UNITED STATES DEPARTMENT OF COMMERCE PATENT AND TRADEMARK OFFICE - - - - - - - - - - - - - - - - - - x : PUBLIC HEARING ON PATENT : PROTECTION FOR THERAPEUTIC : AND DIAGNOSTIC METHODS : : - - - - - - - - - - - - - - - - - - x Suite 912 Commissioner's Conference Room Crystal Park Two 2121 Crystal Drive Arlington, Virginia Thursday, May 2, 1996 The hearing in the above-entitled matter, commenced, pursuant to notice, at 9:15 a.m. BEFORE: LAWRENCE J. GOFFNEY, JR. Acting Deputy Assistant Secretary of Commerce and Deputy Commissioner of Patents and Trademarks VINCE MILLIN Supervisory Primary Examiner Patent and Trademark Office RICHARD WILDER Office of Legislative and International Affairs, Patent and Trademark Office AL DROST Deputy Solicitor C O N T E N T S OPENING REMARKS PAGE Lawrence J. Goffney, Jr. 3 PUBLIC TESTIMONY Neal J. Mosely Retired Patent Attorney 9 Carl Moy, Professor Chair of Committee 103 of the Section on Intellectual Property [testifying on behalf of the ABA Section on International Property] 23 Frank Schaller President, The Boston Patent Company 40 Robert Portman Jenner & Block [testifying on behalf of the Medical Procedure Patent Coalition] 54 Edward Lentz Vice President and Director Corporate Intellectual Property - U.S. SmithKline Beecham Pharmaceuticals [testifying on behalf of The Pharmaceutical Research and Manufacturers of America] 82 Richard P. Burgoon, Jr. Senior Director and Patent Counsel Cephalon, Inc. [testifying on behalf of the Biotechnology Industry Organization] 89 - - -P R O C E E D I N G S MR. GOFFNEY: We have one other member of our panel who is right out there somewhere and should be coming any second. I apologize. Good morning. I am Larry Goffney, actually Lawrence J. Goffney, but everybody knows me as Larry Goffney. I'm the acting Deputy Assistant Secretary of Commerce and Deputy Commissioner of Patents and Trademarks. With me on this panel -- and if I start to my far right -- is Vince Millin who is a supervisory primary examiner. They have down here patent examiner, but he's a primary examiner from Group 3300. And we have next to him Richard Wilder who is with our Office of Legislative and International Affairs. To my immediate left is Al Drost, who is the Deputy Solicitor. Ed Kazenske, who is the Deputy Assistant Commissioner for Patents, will be joining our panel later. I'd like to apologize for the commissioner not being here. For him I'm apologizing. He is called to the Hill on some legislation and won't be able to join us today though he's very concerned about the issue that is before us, and so as a result, I'm conducting these hearings. I too have to leave perhaps before the hearings are over, and I will turn over the chair to someone else on the panel. Unfortunately, I too am scheduled to make an appearance on the Hill. We are here today pursuant to a notice in the Federal Register, Volume 61. No. 50, which was published Wednesday, March 13, 1996, at page 10320, and the Official Gazette on page 1185 OG 64. On March 3, 1995, House of Representative bill 1127, the Medical Procedures Innovation and Affordability Act, was introduced. This bill would exclude from patentability any technique, method or process of performing a surgical or medical procedure, administering a surgical or medical therapy, or making a medical diagnosis. For reasons I will get to in a moment, the administration opposes H.R. 1127. On October 18, 1995, Senate bill 1334, the Medical Procedures Innovation and Affordability Act, was introduced. While S. 1334 would not exclude subject matter from patentability, as would H.R. 1127, it would grant limited immunity from patent infringement to a patient, physician or other licensed health care practitioners to use or induce others to use a patented technique, method or process for performing a surgical or medical procedure, administering a surgical or medical therapy, or making a medical diagnosis. A hearing was held on H.R. 1127 on October 19, 1995, before the House Subcommittee on Courts and Intellectual Property of the Committee of the Judiciary. What we said at that hearing on behalf of the administration bears some repeating here. Quote -- and this is what we said -- "We understand the concerns of the proponents of H.R. 1127. They are concerns that should be addressed. The administration believes, however, that excluding surgical and medical procedures from patentability is not the proper way to address them, and therefore opposes H.R. 1127." It was in an effort to find the proper way to resolve the problems identified by proponents of H.R. 1127 and S. 1334 without eliminating the vital incentives provided by the patent system that the administration offered to hold these hearings. As we proposed, the purpose of the hearings is to determine the extent to which and how the problems presented by the patenting of therapeutic and diagnostic methods can be solved by changes in standards and practices within the PTO. Representative Carlos J. Moorhead, chairman of the Subcommittee on Courts and Intellectual Property, which is a part of the Committee on the Judiciary, took us up on our effort to hold a hearing. In a letter to the PTO, Chairman Moorhead requested the PTO to hold a hearing to quote "determine whether the problems identified by the proponents of H.R. 1127 could be solved administratively rather than legislatively." The purpose then is on administrative changes that we in the PTO could effect to address and hopefully solve the problems identified by the proponents of H.R. 1127 and S. 1334. Thus, I wish to be very clear, today's hearing is not to discuss the moral or economic aspects of patenting of therapeutic and diagnostic methods. Our inquiry today is to determine whether the problems identified by the proponents of H.R. 1127 and S. 1334 can be solved administratively rather than legislatively. I believe that this might best be done by drawing attention to the issues that were isolated by questions posed by Chairman Moorhead, which are also issues for public comment identified in the Federal Register notice. These issues are whether the problems might be resolved by the application of standards of patentability, PTO resources and reexamination in cases involving the patenting of therapeutic and diagnostic methods, whether the publication of patent information could be made more easily and widely available to the medical community, whether we might do something administratively to enhance experimental use as a defense to infringement in connection with some of these problems, whether the problems might have some resolution in foreign and international experience with therapeutic and diagnostic method patents. The relevant history and the legal and technical implications of each of these issues was fully explored in the Federal Register notice, and I'm not going to repeat it here. I look forward to hearing the testimony today and invite your comments as to how our administrative practices and procedures might be changed or improved upon to address the concerns raised relative to the patenting of therapeutic and diagnostic methods. I know that some of you here today will not be satisfied with that. You will want to pursue legislation in this area such as H.R. 1127 or S. 1334. To you I would say please set aside, at least for the moment, your philosophical opposition to patenting in this area and focus on the administrative practices and procedures that are the subject of today's hearing. To the opponents of H.R. 1127 or S. 1334 that are here today, I would also ask you to set aside, again for the moment, your philosophical arguments and focus on the true purpose of today's hearings. So with that, let us turn to the witnesses. A list of the persons testifying today along with an indication of their affiliation is found in the rear of the room. Also found there are copies of the notice of the hearing that appeared in the Federal Register at 61 FR 10320. Persons will testify in the order found in that list of speakers. All persons testifying are asked to limit their presentations to no more than 15 minutes. Speakers will receive an indication of one minute remaining and an indication of no more time. And so with that, I turn to the first witness today, which is Mr. Arthur Gershman, who may not be here. He wasn't seen. So let us go to the second person, which is Mr. Neal Mosely. You were inadvertently left off the list there, and I'm sorry about that. MR. MOSELY: Yes, I realize I didn't get on the list. Do you want full identification of who I am? MR. GOFFNEY: Yes, please give -- and that is even the people who are on the list, please give your name and identification of your affiliation. MR. MOSELY: All right. My name is Neal, N-E- A-L, middle initial J., Mosely, M-O-S-E-L-Y. I am a semi-retired patent attorney, having been in this field for about 50 years, and I still do a little work for a surgeon on surgical methods. So I have great interest in this proceeding. I came up here from Tucson, Arizona to attend. I have very strong feelings against the proposed legislation, but in deference to the procedure of this meeting I'll restrict my comments to the specific issues that we're addressing. I've gone through the notice of the meeting and have tried to work out comments on each of the several points. To start with, the question arises about identifying problems with the granting of patents in surgical procedures, and my initial comment is simply that I do not recognize the problems of some of the proponents of legislation here. I don't recognize that the problems really exist. That's my initial view that I think they are largely illusory. But the problems that are alleged to exist in the area of granting of the patents and the examination proceeding and application of the appropriate standards for patentability, I believe that such problems arise mainly from the examiners not being able to locate such things as publications, foreign patents and prior uses which have been alleged to supposedly show that certain inventions have been done before. My thinking on this subject is that the patent examination proceeding over the years has been one that is directed primarily to U.S. patents as prior art and publications to the extent that the examiners can get to it. So the problems of supposed prior art which may point away from patentability lie in the area of how do we reach this information, and what I've found over a period of probably maybe the last 15 or 16 years is that by use of on-line computer data bases, such as the Dialogue or I think it's now called Knight-Ridder Information Service -- they have a whole library of source materials. And I've found that in my researches that I turn up prior art that often is much closer to the subject matter of my inventions that I've been handling than the patent. In other words, the patented literature is only scratching the surface of what's been done. So I think that data bases of this type -- now there may be a few individual on-line data bases that are not in, say, the Dialogue system, but you can get most of this out of Dialogue. They have something like there must be 25 or 30 separate medically related data bases that are available. The other source is the Internet, and I have found -- I've only been working in that area recently - - but I have found that there is a tremendous amount of information that's available on the Internet. I mentioned these because I believe that a lot of the criticism of the adequacy of examination can be met by extending searches into these areas trying to reach published literature that's not within the classification system of U.S. patents. So this is one of the areas that I believe that we could improve on being able to reach this prior art. This same point carries through into several of the questions that you've raised in the matter of adequacy of the prior art collection and so forth. I would repeat over and over again that there are on-line data bases that will give this kind of information, and there are some of them that are particularly useful as patent data bases as well as the literature. For example, we can get on-line full text of U.S. patents since about 1970. Now, most of the prior art that has any relevance at all to surgical procedures is since that date or it's in the published literature some place. So searching something like the data bases that are available on-line on Dialogue, using the full text, appropriate key word searching, can get you literature that's otherwise difficult to get just by reading or sometimes maybe scanning the patents that are around. The same thing exists in the area of foreign patents. You can get at least abstracts of foreign patents and in many cases full text on things like World Patent Index and Derwent Patent Abstracts. Also, some of these services will give you a classification and a history of the patents as to where they're to be found in different countries. So if you have a piece of prior art that appears relevant, by going to one of these sources, you can find out what countries it's been patented in, and thus be able to get back into other literature. The question was raised about procedures performed in operating rooms, physicians' offices, prior knowledge, prior sales, which constitute prior public use or prior use, and this is rather difficult to reach. My answer to this would be that we have to distinguish here between what is prior public use and what is private or secret use. If the prior use is secret and deliberately kept so, then it would not be relevant prior art, whether we're talking about surgical patents or a patent for a new part of an automobile. I mean we are looking at what is available to the public, and we're concerned about the granting of patents to ensure that the information is kept alive and is published and available to the public. We have an example that I've only located indirect references to it, which I think points out the need for medical patent, and that is back in the 1600s, there was a doctor, an obstetrician, working in England, who developed the obstetrical forceps that are used in the delivery of babies, and that is recognized by, I think, most people in the field of medicine and surgery as probably the major advance over 2,000 years in delivering children. This man was so concerned about protecting his invention that he never showed it to anyone. He would go to visit his patients, he wore a long coat, hid the forceps inside it, and only the mothers ever saw or perhaps a midwife ever saw it, and he did this for, I believe, according to the references I've seen, all of his life, and it almost died with him. And we could very easily get back to that sort of thing if we were to get into an area where protection is not given to new inventions in the field of medicine and surgery. Let's see. Okay. The next one I see is worry about the reexamination proceedings, and here while I would not go along with some of the suggestions as to the wide opening of reexamination, I do feel that we would be well served if reexamination proceedings were opened up enough to include post-issuance of public use proceedings because at the moment this is reexaminations limited to literature and patents, and public use proceedings are carried out against pending applications. We don't really have a procedure for handling it in the area of reexamination. And so if it's feasible to carry on a public use proceeding against a pending patent, there is no reason why it couldn't be made a part of the reexamination proceeding which would, I think, would solve a lot of the objections of the medical profession to the way the law is applied now. On the publication of invention and utilization of medical patents, I don't speak as any kind of an expert in this area, but I do have certain sources, mainly my clients, a couple of surgeons that I work for, and also the fact that my father was a physician and surgeon, and he practiced from 1918 to 1968. In fact, I would give an example of something that he did to show surgical innovation. He never patented anything in his lifetime, but I think he could have done so. In 1921, he was working for a steel mill, and the worker had a steel chip imbedded in his eye. They brought in an eye surgeon, and he said he couldn't get the chip out without essentially destroying the man's eye. So my father sat the man in a chair and brought in a very powerful electromagnet that they used for lifting large pieces of steel and iron, turned that magnet on and pulled the steel chip out of the man's eye; his eyesight was saved. I don't know whether that could have been patented back then, but I think given the state of the prior art, today -- I mean the state of the prior art in 1921 and applying our present procedures, I think that would have been a patentable invention. The use of patent publications I believe is probably limited pretty much to the doctors that do a lot of reading and research themselves in the development of new procedures. My observation is that probably the vast majority -- if I had to pick a number, it would probably be up in the high 90 percent of doctors -- do not do that kind of reading and literature. Most of them are just too busy with their practices to get into that. Most of them don't publish. Most of them don't patent. But the ones that are active in research, that both read the literature and they publish, and when they have something that they think is worthwhile, they patent it. So I think the publication of procedures that would otherwise be kept secret facilitates the grant of patents which allow this material to be disseminated. Next point here was on the matter of early publication, the 18 month publication, in the bill. And while I believe the early publication of patents has something to recommend it, it's workable in other countries around the world, we must keep in mind that it is inconsistent with our system of awarding patents on a first to invent basis. All right. Our whole system of interferences is set up to keep everything secret from both parties until the preliminary statements have been exchanged. You don't find out what the other guy's date is, even his publication. So if you publish patents at 18 months, you open it up for someone to fabricate evidence, and I think it's entirely likelihood that some of that would take place. One last thing here. On experimental use, I believe that the state of the law presently is favorable to people being able to use patented inventions to the extent of testing them to compare. Okay. One last thing. MS. GOFFNEY: Please finish your last statement. MR. MOSELY: All right. The last statement is simply if there is a change in experimental use, I think it should be in the area of codifying the principle that no use of an invention that would otherwise be an infringement is experimental if it is done for profit. MR. GOFFNEY: I'd like to ask you one question, Mr. Mosely. MR. MOSELY: Yes. MR. GOFFNEY: And this certainly is relevant to your statement, though I think it's relevant to other issues in the patent office. You said that the examiners might be able to get more pertinent information and prior art by the use of data bases. MR. MOSELY: Yes. MR. GOFFNEY: You spoke of the Internet and you spoke of other nonpatented literature data bases. MR. MOSELY: Yes. MR. GOFFNEY: How much do you devote to a search in that type of manner? MR. MOSELY: Oh, I don't -- maybe an hour or two, something of that sort. I could -- MR. GOFFNEY: Do you find yourself limited to some extent? MR. MOSELY: That's running the search, and then I just pick off everything that looks like it would be interesting, and then I may spend a couple of hours more scanning the literature, what I've turned up, but I get out full text of the articles that I want. MR. GOFFNEY: Yeah, but you don't feel particularly restricted to get through a particular project at a certain time? MR. MOSELY: No, I don't have that kind of restriction. Incidentally, most of these data bases will include patents as well. So you're doubling up. If you did this kind of search first, you would pick up the literature, but you would also pick up the patents that were relevant within that literature. MR. GOFFNEY: Do you find any difficulty in dating prior art off of the Internet? MR. MOSELY: Mixed, mixed. MR. GOFFNEY: Bulletin board. MR. MOSELY: Well, I haven't been using the bulletin board. I think that's another possibility is just posing questions out on to the Internet on bulletin boards and see if you get replies on them. But you can get a lot of the stuff is, if it's literature or reference to literature, you can get the dates fairly well, and the stuff of things like Dialogue information systems, that's all dated because it's from medical journals and references back to it. MR. GOFFNEY: Thank you. MR. MOSELY: All right. MR. GOFFNEY: Incidentally, for the other speakers, when you come up, there is some water here, and I forgot to introduce Jim Silbermann, who is a detailee to our Office of Legislation and International Affairs, and he's our timekeeper here, as probably has been made evident. And finally does everyone hear well back there? I mean can you hear the speakers? Okay. The next speaker is Professor Carl Moy. MR. MOY: Thank you, Commissioner Goffney. I'm appearing here today not in my academic capacity, rather as chair of the Intellectual Property Section's Committee 103 of the American Bar Association. I'm appearing, first of all, in place of the Section chair, Don Dunner, who was called away on other matters in Boston and asked if I could fill in for him. I'd first of all like to start my remarks by thanking the administration of the Patent and Trademark Office and Representative Moorhead for making sure that these hearings take place. The Section believes and I believe personally that these issues need to be aired and need to be discussed and a record needs to be built, and we are looking forward and appreciate the opportunity to participate in that process. The Section has not yet submitted a written statement. It will do so before the deadline that's listed in the notice in the Federal Register. Today I'm only going to provide summary of those remarks because of the limited time. I would also note at the outset that while the purpose of the Federal Register notice is stated explicitly as dealing with the patent office's administration of the patent system, some of the questions that are posed, particularly those that are posed at the end of the notice, have a somewhat broader scope than that, and so some of my remarks are going to be addressing that broader context. I would also like to point out at the outset that the remarks that I'm giving now are representative of the position of the Intellectual Property Law Section of the American Bar Association. They reflect positions that have been taken by counsel and approved through the formal section mechanisms. They have not, however, been posed to the larger ABA and have not been approved by the Board of Governors and should not be taken as the position of the overall ABA. I think what I'll do today is organize the Section's positions around, I think, three broad themes that I'd like to bring up, and they are as follows: first, I think it's very important for us to realize that therapeutic and diagnostic methods are not unique. They're not unique in their relationship to the patent system. They're not unique in their relationship to the examination process that forms a part of that system, and they are not unique in their relationship to the Patent and Trademark Office. Let me give you an example of what I mean by that. First of all, the examination system. The examination system has as part of its function identified those applications that are for inventions that are novel and unobvious in relation to prior technology. This determination, particularly the determination with regard to unobviousness, is directed toward the quality of thought that would have needed to have been generated by one of skill in the art in order to arrive at the invention after starting at the existing technology. It is not directed toward inquiring about the level of tooling that would have been required to come up with the invention or was required. It is not directed to inquire directly into the level of capital investment that the invention required. And so as a result, patents will issue on surgical methods and on diagnostic and therapeutic methods if, in fact, the patent system and its criteria are applied properly, and that is a statistical certainty. And so to the extent that -- and I was little bit troubled in reading some portions, introductory portions, of the notice -- to the extent that there are some groups who believe that these types of patents will never issue if the patent criteria that are currently listed in the statute are properly applied, the Section takes strong exception with that. We believe that it's a statistical certainty that these patents will, in fact, issue on occasion -- only on meritorious occasions, but they will, in fact, issue. I would also say that the PTO's problems with regard to the examination of therapeutic and diagnostic methods are not unique. There is, for example, currently no evidence that there is a systematic, fundamental problem with the PTO's examination in this area. Rather what we have are some expressions of generalized concern by a particular class of defendants, who might face problems with those patents, and some anecdotal evidence. And so I think we have to be careful about concluding that, in fact, there is some large problem that exists at the moment. But let's assume for the moment that there have been occasionally invalid patents that issue in this particular art. This is, in fact, not unique. The examination system is not a guarantee of protection. Rather, what its purpose is is to approximate what the outcome will be of a district court litigation when and if the issue of patent comes under scrutiny. It has to be judged not in terms of an ironclad guarantee that these patents are valid, but rather with reference to the system that it replaced, one of registration where there was essentially no guarantee of validity whatsoever. And so it is true, I think -- again, it's a statistical certainty in any active art area that on occasions, there will be invalid patents at issue, just as on occasion there will be meritorious inventions that wrongly receive a rejection and even a final rejection. And the question is not getting rid of these totally. The question is whether or not we can manage this number of occurrences statistically down to a level that is small enough that the system can live with, and we believe that that can be accomplished with regard to therapeutic and diagnostic methods just as it has been accomplished in many other areas as well. Every art area has this problem of the patent and trademark's examination and operation to some degree or another, and the fact that the medical community may be experiencing this kind of problem with a particular category of patents is in no way unique whatsoever. The Patent and Trademark Office throughout its history has constantly and continuously managed the expertise that it's examining for to match the ebb and flow of inventive activity across American society. And the fact that we are now seeing an increase in inventive activity that's directed toward the patent system in this particular technology area is, again, not unique, and, in fact, there is no indication that the patent Oofice's abilities to match its expertise internally with that inflow is in this area not going to be possible. And in that sense, I would say that the activity we're seeing in this art area is roughly analogous to the activity that we saw in the biotechnology area and the computer software area where, in fact, there were a few bumps and scrapes in getting started. What we see is that, in fact, the patent system is reacting to that very well, and the examination system seems to be working perfectly fine. I would also say that the relationship that therapeutic and diagnostic methods have to the prior art is, in fact, not unique either. Now we know, and I think everyone in this room knows, that the patent office's files of prior technology, evidence of prior technology, are largely limited to printed publications, whether they're in the form of industry publications or whether or not they're in the form of prior issued United States patents. Well, it appears that with regard to therapeutic and diagnostic methods, and in that technology that, in fact, they are very well documented with regard to printed publications, particularly trade publications, and so it does not seem as though this area is particularly unsuited to patent examination. As a matter of fact, it seems evident that it's particularly well suited to patent examination provided that the patent office makes itself aware of what those data bases are and gets access to them. We also say, and this is a somewhat broader point, that the relationship that therapeutic and diagnostic methods as inventions bear to the law of patent law remedies is in no way unique whatsoever. And here I'm talking about the question of injunctions and the threat of an injunction or the proposed threat of an injunction over such a technology is sort of the cornerstone of a parade of horrors that have been brought up in connection with this technology. But, in fact, injunctions are a specie of equity. That's an equitable remedy. And, in fact, they are subject, and the statute says this now currently without amendment, that they are subject to being awarded under the principles of equity. Well, equity to acquire is a consideration of what impact the proposed injunction would have in the public interest, and it is the considered position of the Section that, in fact, a truly important therapeutic or diagnostic method that is covered by a patent will not be enjoined in such a manner by the courts of the United States under the current law in a way that would materially restrict the access of the public to that advance. And so, in fact, we see here that the problems of the so-called decrease of the public's access to these methods once they're, in fact, subject to patenting, these stated fears are precisely that. They are stated fears. They are not documented reality. In fact, we do not believe that they're a reality that would take place. The second point I'd like to bring up, second broader point, is this: the medical community's discussion of patenting, while it's directed to the patent system, is really, I think, under, it is being driven by a different influence. And that's this. The health care industry in the United States is reported to be undergoing a very severe and rapid consolidation at this point in time, and that really is at the root of the medical community's complaints, not really the patent system. Previously, the medical profession and the people who have practiced in it have practiced as individuals and in small group practices. And what's happening now is, and particularly in Minnesota and the area where I'm coming from, the medical community is consolidating. And many of these medical, licensed medical practitioners, are becoming employees of much larger entities. This obviously causes professional stress and all sorts of problems that are associated with that large sociological shift. And we have sympathy for those problems. But, in fact, removing therapeutic and diagnostic methods from the classes of patentable subject matter and in some way treating them special during the examination process will not stop that process. That process is being driven by much larger concerns that are far beyond the scope of what the patent office, far beyond the scope of these hearings. And, in fact, the question is not, therefore, whether or not these should be removed to solve that problem, but rather the question is whether or not therapeutic and diagnostic methods need to be treated in the patent system or not in a system that will result from that consolidation. And I would note this: previously what we have seen in this area, and I think even the people who are proponents of the bill on the Hill would agree with this, the major mechanism, or one of the major mechanisms, for making sure that these methods become public information has been a personal choice on the part of the inventor to publish and, therefore, receive the benefits of that such as notoriety over individual profit. And that has been a personal, individual decision. And I would pose the question this way: what happens when in the next generation we find that rather than these people being free to act as individuals, they're employees of large corporations, and, in fact, they're under written employment agreements that have confidentiality agreements written into them? In fact, they as a condition of their employment are required to in advance assign their inventions to their employers, just as what happens in many, many large areas where there is active research and development activity. Under this situation, it's the Section's position, and I think only common sense, that the effective availability of patents from therapeutic and diagnostic methods will be critical because this will be probably the primary mechanism to drive the utilization of these and the protection of this form of intellectual property away from the trade secret system, which has no public disclosure and is, in fact, predicated on the lack of public disclosure toward the more socially beneficial form of patenting. And so while we believe that it is a very stressful thing and perhaps subject for a much larger debate as to whether this is positive that the medical profession is moving away from essentially a cottage industry more to a big business situation, we believe that, in fact, the patent system cannot be singled out as being a cause of that. Rather, the question is whether or not the patent system can be changed to deal with it effectively. The last broad point that I'll bring up has to do with foreign patents. The Section is aware, of course, of the fact that some interests have argued that since various foreign countries have a practice of in some way restricting the availability of patents for therapeutic and diagnostic methods, that somehow this is proof that the United States should adopt such a practice as well. And I think in evaluating that, we have to be quite careful because the individual laws, the laws that exist in individual countries, are, in fact, the result of a very complex set of circumstances. They're the result of history, they're the result of culture, and they're the result of economics, all sort of put together. And the question then is, well, if that law is going to be appropriate in the next country, you have to find out and isolate the effect that this is actually the cause of, the root cause rather that is bringing forward this effect, and ask the question of whether or not that exists in a subject country whose laws you're thinking about changing. This is a basic point of comparative law, and, in fact, it is nowhere near as simplistic as has been brought forward. And this is particularly important when we're talking about exclusions from patent protection, which is one of the major items under discussion. Exclusions from patent protection are a classic means in the international patent system -- this has been documented since the 1800s -- of allowing some countries to free ride on the innovations that are paid for by other countries. And so the presence or absence of patents over a particular class of technology is not necessarily a statement of whether or not patenting is appropriate and whether or not the benefits of patenting are worth the cost. It is largely a question of who is going to pay for those and whether or not, in fact, someone else can be encouraged to pay for them while that particular international country takes the benefits. And so we have to be very careful, I think, about relying on those foreign experiences. This is also, I think, something that needs to be carefully looked at with regard to the health care industry, inventions that are important to health care. The patent system is uniquely directed toward encouraging innovation and invention and public disclosure in systems that are private and that are fully competitive. And so the question then that needs to be asked is this: are the health care systems in foreign countries as private and as fully competitive as the one that exists in the United States and the one that we envision existing in the United States? And I think if we ask that question, we will come into some very serious problems and serious areas that need to be investigated before we can say, well, we're going to have to rely on foreign precedents to change our own laws. And the last fact I would make, I would point out, is this: in fact, the foreign experience and what we can see from the foreign experience is that the international community favors the patenting of therapeutic and diagnostic methods rather than runs against it. I'm referring here now to a paper that was published by the World Intellectual Property Organization. It's a summary of exclusions from patent protection, and I believe it was published in 1986. I'll give you the cite. It's HL/CE/III/IF/1. And that document records that at that time, 1987, there were 41 countries that excluded pharmaceutical inventions from their classes of patented subject matter. And at the same time, there were only 29 countries that excluded patents for methods of treatment of the human or animal body, which is the international formulation of this matter. So, in fact, the United States has already gone on record as saying that this exclusion for pharmaceutical product patents is, in fact, ill considered and that the proper course is, in fact, to adopt a more aggressive stance toward patenting. Well, the international community believes that, in fact, those arguments apply more aggressively towards methods of treating the human and animal body than they do the pharmaceuticals. So, in fact, if we look at the international experience, what we see is that it argues for rather than against granting patents in this area and administering the system properly. And so, in summary, it's the Section's position that while there may be a few start-up problems that exist in the area, there is no fundamental problem that exists in the examination system, and that, in fact, the Patent and Trademark Office is going to be careful of administering this properly. Thank you. MR. GOFFNEY: Questions? Thank you. Our next witness is Mr. Edward Lentz. Is Mr. Lentz here? Next is Mr. Frank Schaller. Hi. How are you? MR. SCHALLER: Good morning, Commissioner Goffney, Mr. Wilder, Mr. Millin, Mr. Silbermann, Mr. Drost. Excuse me if I speak fast, but I have a lot to say and a very little time to say it. My name is Frank Schaller, and I'm a native borne American. In fact, I recently learned much to my surprise that I'm an 11th generation pilgrim Mayflower decedent. For the past 33 years, I've been a resident of Needham, Massachusetts, a suburb of Boston. MR. GOFFNEY: I thought everyone in Boston was that. [Laughter.] MR. SCHALLER: Perhaps. I am testifying today as a private citizen, and the views I express are solely my own. My only interest in testifying is to help advance the standard of living in the United States and, thereby, benefit myself, my wife, and my children and my firstborn grandson, Oliver Charles, who was two months old two days ago. MR. GOFFNEY: Congratulations. MR. SCHALLER: Thank you. Before commenting on the subject of today's hearing, I would like to relate some of my background so that you might better interpret my remarks. I have a bachelor of mechanical engineering degree from Clarkson College of Technology. I'm a graduate of the engineer officer basic course at Fort Belvoir, Virginia, and I've done graduate work at the University of Pennsylvania School of Engineering, and I've taken various courses at various other institutions. I am not a lawyer. The only legal training I have had was instruction on the Unified Code of Military Justice while on active duty in the Army. I'm also not a physician. The only medical training I have had is 30 hours of classroom instruction on medical terminology. I am the inventor or coinventor of 12 U.S. patents in the field of computers. My first patent in the late 1950s was for a high-speed printer which printed in two colors. This was developed for the FAA for air traffic control. I recently saw one on television on a program about antiquated equipment in need of replacement at the FAA. [Laughter.] MR. SCHALLER: As I recall, I was paid one dollar for endorsing my employment contract with Remington Rand Univac at the time they submitted the patent application. This is the only direct renumeration I have ever received for a patent. I have been a defendant in a patent lawsuit and a corresponding International Trade Commission complaint. I have been an expert witness, along with former Commissioner Ed Brenner, in a patent lawsuit and corresponding International Trade Commission complaint. In the past, I've been a member of the American Society of Mechanical Engineers, the Institute of Electrical and Electronic Engineers, and the Society for Photographic Scientists and Engineers. At the present time, I am a member of none of those, but I am a member of the Inventors Association of New England. In the late 1960s, I served as chairman of the Business Equipment Manufacturers Association for the Committee on the Standardization of Punch Cards. In this capacity, I served as the chief U.S. delegate to a meeting in Geneva, Switzerland in 1968 for the ISO Standards on Punch Cards. I've been a subscriber to the Official Gazette of the PTO for many years. I have a complete collection of OGs in my office from patent number three million issued in 1961. These OGs contain the abstracts of over 2.5 million patents issued since 1961, and I use this collection on a daily basis. I've been a subscriber to the Journal of the Patent and Trademark Office Society since 1984. Sometimes I read it. Most times it's beyond my understanding. I have a collection of over 100,000 paper copies of patents in the field of computers, medical products and robotics. I have a complete collection of all patents issued since 1/1/95 on CD-ROM for a total of 125,000 patents in that time period. In 1978, I founded the Boston Patent Company with the express purpose of improving the dissemination of U.S. patent information in the field of computers. After reviewing various formats in use around the world, I decided to organize patent information by class or by assignee or by both and reprint the front pages in booklet form. We call these Patent Digests. The name was selected to compare favorably with the worldwide popularity of the Reader's Digest. For a few years in the mid-1980s, we covered robotics. In 1989 we added dentistry, and in 1991 we added some of the surgery classes and prostheses. Since 1978, we have reprinted the front pages of about 100,000 patents in this format. Of this total, about 20,000 are in the field of dentistry, surgery, and prostheses. In my dual role of editor and printer, I have personally handled each one of these patents. At the present time, we publish separate monthly digests of all patents which issue in seven classes; namely, Class 128 surgery, Class 433 dentistry, Class 600 surgery, Class 604 surgery, Class 607 surgery, light thermal electrical application, and Class 623 prostheses. Our customer list for these Patent Digests totals over 1,000, including over 130 Fortune companies, and they are located in 20 countries around the world. In 1995, we added patent searches with Official Gazette patent abstracts to our services. To summarize, I am neither a lawyer nor a physician, but I deal with patents in the field of medicine all day everyday. I often see the words quote "patent practitioner." I have never seen the word defined, but I think I am one. Regardless, because I am neither lawyer nor physician, it is my hope that I can bring a fresh perspective to this debate, and I think a fresh perspective is needed. It seems to me that the debate is bogged down with physicians on one side and patent lawyers on the other. And our legislators might find a fresh viewpoint to be useful. In presenting my views, I would like to make some general comments, and if time permits, I have some specific comments in response to the topics listed in the notice for this hearing. First, I would like to say that I believe that I understand the debate to date. With the assistance of my Congressman Joe Moakley, I have obtained and reviewed the testimony and reports of the October 19, 1995 subcommittee hearing on H.R. 1127. I've also reviewed Report One of the AMA Council on Ethical and Judicial Affairs. I have read Patent No. 5-081-11 and various other commentary regarding this debate. Secondly, I would like to say that I oppose passage of 1127 or any other legislation that remotely resembles H.R. 1127 for several reasons. One, I have a copy of the Declaration of Independence hanging on the wall of my family room, and on line four appear the words quote, "that all men are created equal." Personally, I am offended by the actions of any group which petitions our government for special status and in so doing undermines the principles of coequality which is the foundation of our society. I understand the anguish and economic burden of an unexpected accusation of patent infringement because I have experienced it myself. But I cannot agree that any grouping of citizens of any kind should be given a special status of exemption from our laws. Point two, whether H.R. 1127 offends you or not, imagine what would happen if such an exemption were conferred. Who could deny an exemption for the infringer of a method patent in any other field? As I explained a minute ago, in the last 18 years I have organized and disseminated about 100,000 patents in some of our most active high-tech fields. I can neither prove it nor disprove it and neither can anyone else that I know of, but there is not the slightest doubt in my mind that the high standard of living we enjoy in America today is closely linked with our patent system. My strongest reason for opposing H.R. 1127 is that I fear it will undermine and eventually destroy our patent system. If one group of inventors or one field of technology is awarded special exemptions, I fear the patent system will quickly crumble and our advancement of technology in all fields will be slowed to a snail's pace. Our medical research and development is already moving offshore to skirt alleged delays at the FDA. A weakening of our patent system would certainly accelerate this exodus. Point three, before we succumb to the harmonization of our patent laws, we should carefully consider other factors. Do we really want to change our laws to agree with those of a Communist country like Cuba or a country which practices infanticide in the millions like China? Or a country with rampant unemployment partially brought on by socialized medicine like Sweden? I for one do not. This concludes my general comments, and if time permits, I would like to make specific comments on the topics listed in the notice of the hearing. Topic A.1, I have been hearing comments about patents from inventors for almost 40 years. The most frequent comment I hear is that the PTO issues patents for obvious inventions. This is the case of the experience of a highly skilled specialist versus the more general experience of a patent examiner. It is a fact of life that an inventor is sometimes more skilled than an examiner in his narrow field, and sometimes he is not. Topic A.2, medicine is not the only field where the PTO does not have access to non-written prior art. It is true in most fields. I spend about a day a month at the medical science laboratory of Tufts University doing various research. They have a collection of videos. It's open to the public. You can walk up to the shelf, select a video of your choice, find an empty room and view it. You can see any medical procedure of any kind at your leisure. I think the patent office should avail themselves of video information and make it available to the examiners. I also was privileged to attend the 1994 Annual Meeting of the American Society of Cataract and Refractive Surgery. Much to my surprise, I found they conduct a film festival. They had 115 films submitted for their film festival in 1994. Presumably, most of these were in the field of eye surgery. I think the patent office should avail themselves of information of this kind. It certainly could have helped in the current controversy of the Pallin patent. I don't know the details. I suspect that the PTO has access to the Library of Congress. The very close proximity would certainly make that a very useful resource, I would think. I would also think that the PTO should probably have some MDs on the staff. I don't know if you have any at the present time, but I would certainly be pleased to see that. Topic A.3, on reexamination. The only point I can make on that is I looked up how many have been issued. There is only 2800 that have issued in the last 14 years, only 200 per year. It's one of two things. It's either a ringing testimony of the excellent job being done by the patent examiners or it's a condemnation of the reexamination procedures as not being too useful to the general public, but it certainly is being done on a very low level at the present time. I think it probably is one of the most fruitful areas for resolving this dilemma we're debating this morning. Topic B, publication of patent information. The word "patent," interestingly enough, means open in both the field of law and in the field of medicine. In paraphrasing the World War II song, I think it's time to accentuate the positive and eliminate the negative. We've heard a lot about the negative parts of the patent system, and I think we're giving insufficient attention to the positive aspects. There's a conflict between patents and scientific publishing in all fields, not just medicine. Is progress in medicine really more rapid than process in microprocessors? I doubt it. I think the root of the problem is that the information is exploding in both patent literature and medical literature. For example, I recently did some research at Tufts University on the subject of echocardiology and found much to my surprise there are 25,000 references in echocardiology in the medical literature today. That's certainly a big number. And so anyone that's not aware of it, the current level of patents in the U.S. is 100,000 patents per year. It's my feeling the solution is not legislation. It's improved information dissemination. Topic C, conflict between peer review and patent is not unique to medicine. It's true of all fields. We do have a one year grace period between the first public use and the patent application deadline. Topic D, foreign and international experience. I have no specific comments. I think harmonization is a frivolous argument. And absent specific benefits to the United States, I think it should not receive further consideration. In conclusion, I would like to say I am in sympathy with the frustration of the AMA. My advice to them is to focus on the positive results of our patent system. No system is perfect. And the real abuses of the system are really quite infrequent. Unfortunately, the role of the media in our society has become one of magnifying a dispute all out of proportion to the underlying conflict, and needlessly inflaming the situation, all in the interest of selling more copies of more advertisements. Do not be misled. Our patent system is one of the crown jewels of our system of government. And even in the field of medicine I see it everyday. I hope to devote the rest of my working days to improving the dissemination of medical patent information. I have no argument with the AMA. I would welcome the opportunity to work closely with them in the future. This concludes my remarks. Thank you for your attention. MR. GOFFNEY: Thank you. Any questions? Thank you very much. Let me see. If Arthur Gershman here yet? No. Okay. Then Mr. Robert Portman. MR. PORTMAN: Good morning. I want to thank you for giving us the opportunity to testify here and for holding these hearings. We appreciate that opportunity and commend the patent office for taking the initiative to look at this issue. I am pleased to testify today on behalf of the Medical Procedure Patent Coalition. The coalition is submitting written comments in response to the patent office's request for comments on the specific issues relating to the granting of patents on therapeutic and diagnostic methods as set forth in the Federal Register notice of March 13, 1996. I will be briefly summarizing those comments here today and throughout my testimony. I will be variously referring to patents on therapeutic and diagnostic methods as medical procedure patents, medical method patents, or patents on medical and surgical procedures since those are the terms that have been used more commonly in the discussions we've been having. The coalition, which consists of 17 medical societies and associations, is led by the American Society of Cataract and Refractive Surgery, and includes the American Medical Association. We've listed a complete listing of the coalition members as Appendix A to our comments. Medical and surgical procedure patents in our view are fundamentally incompatible with the medical community's longstanding tradition of free and open exchange of information on new and innovative procedures. These patents can have a chilling and obstructive effect on the quality, cost and availability of medical services. For these reasons, the American Medical Association has declared it unethical for a physician to seek, secure or obtain such patents or enforce such patents. Accordingly, the coalition members and the physicians they represent have a strong and vested interest in both the legislative and administrative efforts to address the problems caused by medical procedure patents. I will begin by providing some general comments on the purpose and effect of these hearings and the nature of the medical procedure patents controversy, which I will try to keep brief in deference to your comments at the beginning, and then I will address the specific issues raised in the Federal Register notice. The Federal Register notice states that the goal of these hearings is to determine the extent to which and how the problems presented by the patenting of surgical and medical procedures can be solved by changes in standards and practices within the PTO, and Chairman Moorhead's letter also asks for the convening of these hearings to determine whether the problems identified by the proponents of H.R. 1127 could be solved administratively rather than legislatively. I guess I should say right now that all these references to the proponents of H.R. 1127, I think for today's purposes can be identified and directed towards me and those that I represent. So the rest of the panel can rest easy. We are the proponents of H.R. 1127 although I have to say -- and I will say in just a moment -- that we are living a little behind the times of the fast-paced evolution of the legislative discussions to be focusing on 1127 since it's not really on the table anymore. The coalition's response to these questions, though, raised in the Federal Register notice is unequivocal. The problems associated with medical procedure patents cannot be solved by administrative changes alone. Administrative changes may have effect, but even if the patent office's standards and practices were dramatically reformed to alleviate any concerns about inappropriately issued medical procedure patents, legislation would still be needed to either ban the issuance of such patents or limit their enforcement against physicians and their affiliated health care institutions. Even where a particular medical or surgical procedure is novel and non-obvious, the availability of patents for such procedures can still have very serious adverse consequences on the availability, quality, and cost of new and innovative medical and surgical procedures. Physicians would still have every reason to be worried about inadvertently infringing an appropriately issued medical procedure patent. Patent holders would still have every incentive to withhold information about their inventions until their patent application was approved. Health care costs would still increase. Peer review would still be obstructed and medical judgment and autonomy would still be impaired, and this all assumes that the limitations in the patent system could be fixed, which we have some doubts about. The problems associated with medical procedure patents demand a legislative solution. In the absence of legislation, individual physicians, medical schools, and teaching hospitals will continue to be subject to the chilling effect of threatened patent infringement suits and royalty demands. While a defendant in an infringement suit may eventually succeed in showing that a patent was inappropriately granted or the procedure used did not infringe the patent, the time and expense necessary to prevail in such litigation is prohibitive and the potential relief is limited to the parties in the suit. Thus, while the coalition is pleased to provide comments on the patent office's current practices and procedures with respect to medical and surgical patents, we do not intend for the submission of these comments to suggest any softening in our resolve to work for a legislative solution to this problem. The two bills that have been identified, H.R. 1127 and S. 1334, one banning medical procedure patents, and S. 1334 limiting the enforceability of medical procedure patents against physicians and their affiliated institutions, are currently pending in Congress. These bills are consistent with the approach taken by more than 80 other countries that have legislatively banned or restricted the issuance of patents on medical and surgical procedures. As I said, while we support in principle and in fact prefer in principle the approach taken by H.R. 1127, we also understand the philosophical objections to a ban on patentability as well as the practical problems in crafting and interpreting such a prohibition without inadvertently precluding certain patents that one would not intend to include, including methods of use, patents for drugs, medical devices, and biotechnological processes. The coalition is actively working, therefore, for the enactment of S. 1334 which addresses these concerns while still ensuring that medical procedure patents do not adversely affect the availability, quality, and affordability of medical and surgical procedures. And although we understand the patent office's legitimate concerns about H.R. 1127, we would strongly urge the patent office to support or at least not to oppose S. 1334. While H.R. 1127 would cause significant or could cause significant implementation problems for the patent office, S. 1334 should have little effect or no effect on the PTO's operation since it applies to the enforcement rather than the issuance of medical procedure patents. I will now turn to the specific questions raised by the Federal Register notice. With respect to the area of question in A.1 on the application of the patentability standards by the PTO, I would first say that we have no qualms with the legislative standards themselves, that we have no reason to believe that that is causing a problem, that our concern is primarily with inherent limitations caused by the nature of the subject matter that we think then caused the patent office to have problems in implementing or in evaluating medical procedure patent applications. We believe the patent office is currently ill equipped to properly evaluate the novelty and non- obviousness of applications for medical and procedure patents. Patent examiners typically lack an extensive or current understanding of the prior art or level of ordinary skill in the various medical specialties for which a medical procedure patent may be sought, and this is not a knock on the patent office or patent examiners. It's just a fact and it just reflects the fact that there are thousands and thousands of different medical procedures and hundreds of different medical specialties, and our information and experience has been that it is impossible for the patent office to be adequately prepared to deal with the wide variety of procedures and various specialties that are involved. We believe the Pallin case, which I was personally involved in litigating, proves the point. In 1993, Dr. Samuel Pallin filed an infringement suit in U.S. District Court in Vermont against fellow ophthalmologist Dr. Jack Singer in the Hitchcock Clinic up in New Hampshire. Dr. Pallin claimed that Dr. Singer had infringed Dr. Pallin's patent on the shape and location of the initial incision for cataract surgery. This is just one of maybe 35 steps in cataract surgery that Dr. Pallin had patented. He initially sought damages and an injunction prohibiting Dr. Singer and the clinic from using or teaching or otherwise inducing others to use the procedure, and at one point asked for a royalty of between 2500 and $10,000 per year. In late March of this year, after nearly three years of grueling litigation, and at least on the defendant's side $500,000 of legal fees and other expenses, the federal judge issued a consent order invalidating all of the patent claims at issue in the case and dismissing the action with prejudice. The court also enjoined Dr. Pallin from enforcing any feature of his patent against any other physicians and other persons or entity ever again. Not surprisingly, the Pallin case has caused a firestorm in the medical community, and I think it has been one of the precipitating forces for the medical community's concern about medical procedure patents. The final resolution of the litigation demonstrated that this was clearly a patent that never should have been issued, and we understand that that's not unique within the patent system, but we think there are factors with respect to medical and procedure patents that are unique. We also understand that this is not the place to discuss the broader policy issues. But the fact is this error was magnified by the fact that at least 2000 surgeons currently use variations of the technique that Dr. Pallin said were covered by his patent. So if Dr. Pallin had been successful, each of these 2,000 physicians would have been a potential target for a royalty demand or an infringement action. For these purposes, the relevance of the Pallin case is that Dr. Pallin consented to the judge's order after defendants presented overwhelming evidence that at least three other surgeons including Dr. Singer, the target of the infringement action, had performed cataract surgery using the initial incision within the scope, using an initial incision within the scope of the claims of Dr. Pallin's patent before Dr. Pallin allegedly invented his procedure. So, Dr. Pallin's patent was clearly anticipated by the prior art. That's why he lost the lawsuit, and, in addition, a cataract surgeon of ordinary skill with full knowledge and understanding of the pertinent prior art would naturally have viewed Dr. Pallin's incision as an available alternative for performing sutureless cataract surgery, which is what he was doing, and the invention clearly failed by the novelty and the non- obviousness test. Yet Dr. Pallin never brought any of the relevant prior art to the patent examiner's attention, and the patent examiner could never have been expected to know about that prior art. At that point, since the field was changing quite quickly at the time, was largely unpublished. It occurred in the, the changes occurred within the operating rooms, within the halls of medical schools, and the exchange of information occurred at conferences and seminars. There is no way the patent examiner could have known, and the only way he could have known is if Dr. Pallin had brought that information to his attention, but in Dr. Pallin's view it wasn't relevant prior art. Well, he turned out to be wrong. In any event, our point here is that patent examiners cannot be expected to be kept abreast of the most recent developments in skill levels in the many different surgical and medical fields. Examiners need to rely on the patent applicant to supply all relevant discoveries in the field and cannot possibly be fully aware of the fast-paced evolution of medical science that takes place in physicians' offices, operating rooms, conferences, and seminars, particularly where this information is unpublished. With respect to more specifically the prior art that is available to the patent office, we believe that as it currently stands -- it's our understanding, consistent with our understanding -- that the patent office's prior art, even for published materials, is deficient, and is not adequate to keep up with the fast-paced change in the medical community. But the fact is that in order to be adequate, you'd have to have a library or access to a library and use and then take advantage of access to a library as complete as the National Library of Medicine in order to cover the countless specialties and subspecialties that exist and the thousands of medical and surgical techniques and procedures that have evolved in each field, and what we see with the Pallin case is it's not just a whole procedure that is patented, but it is one step in a procedure that's patented. So you multiply that by the number of possible procedures and the number of different fields and you're talking millions and millions of different types of techniques. With respect to -- let me just say that while we expect that the patent office could improve its medical library and make a greater effort to research and review other sources of medical information, we just don't see how it can ever gain ready access to the fast-paced evolution of unpublished medical discoveries and advances. With respect to reexamination, we believe that the current reexamination statute clearly does not solve the concerns of physicians and others who have medical procedure patents. As the Federal Register acknowledges, the current system is limited, and there are several problems. One, only patents in patent publications available to the public can be used to invalidate a patent in a reexamination proceeding. Deposition testimony, surgical reports, unpublished articles and affidavits are not admissible. And this rule would severely restrict the ability of a petitioner to demonstrate the existence of anticipatory prior art. Dr. Singer could not have prevailed in a reexamination procedure against Dr. Pallin because the prior art was largely unpublished. Second, patent holders are allowed to revise their claims in response to a petition and thereby strengthen the patent against future challenge. And third, after the initial round of arguments, only the patent holder can participate in the ongoing reexamination proceeding. We understand that H.R. 1732 would address some of these problems and we would support that, in principle at least, that legislation in the sense that it would support those problems, but it still would not address the issue of, it would not allow unpublished prior art to form the basis upon which a reexamination may be requested, and it would continue to allow patent owners to amend their claims in a reexamination proceeding. We think both of these issues would need to be addressed. With respect to publication of patent information, the fact is patents are not a significant source of information for the medical community at all, and this is due in large part to where physicians get their information from, but also due in part to the medical community's determination that medical procedure patents are unethical. So one would not expect physicians generally to be reading the Official Gazette. But physicians and other health care providers learn about new medical advances primarily from studies published in peer review journals, seminars taught by respected colleagues, and conferences and one-on-one exchanges in information, as our written comments speak more fully to. The medical community has a wide and broad history of exchange of information about new medical procedures, and it's not that information is not gained through the patent office and through patent materials. With respect to the 18 month rule, we believe that the 18 month rule would have some benefit in terms of allowing for early publication, but more importantly it would not address the fact that physicians do not and cannot be expected to read the Official Gazette and generally would not be likely to enhance the dissemination of information. Would the absence of patent protection for inventions lead to a reduction in the dissemination of information? No. As I said, there's a broad tradition of exchange of information. You may be able to find some historical examples of physicians maintaining their inventions in secret, but generally speaking the incentive to publish and to get recognition for your inventions and the desire to share and the ethical duty to share information is much stronger than any desire to keep information secret. To conclude, I would refer you to our -- can I just wrap up -- to conclude, I would refer you to our written comments for our responses to your questions about experimental use, which we do not think is a viable alternative here. In fact, experimental use can be thought of as a more limited form of protection than what is being proposed in S. 1334. It's not anything that I think you could do administratively. I think you'd need either judicial or legislative help on that. And with respect to the foreign experience, we would just refer to the fact that we believe that the fact that 80 other countries have taken the approach of either banning or restricting the issuance of medical procedure patents is quite informative in terms of what their public policy determination have been with respect to the balance of public health issues involved here, which we discuss in our written comments, and with respect against the concerns about maintaining the integrity of the patent system. So I would thank you for the opportunity to testify today. I would say that H.R. 1127 and S. 1334 offer two alternative approaches for addressing this problem. We have supported S. 1334, and we would hope that the patent office would at least either support or not oppose the effort to pass 1334 to ensure that medical procedure patents do no further harm to the advancement of medical science and patient welfare. Thank you. MR. GOFFNEY: You made a statement earlier in your testimony that by allowing the patenting of therapeutic and diagnostic procedures, that this would disincent the or that this would cause practitioners to withhold information until their patent is issued. I was a little confused as to what that was directed toward? MR. PORTMAN: What it's directed toward? MR. GOFFNEY: Yeah. What is the incentive to keep an inventor withholding the information until his patent is issued? I don't quite understand what that was about. MR. PORTMAN: Well, there can be several incentives. One is to restrict the availability of the patent for anyone else to know what's in the patent so that they cannot immediately start learning from it or even reviewing the efficacy of the procedure in order for the patent holder's perspective to protect the commercial viability of the procedure. If Dr. Pallin, for example, had put his procedure out there as he did -- let me put it differently -- Dr. Pallin did put his procedure out there and people immediately realized that Dr. Pallin's procedure had significant problems with it. If another physician came along and saw Dr. Pallin's experience, he might be reluctant to put his procedure out there for critical review because it would affect the commercial viability of the procedure later on. If by the time the patent was issued, it had been criticized to the point where nobody would use it, then how could anyone get any royalties for it? That would be one issue. And then just generally the natural incentive under the patent system is to keep information, as one of the previous witnesses said, the general custom is to keep information secret so that no one else can copy that procedure or do something to try to create an alternative procedure that may not be technically covered by the claims of the patent, but commercially would be a competitive procedure. MR. GOFFNEY: How would you respond to Professor Moy's assertion that there is nothing unique to this area of technology from other areas of technology? For example, you were saying that there would be in the medical field an inhibition about carrying out certain techniques because you would be afraid of infringing those techniques or you were saying that there are so many different procedures in the medical field that there is no way that the patent office would have availability to all of the information. I suppose I would ask why is that different from trapping of vermin, you know, mousetraps, which is the archetypical patented area of technology? MR. PORTMAN: Right. There are a lot of differences. Some go to the patent office's ability to evaluate patents and some go to broader public policy issues. But with respect to medical procedure patents, there is currently a broad history of sharing information within the community, and to the extent that the patent system would inhibit people from sharing information, that would have a public policy incentive or public policy adverse consequence of limiting the availability of procedures. With respect to the physician in his office, there is a great potential for the physician in his office to become a victim of a "gotcha" type of situation. Unlike medical devices and drugs where you pay for the royalty for a product in the price of the product, and there is a product that you can buy, with a medical procedure, if I'm a doctor, if I'm Dr. Singer sitting in my office thinking up a new way to perform cataract surgery, and then I have no idea, no way of knowing, unless I'm actively monitoring the Official Gazette and the register of patents, whether or not I have invaded on someone else's patent. And that's going to create a disincentive for people to innovate in an area without either hiring a lawyer to do a patent search or, for example, if somebody calls up and says, you know, I've got a patent on this, then you're going to have to hire somebody to check that out to see if that is actually a valid patent. There are lots of differences in terms of the incentives to patent. With respect to medical procedures, typically we're talking about procedures that evolve gradually over time. This cataract surgery example is one where the profession over about a 25 year period evolved to the point where they could do sutureless cataract surgery, and the step that Dr. Pallin took was just one step, and he thought it up in his mind, he didn't have to put any capital into it, there is no marketing and distribution costs. MR. GOFFNEY: But is it your belief that this doesn't happen in other areas of technology? That all of the leaps are great leaps in other areas of technology? MR. PORTMAN: No, it's not my belief that there are great leaps, but I do believe that this area is one where there is little need for capital investment compared to other areas where there may be significant R&D investment, where there may be capital production costs and distribution costs. So in terms of talking about differences, here is one where you don't have as great a need for an incentive to innovate, both because of the lack of innovation costs and, second, because of the tradition in the community and the ethical duty to share information to begin with. There are other differences I could go into, but our general feeling is that with respect to the patent office, we don't dispute the fact that the patent office could improve its ability to evaluate these patents and potentially limit the number of inappropriate patents that might be available. That still would not address the questions that we've raised and the concerns we've raised about the general availability of even appropriately issued procedures. And let me put it this way. If you're in an operating room, I don't think as a matter of public policy we want physicians or patients to have to worry about whether or not when they decide to do a particular life-saving procedure they are violating a method patent. And we want them to be able to free to make independent choices about which procedures they use and which they don't. If there is a rumor out there that somebody has a patent on Procedure X, which happens to be a better procedure than Procedure Y, but not that one would necessarily perhaps make a difference in saving a life, but may make a difference in how long it takes to recover or some other marginal difference, we do not want to have physicians even thinking twice about whether to use the better procedure. And we believe that the availability of these patents and particularly when they're inappropriate, but even when they're appropriate, the availability of these patents will create such an incentive, and the patent system in our view is a balancing of public policy interests, and this is just one area where we think that the public policy interest in limiting the enforcement of patents in a fairly narrow area is in the broad public interest. MR. GOFFNEY: I don't want to take too much time. Do you have -- MR. MILLIN: I have a question. In your remarks you discussed the patent office improving their library. In your written remarks, are you going to offer any suggestions on how to do this? MR. PORTMAN: Well, we've already done our written remarks, and we have not offered any specific suggestions. I can just say to you that we agree that there are on-line data bases. There are lots of other, there are lots of sources out there in ways to improve the library of the patent office both electronically and in terms of potentially expanding the number of periodicals that you subscribe to. Unfortunately, that would still not address the concern about unpublished prior art, which I think is in this area it is true that most physicians don't publish. They don't have time. And most of the advances that take place take place in physicians' offices. Contrary to what Dr. Moy said, that is not irrelevant prior art. In the Pallin case, the prior art was unpublished, but it was relevant prior art because it was used in the public domain. The physicians who are treating patients, who are exchanging information with their colleagues, who are talking about these procedures at seminars, are creating relevant prior art. And that's where the real problem is going to take place. MR. GOFFNEY: So you would favor taking public use procedures and putting them in a kind of reexamination procedure? MR. PORTMAN: Yeah. MR. GOFFNEY: Which would probably, in fact, you could probably even take them out of the public use pre-grant proceeding and put them in the post-grant proceeding. MR. PORTMAN: We would not object to that. Let me put it that way, and I think that that would improve the reexamination process, and again we are, you know, we favor anything that you can do to limit the number of patents that are issued that shouldn't be issued. Our concern is that we not get distracted by that fact and then lose sight of the other problems that are caused by these patents. MR. GOFFNEY: Thank you. MR. PORTMAN: Thank you. MR. GOFFNEY: Did Mr. Gershman come in yet? Let's see who else do we have? Mr. Lentz. Oh, okay. Mr. Lentz, please. MR. LENTZ: Thanks. I apologize for being late and apologize for the fact that I'll be reading from some notes. My name is Edward Thomas Lentz. I am with SmithKline Beecham Corporation where I'm vice president/director of Intellectual Property. I'm here this morning on behalf of the Pharmaceutical Research and Manufacturers Association or PhRMA. PhRMA is an association whose members are engaged in pharmaceutical research and development as a sole or as a key component of their business. The R&D programs of PhRMA member companies have resulted in the discovery and development and exploitation to the public benefit of countless new therapies and new procedures that are effective, innovative and cost effective. These have resulted in significant improvements in the quality of life for countless Americans. PhRMA member companies have an obvious and keen interest in the patent system and improving the integrity of the patent system because without it, we can't do what we do and we can't bring the benefits to the public that we have brought. SmithKline Beecham is a PhRMA member company. We are a health care company with key business areas in pharmaceuticals, over-the-counter health care products, vaccines, clinical information services and health care management. A major thrust of our business is in pharmaceuticals. We like many of our sister companies in PhRMA spend in excess or in the order of a billion dollars per year on research and development. I'm here today because the patent system is so vitally important to SmithKline Beecham and to the other member companies of the Pharmaceutical Research and Manufacturers Association. This subject in particular is of importance to us. It's important because of its direct effects and because of its potential indirect effects, in some cases those that may be unseen. PhRMA has prepared and is submitting written comments that directly respond to the questions posed in the Federal Register notice. My remarks today will track those, but I will try not to be repetitious in view of those remarks. Instead I will try to emphasize a few points and perhaps to bring a different perspective to the table. The underlying premise of my remarks is that special rules or practices with respect to the patenting of surgical and therapeutic methods are unnecessary, unwarranted, and undesirable. Similarly, too, with the enforcement of such patents. The main reasons for this premise are the following: in the first place, patents on surgical and therapeutic methods provide an important incentive for R&D in this area. I heard the prior speaker say that with respect to at least certain categories of surgical methods, there is not a large capital investment. This may well be the case. But I also know that with respect to overall methods that involve new drugs or new devices, there is a large capital investment that's required, and we cannot jeopardize the patent protection that's afforded by method patents that protect these drugs and devices. Not all commercial products are protected by product patents. In many cases, they are protected by what we call second-use patents, and that's because the underlying product may be unpatentable, maybe because it never was patentable, or maybe because it's no longer patentable, but, in any event, investment decisions, large investment decisions, are made on the basis of these so-called second use patents. Now I'm aware that the Orphan Drug Act and the Hatch-Waxman Act do provide some measure of exclusivity in some circumstances. However, these are limited in both time and scope. In many cases, investment decisions with respect to second uses require patent protection in order to justify, to make a prudent decision to invest in their development. Secondly, special rules for therapeutic and surgical methods will have in some cases unforeseen impacts on the patent and health care systems in this country. Effecting such special rules is going to be complicated. We've seen the drafting efforts that have been made in the Congress in both the House and the Senate. We've seen the kinds of tortured machinations that are required to try to narrowly tailor specific legislation. We know from past experiences and other regards that this is very difficult. We also know that no matter how well intentioned the drafters of such legislation or regulations or procedures, there are going to be loopholes. In some cases, these are going to be large loopholes. Before we put the patent system and the health care system at risk from these loopholes, we need to be sure that there is a serious and widespread problem that's causing harm that outweighs the harms we will cause to the patent system by effecting such special rules. We cannot afford, particularly in this day and age of rising health care costs, we cannot afford to jeopardize our patent system and our health care system by introducing new loopholes into the patent system. If we introduce a loophole here, then what next? Where do we go next? Do we next say, for example, that drugs for treating a certain population ought not to be patentable or devices that are used in particular procedures ought not to be patentable? The point is where do we draw the line? And what are we opening ourselves up to? If there is such a line to be drawn, it's probably the point at which there is a serious and widespread problem that causes a serious harm to the American public. I've not seen evidence of such harm. I'm not aware that there has been such harm. There are legitimate concerns. I understand those concerns. But let's try to distinguish between the legitimate concerns and real serious harms. It's been pointed out, I think, certainly in the press and probably before I arrived here today, that the poster child case, the Pallin case, has been decided in the right way. Now, I understand that patent enforcement is not always a convenient vehicle for effecting justice, and if there are reforms to be made, maybe this is the area where attention should be focused. I'd also like to point out that this not a new problem. It's not new to the health care industry nor is it new in general to the patent system. It's been around for along time, and there are other ways to address these problems. I might suggest, for example, the topic that was discussed by the prior speaker with the panel is in the area of prior art. Let's make sure that we have effective procedures that allow the PTO to do the job they're supposed to do and they're very capable of doing and they do efficiently when they're given the right tools and resources. Perhaps there are more effective ways to put appropriate and necessary prior art before the Patent and Trademark Office examiners. Unfortunately, I don't have a solution for you here today, but I'm sure that if the PTO works with the bar and with the affected members of the public, as it has in the past, that useful vehicles can be developed. Secondly, perhaps we need some education in the medical community. Perhaps we need some education about the patent system, what the real risks are, and how the patent system can be used to incentivize research and development lawfully and ethically. And thirdly, as I mentioned before, perhaps we should be focusing on where the real problem may be, which is in patent enforcement. That concludes my remarks. MR. GOFFNEY: Thank you. Any questions? Thank you. Mr. Richard Burgoon. MR. BURGOON: Thank you. Good morning. My name is Rick Burgoon, B-U-R-G-O-O-N. I'm senior director and patent counsel to Cephalon, Incorporated. I very much appreciate the opportunity to testify today on behalf of Cephalon and the Biotechnology Industry Organization, BIO. BIO represents over 580 companies, academic institutions, state biotechnology centers, and related organizations in 47 states and more than 20 nations engaged in the development of products and services in the areas of agriculture, biomedicine, diagnostics, food, energy and environmental applications. Cephalon is a member of BIO. BIO believes that at the conclusion of your hearings and after careful consideration of all the views expressed by the parties to these hearings, that PTO can and will conclude that the problems identified by the proponents of H.R. 1127 and S. 1134 can be solved administratively rather than judicially or legislatively. Note Mr. Portman's earlier comment that the original proponents of H.R. 1127 have abandoned this approach, which should give us pause to consider that perhaps we should move a little faster in the administrative end and not the legislative end. We do not believe that a legislative approach to any of these asserted problems is necessary at all. It certainly should not be attempted prior to administrative attempts to solve these problems. Prior to addressing your specific questions as set forth in the notice, I'd like to provide you an introductory overview. I have more than ten years experience in the area of intellectual property protection, primarily in the fields of biopharmaceuticals and diagnostic. I believe that this perspective allows me to state that the identified problems regarding medical procedure patents are not unique to inventions from medical arts. It would not be disputed by the majority of our member organizations in BIO that all biotechnology- based companies can claim a kindred connection to the Supreme Court decision, Diamond v. Chakrabarty, a case involving the patenting of a microorganism produced by genetic engineering. In this decision, the Supreme Court issued a seminal statement. Quote, "The Congress intended that statutory subject matter under 35 USC Section 101 to include anything under the sun that is made by man." In light of these clarifying and edifying words, the issue confronting the medical community must not digress to whether medical procedures should be included within the parameters of Section 101. They are. Rather, the issue must be how the medical community can better utilize the procedures already in place at the PTO in dealing with the asserted increase in patent applications related to medical procedures, how the medical community can look to analogous examples in situations that have been addressed by other industries, and how the PTO might facilitate in improving the process for reviewing patent applications involving medical procedures. The initial emphasis of improving the process does not necessarily lie with you at the PTO. Many of the issues raised by the medical community can be addressed by the medical community. However, we appreciate that minor adjustments may be needed within the PTO. The patent application review process might be adjusted to accommodate issues that perhaps uniquely belong to medical procedure inventions. What must not be allowed to happen is that in addressing any of these problems, a basic tenet of our nation's patent system must not be lost. That is that Congress intended Section 101 to include under the sun that is made by man. BIO desires to enhance our patent system with respect to the purported nuances confronting medical procedure patents. As advocates of our patent system, we cannot and will not support any changes to our patent system which would create different standards or procedures for examining inventions from different technical fields. The rules for securing a patent must be the same for all innovators and all inventions. This notion that patents should be in some way tied to the amount of capital investment is incorrect. Patent applications have never been reviewed with respect to the amount of time, effort or money that went into their discovery. One man's flash of genius may be another man's life long obsession. BIO members have examples where issued patents have impacted the entire BIO pharmaceutical industry. Several broad-based biotechnology patents have issued, which have either required taking a license to the technology or inventing around the technology. However, despite whatever limited frustration may have existed by the issuance of such broad-based patents, the biotechnology community did not respond to these patents by seeking an act of Congress to ban the issuance of biotechnology patents, nor did we ask the PTO to create a different set of rules for biotechnology inventions. As the number of patent applications involving, for example, genetic engineerings, molecular biology and biopharmaceuticals increased at the PTO in the mid to late-'80s, we voiced the concern that some of these applications were not being appropriately reviewed by the PTO. In seeking solutions to these problems, our industry considered the problems and sought solutions from within the existing system. In response to these concerns, the PTO primarily on its own initiative created a separate examination art unit, Group 1800, to examine the patent applications involving biotechnology inventions. The PTO also hired additional examiners with technical backgrounds in the area of molecular biology to staff this new art unit. Our industry has also worked with the PTO in improving the examination process of patent applications from our industry. For example, BIO was intimately involved in working with the patent office and Commissioner Lehman in issuing the recent utility guidelines. We submit that our experience offers an excellent model for the medical community to seize, adopt and approve. Questions posed by the PTO in the notice will not be addressed. With respect to the application of patentability standards by the PTO, BIO is unaware of any problems in the application of these standards under Section 102 and 103 to these particular types of patents. By definition, a standard for patentability connotes across-the-board applicability for all, whereby the standards for determining whether a surgical technique complies with the provisions of Section 102 and 103 must be the same as the standards for determining whether a widget complies with these same provisions. Now we recognize that patents sometimes issue which are then later determined to be invalid or unenforceable. This is exactly what happened to the patent in the lawsuit which sparked most of these issues, Pallin v. Singer. But this situation occurs in all technical fields as you had previously indicated. Rarely, if ever, is the problem with such patents determined to be based upon a misapplication of the patentability standards of the PTO. Rather, the problem most often results from error or malfeasance on the part of the inventor or by a genuine mistake by the PTO or the inventor in not finding the relevant prior art. Again, this occurs in all technical fields. Castigating the entire patent system because of the Pallin patent or its lawsuit is just as simplistic as castigating the entire medical profession when a surgeon amputates the wrong leg, as has happened. BIO does not believe that special standards and procedures should be utilized in examining claims to inventions from fields of surgical and medical methods. The standard and procedures utilized in examining claims to such methods must be consistent with the procedures utilized to examine all claims. Our patent system cannot have different criteria for patentability. There are three issues which I want to address regarding PTO resources. Those are Rule 56, statutory prior art, and 35 USC 164. Many BIO members have applied for patents involving therapeutic and diagnostic methods. In most of these applications, prior art rejections are common. Therefore, based upon our experiences, we assume that there was no deficiency in the prior art collection relating to therapeutic and diagnostic methods to which the PTO examiners have access. Now, in deference to certain statements made by the medical community, a unique aspect of innovative surgical procedures that these are often taught and learned by observing a physician performing a technique. We've been told that these procedures are typically not reduced to written form. In this regard, we highlight Rule 56. The importance of Rule 56 may be of particular relevance in the case of techniques and procedures which do not readily lend themselves to transmission via the written word such as a surgical procedure. We further believe that with increased awareness of the rules and regulations governing the application for patent protection and prosecution of patent applications, the medical community can and will gain a greater appreciation for the manner in which non-written information can and should be brought to the attention of the PTO. It may be the case that a majority of physicians and professional medical associations view the patenting of surgical techniques and procedures with a jaundiced eye. We take no issue with that. However, these individuals and groups should then be dedicated to creating statutory prior art, primarily in the form of publications. This can be most readily accomplished via publications of various procedures and techniques in abstracts, articles and book chapters. Now if the medical community does not tend to publish this information, i.e., it does not itself create the statutory prior art, it cannot completely fault the PTO for not locating the most relevant prior art. We note that Dr. Pallin has publicly stated that the driving force behind his decision to file for patent protection for the claimed surgical technique was that his original objective of having the technique published in a scientific journal was rejected. This suggests that had this technique been published, no patent may have been applied for and no patent infringement lawsuit between two physicians would have resulted. We ponder whether other physicians feel similarly slighted and have reacted or will react in a manner similar to Dr. Pallin. Again, publication of surgical techniques not only disseminates the techniques to the medical community but beneficially creates a body of statutory prior art. We therefore encourage the medical community to perhaps reconsider its criteria for publication of these techniques. We also encourage those members of the medical community that have been denied the opportunity to publish innovative techniques in peer review journals but who nevertheless want to publish such techniques to consider pursuing publication of the technique via the PTO in accordance with 37 CFR 1.293, statutory invention registration. The National Institutes of Health and its affiliated institutions offer an excellent resource to strengthen the prior art collection related to medical procedures if a deficiency in this area does exist. Accordingly, we suggest that the PTO consider and the medical community support implementing a referral system with, for example, the NIH for assistance in the examination of patent applications directed to surgical procedures. An analogous situation for you to consider is already in place under 35 USC 164, assistance of the Department of Agriculture. I also refer to the prior testimony of Mr. Schaller. There are sufficient sources already available which may solve the assertive problem of lack of the prior art. For example, a videotape of a surgical procedure catalogued in a library can, of course, serve as statutory prior art. With respect to reexamination, BIO has endorsed H.R. 1732. However, BIO is opposed to creating any special reexamination reforms designed to address therapeutic, diagnostic, and/or surgical procedure methods and patents. With respect to the specific questions presented by the PTO in the notice under this category, BIO does not believe that the current reexamination statute requires modification to solve the concerns of persons practicing in the field of therapeutic and diagnostic methods beyond those complicated by H.R. 1732. Now your notice indicates that persons practicing in the fields of therapeutic and diagnostic methods believe that the proposed changes to the reexamination process should be expanded to include unpublished prior uses. We view this as an example of how a strategy intended to solve a perceived problem, alleged to be unique to a subset of patentable inventions, could wreck havoc on the entire patent system if implemented. If surgical procedure reexamination proceedings are expanded to include unpublished prior art, others will legitimately demand that reexamination proceedings also be expanded in kind. This will be akin to a judicial proceeding. Such unpublished information will in all likelihood be submitted in the form of declarations which will, in turn, be countered with declarations by the inventor and assignee. Thus, the PTO will be placed in the position of trier of fact, forced to determine the credibility of the declarants and their respective evidence. Reliance upon published information automatically avoids such credibility determinations. No matter how well intentioned the objective, allowance for utilization of unpublished information and reexamination proceeding will spawn a myriad of unintended cost for the PTO as well as consequences for both itself and its customers. This leads us back to our earlier recommendation. The medical community has within its power the ability to create statutory prior art. It should do so. BIO endorses the objectives of publishing patent applications 18 months after their original filing date as found in H.R. 1733. We encourage the medical community to also endorse H.R. 1733. With respect to the questions under publication of patent information, there are three issues which I'd like to discuss: the best mode under Section 112, the intent of the founders, and trade secrets. Because of the requirements of 35 USC Section 112, a patent application unlike even a peer review publication mandates that the best mode for practicing an invention by one of ordinary skill in the art be disclosed in the specification. As such, and as you all know, a patent application often will include far more detailed and crucial information than that found in even a scientific publication. BIO thus believes that patents and patent applications play a unique and crucial role in the dissemination of information. Accordingly, early publication of patent applications, as outlined in 1733, ensures continued dissemination of information to a variety of technical fields. There were three questions posed by the PTO in the notice under Publication of Patent Information. BIO defers to the wisdom of the founders, who correctly understood that a patent system which promises the reward of a brief period of exclusivity in exchange for complete disclosure of the invention fosters, promotes, and encourages innovation. In this regard, it is often stated by those who are not familiar with patent application process or the enforcement of patents that patents create monopolies. We all know that that is not true. There is far more information that's necessary to create a monopoly with a patent. Groups who believe that patents do not foster innovation must be required to overcome the sound and time honored wisdom of the founders. We believe that such groups must have the burden of adequately explaining how our nation, the world's leader in innovation, would be able to maintain its position of innovation prominence in the absence of our patent system. An innovator cannot be forced to disclose an invention. This holds true whether the innovator discovers a unique surgical technique or an improved process for making a chemical. There must be some incentive to obtain that disclosure. We recognize at BIO that some procedures are only a value if they are maintained in secret, that is a trade secret, which are an alternative and legitimate form of intellectual property protection. The medical community must appreciate that there are doctors who have taken and will take full advantage of the patent system. If the opportunity for obtaining a patent on their discoveries is taken away, the medical community should consider that some physicians may maintain their innovative techniques and procedures as trade secrets. Our first speaker, Mr. Mosely, gave an excellent historical example of just exactly how that has happened. With respect to experimental use -- my time is up -- I have a few more comments if it's okay -- whatever is easiest. MR. GOFFNEY: I think it would be easier if we go forward and those comments are included -- MR. BURGOON: Sure thing. They are indeed. MR. GOFFNEY: -- with your report to us. MR. BURGOON: Most of them are the same as the folks who are here offering our views that the administrative solution should be taken first. It's much easier to make an administrative rule than it is to pass legislation. MR. GOFFNEY: Mr. Burgoon, I'm going to ask you a question that I probably should have asked Mr. Portman, and so I don't mind your yielding the floor to Mr. Portman to respond. I was wondering do you see any advantage in our recruiting in schools that train people to assist physicians like nursing schools or physician assistants to raise the competency of our examining corps in the medical arts? MR. BURGOON: I think that's an excellent first step. I don't think you're probably ever going to be able to recruit a physician to become an examiner, but I do think that there are, just as we all know from our experiences with the medical profession, that oftentimes nurses are performing many of the duties that traditionally were performed by doctors. One must be able to imagine that nurses have the same understanding and awareness of the medical procedures and techniques. Again, as other speakers have mentioned this morning, the examination process is not perfect. It is not intended to be perfect. It's incumbent upon the inventor to provide the information to the office with respect to relevant information and prior art. But those that are trained in those particular technique areas, they need not be experts, they just have to have the understanding that will allow them to examine the claims with respect to the relevant prior art. MR. GOFFNEY: May I call upon Mr. Portman if he has a comment? MR. PORTMAN: I guess my first reaction to that is if hiring non-physicians in the patent office -- MR. GOFFNEY: Could you come to the microphone, please? MR. PORTMAN: My first reaction to that if hiring non-physicians to reexamine complex surgical and medical procedures and evaluate their novelty and non- obviousness works as well as it has worked in the insurance community for utilization reviews, then I would have concerns. Second, I would acknowledge that it would be better than having someone with no experience. But the real concern is that some of these procedures are highly complex, and I really do think that you do need to have the benefit of input from the medical community, and we perhaps can talk more about that off- line, but it certainly wouldn't hurt the system. I don't think it would help all that much. MR. GOFFNEY: Just as a point of information, we have had medical doctors who worked for the patent office. MR. BURGOON: That's good to know. May I make one comment in response since we're making this like a judicial proceeding? Excuse me, Robert. MR. GOFFNEY: No. I didn't call that as a rebuttal. I just really wanted to have your views on the idea. MR. BURGOON: I'll take the opportunity though. To the degree that Mr. Portman views that some of these inventions are complex, that seems inconsistent with the view that the Pallin invention was obvious. They are probably not that complex where you could not use somebody other than a trained medical doctor to review these applications. Certainly, we do not have CEOs from biotechnology companies staffing the patent office. The patent examiners are certainly capable of reviewing very complex genetic engineering applications. I'm sure they can do the same thing with respect to these so-called complex medical procedures. MR. GOFFNEY: I don't think we want to retry the Pallin case today. MR. PORTMAN: I don't have the experience that Mr. Burgoon has, but my understanding is that the standard is one of ordinary skill in the art, not of someone else who is not of ordinary skill. So complex has to be evaluated in the context of ordinary skill in the art, and that means someone who is a medical physician with comparable skill to the person who is proposing the invention. MR. GOFFNEY: Thank you. I'm afraid that I have to leave at this time. I've found the testimony thus far very enlightening, and I would like to stick around to hear the rest of it. In fact, it was very spirited, which is something that we don't always get at these hearings. Richard Wilder will take over the chair of this hearing. Again, thank you for your participation. I'd like to personally thank you and I'd like to thank you also on behalf of the commissioner, and to the other speakers I am sure to get a full account of your testimony. Thank you. MR. WILDER: Okay. Thank you, Mr. Goffney. We'll just continue on then with the list of witnesses that are scheduled to testify here this morning. The next on the list is Dr. Robert Watson, if he is here? Mr. William Knepshield? Mr. Goffney may have actually seen the end of this. Mr. Michael Gollin? Well, that's it. Congratulations. MR. GOFFNEY: Why don't you deliver the closing statement? MR. WILDER: All right. That does complete the list of persons who have asked in advance to testify, but I would make it available if there are people here that would like to testify that maybe were on the list that were earlier called but weren't here. If not, then let me just offer some concluding remarks and talk a little bit about how we are going to package up the information that's been received in the context of this hearing. The written comments on the notice of hearings and request for comments on issues related to patent protection for therapeutic and diagnostic methods must be submitted by Friday, May 17, 1996. We have received written comments from some parties, and I understand that some were brought here today, but we will continue to hold that option open until May 17 to receive written comments. A transcript of the hearing will be prepared and will be available along with any written comments received and will be made available for public inspection, as the notice said, certainly by June 14, but in all likelihood will be made available prior to that time. It will be made available here in this room -- I'm sorry -- this building, Crystal Park Two, in Room 902, which is just down at the opposite end of the hall. In addition, the transcript of the oral testimony will be placed on our home page through an anonymous file transfer protocol at the address FTP.USPTO.gov. And I would like to state that all written comments and oral testimony will be taken into consideration in the implementation of any administrative changes here in the patent office related to this issue. This concludes today's hearing, and I thank you very much for your testimony and your attendance. Thank you. [Whereupon, at 11:05 a.m., the hearing was adjourned.]