Achieving Additional Harmonization of Patent Laws

Opening Statement by Herbert C. Wamsley

Intellectual Property Owners Association (IPO)
At USPTO Public Roundtable Discussion
Arlington, VA
December 19, 2002

I appreciate the opportunity to participate in this discussion on behalf of Intellectual Property Owners Association (IPO). We commend the Patent and Trademark Office for conducting this meeting. The expense of obtaining foreign patents is one of the most severe problems facing patent owners today.

IPO is a trade association whose members are predominantly large and mid-sized U.S.-based companies. We also have about 70 small businesses and individual inventor members. Our members file about 30 percent of all of the patent applications that are filed in the USPTO by U.S. nationals, and they file many thousands of applications a year in foreign countries.

While the focus of this meeting is on small businesses, no one should believe expense of obtaining foreign patents is not a problem for large businesses. Sixty-nine percent of the respondents in the survey conducted by the General Accounting Office for its July 2002 report said small and large businesses face the same impediments to acquiring patents abroad, and we agree with that conclusion. Small businesses may be affected somewhat differently from the largest businesses, which may file many applications abroad and have overseas operations, but the impediments for small and large businesses to acquiring foreign patents are the same.

The GAO survey reported that 53 percent of patent attorneys thought small businesses hold fewer foreign patents than they need and only 6 percent thought small businesses hold more patents than they need. The same thing probably could be said for large businesses. Several large business IPO members say they are filing fewer patent applications abroad than they would like to file and during the recent current economic downturn their company budgets for foreign filing have been reduced. We believe it is important to businesses small and large for the U.S. government to take action to reduce the obstacles to acquiring foreign patents.

The over-arching obstacle facing small and large businesses is cost. We believe different substantive patent law requirements in foreign countries is the most significant cost-related obstacle, followed by difficulty in enforcing patents abroad, expense of translations, and expense of formalities requirements.

The Patent Cooperation Treaty has been a successful program for helping businesses obtain patents in multiple countries, and work should continue on improving the PCT. A common standard for filing patent applications electronically is another area with promise for reducing costs.

The effort to harmonize substantive patent law requirements under the auspices of the World Intellectual Property Organization, however, is not proceeding at a satisfactory pace. Many observers are questioning whether the proposed WIPO Substantive Patent Law Treaty can become a reality in the foreseeable future. We believe the U.S. should consider all possible alternative mechanisms for harmonizing substantive patent law requirements, including agreements with even a small number of countries that may be willing to agree on a best practices approach to harmonization. Essential ingredients for such agreements include a first-to-file priority rule and a 12-month grace period to protect inventors against patent-barring disclosures.

A contributing factor to high costs of obtaining patents abroad, and particularly the cost of maintaining patents in force abroad, is the practice that foreign patent offices follow of diverting fees received from patent owners to unrelated government programs. In the 1990's the U.S. government began the same practice. Fee diversion needs to be eliminated abroad and in the U.S.

IPO's Board of Directors supports legislation to adopt some features of foreign patent systems without waiting for a harmonization treaty. This should be done in instances where a feature of foreign patent systems is the "best practice." Examples of changes that would improve U.S. law and at the same time move toward uniformity with foreign laws include (1) adopting a first-to-file system in the U.S. for determining priority among rival inventors, and (2) permitting the assignee (i.e., owner) of an invention to file a U.S. patent application, with appropriate statutory safeguards for the rights of inventors.

I suggest that the U.S. Congress should consider moving ahead next year with legislation to adopt a first-to-file system and permit assignees to file patent applications. These are changes that would improve the U.S. system by reducing the cost of obtaining U.S. patents and at the same time narrow the differences between U.S. and foreign systems. The U.S. is the world's technology leader. It should make its own patent system the world model while continuing to work to convince other countries to change their substantive patent law requirements.

We believe these are steps that will help small and large U.S. businesses protect their technology abroad and strengthen the U.S. economy.