues. The most controversial of these issues relate to disVerDate 0ct 09 2002 13:14 Jun 27, 2006 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6601 G:\WORK\COURTS\042706\27224.000 HJUD2 PsN: 27224
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abling or at least diminishing the availability to inventors of adequate remedies when their patents have been found both valid and 

infringed. 

If Congress were to move forward, however, with patent quality 

and related reforms that advance civil justice for patent litigants, 

we believe that these misguided calls for diminishing or disabling 

patent remedies would cease. 

We have heard the arguments that it’s unfair to put a company 

out of business or force the payment of a king’s ransom because of 

a patent of questionable validity that can’t be effectively challenged 

either administratively or in the courts. However, with the enactment of patent quality and related civil justice proposals that we 

support, that specter would disappear. 

When a high-quality patent is issued, and its claims are properly 

limited to truly novel and innovative technology that an infringer 

can’t avoid by redesigning a product or incorporating any alternative technology, no possible justification should exist for denying 

such an inventor the full economic rewards from his contribution, 

including the assurance that ongoing infringement of such a valid 

patent will be stopped by the courts. 

Thank you for permitting me this opportunity to speak today as 

part of your ongoing efforts at patent reform. 

[The prepared statement of Mr. Armitage follows:]

14

PREPARED STATEMENT OF ROBERT A. ARMITAGE


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Mr. SMITH. Thank you, Mr. Armitage. 

Mr. Mueller. 

TESTIMONY OF GARY MUELLER, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, DIGITAL NOW, INC. 

Mr. MUELLER. Thank you, Mr. Chairman and Members of the 

Committee, for allowing me to be here today and express my views 

on patent harmonization. 

I would also like to thank the competitive—the Association for 

Competitive Technology for its leadership on this issue and helping 

me prepare for this testimony. 

My name is Gary Mueller, and I’m the president and chief executive officer of Digital Now. We’re a small, Herndon-based—Herndon, Virginia-based company. We have several employees on staff 

locally and a handful of programmers throughout the United 

States, and we highly leverage our partners and our suppliers in 

our business. 

Despite our small size, we think we’re poised to take advantage 

of emerging technology and being a leader in consumer services on 

the Internet. In the past, we’ve built film scanners and Internet 

photo sites for photo finishers. Now we’re providing digital safe deposit box services to safely and securely store files, digital emotional property that belongs to the consumer, such as digital 

photos, home videos, important documents and records, as well as 

digital IP, or intellectual property, that consumers buy over the 

Internet, such as music, ring tones, e-books, and games. 

Let me say up front that I support the changes in the patent 

processes in the U.S., including the harmonization efforts. I specifically support the first to file proposal and the proposal to file all 

publications or patent applications within 18 months of their filing 

date. 

I’ll try to be succinct. I have four points to make from a small 

business perspective. One disclaimer first. I am not a patent attorney. 

Okay. Point one. File locally, grant globally. In 1999, we got a 

patent for a lamphouse technology quite unique for—and a filmscanning technique capability. Because of the cost and complexity, 

we decided not to file outside the United States. It was a mistake. 

In the fall of 2000, I was at Photokina, which is a large trade 

show for us in Cologne, Germany. And I was shocked when Gretag, 

a large equipment company based in Regensdorf, Switzerland, was 

openly showing the use of our patent in a new competitive scanner. 

When I discussed the issue with our patent attorney, he just told 

me it was too late. Wait until they enter the U.S. market. 

The lack of that patent protection cost me European sales and 

revenue. That impacted U.S. jobs and hurt my ability to build a 

great next product. 

So I’m sensitive to this issue of harmonization, as someone who 

has to make payroll and watch the bottom line. It makes no sense 

to pay for the same work of patent searching and examination to 

be done for the same invention in each country where patent protection is sought. Small companies simply can’t afford it. A single 

search and examination in a single office should be recognized in 

every other country where patent protection is sought. 

36

Point two. File now and attract the cash cow. As a small business, our goal is not to put competitors out of business, but to bring 

others into our businesses. Patents are a key tool to attract investment equity, secure business loans, develop supplier and channel 

partners, and, yes, ensure that we’re fairly compensated for what 

we created. 

When I learned Gretag was violating our patent, I did not want 

to put them out of business. I wanted to play ‘‘Let’s Make A Deal.’’ As a big company, they had more resources, stronger world-wide 

distribution channels, and a customer support infrastructure. 

That’s leverage for what we bring to the market. 

We are now seeking new investors for our new initiatives, and 

guess what they ask first? ‘‘Do you have any patents?’’ We’ve already mentioned the Mossinghoff study. So I won’t go 

into that. But I believe that that study supports the position of first 

to file, and we see that as an important element for our business 

as well. 

Point three. Turbo charge the PTO. In my own view, speed, or 

the lack thereof, is one of the biggest issues facing my industry 

when it comes to patents. They say that speed kills on the highway. Well, pendency kills on the information superhighway. The 

longer I have to wait for a patent to be granted, the longer I have 

to wait for that tool to attract investment and partners. 

The average length for receiving a patent from the U.S. PTO is 

29 months. For software, a very changing industry, the average 

pendency is even longer—40 months. Our own patent on image rotation, automatic image rotation, took us almost 6 years to get. 

I’ve had to abandon other patent applications and, therefore, the 

business opportunities that those patents represented because the 

market moves faster than the PTO office. The opportunity to participate and probably improve the marketplace was lost. 

In today’s fast-paced world, a patent delay is a potential market 

denied. Why? Because, as a small business, I have to weigh the 

risks of ongoing costs of R&D and commercialization against the 

ability to protect that investment from those that can outpace me. 

This also speaks to speed in publishing all applications in 18 

months. If someone has beaten me to the punch, I want to know 

about it right away, as soon as possible, and cut my losses. Go to 

plan B. 

If not, I’m in a better position to raise funds, take the additional 

risk, continue development, and, best of all, get a product to the 

market and sell it. 

Clarity would come with the publication of all patent applications 

at 18 months after the filing date. We would have more information about the competitive environment in which we operate. 

Point four. Small business entrepreneurs need an on-ramp to get 

in the game. As a small business, we have to deal with ‘‘bet the 

company’’ issues almost every day, much more than the larger 

counterpart sitting at the table. We are often in the red to prove 

our technology and our business models. 

Consequently, we have to ante up early in the process $30,000 

or more to get through the patent application process. That money 

would otherwise be used to keep the doors open by paying the rent 

or making the payroll. To suggest that we should not spend this 

37

precious capital on improving our products and services, but spend 

it by rushing to the patent office is a very tough sell in our environment. 

There is a real and persistent fear among entrepreneurs, who are 

often cash poor, that inventions disclosed and patents applications 

once published will be stolen by larger, deep-pocket competitors. 

These fears can be best addressed by a patent system driven by 

quality, clarity, and speed. 

Achieving progress on these points helps a lot. Education is also 

going to be important to re-educate the small entrepreneur. 

In general, bad behavior fosters bad behavior. Bad behavior because of the length of the patent process, the backlog of the PTO, 

and the system in general fosters bad behavior by entrepreneurs 

and inventors. 

Harmonization, improving the PTO performance will foster good 

behavior, especially with small business entrepreneurs. We will 

trust the system, have greater clarity, know where we stand with 

our initiatives and ideas, and we’ll use the system to our advantage. 

Mr. SMITH. Mr. Mueller, we’re going to need to move on. I think 

you got your four points in, though. 

Mr. MUELLER. I did. Perfect timing. 

[The prepared statement of Mr. Mueller follows:]

38

PREPARED STATEMENT OF GARY MUELLER


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Mr. SMITH. Thank you very much. 

Mr. Choate. 

TESTIMONY OF PAT CHOATE, POLITICAL ECONOMIST AND AUTHOR OF ‘‘HOT PROPERTY: THE STEALING OF IDEAS IN AN 

AGE OF GLOBALIZATION’’

Mr. CHOATE. Thank you, Mr. Chairman. 

I’m here today on behalf of the Professional Inventors Alliance. 

The two founders of that, Ron Riley and George—— Mr. SMITH. Mr. Choate. Yes, pull the mike a little bit closer to 

yourself. 

Mr. CHOATE. Okay. I’ll be happy to. 

I’m here on behalf of the Professional Inventors Alliance. Two of 

the founders of that organization, Ron Riley and George Margolis, 

are here with us today. 

Small inventors are part of a group called the ‘‘small entity inventors.’’ That is independent inventors, small businesses such as 

Mr. Mueller’s, nonprofits, academics. They make up and contribute 

45 percent of the patents done in this country. 

If you remove the foreign patent applications submitted, they’re 

the largest contributors to the patent system. They make the most 

patent applications. And studies done by the Small Business Administration reveal that they produce more highly sighted patents 

than large firms on average, and small patenting firms produce 13 

to 14 times more patents per employees as large patenting firms. 

They’re an important part of the innovation in this country. And 

so, how patent law affects them is vastly important to our technological and innovative future for this country. 

The question really is not whether one is for or against harmonization. Harmonization is a good thing. No one opposes having similar administrative procedures. I think it’s a good thing for the 

world to file patents in English. English is the language of commerce in the world today. 

The question of reasonable access to prior art is—is a very desirable thing, and it’s facilitated by the Internet. Researchers such as 

myself increasingly depend upon it. Ten years ago, I employed two 

research assistants. Today, I employ none. The Internet serves that 

function actually even better. And I think no one objects to standard searches. 

The question is, is in this process of harmonization, will we lower 

the U.S. patent standards to that of other countries, or will we 

raise—insist upon raising the standards of other countries to our 

own, which I think is the finest patent system in the world and has 

served us very well for two centuries? 

As I take a look at the issue, there are three major issues that 

this patent system faces today. The first is the extended pendency 

rates. In the past 12 years, they’ve gone from 19 months to almost 

30 months. 

We talk about wanting a surge of innovation in this country. We 

can go over into Virginia, and there is something like 500,000 to 

600,000 patent applications in a warehouse waiting for their turn 

to be considered. If we could get the pendency rate down to something like 6 months, we could unleash a vast amount of new innovations. 

54

And what we’re talking about here are some simple procedures 

and the Congress appropriating another billion or $2 billion to hire 

more patent examiners, which would be one of the best investments this country could make. 

The second major question is piracy. So much of what we’re talking about today reflects our inability to deal with piracy. Now this 

Congress and this country led the way in the 1990’s to create 

TRIPs, a major shift in world intellectual property rights. We created for ourselves and to get those rights, we swapped off the 

American apparel and textile industry. We have major rights there. 

But when we deal with countries such as China, we have not 

filed a single WTO case against China, and they’re facing major 

violations. 

And then finally, the premature—what I call the premature publication of patents. The issue, it would seem to me, is not to pick 

up that 10 percent of inventors that are left out of that, but for us 

to go and renegotiate to take the United States off that 18-month 

patent rule. 

Think about it, what it says. First of all, we’ve set up the rule, 

the 18-month rule, because we’re unwilling to deal with the pendency issue. We’re unwilling to deal—if we were issuing patents at 

6 months, there’d be no need for an 18-month rule. 

Alexander Graham Bell, for example, got his patent in 3 weeks. 

It was 600 lawsuits, including 5 challenges at the Supreme Court. 

This is doable. 

But more importantly, what we find is this 18-month rule is a 

major boon to pirates around the world. The Japanese patent office, 

for example, sent some of their people to China, visited with various countries. And what they found was rows and rows of computers where the Japanese—I mean the Chinese companies were 

pulling down the information off the Net about Japanese and 

English and German and American patents. And they said, ‘‘We 

don’t need to research. All we need is this access to the 18-month 

rule.’’

And moreover, when the Japanese went back and checked their 

own computers, they found they were getting 17,000 hits a day 

from Chinese companies looking into their patents, and they found 

that South Korea was hitting it 50,000 times a day. 

Another thing that happens with the 18-month rule, if an inventor makes a filing for a patent, if it goes up at 18 months and if 

he’s denied or if that inventor is denied a patent, after that 18-

month rule the application is filed, he, in effect, loses the right to 

operate his innovation as a trade secret. It’s given away already. 

Now about a third of the patent applications every year are rejected. We’re losing 60,000 or 70,000 innovations a year that inventors have, where they could use it as a trade secret, re-release it 

entirely to the world. 

As to the question of best mode, the golden covenant that the 

Constitution provides is an exchange of knowledge for a grant of 

the exclusive right to use. Best mode is, I think, a necessity. 

This country has had some very bad experiences in the past. As 

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getics, aspirin, et cetera. The Germans cheated. The Germans 

didn’t give the best mode of use. 

When the Dupont Company, at the direction of the U.S. Government, moved to try to replicate those inventions in a time of crisis, 

what they discovered is that if you followed the techniques laid out 

by I.G. Farber and others, you’d kill your chemist. Best mode is 

very important. 

And thank you for your questions, and I am glad to come. 

[The prepared statement of Mr. Choate follows:]

PREPARED STATEMENT OF PAT CHOATE

Mr. Chairman and Members of the Committee: 

Thank you for the invitation to present my thoughts on ‘‘Patent Harmonization.’’

I appear as a member of the Advisory Board of the Professional Inventors Alliance—

a group of independent inventors that support strong patent protections. 

THE THREE P’S

The U.S. patent system has three major problems today.

1. Pendency rates are far too long, denying the nation new innovations in a 

timely manner;

2. Piracy of U.S. intellectual property rights is not being adequately addressed;

3. Premature publication of patent applications at 18-months is (a) enabling the 

theft of U.S. intellectual properties, (b) denying patent applicants the ability 

to use their innovations as trade secrets, and (c) encouraging inventors not 

to file patent applications, thereby diminishing the nation’s general knowledge. 

Proposals to shift from a first-to-invent to a first-to-file system, to eliminate the 

‘‘best mode’’ requirement in a patent application and to expand the publication of 

patent applications will weaken the U.S. Patent System and discourage American 

innovation at just the moment both should be strengthened to meet expanding global competition. 

SIX NATIONAL ECONOMIC TOOLS

The President and Congress have six basic tools to direct the U.S. economy:

1. Fiscal Policy

2. Monetary Policy

3. Exchange Rate Policy

4. Trade Policy

5. Technology Policy

6. Competition Policy (Antitrust)

For more than two centuries, the strongest of those six has been U.S. Technology 

Policy, the heart of which is the nation’s system of intellectual property laws and 

the rights they create. Those laws and rights, the strongest in the world, have encouraged national innovation and the spread of general knowledge beyond anything 

achieved by any other country in history. 

These intellectual property rights, in whatever form they exist, are ultimately social contracts between the originator of an idea and society. The arithmetic of the 

exchange is simple: the temporary award of ownership allows the public to benefit 

from new ideas and encourages the creation of even more innovations. 

What varies among nations is the way they balance this quid prod quo—ownership for disclosure—and which interests they favor in their patent policies. 

At its heart, the American system of intellectual property protection—whether 

that protection comes as a patent, copyright, trademark, computer mask, or trade 

secret—favors the rights of ownership. U.S. law gives inventors and writers the 

long-term, exclusive right to make, use, or sell their creations and powerful legal 

means to defend their rights in U.S. courts. 

Most other nations, however, still view an originator’s discovery as a legacy to society almost from the inception. Thus, those intellectual property systems favor the 

quick distribution and shared commercialization of new ideas, even if this puts the 

inventor or writer at a disadvantage. 

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Think about cameras. In the United States, Kodak violated Polaroid’s instant photography patents, lost their case in court and then had to pay Polaroid $1 billion 

in damages. In Japan, by contrast, one company develops a killer application, such 

as technology to stabilize shots, but all other Japanese camera makers soon introduce the same technology. In the U.S., the innovator could use that technology to 

sweep the market. In Japan, a government-approved and often a government-guided 

cartel shares the technology among competitors. 

The differences of national emphasis—ownership vs. sharing—among the U.S. European, and Japanese intellectual property systems are substantial. 

The stated or explicit goal of patent harmonization efforts is to synchronize these 

divergent patent systems so they generally work alike. In itself, this bringing together of national systems is desirable. 

However, there is an unstated, and vital, issue involved: Will patent standards 

and protections be raised or lowered in the harmonization process? Harmonize up? 

Or, harmonize down? 

That is the choice now before Congress. 

PARTIES IN CONFLICT

For almost two centuries, Congress has set intellectual property rights by allowing the affected parties to find a compromise. Now that process is impaired, largely 

because of the changing nature of the parties at interest. Before the 1960s, the battle was between domestic industries and between individual industries and large 

corporations. With globalization, the conflict is between national systems, which 

means foreign nations and their corporations versus both small and large entity inventors. As U.S. corporations offshore their R&D and manufacturing, their interests 

are increasingly aligned with those of foreign-based multinational companies that 

are trying to weaken U.S. protections for small entity domestic inventors. 

Small versus Large Entities—The United States Patent and Trademark Office 

(USPTO) distinguishes between what it terms ‘‘small entities’’ (independent inventors, companies with 500 or fewer employees, not-for-profit organizations and universities) and ‘‘large entities’’ (larger corporations). 

Until the last half of the 20th century, the principal patent conflict was between 

independent inventors and large U.S.-headquartered corporations, reflecting the fact 

that individual inventors are a natural enemy of the status quo, large corporations 

and state-owned enterprises. 

‘‘Innovation is a hostile act as it threatens the status quo and those who benefit 

from it,’’ says inventor Paul Heckel. That threat, Heckel claims, explains the difference between the U.S. patent system and those of Japan and Europe. Those systems were developed to minimize the threats to entrenched interests, while ours 

was created after our Revolution when the entrenched interests, that is, the British, 

had been overthrown and those in power had little but the vast future of a nation 

to develop. 

The American experience is that these small entities, particularly independent inventors, can devastate an entrenched interest, almost overnight. Indeed, doing just 

that, and becoming rich and famous is the dream of most such entrepreneurs. Moreover, it happens repeatedly in America. Small entity invention has a particular 

American quality, reflecting our culture. Even with all the filings from large U.S. 

corporations and their counterparts from around the world, small entity inventors 

still file roughly 45 percent of all U.S. patent applications every year. That happens 

nowhere else in the world. 

Such innovation is the very heart of what Austrian economist Joseph Schumpeter 

called ‘‘creative destruction.’’ For more than two hundred years, it has been the engine of America’s economic growth. It is our principal hope for meeting the global 

economic challenge we face. 

For the small entity inventors, their IP rights are essential. Patents provide them 

the means to raise capital, make license arrangements and defend themselves 

against infringers. As surely as night follows the day, other nations will seize upon 

patent changes to weaken intellectual property rights in the United States and thus 

weaken those same IP rights abroad. 

Moreover, with weakened protections, no U.S. IP holder will be safe, whether 

small or large. In a world where China, India, and other nations are quickly becoming the world’s workshop—manufacturing everything from the simplest to the most 

advanced technologies—a large and growing number of traditional U.S. corporations 

are in reality little more than intellectual property holders, who are ‘‘non-practicing’’

their technologies. In this radically different economic environment, the protection 

of those corporations’ intellectual property rights is vital because those rights are 

what constitute their stockholders’ real value. 

57

Small Entities versus Transnational Entities—Europe, Japan, China, India and 

other nations aggressively use their patent systems as a tool of national development. Changes in U.S. patent laws that enable their corporations to get a look at 

U.S. patent applications before a patent is awarded is to their advantage. So, too, 

processes that ease their ability to challenge U.S. patents as a means to coerce a 

license or shorten the duration of a patent through confrontation, or place the validity of a patent into legal limbo is also to their advantage. 

Since the early 1990s, one of the principal goals of Japanese and European-financed lobbying in the United States has been to change U.S. patent practices. 

Theirs is a formidable force. Overall, the Center for Public Integrity reports that foreign governments and corporations now fund almost one-third of all lobbying in 

Washington, D.C. When the lobbying dollars of the largest U.S.-based corporations 

and their trade associations is added to the foreign efforts, almost 80 percent of all 

lobbying dollars come from a coalition of businesses and governments that wish to 

weaken U.S. patent protections. Their goal, moreover, is fully understandable—in 

America, an inventor with strong patent protections, a contingency fee law firm, and 

access to the federal court system is a real economic threat to a patent pirate. 

HARMONIZING DOWN U.S. PATENT STANDARDS

Not surprisingly, many U.S. corporations have long sought to weaken patent protections for independent inventors. Repeatedly over the past forty years, a succession of Presidents has appointed patent reform commissions dominated by these corporate interests. Their reports repeatedly offer the same solutions—(1) they seek to 

cut the term of patent protection; (2) they seek to give the world a look at a patent 

application before the USPTO grants patent protection; (3) they seek to weaken the 

legal remedies and damage awards to small entity patent holders; and (4) they seek 

to change the award of an invention from the first-to-invent to the first-to-file a patent application. 

In short, these corporate-led commissions have urged Congress to harmonize 

down—that is, to make the U.S. patent system more like that of Japan and Europe 

rather than have U.S. patent negotiators try to raise the patent standards of those 

nations to that of the United States. 

Moreover, the temptation of the Executive Branch of the U.S. Government to reduce IP rights is great. The temptation arises out of the creation of TRIPS within 

the World Trade Organization, which has put IP rights into trade negotiations. In 

the past, the United States has traded away various U.S. industries to secure global 

trade agreements—textiles, apparel and steel are the most visible examples. 

In the current WTO round, developing nations refused to begin the negotiations 

unless the United States would agree to compulsory licensing of pharmaceuticals. 

The USTR capitulated, putting this nation on a slippery slope of IP concessions in 

exchange for trade rights. 

Indeed, we are already along that path. China is a flagrant violator of U.S. IP 

rights, yet our government refuses to bring a case against China at the WTO for 

denying U.S. intellectual property owners’ rights that are supposedly theirs under 

China’s accession agreement to the WTO. Again, the U.S. is swapping away IP 

rights for foreign policy and other trade goals. 

This ‘‘harmonize down’’ effect comes into sharp relief by reviewing a landmark 

GAO study—Intellectual Property Rights—US Companies’ Patent Experiences in 

Japan, published in the spring of 1993. It provides a baseline comparison of the 

U.S. and Japanese patent systems, as they existed 13 years ago. The changes since 

then are dramatic. 

In this study, GAO examiners interviewed Japanese patent officials and lawyers, 

and they surveyed 300 corporations who were top patent holders in Japan. The respondents were top U.S. patent holders in three sectors—chemicals, semiconductors, 

and biotechnology—and included 90 percent of the U.S. companies that were part 

of the top 200 U.S. patent holders in 1991. Almost half of these companies had 

10,000 employees or more, 32 percent had between 501 and 10,000, and 19 percent 

had 500 or fewer. More than 90 percent of these respondents had also filed patent 

applications in Japan during the past five years, two-thirds held ten or more Japanese patents, and all were experienced international businesses. The majority of 

these respondents were also large enterprises, with 60 percent reporting sales of 

more than $1 billion annually. 

While the 300 responding companies had all the resources needed to hire the best 

talent and do whatever the Japanese required foreign businesses to do in Japan, 

two-thirds reported significant problems dealing with Japan’s patent system. By 

contrast, only 25 percent said they had similar patent problems in Europe and 17 

percent in the United States. 

58

In stunning detail, the GAO study also revealed that, unlike the United States, 

which administered its patent system in a country-neutral manner, Japan’s patent 

system then was at once a defensive, offensive, and a strategic tool of national development. It was being used to (1) keep foreign goods out of Japan, (2) protect proprietary Japanese technology, (3) examine the inner workings of the best foreign 

technology and (4) get foreign patents under advantageous conditions. 

The GAO concluded that the differences in patent policy between the U.S., Japan 

and Europe were as follows:

• The United States awarded patents to the person who is the first-to-invent. 

Europe and Japan awarded patents to the first-to-file an application.

• The United States provided seventeen years of protection from the date it 

issues a patent, no matter how many years the USPTO took to process the 

application. Europe and Japan provided protection that ended twenty years 

after the filing date, despite how much time they consumed in the review 

process.

• United States patent applications were secret until the government granted 

a patent. All other nations published patent applications eighteen months 

after an applicant files.

• The United States gave inventors a grace period of one year in which to file 

an application after they have shown their invention to the public and imposed no restrictions on the ways originators may reveal their inventions. Europe and Japan gave inventors a grace period of six months for disclosure and 

limited the types of disclosures they could make without losing their right to 

a patent.

• The United States and Europe excluded third parties from the patent review 

process. The Japanese Patent Office allowed third parties, including rival 

companies, to participate in their patent reviews.

• The United States did not allow third party opposition during the patent review process. Japan allowed third parties to oppose a patent application even 

before they grant an award. Europe allowed third party opposition but only 

after they grant a patent.

• The United States Patent Office automatically examined every patent application filed. Europe allowed patent applicants to defer examination for up to 

six months. Japan allowed patent applicants to defer examination for up to 

seven years.

• The United States accepted patent applications in all languages. Europe accepted applications in the languages of nation party to the European Patent 

Convention. Japan accepted the patent applications in Japanese.

• The United States and Europe processed patent applications rapidly, generally in nineteen months or less. Japan processed patent applications slowly, 

generally in six to seven years.

• The United States’ and Europe’s scope of patent protection is wide, giving the 

inventor exclusive rights within a broad boundary of claims. Japan construed 

the scope of its patent protection as narrowly as possible.

• The United States and European legal systems eased the private enforcement 

of patent rights. Japan has discouraged private action.

Most of the 300 corporate respondents to the GAO survey answered that they 

were unable to protect their intellectual property in Japan, and many also acknowledged that they were forced to enter cross-licensing and partnership deals with Japanese rivals that they would never have even considered in Europe or the United 

States. 

If these large transnational corporations were unable to cope in Japan, then most 

individual inventors and small firms faced an almost impossible task. 

In the intervening years, Japan has made some changes in its patent system. It 

has established a tribunal to hear patent cases, takes applications in English, hired 

more examiners and lowered its pendency rate. Yet, its basic system remains unchanged. It uses the first-to-file approach, limits patent terms to 20 years, pre-publishes applications and permits third party opposition. 

As this list reveals, the direction of U.S. patent law changes over the intervening 

years has been to change the U.S. patent system so that it is more like Japan’s. 

Moreover, the USPTO is taking (May 3, 2006 deadline) public comment on a proposed rule on the practice of continuation applications that will further make the 

U.S. system like Japan’s—a rule that will cut the number of a patent claims in an 

application. 

59

As you know, pendency is an ongoing and increasing problem for the PTO and 

frankly for American competitiveness. However, any change in PTO rules that limits the number of continuations and the number of claims will not affect pendency. 

But, it will create great suffering for small entity inventors—universities, biotechnology firms, emerging technology companies, small businesses and independent 

inventors. Currently, they can file a patent application and modify it as one’s research progresses. Application and revision costs are borne by the applicant progressively and timely public disclosure occurs. 

The proposed rules restrict the patent applicant to 10 claims and to 1 continuation absent special circumstances. The PTO thinks that this will reduce examiner 

workload and relieve pendency, though it has yet to demonstrate this. Instead, the 

rules create new, amorphous requirements that the patent applicant must meet. Essentially the rules mean that the patent applicant must perform the examination 

process themselves all in advance. This radical change represents a first step toward 

converting the PTO into a registration system. 

This rule change is so significant it is something for Congress and not for the PTO 

to decide. I urge this Committee to review those proposed changes and comments 

in hearings. 

THREE HARMONIZATION ISSUES

First-to-Invent Versus First-to-File—For more than two centuries, the United 

States has awarded a patent to the first person to invent the creation. All other nations award the patent to the first person to file a patent. The Governments of 

Japan and Europe support U.S. adoption of a first-to-file system. Several Presidential and academic study commissions also favor a first-to-invent approach. In the 

1993 GAO survey, three-quarters of the companies with 10,000 employees or more 

favored a first-to-file system, as did about half the companies with 501 to 10,000 

employees. 

In that survey, of course, a quarter of the large corporations and about half of 

the mid-sized companies favored a continuance of the first-to-invent approach. I am 

unaware of any survey of small entity inventors on this issue. Various independent 

inventor groups, however, advocate leaving the first-to-invent system in place, arguing that it is functioning well. 

In a recent study of whether small or large entities are advantaged or disadvantaged by the first-to-invent approach, former Commissioner of Patents and Trademarks Gerald J. Mossinghoff did a statistical analysis of what happens when two 

parties claim to have invented something at nearly the same time, a process called 

interference cases or two-party decisions. If there were problems in the first-to-invent system, a large number of such cases would exist. 

Remarkably, in the 22-year period 1983–2004, Mossinghoff found there were only 

3,253 two-party decisions, a period when the USPTO received 4.5 million applications and granted more than 2.4 million patents. Thus, there were on average only 

such 155 such cases per year, or as Mossinghoff pointed out, fewer than one in one 

thousand applications filed. 

Mossinghoff also found that the number of small entities advantaged in that 22-

year period by the interference process was 286 and the number disadvantaged was 

almost the same (289), a strong statistical suggestion that the USPTO was ably 

managing the process. 

Mossinghoff’s data provides a strong argument for not changing from a first-toinvent to a first-to-file patent system. Specifically, the supposed disadvantage of the 

present approach is that it leads to confusion and conflicts. Yet, as Mossinghoff’s 

data reveals, the number of interference cases in the 22 years analyzed was administratively trivial. 

His data also reveals that small entities were involved in only 17.6 percent of 

these two-party cases, although they generate 45 percent of all patent applications. 

The overwhelming majority of those interference cases (82.4 percent) were between 

large entities fully capable of financing their advocacy. 

Mossinghoff’s data reveals that the number of small entity inventors affected by 

interferences occurs only with one of every 7,800 applications. This is so statistically 

insignificant as to be irrelevant. One of 7,800 is not a problem. 

The point is that our present system is not adversely affecting large or small entity inventors. Then, why change it? Why go to all the trouble, all the costs of changing to something else, when the benefits are so illusory and slight? If there is some 

benefit other than doing like other nations do, advocates of that change should be 

forthcoming as to what that is. 

The other question raised in Messinghoff’s paper is about the ability of those few, 

those one of 7,800, inventors to finance the legal costs of a two-party case. He found 

60

1 Calculated from data contained in Federal Judicial Caseload Statistics, 2004, Table C-4 and 

Performance and Accountability Report: fiscal year 2004, Table 1, p. 116. 2 Calculated from data contained in Federal Judicial Caseload Statistics, 2004, Table C-4. 3 Ibid.

4 Ibid.

5 Ibid.

that 575 small entity inventors took their cases to conclusion, which also strongly 

suggests that legal costs were not a barrier, even for those few. 

The question of legal costs is related to a broader argument made for altering the 

U.S. Patent System, namely that the U.S. is in a ‘‘patent litigation’’ emergency— that is, a flood of lawsuits with little or no merit is threatening the innovation process. I examined that issue in a recent working paper published by the U.S.-China Economic and Security Review Commission (A Great Wall of Patents, October 2005). 

I concluded from publicly available data that the U.S. does not have a patent litigation crisis. Indeed, the data makes clear that the threat of lawsuits for most inventors is actually diminishing. 

The real litigation threat is to a handful of large corporations whose business 

models rely on the aggressive, unapproved and uncompensated use of the patented 

works of others. The owners of that intellectual property are suing these large companies and winning large awards. In appeal, the courts are upholding these awards 

as valid. Now, a handful of these large entity patent holders have banded together 

and are trying to achieve through legislation what they cannot get in the courts— easier access to the IP of others, at a lesser cost and with fewer penalties. 

Federal judicial caseload statistics for patent lawsuits and USPTO data on patent 

applications and patents issued reveal:

• An inventor is less likely to be involved in a patent suit today than in the 

past. The number of patent lawsuits filed per the number of patent applications filed has been on a downward slope since 1990.

• Likewise, the number of patent lawsuits filed per the number of patents 

granted by the USPTO has also declined even greater—almost 13 percent between 1988 and 2004.

• Only 5/10,000 of one percent of patents issued are challenged in a patent 

trial.1

• In 2004, more than 28 percent of patent lawsuits settled with no court action 

required.2

• In 2004, more than 53 percent of patent lawsuits settled before pretrial.3

• In 2004, more than 14 percent of patent lawsuits settled during or after pretrial.4

• In 2004, only 96 patent cases went to trial, which represents only 3.5 percent 

of all patent cases filed that year.5

Put into context, the number of patent lawsuits that went to trial during the period 2001 to 2004 rose from 76 cases to 96. 

Fewer than 100 patent trials a year is not a patent litigation crisis—particularly 

in a nation that issues almost 200,000 patents annually and where litigants settle 

almost all patent lawsuits before trial. 

Although the current first-to-invent system is working very well, imagine what is 

likely to happen if Congress were to change it to the first-to-file approach. 

The large corporations could standardize their global patent operations and perhaps get some savings out the efficiencies. They are well accustomed to working in 

first-to-file systems around the world. 

For the small entities, the shift would be chaotic. They are not accustomed to the 

first-to-file approach. Their experiences and knowledge of the patent system are 

grounded in the first-to-invent system. Hundreds of thousands of inventors, academics, lawyers and paralegals would be forced to learn a new system—a costly and 

disruptive process at best for them, and for the USPTO. 

The first worry on the part of many inventors and academics would be whether 

someone would steal their innovations and rush to the USPTO to file an application—a legitimate concern in today’s world of unchecked piracy. Indeed, Chinese inventors are now taking patent applications posted on the Net and using that information to be the first-to-file in China. 

The fear of patent piracy, here and abroad, would motivate countless inventors 

to rush to file. Inevitably, the result would be a flood of premature patent applications. In turn, the influx of such applications will greatly burden the USPTO at a 

time when patent pendency is already rising. 

61

And what are the principal gains from incurring these costs and dealing with the 

resulting chaos, other than pleasing patent bureaucrats in other countries and allowing transnational corporations to save a few patent-processing fees? Other than 

being like other nations, what is the advantage to the United States and small entity inventors for making such a shift? 

In short, the advocates of this change have failed to prove that the marginal benefits of this shift will equal the marginal costs and inventor confusion. This is significant, for we are at a moment when larger patent issues loom, such as unchecked 

patent piracy by nations such as China, the growing technological challenge from 

abroad and rising pendency rates at home. Our limited USPTO resources should be 

devoted to those issues, rather than to a change that would create unproductive 

chaos. 

Imagine the response if we were to ask England and Japan to change from a right 

to a left hand drive system for their automobiles so they could be like us and thus 

make life easier for our automakers. Congress should view their demands for patent 

harmonization in a similar way—deciding what is in our inventor’s and our country’s best interests. 

Best Mode—Should inventors be required to include in their patent applications 

the ‘‘best mode’’ to replicate and use their creations? 

I think the answer is yes—absolutely. The golden covenant of a patent is simple— exclusive use in exchange for making public new knowledge. Otherwise, the patent 

grantee gains the benefits of government-licensed exclusivity, while denying the 

public the full knowledge to which they are entitled. 

In the early part of the 20th century, I.G. Farben, the giant German chemical cartel, was granted hundreds of chemical patents in the United States, giving them exclusive use over their creations. However, Farben cheated. When DuPont and other 

chemical makers tried to replicate those processes during World War I, they discovered that vital elements were missing. Indeed, Pierre DuPont, who lost more than 

$100 million of 1917 dollars trying to replicate those chemicals, claimed that if DuPont chemists had followed the Farben patents, they would have been killed. 

The point is the United States should not give exclusive rights to inventors unless 

they share with the public the best and true mode. Expanding public knowledge is 

one of the patent system’s most important functions. 

Pre-Publication of Patent Applications at 18-Months From Filing—In 1999, the 

United States enacted harmonization legislation that required the USPTO to reveal 

to the world vital information from all patent applications that have been on file 

for 18-months. An exception was made for those inventors who seek a patent that 

is limited to the United States. Today, approximately 10 percent of patent applications fit that criteria and are not published on the Internet at 18-months if not 

granted. 

The 18-month rule may be meaningless for large entity inventors. It devastates 

small entity inventors—giving competitors and pirates the world over vital details 

about their creations before patent protections are granted. 

The 18-month rule is driving small entity inventors away from the patent process, 

denying the nation substantial knowledge. In the past, an inventor could take a 

failed application and apply the knowledge as a trade secret. With 18-month publication and 30 months plus patent pendency, the secret is spilled to the world. The 

USPTO rejects about one-third of all patent applications. This means that approximately 60,000 to 70,000 potential U.S. trade secrets will be made available to U.S. 

competitors and pirates worldwide annually. 

Are foreign competitors stealing ideas and technologies from what I label the premature publication of patent applications? Consider this: In 2004, the director of Japan’s External Trade Organization’s Intellectual Property Rights Office in Beijing 

visited a leading Chinese company. The head of that corporation’s intellectual property division showed him a room with several dozen computers whose exclusive purpose was to search the patent applications put up on the Internet by the USPTO 

and its equivalent in Japan and Europe. The Chinese executive explained it was 

easier and far less expensive to pull information from foreign patent applications 

than to do their own research. 

When informed of this, the Japanese Patent Office began monitoring the number 

of hits its patent application files on the Net were getting. They counted 17,000 hits 

per day from China and 55,000 per day from South Korea. 

Likewise, the very system that is supposed to protect America’s most precious 

technological secrets is revealing them prematurely to the rest of the world. When 

I explain the 18-month publication rule to business executives, they are dumbfounded that such a thing could be possible. 

I conclude that the real issue is not whether to include the 10 percent of patents 

under the 18-month rule, but how to stop pre-publication altogether. I cannot imagVerDate 0ct 09 2002 13:14 Jun 27, 2006 Jkt 000000 PO 00000 Frm 00065 Fmt 6633 Sfmt 6621 G:\WORK\COURTS\042706\27224.000 HJUD2 PsN: 27224
62

ine any benefits to U.S. inventors or the nation from the present approach, while 

the liabilities are obvious. 

CONCLUSION

Harmonization of the world’s patent systems is a desirable goal for the United 

States. The vital question in that harmonization process is whether the United 

States should lower its standards to those of other nations or whether we should 

work to raise their standards to ours. 

Put another way, what is there in the patent systems of Germany, France, Italy, 

England, Japan, Brazil, India and South Korea that is so superior to that of the 

U.S. that Congress should change two centuries of success to follow their lead and 

be like them? The argument that all other nations do something—that the U.S. 

should join a herd simply because there is a herd—is insufficient reason to change 

U.S. patent laws that have worked so well for this nation for so long. 

As I describe in this testimony, the U.S. has followed the lead of other nations 

in recent years and lowered its vital patent standards in the name of harmonization. 

Those changes, and those now before the Congress, weaken U.S. IP protections. Our 

independent inventors are greatly disadvantaged by those changes—shorter effective patent terms and the premature publication of patent applications particularly. 

It would be very useful to have these harmonization issues rethought in a forum 

where small entity inventors—independent inventors, small companies, non-profit 

organizations and academic inventors—are an integral part of the process. Such an 

exchange would be congruent with our long tradition of bringing a balanced compromise on patent policy to the Congress. 

Thank you for allowing me to share my perspectives with you.

Mr. SMITH. Thank you, Mr. Choate. 

To me, one of the primary purposes of today’s hearing is to try 

to better answer the question of why independent inventors sometimes object to our efforts to try to implement a first inventor to 

file, the harmonization that you all have been talking about. And 

my questions are going to be focused primarily on trying to answer 

that particular question. 

Mr. Dickinson, for example, you mentioned in your testimony 

that the very individuals who, in recent tradition, have been most 

concerned about this change, the individual or small inventors, 

have actually been disadvantaged by our current system. 

In just a minute, I’m going to ask you all to respond to a couple 

of Mr. Choate’s points. But I’d like for you to go into a little bit 

more detail, Mr. Dickinson and Mr. Armitage. You mentioned harmonization, bringing in objectivity and transparency. Mr. Mueller, 

you actually said that a patent system that requires application for 

the same invention to be researched and re-examined in each country where patent protection is sought makes little sense in today’s 

global marketplace, and that harmonization will reduce the cost 

and complexity of obtaining patent protection around the world. 

If you can go into a little bit more detail, elaborate a little bit 

more as to why you think independent inventors are actually benefitted by harmonization? And maybe you can speculate—I’m going 

to give Mr. Choate equal time in a minute—maybe you can speculate as to why independent inventors seem to be opposed to the 

idea of harmonization? 

And Mr. Choate, just a quick comment, your direction. You said 

you supported the concept of harmonization in some areas, but you 

had concerns about this particular proposal. I wonder a little bit if 

conservatives like you and me sometimes just don’t resist change 

regardless. 

And I’m going to come back to that theory in just a minute. But 

Mr. Dickinson, if you will begin? 

63

Mr. DICKINSON. Thank you, Mr. Chairman. 

A couple of questions there. Let me see if I can respond. And I 

have pretty good contact with the independent inventors, talk with 

them a lot about these issues, and particularly this issue of first 

to file versus first to invent. 

Interestingly, I think the record shows that some 30 years ago, 

when hearings were held on this topic, the roles were actually reversed. The independent inventors actually supported moving to 

first to file, while the largest entities in some cases resisted it. Now 

we seem to have changed sides a little bit. I don’t think the arguments have really changed, however. 

The challenge with first to file, and I think the reason why independent inventors—and they probably can speak for themselves— but I think the reason why they tend to generally oppose it is that 

they’re worried on a couple of things. 

One, that they will lose the so-called race to the Patent and 

Trademark Office. And that, on its face, is not such—there’s maybe 

some validity to that on its face. In reality, large companies like 

mine, we have fairly—we try to make them very streamlined, but 

we have fairly cumbersome processes for approval. We have fairly 

elaborate mechanisms for taking the inventions from the bench, 

going through the invention disclosure process, and on up to an application. 

So, for us, we’re a little inhibited in that race. Independent inventors, on the other hand—particularly with the development of 

the Internet, the opportunity now to electronically file patent applications, the ability to do research and to find legal resources, patent legal resources on the Internet and do the searching on the 

Internet—they are able to make those decisions a lot quicker. 

Mr. SMITH. Let me interrupt you because I want to—Mr. Choate 

made a point in his written testimony that I’m not sure he mentioned it in his oral testimony that maybe we’re trying to address 

a problem that doesn’t really exist. 

He makes the point that if there were problems in the first to 

invent system, a large number of interference cases would be filed, 

and they are not. So would you address that? 

Mr. DICKINSON. That’s an interesting question. I think one reason why there aren’t that large number of interferences is because 

of circumstances that give rise to the interference and, by extension, the concern that independent inventors have, the fact that 

two inventors coming to the same invention in roughly the same 

period of time only happens in a very few instances. 

I think we declare each year something on the order of, off the 

top of my head, 400 interferences out of 400,000 patent applications that might be filed. So that process of determining who the 

first inventor is only occurs in a very minor subset. That dispute 

only occurs in that little—in that little—— Mr. SMITH. Mr. Dickinson, let me sneak in another question here 

to Mr. Armitage and Mr. Mueller. Mr. Choate also makes the point 

somewhat similar to the one I just repeated. Our present system 

is not adversely affecting large or small inventors, then why change 

it? Why go to all this trouble? Mr. Armitage? 

Mr. ARMITAGE. Can I first go back and maybe add a little perspective on your original question——

64

Mr. SMITH. Sure. 

Mr. ARMITAGE [continuing]. About why sometimes independent 

inventors think of the first to file system as a bad deal for them. 

In some of the discussions I’ve had over several decades, first of 

all, they think it’s a true first to file system—in other words, whoever files first is going to get the patent—rather than a system that 

truly protects the inventor who files first. And if you’re not the inventor and just the first filer, you’re not entitled to a patent. 

In your bill, in fact, there’s a section—a new section on inventors 

rights contests. If someone who files first and they’re not the inventor, they don’t get a patent. The first inventor to file gets the patent. 

Second thing, and I think it’s very important given what Mr. 

Choate said, sometimes when first to file is used, people think 

they’re getting the European patent system with no grace period, 

where if an applicant files two patent applications on the same 

subject matter or similar subject matter, one application can collide 

with the other and destroy the right to fully patent the invention. 

They also think they’re getting the European rule on absolute 

novelty, where any divulgation of the invention, even if it isn’t publicly accessible, can be prior art. And in fact, in the first inventor 

to file proposal that’s in H.R. 2795, none of those are true. It’s a 

very inventor-focused system. 

Mr. SMITH. Thank you, Mr. Armitage. 

I’m going to come back and ask some more questions in just a 

few minutes. And Mr. Choate, we’ll be sure and give you equal 

time. 

For now, my time is up, and the gentleman from California, Mr. 

Berman, is recognized for his questions. 

Mr. BERMAN. Thank you very much, Mr. Chairman. 

I apologize for not being here during most of the testimony. I sort 

of came in the middle of Mr. Choate’s testimony, where mostly you 

were talking about the—the—your dislike. And I think I was aware 

of that because it was controversial at the time of the 18-month 

publication. 

But I am curious that from the testimony, both you and Mr. 

Dickinson cite the study by Commissioner Mossinghoff for opposite 

propositions. Dickinson says it supports the change to first to file. 

Mr. Choate says it shows the advantages of maintaining the current system. 

Can you each respond to the other one’s arguments? 

Mr. DICKINSON. I think the principal take-away from Commissioner Mossinghoff’s study was that the purported advantage to 

small inventors by the current system doesn’t really exist and that 

when small inventors get into the dispute resolution mechanism for 

that contest, the interference, that they are disproportionately, actually negatively affected. And that’s irrespective of the fact that 

it costs probably multiple hundreds of thousands of dollars to be 

able to even try to take advantage of that mechanism. 

So that in the first instance, because of the cost, small inventors 

might not even be able to prove that they were the first inventor. 

And secondly, if they are able to do that, if they are as we say the 

‘‘junior party’’—namely they are the second filer, but are seeking 

to prove they were the first inventor—the junior party routinely 

65

loses. Loses some 80 percent of the time because of the nature of 

the rules, the nature of the interference practice, and because the 

first filer is very often able to demonstrate they were also the first 

inventor. 

Mr. BERMAN. Mr. Choate? 

Mr. CHOATE. First of all, in the Mossinghoff study, it found that 

the small entity inventors were advantaged 286 times, and they 

were disadvantaged 289 times. That’s 3 case difference. Now what 

that says is it’s a wash at 289 to 286. Moreover, more dramatically, 

it says there’s 576 such cases over a 22-year period when you were 

dealing with something like 4.5 million patent applications. 

When you run those kinds of numbers, 500 cases—500 plus cases 

out of 4.5 million, and it splits, it says, first of all, the interference 

process is working fairly. Secondly, it says with 500 out of 4.5 million, it is a trivial, it is statistically totally insignificant in the management or operation of a system—— Mr. BERMAN. But the figure is the figure of the number of patents filed. 

Mr. CHOATE. That’s right. 

Mr. BERMAN. Not the number of places where two people——

Mr. CHOATE. No, no. 

Mr. BERMAN [continuing]. Claim to have invented the same 

thing. 

Mr. CHOATE. The point I’m making is when you have a system 

where you’re filing 4.5 million patents and you only have—you 

have less than 600 instances over 22 years where there’s a contest, 

it means that that is so small, it means the system works so well 

that you only have 600 cases out of 4.5 million. It’s a tribute to the 

system. 

Mr. BERMAN. That’s the system with the 18-month publication? 

Mr. CHOATE. No. It’s the system with the way that we file patents now, a first to file system. I have other arguments against the 

18-month rule. 

But the current system, from the Mossinghoff data, if you had 

this kind of efficiency in any business, everyone would be coming 

to study how you did it. 

Mr. DICKINSON. Mr. Berman, just a quick, brief follow-up. I think 

the data that Mr. Choate references actually proves the other 

point. 

I mean, we have so few of these contests, the need to determine 

who the first inventor is versus the first to file is so infrequent and 

so costly that there is very little harm in moving the system to first 

inventor to file to achieve the bigger goal of getting global harmonization. 

Mr. BERMAN. And why couldn’t I draw the other inference it’s 

very little reason to change it? 

Mr. ARMITAGE. Could I jump in here? This morning on NPR, 

there was a report that a new virus, a new vaccine against the 

Marburg virus had been tested in monkeys and appears to be very 

effective. 

Now it’s stupid for researchers to work on the Marburg virus because it kills very few people, right? Wrong. It’s a horrible death 

if you happen to have the Marburg virus, and also the fear in any 

community when that virus infects even one person is horrific. 

66

Going back to what Mr. Mueller said, that’s exactly the problem 

that faces the patent system. If you’re a small inventor in an interference, it can be death. And not only that, the way the first to invent system works, you never know you’re the first inventor because you never know when someone’s secret invention date will 

come out of hiding, and they get your patent. Either take it away 

and give someone else a patent and exclude you from marketing 

the products you’ve developed, or simply invalidate your patent. 

So it’s really the fear that it injects, the uncertainty it injects 

into every patent in the entire system that makes those small number of deaths intolerable. 

Mr. SMITH. Thank you, Mr. Berman. 

The gentleman from California, Mr. Schiff? 

Mr. SCHIFF. I just wanted to follow up on one issue related to the 

first to file, first to invent, and ask you to speak for some people 

that are not at the table today. The university community I know 

has raised some concerns about moving to a first to file system. 

And I know within the university community, in fact, within the 

individual universities, there are difference of opinion. 

But give us your assessment, pro and con, of what this change 

will mean to universities. I know they’re concerned, among other 

things, with not being able to compete with the private sector in 

the race to file and the different nature of the academic process at 

a university. If you could share your thoughts on those issues? 

Mr. MUELLER. I’ll speak from my perspective. I went through 

getting my master’s in electrical engineering and doing a paper and 

developing research on how to do film scanning. And came up with 

some novel ideas and some new techniques. 

From my perspective, when I look at this strategy, I believe 

there’s an opportunity to foster under a first to file system. If that 

was in place, somebody would have tapped me and said, ‘‘Gary, 

that’s great. Let’s write it up, and let’s get it into the process.’’ And 

why can’t that be part of the educational system, especially with 

all of the research that’s going on there now? 

And as a small company, we’re always looking at research activities and working with graduate students that have some great 

ideas that may apply to ours. And I would think that in a first to 

file system, if encouraged and trained to the small entrepreneurial 

community that includes strong element of educational institutions, 

that that would be a great place to capture those ideas and credit 

to first person that invented it, have them file it, and then attract 

businesses like myself to say, ‘‘Well, gee, I saw this patent application. You’ve done some research on this. I’ve now got a job for you.’’

And so, I look at it from that perspective and say the first to file, 

with the discipline of understanding that it’s there and the encouragement to the educational institutions would be a great plus. 

Mr. SCHIFF. So you think that the universities can easily adapt 

if they educate their researchers, Ph.D. candidates to——

Mr. MUELLER. They should be doing that. I mean, I was recently 

up at Penn State because my son’s looking at going there, and I 

actually ran into a lady who was actually teaching a minor in 

entrepreneurialship as part of the engineering department. 

And I think that if you bring the educational environment and 

the research that goes on in the educational environment together 

67

with this concept of ‘‘great idea, great graduate paper. New intellectual property has been invented here. Let’s get you into the system.’’ I think that would be a tremendous plus for the American 

educational system as well as the entrepreneurial environment in 

the U.S. 

Mr. SCHIFF. If you could give me, I don’t know if you wanted to 

add on also, but I’m curious, too, about in the effort to find consensus on this, are we missing the bigger problem at the patent office in terms of the delay and the backlog? Are we going after the 

low-hanging fruit rather than the bigger problem? 

Mr. DICKINSON. Speaking to the latter maybe, as a former director, I think that a number of the challenges and problems of the 

PTO can be addressed by some of the reforms we’re talking about. 

But as I mentioned earlier, I think the biggest and best way to 

do that is to make sure that the PTO has the resources that it 

needs. And then when it gets those resources, that it deploys them 

effectively and efficiently. I think one of the——

Mr. SCHIFF. On that second point? 

Mr. DICKINSON. Yes. 

Mr. SCHIFF. Which do you think is the bigger problem, a lack of 

resources or lack of effectively utilizing the resources they have? 

Mr. DICKINSON. Fortunately, because of the work of this Congress and several previous Congresses and the Administration, full 

funding has come in the last several years on an annualized basis 

to the PTO. So the resources are moving to be in place. 

The next thing we’ll have to see is whether they can be deployed 

in ways which try to ameliorate some of the problems. I was very 

fortunate that, at several points, I was able to get the resources 

and hiring necessary. I think in 3 years running, I hired 900 examiners each of those years, and pendency started to come down. It 

literally does. 

So while we like to say you can’t buy your way out of the problem, you can buy your way out of a big chunk of the problem by 

hiring the folks who do the professional work. 

And then, candidly, one important point. I think you need to give 

the examiners more time. I think no single deployment of those resources—this is a personal opinion—better serves the examiners’

cause and better serves our causes as applicants than to get more 

time for examination, both in terms of quality and, I think by extension a little bit, pendency. 

Mr. SCHIFF. Yes, sir. 

Mr. CHOATE. To the question of the universities and the small inventors, we’ve used the system that—for 200 plus years. And our 

whole administrative structure is built around a first to invent. All 

of our forms, all of our people, all of our knowledge, all of our lawyers, our paralegals, the whole system is set up to operate in the 

way that it does, and it operates very well. 

If we administratively change this system, the first thing that 

you’re going to have from small inventors and academics and small 

businesses is that fear is going to be acted upon that others are 

going to rush. And so, what you’re going to see, I think, is a flush 

of premature applications going to the patent office. Applications 

that haven’t been thought out or done in the way that they should 

68

be, which, in turn, will exacerbate our problem with pendency upon 

the backlog. 

I mean, the question I think that should be paramount here is 

do the marginal—what are the marginal benefits of making this 

radical change in our country against what are the marginal costs 

of undertaking that? 

I think the costs are going to be far more enormous than the benefits that are going to be laid out. I think where the attention 

should go, rather than taking a patent system and taking our patent people and focusing them into creating and administering this 

new system, it should be to give them the resources that they need 

and go after that pendency rate. 

For the Congress to set some Apollo moon shot objective to say 

that in 3 years, you want that pendency rate down to 18 months, 

and a year after that, 12 months, and a year after that, in 6 

months. As Mr. Mueller said and as I think the history of the patent system says, if we can move those patents through there, we 

can get those innovations online, and that’s what’s in the best national interest. 

Mr. SMITH. Thank you, Mr. Schiff. 

Do you want to respond real quickly, Mr. Armitage? 

Mr. ARMITAGE. Just one comment. In terms of the kind of surgery to the patent system first inventor to file is, you can think of 

it as an appendectomy. Okay, something gets taken out that had 

no function anyway. 

Literally, what you’re doing and every time there is a contest 

over who should get a patent is first determine who filed first. You 

can’t have a patent interference unless you know who filed first. 

And then in those rare cases someone has proofs of invention to 

prove they invented first, that’s the appendix that gets cut out. 

So, in other words, there isn’t any infrastructure that needs to 

be rebuilt in a first inventor to file. There is just this piece of the 

patent system that has enormous cost and uncertainty that gets removed. And indeed, I think we demonstrated with data on how 

much interferences cost, how long they take, that this is a seriously 

inflamed appendix. 

Mr. DICKINSON. Quickly——

Mr. SMITH. Yes, Mr. Dickinson? 

Mr. DICKINSON [continuing]. With regard to the university community and a small addition to that, too. 

International harmonization often pairs a grace period with first 

to file. We like to not try to link them, but they are, for good or 

bad, inextricably linked. Europe and other major developed countries don’t have a grace period. That’s particularly disadvantageous 

to the university community, where publication is the norm. 

So you’re constantly worrying about whether an early publication 

is going to defeat the absolute novelty in a country in Europe, 

which does not have a grade period. 

If we were able to get the international harmonization, and that 

would—I think it requires a pairing of first inventor to file and 

grace period—the university community would actually be better 

served, I think. 

Mr. SMITH. Thank you, Mr. Schiff. 

69

Let me go back to that question, Mr. Mueller, with you, and I 

appreciated your response to Mr. Schiff’s question about the impact 

on universities. 

A university president with whom I spoke recently who is an expert on patent reform said basically what you did, which is, yes, 

there would be some initial, you know, inconvenience., but they 

could adjust, and they could adapt. And if you took the long view, 

it would be better for everybody involved. 

And Mr. Choate, that gets back to the direction I was going with 

you and which is I just wonder if there is just sort of a resistance 

to change regardless of or irrespective of whether there is a great 

deal of harm or a great deal of benefits? 

And I’m going to quote you, part of your written statement—— Mr. CHOATE. Okay. 

Mr. SMITH [continuing]. Which is a little bit different than what 

you just said a minute ago. You were talking about the cost far outweighing the benefits. 

In your written statement, you said that all the cost of changing 

to something else when the benefits are so illusory and slight. And 

I wonder if that wasn’t a quote, a slight admission of a slight benefit as a result of harmonization? 

And to me, the benefits are real and not imagined, not illusory. 

But even your own statement says they may be slight. But that 

gets back to my point. Do you just oppose harmonization just because it is a change, and it’s a little bit of an unknown future? 

Mr. CHOATE. Well, two things. As with everything, there are benefits to—there would be benefits to having everything the same. It 

would cut some of the administrative costs for those corporations, 

obviously, that are engaged internationally. It might speed time, 

and certainly I acknowledge that in my testimony. 

And as far as defending the status quo, that’s a very unusual— I find myself in a very unusual position doing that. I don’t usually 

defend the status quo. But in this particular case, I think it merits 

defending. 

I think the existing system, though we might like it to be somewhat different, that the cost of changing it and the chaos of changing it would be great. And——

Mr. SMITH. Let me ask some of the other witnesses to respond. 

You made the point a while ago you thought there might be a rush 

to file if we changed the system. I don’t know whether that would 

occur or not. But if it did, it would sort of wash by and then we’d 

be back, left with a better system perhaps. 

But Mr. Dickinson, Mr. Armitage, Mr. Mueller, do you want to 

respond to some of the points we’ve been discussing? 

Mr. ARMITAGE. Yes, I think the question I would have is rush to 

file by whom? 

Forty some percent of our patent system is foreign inventors who 

come to the U.S. patent office. They already file based on a first 

inventor to file principle. You have another, maybe quarter of the 

patent system that’s large entity, domestic-based inventors. They’re 

already operating under a first inventor to file system to the extent 

they file globally, and most do. 

And then you have independent inventors, small businesses, and 

universities that, if they’re getting any kind of good legal advice, 

70

know the imperative to file applications promptly once they’re able 

to make a complete disclosure of the invention. And there are a 

couple of reasons. 

One, technology moves quickly. Prior art is published. Your invention may be unpatentable if you wait to file. And of course, if 

you’re waiting to file in the hope of winning a patent interference, 

good luck. 

If you’re a small entity inventor, the costs and delays and the 

lost opportunities of not having the presumption of being the first 

inventor because you were the first filer leaves you with very little 

prospect of winning a patent interference. 

So if there are a few inventors who, as a result of this, get better 

legal advice and file their applications in a little more timely manner, that’s a big plus for them and for the patent system. 

Mr. SMITH. Thank you, Mr. Armitage. 

Mr. Choate, one other question for you. Then I’ll give Mr. 

Mueller a chance to respond. 

Why wouldn’t it be an advantage to the independent inventor as 

a small businessman, business owner, to have harmonization 

where their patents would be better protected in other countries? 

If they were dreaming big dreams and expected their patents to be 

used across the world, why wouldn’t they benefit from harmonization? 

Mr. CHOATE. Well, having their patents defended in other countries is, as we have learned, is really not a function of designing 

better patent laws. It’s a function of the willingness of the U.S. 

trade representative to insist that American inventors’ rights be respected and that treaties be enforced. 

Mr. SMITH. Yes. Which we know is difficult. 

Mr. CHOATE. Which we know is difficult. So, in that circumstance, the best option for the small inventor is to say who may 

or may not get their rights enforced overseas is to ensure that a 

system that works is continued. They’re comfortable. They’re comfortable with this system. 

Mr. SMITH. Thank you, Mr. Choate. 

Mr. Mueller, you had a comment a while ago? 

Mr. MUELLER. Yes, I just wanted to respond to the comments 

that maybe there’s going to be a rush to the patent office. And I’m 

sitting here saying, well, guess what? As a small business person, 

I’m not rushing unless I think I have something that’s really worth 

it because I’m still facing the cost of the whole process to do this, 

and I’ve got other uses for those funds. 

So I think that’s going to be a significant mitigating factor. And 

then when I go back and think about the educational institutions, 

how many grad students I know that have deep pockets that can 

do that as well? 

So—and they’re the ones that are actually, when they’re doing 

their graduate paper and doing the research, they’re doing a plethora of studies and analysis and looking at what everybody else has 

published and what everybody else has done. So they’re doing their 

homework. 

And if they think that they’ve got something they can go to the 

patent office with, it’s probably worth the time and an effort to pursue it. 

71

Mr. SMITH. Thank you, Mr. Muller. 

Let me see if other Members have questions. The gentleman 

from California, Mr. Berman? 

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

I note, Mr. Armitage, that you chose not to confine yourself to 

the issue of first to file and decided to comment on other aspects 

of patent reform. So I’d like to just pursue that with you a little 

bit. 

You criticized the second window provision of our bill, a provision 

that was once in an earlier draft, a bill that was circulated by the 

Subcommittee. I’m not particularly wedded to the second—I mean, 

one window, two windows, whatever. It’s finding a way that we can 

address the problem of the quality of patents that have already 

issued. 

And having one window right after the patent is issued I don’t 

think is adequate to dealing with that. I mean, we see patents that 

are being litigated now that were issued 6 years ago and 5 years 

ago. You mentioned the coalition support for reform that permits 

the public to see post issuance revocation of any patent at any 

time, which is what I think. But are you referring to the current 

inter parte/ex parte re-exam? 

I know that you know the limitations of that process, and how 

do we avoid—how do we try to provide a useful, effective alternative to costly litigation that goes on and on at tremendous expense to both sides? That’s what we were trying to do with the second window, to have something when the person knows that 

they’re being charged with infringing conduct. 

Mr. ARMITAGE. You raise a good question. The coalition, in its 

September 1 text that will be part of the record of this hearing, actually proposed that post issuance revocation of all patents at any 

time during the term of the patent be available either through the 

new post grant opposition procedure, which was designed to have 

a 9-month window immediately after the patent granted, or by expanding inter parte re-exam in several important ways. 

First of all, inter parte re-exam today is not open to all patents. 

It would be. Second, inter parte re-exam today can’t be effectively 

used because of the estoppel against later going into court and really having the opportunity to fully litigate the patent when you have 

full discovery available. That would go away. 

Mr. BERMAN. What would go away? 

Mr. ARMITAGE. The draconian part of the estoppel principle that 

basically makes it unusable. So what——

Mr. BERMAN. Oh, I thought you said——

Mr. ARMITAGE. Would go away under, frankly, 2795 as well as 

the coalition text. 

Mr. BERMAN. But——

Mr. ARMITAGE. So we would be left with then, at any time during 

the life of the patent, the ability to raise any new question of patentability based on a patent or a printed publication. 

Mr. BERMAN. But without discovery? 

Mr. ARMITAGE. Without discovery. And therein, I think, lies the 

rub. Because even in a post grant opposition, there is going to be 

very limited discovery available. And indeed, for certain kinds of 

prior art, such as unpublished prior art based on foreign knowledge 

72

of a patented invention, that is a serious compromise in the 9-

month window for post grant opposition. 

Now it’s a limited compromise because if you’re talking about an 

alleged public disclosure in India that occurred a year or two before 

the patent was filed, and now you’re talking about an opposition 

immediately after the patent was granted, it may be fair to have 

that administrative proceeding with limited discovery be able to 

wipe out a patent. 

But let’s fast forward 15 years into the life of the patent and 

then say do you really want less discovery than you can get in a 

Federal District Court? And do you really want simply an administrative proceeding that was entirely designed to be a quality check 

in the immediate post issuance period? 

My concern with your bill, Representative Berman—which I, 

frankly, admire your willingness to stick with the patent reform 

issue given all of the difficulties—is that it goes just a step too far. 

In a post grant opposition, you can raise all issues of patentability. You have in an inter parte re-exam the ability to raise almost all issues of patentability except if you want to prove public 

knowledge of an invention based on its use or sale, which could be 

anywhere in the world. And frankly, that, to me, is a bridge too far 

for an administrative proceeding. 

Mr. SMITH. Thank you, Mr. Berman. 

Mr. Schiff? 

Mr. SCHIFF. Sir, I have no further questions. 

Mr. SMITH. Okay. Thank you. 

That concludes our hearing. Thank you all very much for your 

testimony. You’ve been very informative. 

I am not sure we resolved everything, but at least we know more 

than we did. And so, appreciate your expert testimony. 

With that, the Subcommittee stands adjourned. 

[Whereupon, at 10:20 a.m., the Subcommittee was adjourned.] 

(73)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

PREPARED STATEMENT OF THE HONORABLE HOWARD L. BERMAN, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF CALIFORNIA, AND RANKING MEMBER, SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

Mr. Chairman, 

Thank you for scheduling this hearing on patent harmonization. The past hearings on patent reform have primarily focused on litigation, quality, and damages 

issues, but have not really delved into the specifics of the harmonization issues—

so I appreciate the opportunity to do so now. We have tried to bring in all the interested parties in this debate—by having witnesses from the technology and pharmaceutical sectors (among others), public interest groups, academics, and the USPTO. 

Our last attempt at harmonization was met with resistance by the small inventor 

community and that is why I believe that it is extremely important to include individual inventors in this process. Individual inventors are responsible for nearly half 

of all U.S. Patent applications filed each year. 

Article I, Section 8 of the Constitution is the basis for our patent system today: 

Congress has the power to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective 

writings and discoveries. The United States stands apart in awarding patent protection to the inventor who is ‘‘first-to-invent.’’ Some question whether we are global 

leaders in innovation specifically because we reap the benefits of a first to invent 

system. 

Confidence in the patent system is essential to encouraging innovation. When 

functioning effectively, the patent system should encourage inventors to push the 

boundaries of knowledge and possibility. Two presidential commissions have recommended that the U.S. change its patent system to a first-inventor-to-file system—

first in 1966 and again in 1992. Most recently, the National Academies of Science 

recommends adopting that change as well. The advantages to amending the ‘‘first 

to invent’’ standard so that the ‘‘first inventor to file’’ is entitled the ownership of 

a patent seem clear. This change will bring U.S. patent laws into harmony with 

international patent laws and create ease in determination of priority rights. However, even though this change may encourage inventors to file more quickly and enable inventions to enter the public realm sooner, we must listen and evaluate the 

concerns of inventors, both large and small, as part of making substantial reform 

to the system’s framework. I have always been a strong believer in the importance 

of robust patent protection and as we move towards a global economy, harmonization of patent laws becomes an extremely important issue for discussion. 

I yield back the balance of my time.

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INTELLECTUAL PROPERTY COUNSEL, GENERAL ELECTRIC COMPANY


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Æ


QTD0035.eps