Skip over navigation

Transcript of proposed Rules of Practice in Patent Cases; Reexamination Proceedings



- - - - - - - - - - - - - - - - - - x





- - - - - - - - - - - - - - - - - - x

		    Stouffer Renaissance Crystal

		    City Hotel

		    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.



	Acting Deputy Assistant Secretary of

	Commerce and Deputy Commissioner

	of Patents and Trademarks


	Deputy Assistant Commissioner for Patents


	Deputy Assistant Commissioner

	for Patent Policy and Projects




ORAL TESTIMONY BY:                          PAGE

Don Dunner

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

Frampton Ellis

Anatomic Research, Inc.                      65


	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

in writing.

	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

proposed rules.

	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

their behalf.

	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

contested reexaminations.

	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

of interviews.

	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

have any.

	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,

I believe.

	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

be justified.

	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

technological systems.

	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 PTO.

	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

States patents.

	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

specific circumstances.

	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

administrative costs.

	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

Richard Jordan.

	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

for consistency.

	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

clarify that.


	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

jury trial.

	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

name, please.

	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.]


507 C STREET, N.E.


(202) 546-6666


United States Patent and Trademark Office
This page is owned by Office of Policy and International Affairs.
Last Modified: 7/4/2009 5:53:50 PM