Transcript of proposed Rules of Practice in Patent Cases;
VSM UNITED STATES DEPARTMENT OF COMMERCE
PATENT AND TRADEMARK OFFICE
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PUBLIC HEARING ON EXPANDED :
REEXAMINATION OF PATENTS :
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Stouffer Renaissance Crystal
2399 Jefferson Davis Highway
Arlington, Virginia 22202
Wednesday, September 20, 1995
The hearing in the above-entitled matter,
commenced, pursuant to notice, at 9:30 a.m.
LAWRENCE J. GOFFNEY
Acting Deputy Assistant Secretary of
Commerce and Deputy Commissioner
of Patents and Trademarks
EDWARD R. KAZENSKE
Deputy Assistant Commissioner for Patents
STEPHEN G. KUNIN
Deputy Assistant Commissioner
for Patent Policy and Projects
NANCY J. LINCK
C O N T E N T S
ORAL TESTIMONY BY: PAGE
American Bar Association/
Intellectual Property Law Section 7
Herbert C. Wamsley
Intellectual Property Owners 19
Marcia H. Sundeen
American International Property
Law Association 28
Joseph Mendelson, III
Center for Technology Assessment 38
Richard D. Jordan
Exxon Chemical Company 51
Lawrence J. Bassuk, Sr.
Texas Instruments, Inc. 64
Anatomic Research, Inc. 65
P R O C E E D I N G S
MR. GOFFNEY: My name is Lawrence Goffney, and I
have one of the distinctions of having one of the longer
titles in government. I am the Acting Deputy Assistant
Secretary of Commerce and Deputy Commissioner of Patents and
Trademarks. Joining me this morning are Edward "Kaz"
Kazenske, who is the Deputy Assistant Commissioner for
Patents in charge of 3,800 member patent operation; and
beside him to his left is Stephen G. Kunin, who is the
Assistant Commissioner of Patent Policy and Projects;, and
to my immediate left is Nancy Linck, the Solicitor.
This is a hearing to receive public comment on the
Notice of Proposed Rulemaking to Implement the Expanded
Reexamination of Patents as provided in the House bill H.R.
1732 and the Senate bill 1070. The proposed rules and
request for public comment were published on August 11, 1995
in Volume 60 of the Federal Register, pages 41035 through
41051, and on August 22, 1995 in Volume 1177 of the Official
Gazette of the United States Patent and Trademark Office,
pages 130 through 145.
H.R. 1732 was introduced in the House of
Representatives on May 25, 1995, and S. 1070 was introduced
in the Senate on July 10, 1995. Both bills would change the
current reexamination system to make it a more effective
option for reviewing PTO patentability determinations in
granted patents. They would do so by increasing third party
participation throughout the proceeding and by allowing
review of patentability questions based on prior art patents
and printed publications as well as other grounds.
If enacted, the bills would expand the grounds
upon which one may request reexamination of a patent to
include compliance with all aspects of 35 U.S.C. Section 112
except best mode. Furthermore, the expanded grounds under
Section 112 will apply not only to amended and newly added
claims in the reexamination but to original patent claims as
The bills would provide third party requesters the
opportunity to participate throughout the proceedings by
providing written comments on any patent owner response to
an office action. The third party requester's comments will
be limited to issues covered by the office action or the
patent owner's response. New issues may not be raised by
the third party in its comments.
The bills further provide a third party requester
the opportunity to participate in any appeal taken by the
patent owner with respect to any final decision adverse to
patentability. Moreover, the third party requester will be
able to file its own appeal from any final PTO decision in
favor of patentability.
The bills provide for two safeguards which will
ensure that reexamination will be conducted with special
dispatch. First, unless authorized by the commissioner
neither the patent owner nor the third party requester may
file a subsequent request for reexamination of the patent
until a reexamination proceeding is concluded. Second,
third parties will not be permitted to request reexamination
where they have previously been unsuccessful in proving
patent invalidity in litigation involving the patent. This
will estop parties from attempting to raise issues in
reexamination which were previously raised or could have
been raised in prior litigation.
Although the bills do not specifically address how
interviews will be conducted, the proposed rules provide for
the full participation by third parties in patent owner
initiated interviews. Third party requesters will not be
permitted to initiate interviews in reexamination.
A transcript of this hearing will be prepared and
a copy will be made available for purchase by the public
approximately ten days after this hearing. Copies of the
transcript will also be available for purchase directly from
the stenographer. The name of the stenographic service is
Miller Reporting. Their telephone number is area code
We have received two written comments to date and
eight requests to appear orally at this hearing. Due to the
number of requests and to permit those signing up today to
present testimony, each speaker will be limited to ten
minutes. Those persons who wish to provide additional
comments may, time permitting, continue their testimony at
the end of today's hearing or may submit comments to the PTO
The speakers have been listed in order in which
requests were received by the office. Any persons who wish
to speak and who have not previously informed us of their
desire are requested to add their names to the list located
on the table at the rear of the room. You may also pick up
at the table copies of the Official Gazette notices of the
When you present your comments, please give your
name and address and state whether the comments presented
are your own, those of your law firm or company, or whether
you represent an organization and are presenting comments on
Now the first person to testify today came just on
time, Don Dunner.
MR. DUNNER: Deputy Commissioner Goffney and
members of the panel, I'm sorry I'm a little late. There's
a protest on Theodore Roosevelt Bridge. It has had nothing
to do with these proceedings, I understand, but I thought I
was going to be here at 11 rather than 9:30.
My name is Donald R. Dunner. I am here
representing the 14,000 members of the Intellectual Property
Law Section of the American Bar Association. I am speaking
today only on behalf of the Section. Because of the
hierarchial difficulties of getting full ABA approval of our
positions, we have been restricted to obtaining blanket
authority. But I do speak for the Section. The Section is
generally in agreement and supports the provisions of H.R.
1732, which in turn track the recommendations of the
advisory commission on which I was privileged to serve.
We commend the Patent and Trademark Office, not
only for implementing rules with this proposed legislation,
but for doing it well in advance of the enactment of the
legislation. If we were all that efficient, we would be in
"On Golden Pond."
There are five specific areas of concern, however,
that the Intellectual Property Law Section has with the
proposed new rules. One of them deals with filing fees.
One of them deals with the period for response to office
actions. Another for the procedure in appealing to the
Board of Patent Appeals and Interferences. A fourth one
deals with interviews, and a fifth one deals with the
enforcement role of the Patent and Trademark Office in
Let me deal with filing fees. The Intellectual
Property Law Section of the ABA is very concerned with the
magnitude of the fees. We realize that the goal of the PTO
is to recover the full cost of these proceedings. But the
proposed Rule 20(c) actually proposes fees which are so
large that we fear they may discourage participation in
reexamination procedures. The fee for the patent owner is
$4500; the fee for a third party requester is $11,000. That
is more than two times the current fee or two times the
current fee for patent owners. It's about five times the
current fee for third parties.
Now, it isn't that we really don't trust the
Patent Office's calculations, but we really don't know how
they were generated, and we have what I would call a healthy
degree of skepticism. If we could see the numbers, we're
afraid that a worst case scenario has been used to calculate
these numbers, and were it not for the fact that the numbers
are so high, we might not protest, but nevertheless that is
a first basis for concern.
Secondly, we think that fees that are that high,
that may in turn result in less than an ideal use of the
reexamination procedure, should not be charged without some
actual base of experience. And so our suggestion to the
office is go slow, pick lower fees, do not use the worst
case scenario. If after a brief period of time, you find
out that the numbers are wrong, then by all means you can
reconsider changing them to some higher fee level.
We also have trouble with the two tier level of
fees. We have trouble with a fee of 4500 for patent owners
and 11,000 for third party requesters where it's not based
on need but based only on the status. We understand why
that was done, but we have concern with it, and we would
prefer having equal fees and also lower fees than now exist.
Secondly, period for response to office actions.
Under the current rules, a patent owner has two months for
responses to reexamination. You get extensions only for
cause. Third parties are not permitted to respond other
than at the very beginning in certain situations in the
reexamination proceeding. The proposed rule 1.945 would
give patent owners 30 days for response, the same period for
a third party, extensions only for cause. We think this is
unrealistic. Particularly if you're dealing with foreign
clients, there's a period during which you need to
correspond with your client. There may be multiple
attorneys involved. There may be multiple principals
We understand the goal here is to maintain the
same time levels, but we think it's unrealistic. We think
it's just going to guarantee pro forma requests for
extensions of time and will end up prolonging the proceeding
rather than shortening it. We recommend a two month period
for each party. We also recommend an additional first month
extension beyond that for purchase without cause further
extensions with cause. We don't think that will unduly
prolong the proceeding, and we think it's much more
How about appealing to the BPAI. Under proposed
rules 1.963 to 73, the appellant has no ability to respond
to the contentions of the respondent if the only time you
can file a reply brief is if there is an examiner's answer
and, in fact, that's not mandatory. That is contrary to the
near universal practice in other fora in which an appellant
is given an opportunity to respond to the appellee or the
parties in those positions. It will leave unrebutted
arguments of third parties regardless of how strong those
arguments are or how week those arguments are. It will
almost guarantee that the appellant will have to have
preemptive arguments in his or her brief in order to
anticipate that situation.
We think the appellant should be permitted to
respond to the respondent's opening brief and should also be
permitted to respond to any examiner's answer which is
filed, perhaps in a single brief if that is required. In
addition, the requirement for declaring whether you want an
oral argument comes at the end of the same period as the
period within which you have to file a brief. We think this
will automatically guarantee that people will ask for oral
arguments whether or not they want them. Maybe they do that
most of the time in any event. But we suggest a simple
solution to that problem is to have the option for asking
for oral argument come 15 days later after the briefs are
in, which will give both parties a chance to evaluate how
strong or weak their opponent's brief, in which case you can
more objectively and more realistically determine whether
you need an oral argument.
We don't think the combination of these two times
will meaningfully delay the proceeding. It's doubtful that
the board would have a hearing immediately thereafter in any
How about interviews? Interviews under the
current practice and the recording of interviews is felt by
many to be grossly inadequate. A patent owner goes in, has
an interview with the examiner, which at the present time is
an ex parte interview, and the recording of the interview is
a bare bones minimal record. The new procedure, the
proposed procedure, would solve that in that a third party
would participate in the interview and, therefore, would
know what happened, but in subsequent litigation, people who
were not at that interview will not know. And we think a
simple solution to the problem, to eliminate the possibility
of abuse, is to have either party authorized to have a
reporter or whatever brought in to record the interview, to
have the interview transcribed, at his or her expense, so
there's no expense to the Patent and Trademark Office.
Now I might note that a bare majority of the
Intellectual Property Law Section Council supported that
view. A very strong, in fact it was a one vote difference,
a very strong minority felt that we should use something
resembling the current procedure with the examiner
summarizing the interview and with each party being given an
opportunity to comment on the summary.
Now lastly, the enforcement role of the PTO in
contested reexaminations. There is some concern that with a
new evolution into contested reexaminations with third
parties actually participating, the PTO will move back and
will play not only a lesser role but will not even play the
public guardian role that it should be playing even in
contested reexamination proceedings. And our only
suggestion here is that the PTO should consider making
certain that the examiner does perform the guardian role,
making sure that the public interest is protected, does not
just engage in pro forma activity in the proceeding, and
moreover to assure that if there is an appeal, we think an
examiner's answer should not only be permissive but
Those basically are my comments on behalf of the
Intellectual Property Law Section of the ABA. I would
welcome any questions and try to answer them if you have
MR. GOFFNEY: Well, I have one. In your own
experience, how do these fees relate to or compare with the
fees of contesting validity in a litigation?
MR. DUNNER: Well, needless to say, the fees
compared to contested litigation are like comparing a flea
to an elephant.
MR. GOFFNEY: Okay.
MR. DUNNER: Contested litigation, typical
estimates for litigations going full term are a million
dollars, $2 million and more. Needless to say, this is
nothing compared to that, and if that were the
consideration, I agree there would be no problem. But when
you have a small party who might want to file a protest, for
whom litigation is not even a consideration because that
party can't afford it, $11,000 may be more than that small
party feels it can afford, and that's the problem. It's not
the problem of the big corporations. It's the problem of
the small person for whom Congress is continually concerned
and for whom the Patent Office is continually concerned.
MS. LINCK: Don, I have a question.
MR. DUNNER: Yes.
MS. LINCK: Under the present system, do you
advise third parties to file?
MR. DUNNER: Under the present system with great
reluctance I advise third parties to file. If it's an
important suit, I almost invariably do not advise third
parties to file unless that's the only alternative. If the
only alternative is filing or going out of business or going
out of this particular area, I might advise it. Otherwise I
won't. It's too loaded against the third party.
MS. LINCK: Does the expanded system change?
MR. DUNNER: The expanded system changes it
considerably. I was one, in fact, the reexamination
provisions came out of my group in the advisory commission.
I was personally at least meaningfully responsible for them.
The legislation pretty well tracks the advisory commission.
I support that part of the legislation wholeheartedly. My
own hope is that with this meaningful interparties'
participation, third parties will participate, that I
personally will be able to advise my clients who are third
parties to participate, and I think it's a giant step --
MS. LINCK: Thank you.
MR. DUNNER: -- for womankind and mankind.
MS. LINCK: Thank you.
MR. GOFFNEY: Thank you, Don. We will change the
order of the next speaker. As it turned out, Gary Griswold
had made a request earlier, and it should have been the
second speaker as listed in the order in which the requests
came in. In place of Gary Griswold, who is not able to make
it here today, Herb Wamsley, who is the executive director
of IPO, will speak. Herb.
MR. WAMSLEY: Deputy Commissioner Goffney and
members of the panel, I appreciate the opportunity to be
here today to speak on behalf of Intellectual Property
Owners. My name is Herbert Wamsley. I am substituting for
Gary Griswold of the 3M Company, who is the president of
Intellectual Property Owners.
IPO is a nonprofit trade association representing
companies, individuals and universities who own patents,
trademarks and copyrights. IPO's address is 1255 23rd
Street, N.W., Washington, D.C.
We would like to compliment the Patent and
Trademark Office for holding this hearing on the
implementing rules for H.R. 1732 and S. 1070. We think that
it is helpful to have the hearing at this time so that the
office will be in a position to implement the new
reexamination law promptly after it's passed by Congress.
IPO is strongly supporting congressional enactment
of H.R. 1732 and S. 1070 because we believe the legislation
will encourage greater participation in reexamination
proceedings by third parties, third parties who today are
relying on more expensive court litigation to resolve their
disputes over patentability.
We support nearly all of the rules in the form
proposed in the Federal Register and have only a few
comments to offer. I will explain our comments in terms of
how we believe some of the proposed rules will affect
incentives for third party participation in reexamination
proceedings. The points that I want to address in the
proposed rules have to do with fees, interviews, estoppel of
third parties, and identification of the real party in
Proposed Rule 1.20 calls for significant increases
in the fees for reexamination, $4500 for a request by a
patent owner and $11,000 for a request by a third party
requester. Now, the fees are based on the office's estimate
of the cost of conducting the two types of reexamination
proceedings. Although, in general, IPO is concerned about
the cost of patent prosecution and cost of litigation and is
emphasizing cost control, we believe it is reasonable to
charge for the reexamination proceedings, whatever it costs
the office to conduct the proceedings, and we think it's
reasonable to have a different, more expensive charge for
reexamination conducted by third party requesters in view of
the fact that that type of reexamination will cost more.
We would not want to support subsidization of
reexamination proceedings for purpose of encouraging third
parties to attack patents. So while a fee of $11,000 may
seem high, we are not objecting to the fee if that's what it
costs the office to conduct the third party reexamination
proceeding. $11,000 may seem like a high amount, but it is
a modest amount, as Mr. Dunner indicated, compared with the
cost of a third party litigating a patent in court.
We believe that the reason that third parties are
discouraged today from participating in reexamination is the
perception that under existing law, the reexamination
proceeding is not a level playing field for the third party.
H.R. 1732 and S. 1070, we believe, move toward leveling the
playing field or level the playing field for the third
parties, and so the disincentive for third parties to
participate in reexamination is being eliminated. In the
scheme of things, we conclude that an $11,000 fee is not
going to discourage a third party from participating in
reexamination if the alternative is legislation.
As far as the small inventor, the discouragement
even there, we don't think the $11,000 would be the pivotal
thing. So we would disagree with the American Bar
Association on the fees being a problem.
Turning to interviews, we support proposed Rule
1.955 in the form in which it's proposed. We believe third
party requesters should have a right to participate in
interviews with the examiner although not the right to
initiate interviews. The rules need to balance the right to
encourage third parties to participate in reexamination with
the need to keep reexamination quick and inexpensive.
Because of our concern about keeping reexamination
inexpensive, we would not favor a change that would permit
or require the parties to make a transcript of the
interviews. We believe this would be making the interviews
more like court proceedings, and so once again we would
disagree with Mr. Dunner and our friends from the American
Bar Association on the question of authorizing transcripts
We would like to see clarification of the term
quote "could have raised" that is used in proposed rules
1.907 and 1.909. Those rules prevent third parties from
raising in subsequent reexaminations or court proceedings
issues that the parties could have raised in an initial
proceeding. The term "could have raised" also is used in the
legislation. We agree that the legislation and the rules
must prohibit repeated raising of the same issues, but if
the term "could have raised" is given too broad an
interpretation, we believe it may encourage some parties,
some third parties, from using reexamination.
The term "could have raised" should not be
interpreted to mean, for example, that a large company could
have asserted an item of prior art that was in its files
somewhere in the company but not known to or accessible to
the employees of the company who were involved in the
reexamination proceeding. So we would suggest clarifying or
elaborating in the rule what the meaning is of the term
"could have raised" or the situations in which it would
Finally, with respect to identifying the real
party in interest in reexamination proceedings, we believe
that proposed rule 1.915 paragraph (b)(10) needs some
clarification. The discussion in the Federal Register
indicates that an attorney must identify the real party in
interest in the initial request for reexamination if the
attorney is acting in the capacity as an attorney and is
named as the party. However, the text of the rule itself in
the Federal Register in paragraph (b)(10), as we read it, is
not clear on the question of whether a third party request
for reexamination filed in the name of an attorney must
identify the real party in interest.
Intellectual Property Owners testified in the
congressional hearing on H.R. 1732 in June 1995 that we
could favor identifying the real party in interest at least
by the time an appeal was filed in a reexamination. If the
office believes that the rules should require identification
of the real party in interest at an earlier time, namely at
the time when the request for reexamination is filed in the
office, IPO would not object to requiring identification of
the real party in interest at that time. That concludes my
comments. I thank you for the opportunity to present these
views, and I will be happy to answer any questions if you
MR. GOFFNEY: Herb, I have one question with
regard to this question of estoppel. Are you suggesting
that in a large company there not be a requirement that
there be at least some kind of due diligence, some kind of
an attempt to locate the prior art, or to make all parts of
the company aware of the particular reexamination that is
taking place in an attempt to locate prior art that they
might have in their files?
MR. WAMSLEY: We have not had an opportunity to
formulate what we think the standards should be for "could
have raised." Some people in the patent bar have suggested
that it should be a standard similar to the duty of
disclosure for people who are citing prior art to the
office, which in some cases, as I understand it, would
involve a duty to see what you have in your files. But if
there is to be such a duty or that is to be the appropriate
standard, still a large company wouldn't have the duty to
search worldwide in every file cabinet in the whole company,
So all we're suggesting is that we're concerned
about what the term "could have raised" means because we
don't know how broadly it might be interpreted, and if the
widest possible interpretation of it were taken, we believe
it would cause problems for large companies and might
discourage them from coming in to participate in
reexamination. So we would hope that something could be
formulated in the final rulemaking adoption notice giving
some guidance as to what the office believes the scope of
the term should be.
MS. LINCK: Mr. Wamsley, could you explain your
basis for objecting to full recordation of the interview?
MR. WAMSLEY: Well, we believe that it would add
to expense. We believe that if you, I suppose there's two
ways to do it. One is just to authorize it. I believe
that's what the American Bar Association is suggesting that
when at least one of the parties wants a transcript, that
they'll be authorized to record the interview. But I think
that if you start recording interviews, the other party
inevitably is going to raise questions about the accuracy of
the transcript or start coming back with attempts to clarify
what was said, and I believe that we are raising the expense
of the interviews considerably. And that's the concern.
MS. LINCK: It seems to me a recording would avoid
problems about what exactly was said, and when you're
talking about $4500 or $11,000, the cost of having someone
there recording the interview would probably be no more than
$50. So I don't understand exactly.
MR. WAMSLEY: It's not the cost of recording.
It's the hassle between the parties as to what was meant,
and the continuing attempts to clarify the record, I
believe, would be the greatest concern. The way interviews
are conducted today before examiners, and there's a summary
prepared, but the examiner, as I understand it, has the last
word on clarifying the record as to what was done in an
interview, and that seems to be the simplest and lowest cost
way to do it.
MS. LINCK: Thank you.
MR. GOFFNEY: Any other questions?
MR. WAMSLEY: Thank you.
MR. GOFFNEY: Okay. Thank you. Our next speaker
is Marcia Sundeen.
MS. SUNDEEN: Good morning. My name is Marcia
Sundeen. I'm appearing on behalf of the American
Intellectual Property Law Association. I'd like to thank
Assistant Commissioner Goffney and the panel for providing
us the opportunity to present our views.
The American Intellectual Property Law Association
is a national bar association of nearly 9,400 members. Our
statement reflects the position of the AIPLA as adopted by
the board regarding the PTO's proposed reexamination rules.
The Association Committee on Relations with the PTO assisted
the board in preparing these comments. Overall, the
association's view is that the proposed rules are fair and
balanced approach to allowing limited participation by third
parties in reexamination proceedings before the PTO.
We have six general areas of comments. The first
area which the previous two speakers discussed has to do
with the fees. The second area has to do with third party
estoppel which also has been discussed. The third area
concerns the length of the responses. The fourth area
concerns the time period for the responses. The fifth area
concerns the PTO's designation of an examiner for the
reexamination proceedings. And the sixth area concerns the
citation of prior art.
Turning to the fees, the proposed fees for the
reexamination proceedings are $4,500 for a patentee and
$11,000 for a third party requester. Although these fees
appear high, they may be justified. Reexamination can be an
important alternative to litigation for small businesses and
individual inventors. The recommended fee of $11,000 for
third party requesters may discourage third parties from
filing inappropriate reexamination requests and harassing
individual inventors and small businesses. We view these
fees as a balanced approach.
The association also recommends that the large 75
percent refund proposed by the rules in the event that the
request for reexamination is denied be reduced. A third
party who files an unjustified reexamination should not be
rewarded by the return of three-quarters of the fee.
Turning to the second issue, the third party
estoppel issue, this issue was previously discussed by the
IPO. The proposed rules prohibit request for reexaminations
by third parties or their privies in certain circumstances.
Proposed rule 907 and 909 use similar language in estopping
third parties. The language that's used that would estop a
party is any issue that could have been raised during the
prior examination proceeding will estop a third party from
bringing another reexamination request. We agree with IPO
that multiple requests for reexaminations should be limited,
particularly when there are issues that could have been
However, the use of the term or the phrase "could
have raised" is ambiguous and can create problems. We
recommend that the PTO clarify what it means by this
language. Specifically, the association recommends that
this language be interpreted to mean that in the first
instance a requester has the same obligation to raise issues
known to him as a patentee as the same issues that a
patentee would be required to raise in a reexamination
proceeding or a pre-grant patentability proceeding.
In other words, an issue that could have been
raised and which would estop a third party requester from
bringing a second reexamination request is an issue that a
patentee would be required to raise in a patentability or
reexamination proceeding at the PTO.
The association notes that at least one court has
imposed the same duty of candor and good faith on the third
party requester in a reexamination proceeding as that that
is imposed on a patentee. The association would also
support a requirement that a requester certify that the
reexamination request contains all information that the
requester regards as materially adverse to patentability
based on 37 CFR 1.56.
The association also recommends that proposed rule
909 would require that a real party in interest be
identified at least by the time of the filing of a notice of
appeal to the Court of Appeals for the Federal Circuit. We
are in agreement with the views expressed by the IPO on this
The third area on which the association has some
comments is the lengths of responses and briefs. Proposed
rule 943 limits briefs and responses to 50 pages. This 50
page limit is too restrictive. There are many instances
where the patent owner is required to respond to numerous
issues raised by third party requesters. 50 pages may not
be a sufficient length for a brief to respond adequately to
every issue. We would recommend that the rule be changed to
permit longer briefs upon a showing of good cause.
The fourth area of our comments have to do with
the time period for responding to office actions. First, we
suggest that Rule 9.45 and Rule 947 be made consistent with
each other. One rule talks about the time period being one
month, and the other rule speaks the time period being 30
days. We recommended the two rules be made consistent and
that the time period be expressed in a number of months.
Second, we submit that one month is unfairly short
deadline for responding. Given the docketing,
correspondence, study, drafting and discussion that are
entailed by a significant office action, a period of one
month is simply too short. If examiners are routinely
permitted to set a one month period for response, then
invariably the parties will be forced to request a longer
time period. This will increase the workload of the PTO and
the parties without a good reason. We recommend that a
period of two months be provided for responding.
Third, we also believe that the procedure for
requesting extensions of time is unworkable. Even if a
request for extension of time were submitted several days
before the due date, this would be insufficient time for the
PTO to act on the request, we believe. We recommend,
therefore, that the usual extension of time procedure be
used. In other words, by paying a fee, an extension of time
would be granted.
The fifth area of our comments has to with the
designation of an examiner for the reexamination proceeding.
The only limitation placed on the selection of an examiner
is that provided by Section 1.931, namely that an examiner
whose decision refusing reexamination has been reversed on
petition will not ordinarily conduct the reexamination. The
AIPLA recommends that the PTO reevaluates the practice of
assigning the same examiner who prosecuted the application
to the reexamination proceeding. We recognize that the PTO
has previously studied this issue and its statistics show
that the results in reexamination proceedings are the same
regardless of whether the same examiner is assigned or a new
However, we note that many practitioners feel that
the original examiner may have a bias against fully
considering prior art during a reexamination proceeding.
Therefore, we request that the PTO again reevaluate the
Our final comment has to do with Rule 901 which
concerns the citation of prior art. This proposed rule
places an unnecessary burden on the person citing prior art.
The proposed rule requires the person citing the art to
include a statement that the art is pertinent and applicable
and has a bearing on the patentability of any claim. There
is no reason for requiring this certification, and we
believe it is an undesirable requirement.
An example of why it is undesirable would be when
a piece of art is cited in a foreign application or by a
foreign search. In the spirit of full disclosure, the
patentee should be encouraged to file that art in the patent
office. However, the patentee should not be required to make
a statement that the art is pertinent and applicable. The
disclosure would benefit the public, and the patentee may
not be fully aware of the relevancy of the art and the art
may turn out to be pertinent when combined with other art in
the possession of a third party.
That summarizes the association's comments. I
thank the panel for giving me the opportunity to speak, and
I would be pleased to answer any questions.
MR. GOFFNEY: Ms. Sundeen, I have one question if
I could put together all of the suggestions that you have
made. Do you think that those suggestions might cause a
greater expense to the reexamination proceeding and does
your association support an increased fee in order to
incorporate such suggestions?
MS. SUNDEEN: Well, I'm not sure that all the
comments and the suggestions we have would cause the fee to
increase. We haven't considered whether we would support a
higher fee. Our position is that these fees may be
justified considering the proceedings. I'm sorry I don't
feel comfortable in saying whether we would support a higher
fee because we do consider these somewhat high, but they may
MR. GOFFNEY: Okay.
MR. KUNIN: Ms. Sundeen, I'd like to ask whether
you could provide some commentary on the issue of
recordation of interviews?
MS. SUNDEEN: The association hasn't taken a
position on that issue.
MR. KUNIN: Thank you.
MS. LINCK: Same question.
MS. SUNDEEN: Thank you.
MR. GOFFNEY: Thank you. Our next speaker is
Joseph Mendelson, III.
MR. MENDELSON: Good morning, Deputy Commissioner
Goffney and members of the panel. I appreciate the
opportunity to discuss with you the PTO's implementation of
H.R. 1732 and S. 1070 this morning. I'm Joseph Mendelson,
legal director for the international Center for Technology
Assessment. We are located at 310 D Street, N.E.,
Washington, D.C. Zip code is 20002.
The CTA is a nonprofit organization formed to help
assist the general public and policymakers better understand
how technology affects people's lives. The center performs
assessments of technology encompassing the economic,
ethical, social, environmental and political impacts that
can result from the application of technology or
In addition, I should note that I'm also here
representing the Edmonds Institute of Edmonds, Washington.
This institute is also a nonprofit public interest
organization dedicated to the public education about
environment, technology, and intellectual property rights.
The proposed rules that are the subject of today's
hearing represent a significant step towards making our
patent system more responsive to the public. CTA supports
both H.R. 1732 and S. 1070 and our support was detailed by
the testimony of our executive director, Andrew Kimbrell, at
the June 8 hearing by the House Judiciary Committee
Subcommittee on Courts and Intellectual Property.
Today, I will, of course, limit my remarks to more
specific analysis of the proposed rules. In particular, I'd
like to speak to the fee structure and would also like to
say that we support many of the comments made by the
American Bar Association on this matter.
As noted by the PTO's proposed rule 933, quote, "A
patent is by its very nature affected with the public
interest." This statement could easily be narrowed to say
that the reexamination process is by its very nature
affected with the public interest. Congress had this
important concept in mind when it originally enacted the
reexamination statute. This statute was part of a larger
effort to revive U.S. industry's competitive vitality by
restoring confidence in the validity of patents issued by
The original reexamination legislation allowed the
PTO to recover administrative jurisdiction over an issued
patent in order to remedy any defects in the initial
examination. In part, the reexamination system allowed
third parties to assist the PTO in its vigilance over its
patent defects by providing for third party reexamination
petitions. Both legislators and the federal court have
supported the intent of reexamination. Senator Birch Bayh,
going back a couple of years, stated upon introduction of
the original patent reexamination legislation that a strong
dependable patent system is absolutely essential to our
continued ability to meet the challenges of the future.
Indeed, the United States Court of Appeals for the
Federal Circuit recognized the important goals of
reexamination when stating, quote, "When Congress voted the
reexamination into law, it had before it a voluminous record
to the effect that the procedure was an important step
forward for the United States patent system and for the
public interest that the system is charged to serve."
The proposed Patent Reexamination Reform Act of
1995 represents another step in Congress' efforts to protect
the public interest in the patent system. As Mr. Dunner
stated, the legislation incorporates many of the proposed
changes by the 1992 Report of the Advisory Commission on
Patent Law Reform. These changes are designed to create a
greater involvement by the third party in the reexamination
procedures and improve the quality and reliability of United
We applaud the PTO for acting swiftly toward the
enactment of this legislation not yet approved by Congress.
However, one significant problem exists with the PTO's
proposed implementing regulations. Contrary to the
legislative intent, the proposed regulations as drafted
would severely hamper the ability of many third parties to
actively participate in the reexamination process. As stated
earlier, the proposed Section 1.20, Subsection (c) would
create two tiered fee scale in which patent owners
requesting reexamination would be charged $4500 and third
party requesters $11,000.
This rule places significant new financial burden
on third parties by raising the fee upwards of almost five
times its current state. As a result, the proposed rules,
contrary to the intent of H.R. 1732, will deter many third
parties from petitioning for reexamination. In particular,
the new fees would effectively prevent many independent
inventors, small business concerns or non profit
organizations from participating in the reexamination
This result would appear to be contradictory to
Congress and the advisory board's goal of creating a system
which protects the public interest by encouraging third
party involvement in reexaminations. Indeed, how can the
aforementioned public interest in the patent system be
protected when the proposed system economically eliminates
many sectors of the public from participating? The PTO has
long recognized the unique economic situation faced by
independent inventors, small business concerns and nonprofit
In many instances, the PTO's current fee structure
works on a two tier system which provides reduced fees to
small entities defined as independent inventors, small
business concerns and nonprofit organizations.
Unfortunately, the PTO has not transferred this fee
structure to its proposed reexamination regulations. In the
interest of maintaining a vital reexamination process, CTA
strongly believes that the proposed regulations must be
drafted to ensure maximum involvement by small entities.
This can be accomplished by at a minimum maintaining the
current fee of $2250 for reexamination petitions filed by
small entities or providing a third party fee waiver for
The PTO already operates under a regulatory model
that could be adopted for this purpose. The Department of
Commerce's regulations implementing the Freedom of
Information Act provide for a waiver or a reduction in fees
in supplying documentation to many sectors of the public.
And as the panel knows, the PTO must operate under these
regulations when fulfilling any FOIA request. These
regulations, therefore, can serve as a useful model for the
PTO's adoption of a reexamination fee structure that
includes a fee waiver.
The current Department of Commerce FOIA fee waiver
provide that documents are furnished without charge if
disclosure of the information is in the public interest
because it is likely to contribute significantly to public
understanding of the operations and activities of the
government and is not primarily in the commercial interest
of the requester. As already noted, the patent system and
reexamination process are designed to provide the public
with information disclosing new technological innovations.
Thus, the FOIA fee waiver model would seem appropriate to
apply to limited reexamination cases.
A fee waiver or reduction for reexamination need
not frighten a fee supported agency like the PTO. The
Commerce Department's FOIA regulations only provide a fee
waiver or reduction in particular cases. To assure the fee
waiver's two requirements are met, the Department of
Commerce looks at a number of factors to determine if a
waiver is warranted by the public interest value of the
material. This analysis looks at several things including:
whether the requested record concerns government operations
and activities; whether the disclosed information will
assist in the understanding of government operations or
activities; will the disclosed information contribute to an
understanding of the subject by the general public; how
significant this contribution to understanding can be made,
that is the public understanding; existence and magnitude of
the commercial interest of the requester; and whether the
primary interest is commercial or in the public interest.
Indeed, the FOIA fee waiver model appears to
address many of the concerns that are raised about the
reexamination process such as administrative cost and abuse
of the procedures. Similar to reexamination costs, FOIA
requests can be quite costly to federal agencies. Search
time, processing time, copying costs, mailing and potential
appeal costs routinely run into the thousands of dollars.
In the interest of ensuring that the public scrutiny over
government provided by FOIA is not lost to the public
through such excessive economic burdens on requesters, the
federal agencies like the Department of Commerce have
developed a system that weighs public interest with
The CTA recognizes the PTO's interest in
maintaining a fee supported balanced budget, and we are, I
should add, sympathetic to the current budget cuts that were
mentioned by the commissioner at yesterday's hearing.
However, a fee waiver reduction would pose no threat to the
fiscal solvency of the agency. First, the number of third
party interventions, reexamination interventions, qualifying
for a fee waiver would be small. Any small entity with a
commercial interest could be screened out, thereby
eliminating abuse of a fee waiver or fee reduction scenario.
Second, the commissioner's ability to deny
reexamination petitions as provided for in the proposed
rules would prevent frivolous claims being filed through the
fee waiver provision. Indeed, the reexamination process has
been carefully designed to prevent frivolous pursuit of
reexamination claims and a third party fee waiver would do
nothing to change that. As noted, the $11,000 reexamination
application fee would prevent many third parties from being
involved in the process. Without the adoption of a fee
waiver or fee reduction for certain third parties, the
contemplated implementation of H.R. 1732 will not provide
for greater third party involvement in the reexamination
This economic inability of some third parties to
bring defective patents to the attention of the commissioner
is contrary to protecting the public interest of defect-free
patents. By adopting a fee waiver or reduction provision,
the PTO would ensure that this agency scrutiny takes place.
Further, a fee waiver will help ensure that the
reexamination process becomes a viable alternative to
litigation as contemplated by both Congress and the Advisory
Committee on Patent Law Reform. The CTA, therefore,
strongly urges the PTO to consider these recommendations. I
thank you for the opportunity and would welcome any
MR. GOFFNEY: Mr. Mendelson, I notice you didn't
mention the commissioner ordered reexaminations in your
discussion about the public interest. Don't you feel that
that might be able to serve the public interest in that the
commissioner is a politically placed person who is there, of
course, to effect the public interest and does have the
ability to have a commissioner ordered reexamination without
the necessity of a third party paying any fees to draw this
to the commissioner's attention?
MR. MENDELSON: Well, I think in part that may
take care of part of the issue. Unfortunately, I don't
believe the proposed regulations really provide for a way
for third parties outside of the patent system to ask the
commissioner to seek a reexamination on their behalf, and
that would be something that we would welcome to explore
with the PTO. In addition, I think there will be some
concerns by third parties in the public interest that may be
outside of what the commissioner himself would be thinking
in the agency. So I think while that does provide part of
that solution, I don't think it would satisfy the whole.
MS. LINCK: Mr. Mendelson, I think I could speak
on behalf of the panel and the PTO in saying that we
strongly agree that the public has a strong public interest
in the patent system, but, in fact, Congress has decided
that the public should pay nothing for our patent system.
In fact, the Senate recently has voted to take $55 million
from our users, and our small entities, in fact, are
subsidized by the large entities and not by the public.
I'm wondering if CTA is taking any action to
assure not only that we keep our fees but that perhaps the
public should contribute to this system that really is the
system that's going to support our society in the future?
MR. MENDELSON: As we did mention, we're certainly
very sympathetic with the budget cuts that may have
significant impact on the PTO's ability to perform its
function. We are a small organization. I can say that we
haven't taken any particular action in the appropriations
process. That's more on our limited resources, not on our
However, I would say that I think that what we're
talking about as far as a fee waiver would only encompass a
very small number. I can't see more than possibly a dozen a
year, and if that's the case, I really think that's a small
amount of money that in the large scheme of things would not
present a severe financial obstacle to the agency.
MS. LINCK: In fact, you mentioned FOIA requests,
and I have one lawyer now in my office that works fulltime
on FOIA requests, and the cost for that lawyer, in fact,
comes out of our customers' fees, and it just seems very
unfair to me that these expenses that are for the public
good should be borne not only by our clients but more
heavily on certain clients than others. It's not a fair
MR. MENDELSON: Thank you.
MR. GOFFNEY: Thank you. Our next speaker is
MR. JORDAN: Good morning. My name is Richard
Jordan. I'm representing Exxon Chemical Company whose
headquarters office is located in Houston, Texas, and I'd
like to thank Mr. Goffney and the PTO for giving us the time
here this morning to add our comments. And since this is on
behalf of Exxon Chemical Company, I have a prepared
statement that I will largely follow from anyway.
We at Exxon Chemical Company support greater
participation by third party requesters than is currently
allowed under the reexamination laws. With the appropriate
laws and rules in place, we believe that full interparties'
proceedings can provide the public with a more effective
system in which the Patent and Trademark Office will have a
higher degree of certainty in issuing patents having valid
While we at Exxon Chemical Company prefer the high
quality of interparties' post-grant oppositions proceedings
similar to that of the European Patent Office, we consider
taking advantage of the means provided under the proposed
legislation H.R. 1732 if appropriate rules are promulgated
to provide a high quality reexamination process within the
U.S. PTO. Although the PTO has done an excellent job in
providing a sound procedural model which is much improved
over the present system, we believe that there is still
significant room in which the quality of the reexamination
process can be improved within the framework of the proposed
Specifically, we believe that quality of
reexamination at the PTO could be improved by modifying the
proposed rules to provide (1) a more open and rigorous
review system for examiner interviews; (2) a process in
which more than one examiner would be responsible for
issuing the right of notice of appeal; and (3) specific
procedures for consolidating multiple reexamination requests
of the same patent.
And I'll address each one of these in order. The
first proposal, as I mentioned, regards examiner interviews.
The purpose of an examiner interview should be twofold in an
interparties' reexamination proceeding. On the one hand, an
interview should provide any party to the proceeding a means
to better communicate issues to examiners, particularly
those issues which are difficult to express on paper. For
example, one might be better able to physically demonstrate,
maybe by charts, tables or physical demonstration, what is
purported to be the main aspect of the invention and how
that aspect is or is not suggested by the prior art.
It may also be more effective to review
complicated data with examiners prior to submitting such
data in declaration form so that they will have a better
understanding of what the data represents.
The second purpose for an interview in an
interparties' reexamination proceeding should be to build a
more complete record for later review. For example, should
a case be appealed to the Board of Patent Appeals and
Interferences in which an interview is held, and the issues
discussed in the interview were recorded, the administrative
patent judge in charge of the appeal would have a more
thorough record upon which to base his decision. Likewise,
an attorney who reviews the file history of a reexamination
proceeding would have a better record upon which
infringement risk assessments could be made.
As the proposed rules now stand, they fall short
in meeting the twofold objective of an interview. In
particular, under proposed Rule 1.955, the benefits of
examiner interviews are heavily weighted in favor of the
patent owner since that is the only party who would be
allowed to request an interview if there were a third party
requester. In our opinion, the proposed rules provide a
tremendous advantage to the patent owner. To that extent we
at Exxon Chemical Company have serious doubt as to whether a
third party requester would ultimately gain much more under
the proposed rules than the present reexamination rules
Therefore, we believe that the PTO should give
long and serious thought to modifying Rule 1.955 to make the
reexamination proceeding more equitable by allowing a third
party request or the opportunity to initiate an interview.
Proposed Rule 1.955 is also deficient in that there is no
specific requirement for recording what transpires at
We can only assume that the PTO will at least
issue an examiner interview summary record. This summary, as
it is presently recorded, however, would be of little value
in an interparties' proceeding. First of all, the present
form of the record is too abbreviated to be of any real
value in subsequent proceedings. Secondly, it is unlikely
that much detail could be put into any interview record if
more than one party as well as a senior level official whose
presence would also be required at an interview under the
proposed rules are all present and are relying upon an
examiner to hurriedly write a summary of the interview.
It would be unreasonable under these circumstances
to expect anyone to give an accurate account of what
transpired. Therefore, proposed Rule 1.955 should be
modified to include an effective procedure for recording the
details of what transpired at the interview.
The second proposal that we mentioned earlier
involves more than one examiner having the responsibility
for issuing the right of notice of appeal or that is appeal
notice. As we mentioned in our opening remarks, Exxon
Chemical Company is strongly in favor of interparties' post-
grant oppositions proceedings, similar to that of the
European Patent Office because of the high degree of quality
which that type of proceeding affords.
One of the reasons for such a high degree of
quality in that proceeding is that the final decision is
given by three examiners. Needless to say with a decision
from three capable examiners, it is less likely that there
will be ancillary issues that are later raised such as, for
example, examiner bias or examiner's lack of understanding
of the relevant law or art. An even higher quality
reexamination in the U.S. PTO could be following a multi-
examiner final review process similar to that in EPO
This type of review process would not be at odds
with the present House bill and would, in fact, be in
alignment with multi-examiner review of patent applications
in which the PTO already has experience. To include a
multi-examiner final review process for reexamination would
take little modification of the proposed rules. For
example, proposed Rule 1.953 stipulates that the examiner
shall issue a right of appeal notice unless prosecution is
reopened and that such a notice shall include a final
rejection and/or final decision favorable to patentability.
Instead of one examiner issuing the right of
appeal notice with the final written decision, it would be
preferable for a panel of three examiners, for example, to
have this responsibility. This panel can include, for
example, a legal specialist within the examining group, the
original examiner of the application, and a primary examiner
having knowledge of the relevant technical field. It may be
that all examiners would concur on the written decision or
that one may dissent with his or her own written opinion,
and this would be similar to the process which currently
goes on at the Board of Appeals.
A multi-examiner final review process would be of
benefit to both the public and the PTO in that a high degree
of quality in the reexamination process would be ensured.
Whether all examiners concur in the final decision or
whether there is a dissent, the result would be a sound
record upon which a subsequent reviewing body would be able
to better make informed decisions. As we see it, the
subsequent reviewing body might not just be the Board of
Patent Appeals and Interferences or a federal court but the
public at large which might be interested in reviewing the
case, particularly for the purposes of giving credible
infringement risk assessments.
Since a multi-panel final review process would
have a high degree of what one might call built-in quality,
it would be unnecessary for the PTO to have a quality review
program for reexaminations. In cases where there was a
unanimous final decision by the examiners, it's also less
likely that such a decision would be appealed by the losing
party and this would mean, of course, that the workload of
the administrative patent judge might not be unduly
And one last point regarding a multi-examiner
final review process is that each examiner should be present
at interviews for the obvious reason of ensuring that each
examiner understands all the issues at hand and to that
effect proposed Rule 1.955 would also have to be modified
The third point that we raised earlier involves
consolidation of multiple reexamination requests. It's not
unreasonable to assume that certain patents would spark
sufficient commercial interest such that several different
parties might file separate reexamination requests. At
present, the proposed rules do not specific procedures for
taking into account multiple reexamination requests for the
same patent. It would seem that it would be efficient for
the PTO to consolidate multiple requests once the decision
has been made that a substantial new question of
patentability has been raised by each requester.
Whatever the PTO does in cases of multiple
reexamination requests, rules should be published to give
the public prior notice of what procedures would be
followed. And this would be far too complicated of a
procedure in which the public would otherwise be at the
mercy of PTO internal policy. So, in conclusion, we believe
that the quality of reexamination at the PTO could be
improved by modifying the proposed rules to provide (1) a
more open and rigorous review system for examiner
interviews; (2) a process in which more than one examiner
would be responsible for issuing the right of notice of
appeal; and (3) specific procedures for consolidating
multiple reexamination requests.
In our opinion, if these modifications are not
made, it's questionable whether a third party requester
would really be in a much more improved position than what
he would be afforded under the present system. We,
therefore, request that the PTO give serious consideration
in modifying the proposed rules. Thank you very much. If
you have any questions, I'll be glad to comment.
MR. GOFFNEY: Yes. Mr. Jordan, I'll ask you
whether a modification, even though the modification in your
view would not call for much of a modification in the rules,
what about in the fee structure? What about in the fee
structure? Would you support higher fees in order to provide
for these improvements as you call them?
MR. JORDAN: We have discussed this within Exxon
Chemical. Our position is that if we request a service, we
should pay the fair price of what that service costs. In
that regard, taking this sort of one step further, we side
with the IPO and the AIPLA on the fees. We do not consider
these to be excessive. I think what we project is that
these sorts of proceedings could become quite complicated.
And we look at these as similarly as we would interference
proceedings as far as costs go, and when you run an
interference proceeding, it may cost you as much as half a
million dollars just to get through the first stage of the
$11,000 out of what we consider to be high outside
counsel fees, high inside counsel fees and possibly
technical fees is insignificant. So even an increase from
the 11,000 within what is fair under the system would not be
excessive to us.
MR. GOFFNEY: I also have another question about I
want to follow you on your notion that third party
interviews should be recorded, and I'd like to ask you why
is it that they should be recorded for third party
interviews but for regular interviews or the interviews that
take place in prosecution, that recording is not necessary
or is it necessary are you saying?
MR. JORDAN: That was really misleading. I want to
MR. GOFFNEY: Yes.
MR. JORDAN: All interviews we believe should be
recorded, but the point of the third parties is third
parties should be allowed to request the interview, and then
once that interview is held, then it should be recorded.
But we do take the position that all interviews should be
more accurately recorded as compared to their present state,
which we feel to be deficient.
MR. GOFFNEY: Any other questions? Thank you.
Our next speaker is Maxim Waldbaum or one of the three of
Maxim Waldbaum, Tipton Jennings and Raymond Stewart. Is
there any one here for --okay. None of the three.
Our next speaker then is Lawrence J. Bassuk. As
one Larry to another, I should have said Larry Bassuk.
MR. BASSUK: Yes, thank you very much, Larry.
Good morning, ladies and gentlemen. My name is Lawrence
Bassuk. I'm a senior corporate counsel with Texas
Instruments, Incorporated. I speak on behalf of Texas
Instruments and for Mr. Richard Donaldson, general patent
counsel, who sends his regrets.
I want to thank the commissioner and their staff
for all their work in these fine explanation of the rules
this time around. I think the comments indicate many of the
concerns that we have. Texas Instruments has only one
question for you, and that is the amount of the fees. We
don't understand why the reexamination fees must be six
times that of a filing fee for a U.S. patent application or
a reissue patent application and why they must be
approximately 15 times the filing fee when it's a third
party? We would appreciate a little further explanation of
Oh, there was one other point. In the commentary
in the Rule 906, it indicates there would be, as a routine,
there would be no new search. For a fee of that magnitude,
I would hope that the examiner would on his own at least
look through the art. Thank you.
MR. GOFFNEY: Thank you. Any questions or
responses? Thank you.
MR. BASSUK: You're welcome.
MR. GOFFNEY: Now next listed, the last of the
listed speakers is Frampton Ellis. How are you?
MR. ELLIS: Deputy Commissioner Goffney and the
rest of the panel, my name is Frampton Ellis. I'm an
independent inventor holding a number of U.S. and foreign
patents and head of a small corporation, Anatomic Research,
which is located here in Arlington at 2895 South Abington
Street. I'm here on my own time and my own expense
representing myself. I am one of several hundred thousand
independent or small business inventors who file each year
patent applications in the U.S.
We form the vast majority of the U.S. Patent
Office's base of customers. Historically, we provided most
of the basic breakthroughs in technology, those which create
whole new industries, and we provide the greatest proportion
of the economy's new jobs. The Federal Register
announcement of August 11 states, and I quote, "The
proposals are in response to H.R. 1732, which resulted from
suggestions and comments to the administration by the
public, bar groups and the August 1992 Advisory Commission
on Patent Law Reform suggesting more participation in the
reexamination proceedings by third party requesters."
I would respectfully like to ask whether the
public mentioned here as requesting more third party
participation included any independent or small business
inventors? If that information is not available now, I
would like to request that it be provided in the PTO's
response to today's proceeding or possibly that it be noted
as unknown. In addition, I would like to formally ask also
whether the Advisory Commission on Patent Law Reform had any
members who are independent or small business inventors?
Again, I respectfully request that that information be
provided for the record if not available here.
Lastly, I would like to ask whether the PTO has
made any outreach effort to gauge formally or informally the
reaction of the bulk of its customers, that is the
independent and small business inventors, to these proposed
rules. If the answer is that this public hearing is that
outreach effort, I would like to have the PTO's estimate as
to the effectiveness of this approach in reaching such
independent and small business inventors such as in terms of
numbers reached, what percentage that might represent to the
overall total, and what statistical relevance could
reasonably be placed on those estimates?
Until and unless shown otherwise, I would like to
submit at least hypothetically that there is no such
suggestion for more reexamination participation from any
independent or small business inventors, and that except for
some possibly token participation, if that, independent and
small inventors have not been adequately included in the
proposed rulemaking process or its evaluation given their
relative importance in terms of numbers or in terms of
effectiveness and technical progress and employment growth.
If the PTO is in the process of reinventing
itself, as part of Vice President Gore's government-wide
initiative, why is the PTO not making a more concentrated
effort to identify and focus on the needs of the bulk of its
customers as expressed by those customers. It seems to me
fairly plain that the suggestion mentioned above comes from
big business and bar groups. To the outsider looking in, it
appears that these two groups effectively form the only core
of customers that the PTO is now serving directly.
That has at least the appearance of a major
problem. The interests of these two groups are frequently
diametrically opposed to those of independent and small
business inventors. Big business typically either licenses
or buys most of its best technology from independent or
small business inventors. To take just one example. Windows
95 is said to be the first code ever written exclusively by
Microsoft, which, of course, purchased MS-DOS, Word, EXCEL,
Power Point, and its other core products from small
Generally, big businesses are licensees and
buyers. Independent and small business inventors are
licensors and sellers. Their interests are often in
conflict. The same is true for bar groups which typically
include many representatives of large business either in-
house or outside. And, of course, even patent attorneys of
independent and small business inventors are sellers of a
service of which the inventors are buyers.
It's not clear at all that members of the legal
profession should be properly considered customers of the
PTO in any true sense. They would appear to be middlemen.
The essential interests of all three of these groups must be
balanced by the PTO. Currently, independent and small
business inventors do not seem to be directly included in
any meaningful way in the policymaking process in the PTO.
If that observation is incorrect, I would be most grateful
to hear why, perhaps now, and later in more detail in the
hearing response, including what steps the PTO might propose
to better include all of its customers.
I have raised the issue of a proper and complete
definition of customers because nowhere in the PTO
proceedings are conflicts between the interests of different
categories of customers likely to be more intense than if
third party participation is increased in reexamination
proceedings. Clearly, given their relative financial
resources and the legal talent that that buys, the third
parties that we're talking about here are big businesses,
and the reexaminations will likely be mostly of patents
filed by independent and small business inventors.
Independent and small business inventors will be
faced with repeated expensive challenges from big businesses
who can use their superior financial resources to wear down
and out small businesses, the classic tactic of outspending
the little guy. And big business will risk only whatever
litigation funding they choose to invest, no more. With
more resources, they can usually win at least some time and
cannot lose more financially than they choose to.
Contrast that with the far better legal protection
than currently exists for independent and small businesses
in the U.S. court system. The risk for big businesses there
are far higher. The patents of small businesses must be
challenged with costly real products which if found to
infringe will lead to much greater costs, perhaps
prohibitive ones, and the total cost is unknowable
beforehand and uncontrollable. And since infringement
judgments are now much more likely in light of the recent
Hilton-Davis decision, under the U.S. court system
independent and small business inventors have recourse to a
Let there be no doubt about it. The proposed
reexamination rules will grossly tilt a relatively balanced
playing field now firmly in the direction in the big
businesses at the expense of independent and small
inventors. On what grounds can the PTO identify to justify
so favoring one class of its customers over another? How is
the public interest served? Thank you.
MR. GOFFNEY: Mr. Ellis, your comments are
appreciated by us. Just as a point of information, over the
past two years that I've been associated with Patent and
Trademark Office, I've been a party to many customer focus
sessions in which many of the small inventors were included.
In fact, on at least one occasion -- this was out in San
Francisco -- we invited only small business or small
inventors, small business, not small inventors, small
businesses, most of whom were inventors who started their
own businesses. And during those sessions, one of the
things I asked them about was what kind of needs do we have
in order to develop better policies in the Patent and
Trademark Office on behalf of small businesses.
It was even to my own curiosity that in one
session a number of them said that the reexamination
proceedings don't allow them to participate as readily, and
their course of actually bringing actions, declaratory
judgment actions, for example, in court was not accessible
to them because of the prohibitive fees. It may well be
that the $11,000 is not available either, but I'm just
mentioning that that was a concern, and we talked about
that. There has been some outreach. I just wanted you to
know that that outreach has been there for small businesses,
and, you know, it might be the case that in many cases with
small businesses because they're running their businesses,
they don't have the time and luxury to come in and talk to
us in some of these fora.
But I will assure you that we will continue to
make an effort to include all of our customer base in our
proceedings and in our determinations. Are there any
questions that anyone else has here? Thank you.
Okay. This completes the list of those who have
asked to testify, and I have the sign-in list, and there is
no one there. Let me just ask orally is there anyone else
who would like to present some testimony?
MR. STEIN: May I ask a question?
MR. GOFFNEY: Sure.
MR. STEIN: There have been a number of comments
with recording the interviews. I understand the concern
there. If they would be recorded --
MR. GOFFNEY: Come to the microphone and give your
MR. STEIN: My name is Bruce Stein. My question
deals basically with the number of comments dealing with
recording of the interviews. I understand the reasons for
maybe not doing it. But if it was going to be done, would it
be done under oath then?
MR. GOFFNEY: Well, we haven't established a rule
in that regard so is that a suggestion that it be done under
oath or should it not be done under oath or --
MR. STEIN: I think it should be considered.
MR. GOFFNEY: Should be considered. Thank you.
Are there any other questions or comments? If not, let me
mention that written comments must be submitted on or before
September 22, 1995, and a transcript of this hearing as soon
as it is available as well as written comments received will
be available for review on or about October 2, 1995 in Room
520 of Crystal Park One. That's 2011 Crystal Drive in
Arlington. And will be available on the Internet through
the anonymous file transfer protocol ftp. The address is
Now all written comments and the oral comments
made here today will be taken into consideration before
final rules are adopted. Any written comments received
after September 22, 1995 cannot be assured for
consideration. This concludes today's hearing. Thank you
very much for your testimony and for your attendance.
[Whereupon, at 11:05 a.m., the hearing was adjourned.]
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