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

VSM UNITED STATES DEPARTMENT OF COMMERCE PATENT AND TRADEMARK OFFICE - - - - - - - - - - - - - - - - - - x : PUBLIC HEARING ON EXPANDED : REEXAMINATION OF PATENTS : : - - - - - - - - - - - - - - - - - - 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. BEFORE: 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 Solicitor C O N T E N T S 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 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 well. 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 202/546-6666. 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 involved. 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 realistic. 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 event. 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 mandatory. 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 any. 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 interest. 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 apply. 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 raised. 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 issue. 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 examiner. 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 situation. 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 process. 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 organizations. 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 process. 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 questions. 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 sympathies. 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 system. 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 claims. 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 legislation. 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 afford. 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 interviews. 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 oppositions. 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 increased. 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 interferences. $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. 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 that. 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 companies. 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.] MILLER REPORTING CO., INC. 507 C STREET, N.E. WASHINGTON, D.C. 20002 (202) 546-6666 vsm