BEFORE THE UNITED STATES DEPARTMENT OF COMMERCE PATENT AND TRADEMARK OFFICE In Re: Proposed Amendments to Rules of Practice to Implement 20-Year Patent Term and Introduction of Provisional Applications as Contained in the Uruguay Round Agreements Act Stouffer Hotel 2399 Jefferson Davis Highway Arlington, Virginia Thursday, February 16, 1995 The public hearing convened, pursuant to notice, at 9:30 p.m. BEFORE: BRUCE A. LEHMAN, Chairperson, Assistant Secretary of Commerce and Commissioner of Patents and Trademarks PARTICIPANTS LAWRENCE J. GOFFNEY, JR. Assistant Commissioner for Patents MICHAEL K. KIRK Deputy Assistant Secretary of Commerce Deputy Commissioner of Patents and Trademarks STEPHEN G. KUNIN Deputy Assistant Commissioner for Patent Policy and Projects NANCY J. LINCK Solicitor U.S. Patent and Trademark Office FOOD AND DRUG ADMINISTRATION Elizabeth Dickinson Office of General Counsel CONTENTS Page INTRODUCTION AND WELCOME Commissioner Lehman............................. 5 STATEMENTS OF Morning Session Gary Griswold.................................. 10 Richard L. Donaldson........................... 19 Thomas I. Irving............................... 24 Vincent A. Castiglione......................... 34 Gary L. Newtson................................ 38 Robert A. Armitage............................. 44 Paul Wolstenholme.............................. 51 Kate H. Murashige.............................. 54 Rene D. Tegtmeyer.............................. 59 Kenneth J. Burchfiel........................... 63 Orville Litzsinger............................. 68 Frampton Ellis................................. 75 Harold C. Wegner............................... 78 James M. Slattery.............................. 88 Afternoon Session Don Stone...................................... 99 Robert S. Milanese............................. 108 Robert Foster.................................. 119 Gerald J. Mossinghoff.......................... 124 Donald J. Barrack.............................. 130 Robert F. Green................................ 138 Lewis A. Engman and Alfred Engleberg........... 149 Robert A. Armitage............................. 161 Frank D. Lasaracina............................ 169 Brian Foley.................................... 178 Colin Sandercock............................... 179 Don J. Pelto................................... 185 PROCEEDINGS COMMISSIONER LEHMAN: Good morning. My name is Bruce Lehman. I am Assistant Secretary of Commerce and Commissioner of Patents and Trademarks. Joining me this morning at his hearing are Michael Kirk, the Deputy Assistant Secretary of Commerce and Deputy Commissioner of Patents and Trademarks, to my immediate left. And then, Lawrence J. Goffney, Jr., Assistant Commissioner for Patents; and Stephen Kunin, the Deputy Assistant Commissioner for Patent Policy and Projects; and Nancy Linck, the Solicitor of the U.S. Patent and Trademark Office. This is a hearing on proposed rule changes to implement 20-year patent term and provisional applications and to modify certain procedures for filing and continuation of provisional applications. The proposed changes would amend 37 C.F.R. Parts 1 and 3. The proposed rules were published on December 12, 1994, in Volume 59 of the Federal Register, at pages 63951 through 63966, and on January 3, 1995, in Volume 1170 of the Official Gazette of the U.S. Patent and Trademark Office, at pages 377 through 390. The request for comments on changes to a 20-year patent term and its effects on patent expiration and patent term extension under 35 U.S.C. 156 was published on January 17, 1995, in Volume 60 of the Federal Register, at pages 3398 and 3399. Oral testimony relating to patent term extension under 35 U.S.C. 156 will begin this afternoon at 1:00 p.m. On December 8th of last year, 1994, President Clinton signed the Uruguay Round Agreements Act, Public Law 103-465. Most of the provisions of the legislation will take effect on January 1, 1996. However, provisions relating to patent term and provisional application will take place sooner than that, on June 8, 1995. The legislation that President Clinton signed amended 35 U.S.C. 154 by establishing a 20-year patent term from the date of filing of the application. This legislation provides safeguards for applicants where the issuance of the patent was delayed due to interferences, secrecy orders, and/or successful appeals to the Board of Patent Appeals and Interferences or to the Federal courts. In these cases, applicants are entitled to patent term extension of up to five years. The legislation also includes transitional measures to minimize the need to file continuing applications after the effective date of the 20-year patent term provisions, that is, June 8, 1995. These transitional measures will change the after, final, and restriction practices for certain applicants. The legislation also provides for the first time the filing of provisional applications. The filing of the provisional applications will not be counted in the measurement of the term of a later-filed application which claims the benefit of the earlier-filed provisional application, in effect, a 21-year term. A transcript of these hearings will be prepared and a copy will be made available for purchase by the public approximately 10 days after this hearing. Copies of the transcript will also be available for purchase directly from the stenographer, if you so choose, and the name of the stenographic service today is Miller Reporting. Their telephone number is (202) 546-6666. That is, (202) 546-6666. We received 18 written comments and 25 requests to appear orally at this hearing this morning. Due to the number of requests to appear orally and to permit those persons signing up today to present testimony, we are going to ask each speaker to hold their comments to 10 minutes. Those persons who wish to provide additional comments may, time permitting, continue their testimony at the end of today's hearings or may submit their comments to the Patent and Trademark Office in writing. The speakers have been listed in the order in which their requests were received by the Office. Any persons who wish to speak and who have not previously informed us of their desire to do so are requested to add their names to the list located at the table in the rear of the room. You may also pick up at the table copies of the Federal Register publication of the rules change proposal. When you present your comments, please give your name and address, and whether the comments presented are your own, those of your law firm or company, or whether you represent an organization and are presenting comments on their behalf. I would like to make an observation about this hearing this morning, and that is that the hearing is not about the wisdom of the legislation that Congress enacted last fall. The hearing is about implementing that legislation, and so, I would hope, out of fairness to the people who have come to talk about the Federal Register notice, that witnesses would keep that in mind in presenting their testimony. I would also like to say, too, that in that regard, probably the most important two people who are here, in that regard, on the Panel this morning, are Assistant Commissioner for Patents Larry Goffney, and Steve Kunin, the Deputy Assistant Commissioner for Policy and Projects because they will be the ones primarily responsible for implementing this change, because Commissioner Goffney really is in charge of our patent operation. I also would just note that it may be, given the press of business in Washington and lots of other things that are going on, that I may have to depart and not be here for all of the testimony. But rest assured that Commissioner Goffney and other members of the Panel will be here and we will have a written transcript of everyone's comments. With that, I would like to ask our first witness, who is the first person to sign up, to come forward please, and that is Gary Griswold. MR. GRISWOLD: Good morning. I am Gary Griswold. I am representing IPO, Intellectual Property Owners. Intellectual Property Owners is located at 1255 23rd Street NW, Suite 850, Washington, D.C. 20037. I am the President of IPO. IPO members are responsible for a substantial portion of the R&D that occurs in the United States. In 1993, members of IPO received 23 percent of all U.S. patents that were received by U.S. nationals. IPO strongly supports the 20-year patent term measured from application filing and provisional patent applications, both of which were adopted by the Uruguay Round Agreements Act, Public Law 103-465. The 20-year patent term measured from application filing will discourage the abuses of the system that have resulted in unreasonably extended patent terms in some cases. The provisional application will permit applicants to make an initial filing quickly and at a relatively low cost. It should benefit many that do not have access to the system today because of cost. It is very important that the Patent and Trademark Office implement the 20-patent term and provisional application filing procedures in a way that will best achieve the objectives that Congress intended. Some people are concerned that with the 20-year patent term measure for filing patent applications will not receive as many years of patent life as they would with the term of 17 years from grant because applicants will encounter unreasonable delays in the Patent and Trademark Office. There are some extensions that you mentioned that are provided in the legislation. Opinions differ on the magnitude of this problem. IPO strongly opposes any legislation that would return the term of 17 years measured from grant and which would reopen the abuses that I mentioned earlier. We do, however, support PTO practice changes or legislation that would ensure against loss of patent life as the result of PTO delays that are beyond the control of the applicant. We also support patent term restoration that will be a subject of the hearing this afternoon relative to products involved in regulatory approval and Ag Chem, for example, pharmaceuticals. I am going to specifically turn to a couple of areas where I think work needs to take place. This relates to final rejection practice and restriction practice. The transitional provisions provided in Public Law 103-465 and the rules that are the subject of this hearing liberalize final rejection practice and restriction practice on certain applications on file at the effective date of this legislation. More is needed in this area. We propose that the PTO work with the private sector to develop some changes, and I am going to talk a little bit more about that, now. In order to prevent delays, we recommend permanent reform of the long-standing practice of almost always making the second rejection in a patent application the final action. This needs to be relaxed. Oftentimes, the issues have not been crystalized at that point and maybe further interviews need to take place and other activities need to take place, and forcing a filing of a continuation, we don't believe, is good practice. With the 20-year patent term, the applicants will be incentivized to move forward with the prosecution. I think if applicants are given the opportunity to continue prosecution efforts for final rejection they would avoid the delays and inefficiencies that are inherent in the filing of continuations, which I mentioned. With payment of a reasonable cost-based fee, the PTO could permit applicants to submit amended claims or additional evidence or arguments after final rejection. Both of these would help. This would help the PTO and help the applicant reduce cycle time to a final conclusion relative to that technology or invention, so we think work needs to be done there. There is some language in the provision relative to the transition that deals with this. There you are allowed two additional shots for payment of a fee. Activity like that needs to take place relative and on a permanent basis. Now turning to the restriction practice. We also urge that permanent reform needs to take place relative to restriction practice in order to help avoid PTO delays beyond the control of the applicant. Again, the legislation is not required. PTO rules could be amended, for example, to permit all or at least several inventions to be examined in a single application upon payment of an extra fee. We can calculate the fee. The math can be done to figure out what the extra cost burden is. The practice would be appropriate, for example, in situations where the claims are related, such as method and apparatus claims or product claims and method of making or using claims. Some say our classification or examination system won't allow us to do this. Well, I say, re-engineering may provide an opportunity to do this, so let's do some re-engineering and get this fixed. COMMISSIONER LEHMAN: That is a very important point that you raise, because it has been increasingly our observation here inside the PTO that certain of our practices are driven by the fee structure, and then you get a very artificial and in some ways inefficient processing. MR. GRISWOLD: Right. COMMISSIONER LEHMAN: I am wondering -- of course, many fees are statutory fees. MR. GRISWOLD: Yes. COMMISSIONER LEHMAN: Assuming that we are not talking about charging more than the cost of the application, and assuming that we would not change the small entity subsidy, would IPO support a little more discretion in the Commissioner to have more flexibility in setting fees after having public hearings and notice and so on and so forth? MR. GRISWOLD: Yes, I think fees should be cost-based. What you need to do is to set down and process people, look at the best system for examining method and apparatus claims together, for example. What is the best system? And then, maybe the filing fee should be 1.5 times the normal application fee. Maybe it is 1.3, maybe it is 1.6, you do the math and come out with the right equation. We shouldn't let two things drive us. One, cost, we shouldn't be wooden in our approach relative to cost; and two, we shouldn't be wooden relative to the fact that we have a classification or examination system that says "Art Unit X deals with it now; Art Unit Y deals with something else." Restriction practice needs a lot of work. It is a serious problem and it needs to be fixed, no matter what. We need to have that fixed. It sounds to me like -- and the nods of the heads of you guys -- you seem to agree, that there is some effort that needs to take place in this respect. We appreciate that. Back to cost. Obviously, we want to keep costs as low as possible because we want people to have access to the system of all types and financial ability. The fees that are proposed for additional inventions requested for a single application under 1.129(b) and for filing addition arguments after final appear to be higher than the cost involved. I don't know. I haven't done the math, but it seems like you just picked a fee from the air rather than picking it as cost justified. So, these should be cost-based and reasonable fees. Another situation is where a regular application is converted to a provisional application which is followed then by another regular application. Once again, that should be a cost-based fee and I doubt that you need to charge the full filing fee. Now, those are the comments that I have relative to those two issues. I am just going to hit a few of the details for a couple of minutes of the rules. The first one is, the new rules should avoid adding paperwork as much as possible. The Federal Register proposes that file wrapper continuing procedure of Rule 1.62 will not be used for provisional applications. However, this seems to be a good situation where it could be used because you are going to use the same file, so it seems to me that that is a good opportunity to use 1.62. I don't know all the nuances of why you did it this way, but that seems like an opportunity to save paperwork. Another one is that the proposed rule should be revised to make clear that an applicant may file two or more provisional applications in a 12-month period before filing the regular application. That is the deal, but we want to make sure that is clear. Another point is that in proposed Rule 1.701(d)(2), we talk about due diligence and looking at due diligence relative to appeals, but you are looking at due diligence during the period of prosecution. It appears that the statute, if you take a look at the statute, the statute would indicate that it relates to the due diligence during appeal. I think we need to take another look at that. I am not sure that the rule tracks with what the statute says. We are going to submit some additional suggestions in writing relating to updating best mode, making sure that the inventors relate to the invention disclosed in the patent provisional, and allowing the filing of a regular application and a provisional application and another regular application. Final comment would be this. That we need good forms and good information relative to how to reference these provisional applications. There was some real good rulemaking done, I understand, and published in the Official Gazette on February 1, 1983. That was a long time ago, but it laid out how to do it. There is a lot of opportunity for mistake here because of the changes. We need to have really a see-spot-run type set of rules and directions, so we would ask you to provide that and I am sure you can. Thank you. Any other questions or comments? MR. KIRK: Mr. Griswold, one comment, and that is that with respect to the conversion and using the 1.62 to convert the provisional to the complete. MR. GRISWOLD: Yes. MR. KIRK: The concern that was had about allowing that practice, where you would simply do the file wrapper conversion, had to do with the situation where you would not have a claim in the provisional and the conversion to the complete, if it were at the relevant date and claim were not present, you might have a problem in terms of losing the benefit of the provisional's filing date because you wouldn't have a complete application. Not that that can't be overcome, but in your additional comments, if you could address that for us, we would appreciate it. MR. GRISWOLD: Actually, what I was referring to is the reverse to that. MR. KIRK: Complete to provisional, okay. MR. GRISWOLD: Complete to provisional. I understand the point you are making relative to the reverse. MR. KIRK: Right. MR. GRISWOLD: But when you go, complete to provisional, it is a different issue. MR. KIRK: Right. MR. GRISWOLD: That is my point. Okay? MR. KIRK: Thank you. COMMISSIONER LEHMAN: Thank you very much. Next, I would like to call on Richard Donaldson. MR. DONALDSON: Good morning, Assistant Secretary Lehman, distinguished staff. My name is Richard L. Donaldson. I am Senior Vice President of Texas Instruments Incorporated and General Patent Counsel for Texas Instruments. We are located in Dallas, Texas. I am representing Texas Instruments, today, in my comments. I would like to make the general statement that Texas Instruments does fully support the 20-year patent term and provisional applications. We are submitting some written comments with respect to the proposed rules and those will be submitted today. I would like to direct my comments, and focus my comments today, just on two points, and I think it can be fairly short. The first point has to do with Section 129(a), dealing with transitional procedures. And the second point, deals with Section 701(d)(2). First, with respect to transitional procedures for the limited examination after final, we think this is a great idea. And I guess our comment would be, we would like to see this made permanent. I think it would avoid additional papers being filed. It would avoid prosecution delays, and so, we would hardily support consideration of that. The second issue, the 701(d)(2), dealing with the limit to an extension of the term, when you have successfully appealed, we believe that this conduct that you look at with respect to the lack of due diligence should only apply during the appeal process. Or if that is not possible, then we would like to see a clarification of the term, due diligence, because we think otherwise their conduct during the prosecution of the patent application would be punished, which is really normal conduct that should not be punished. As worded, the proposed rules, I think, clearly do apply to conduct any time during the prosecution of the patent application. And it would apply to conduct such as extensions of time, nonresponsiveness, and informal applications. When you look at the underlying statute, 35 U.S.C. 154, however, we think it is clear in that statute that due diligence refers to conduct during the appeal process and we believe that is the right standard to use. For the appeal process, if you look at the prosecution, this treats differently the successful appellant and term extensions where secrecy is involved or where you are involved in an interference. We do not believe there is a good reason to treat what happens in prosecution different in those three cases. The statute does not address due diligence during prosecution and we don't believe that the rules should, either. The 20-year term, we believe, already covers that aspect. If you delay or are not diligent during prosecution of your patent, you will get a shorter effective patent life. We think that is an incentive not to delay during prosecution. As the rules are presently stated, however, the successful appellant could be penalized, if you want to call it a penalty, twice for the same conduct. He gets a shorter patent life, plus he would get a shorter effective extension of his patent. I guess, in the general sense, we believe that abusive delay should be applied to all applicants, not just a successful appellant. However, if it is necessary to include in the rules a provision for the appellant that it covers prosecution delays, we would like to see the term, due diligence, clarified so that normal conduct would not be covered. There are good reasons for extensions of time and for some of the other examples that have been given, and we think that you should not be penalized for that. We think that, also, there could be an administrative burden on the Patent Office if the Patent Office is required to evaluate, for example, extensions of time to see if good cause is present. A change had been made where you can get an extension of time, just by paying the fee. Now, under these proposed rules, the Office may be faced with looking at the intent of the conduct years after the fact to determine whether or not to shorten the period of extension of the patent term. We would like to see an affirmative provision that says actions for adequate cause would be deemed due diligence, and we would like to see the applicant be given notice that the Patent Office believes that conduct will shorten his term so that he has an opportunity to at least rebut that and provide his point of view. That concludes my remarks. If there are any questions? COMMISSIONER LEHMAN: Yes, Ms. Linck? MS. LINCK: Mr. Donaldson, you limited your remarks on transition practice to 129(a) and not 129(b). Was there a reason for that? MR. DONALDSON: Yes, if you cover different inventions in the same application, I think it makes a lot of sense to have different patents, particularly if you are involved in a licensing program where you may want to consider one invention separately from another when you license it. It just makes it a cleaner operation and we would support still having the separate patents. MS. LINCK: Thank you. MR. DONALDSON: Yes. COMMISSIONER LEHMAN: Thank you very much. Next, I would like to call Thomas Irving. MR. IRVING: Assistant Secretary Lehman, distinguished staff of the United States Patent and Trademark Office, ladies and gentlemen. Good morning. My name is Thomas Irving. I am a partner with the law firm of Finnegan, Henderson, Farabow, Garrett & Dunner. My address is 322 Avenue Louise, Brussels, Belgium. I am here today solely on my own, to offer my own conclusions, after having written and lectured extensively about the statute and proposed rules. I am not offering these comments on behalf of any client or on behalf of my law firm. The first comments I would like to address are with respect to provisional applications that are provided for in the proposed rules 1.51 and 1.53(b). And the question I would like to raise is the filing date of provisional application and effective date under either Section 102(e) or Section 102(g). Under our current law, when an application filed in the United States issues as a patent it becomes prior art under 102(e), as of its U.S. filing date against all other patent applicants. Where the patent claims benefit of a foreign application under 119, that patent is still prior art as of its U.S. filing date, but not as of the date when the foreign party application was filed. This rule, as we know, was created judicially in In Re Hilmer, the 1966 version of that, with respect to Section 102(e); the 1970 version of that, with respect to Section 102(g). Now, under the new law and under the proposed regulations, one can argue that a provisional application would be a Section 102(e) reference as of its filing date, assuming of course that a Section 111(a) application, claiming proper benefit thereof, is subsequently filed and issues as a U.S. patent. Because, after all, the provisional application is an application filed in the United States. Further support for this conclusion can be found in the express wording of new Section 119(e)(1), that talks about an application for patent filed under Section 111(a), for an invention disclosed in a provisional application filed under 111(b), shall have the same effect as the such invention. Now I realize that very similar language to this is found in 119(a), which is old 119 that was already construed in the Hilmer cases. It will be noted, however, that unlike 119(a), 119(e)(1) does not contain language that relates to the statutory bar that is determined by your actual U.S. filing date. Thus, unlike a conventional non-U.S. priority application, a provisional application provides protection against a statutory bar to a later-filed application under 111(a). I have heard some argue that this is yet another reason why the Hilmer doctrine does not apply to provisional applications and why those applications should be accorded a 102(e) date, subject to the assumptions we discussed above. On the other hand, one can argue, looking back at the Alexander Milburn Supreme Court case, that the policy considerations that led to the statutory enactment of 102(e) simply do not apply. Since the provisional application is not examined, it is not possible that that could have issued as a patent on the same day it was filed, even if the PTO were a 100 sufficient. One could also argue that since priority to the provisional applications claimed under 119, the rationale of the Hilmer cases that Section 119 and Section 102(e) and (g) have nothing to do with each other may still apply. Now in the second Hilmer case, the Court reiterated that 119 and 102(g) are entirely different, but there again, a distinction is, those were foreign applications where here we are talking about applications filed in the United States. Since the provisional application is provided for in the applications section of the statute and since the statute requires that inventors be designated, one can argue that the filing of the provisional application constitutes a constructed reduction to practice of those inventions described therein, satisfying Section 112, first paragraph, and thus does create a 102(g) date that can be offensively against other applicants. Counter argument would still be to go back to Hilmer and point out the differences between Sections 119 and 102. The U.S. PTO, in administering the Act, will have the opportunity to decide whether the filing of provisional application creates a prior art date against other patent applicants under either or both of 102(e) and 102(g). Therefore, I urge the PTO in the forthcoming Notice of Final Rulemaking that will be published in the Federal Register, to indeed express its position with respect to whether the filing of provisional application under circumstances where a 111(a) application is timely filed and issues as a patent creates either or both a 102(e) or 102(g) date that can be applied against other patent applicants. By doing so, the public will be aware of the PTO's position in what I think is a highly significant matter. Let me tough also on Rule 701(d)(2), due diligence, as it has been expressed by previous offerors of testimony. Only with respect to extensions of patent term accorded a patent resulting from a successful appeal, as set forth in Section 154(b)(1), is the Commissioner charged under 154(b)(3)(C), to reduce the extension by the period of time during which the applicant for patent did not act with due diligence. Now in the discussion of specific rules set forth in the December 12, 1984, Federal Register, examples are given of what may -- and I emphasize may -- constitute lack of due diligence, including requests for extension of time to respond to Office communications, submission of response which is not fully responsive to an Office communication, and filing of informal applications. It is believed by many, in my travels and lectures, that these examples are overly broad and they should be modified in the discussion that will accompany the forthcoming final rules. For example, with respect to extensions of time, the examples are not limited to those related to a filing of the appeal brief that can be read to cover any extension of time, taken at any time during prosecution. Similarly, filing of informal applications includes filing an application without an oath or without a fee which results in the issuance by the PTO of a Notice to File Missing Parts. Thus, it seems to be contemplated in the discussion of the Federal Register that acts during the entire course of prosecution will be considered and not just those arising on or after the filing of a notice of appeal. There seems to be at least two problems with this possibly overly broad approach. First, Rule 136 expressly provides for extensions of time and, second, the statute, Section 111(a)(3) allows for the fee and oath to be submitted after the 111(a) application has been filed without losing the filing date. How can it be lack of due diligence if a patent applicant takes actions expressly authorized by the statute and rules of practice? Second, in a 20-year-term world, that will exist under the Act, any extension of time, any informal application that is filed, is filed at its peril because it inevitably results in loss of effective patent term. So why, since this is already the case, should that same period of time be again subtracted from the possible extension under 154(b)(2)? I would urge the PTO to reconsider and withdraw these comments in the final version. Perhaps an appropriate example of lack of due diligence would be actions taken by the applicant to postpone the date of an oral hearing, either before the Board of Patent Appeals or the Court of Appeals for the Federal Circuit. The last point I would like to touch on is the effective date of international applications filed under the PTC designated in the U.S. I have heard questions raised repeatedly whether the proper filing before June 8, 1995, of an international application, designating the U.S. under the PCT, whether or not that filing is effected in receiving office other than the PTO will preserve the possibility that any patent resulting from entry of the United States national stage will have a 17-year term, even if entry of that national stage occurs after June 7, 1995. The question, of course, assumes that no continuation application is later filed in the U.S. That is, that the patent issues directly from the application by which entry into the U.S. national stage was effected. Now according to Section 154(c)(1), the term of a patent that is enforced on June 8, 1995, or the results from an application filed before June 8, 1995, is the greater of 17 years from issue or 20 years from filing. The issues are whether in the circumstance described the international application qualifies as, under 154(c)(1), an application filed before June 8, 1995, for purposes of Section 154(c)(1) and whether the subsequent post-June 7, 1995, filing of the application by which entry into the U.S. national stage is effected somehow eliminates the possibility of a 17-year patent term. I would direct your attention to Section 363 of the Act, which states: "[a]n international application designating the United States shall have the effect, from its international filing date under article 11 of the treaty, of a national application for patent regularly filed in the Patent and Trademark Office except as otherwise provided in Section 102(e) of this title." This suggests that a PTC application filed before June 8, 1995, an international application designating the U.S., should be subject to 154(c)(1), even if it subsequently enters the U.S. national stage after June 7, 1995. This would retain, of course, the possibility of a 17-year term from issue. It is important to the public to know whether the PTO interprets the Act to mean that entry into the national stage in the U.S. must occur before June 8, 1995, in order to preserve the 17/20 possibility of patent term possibilities. Specifically, patent applicants must know and want to know whether their pre-June 8, 1995, PTC international filing date will preserve the possibility of a 17-year term from issue for a patent obtained by entry into the U.S. national stage after June 7, 1995. I would respectfully urge the PTO to make clear in the commentary associated with the final rules what interpretation it is going to follow and to answer the question: Does the international filing date or the date of entry into the U.S. national stage control for purposes of Section 154(c)(1). COMMISSIONER LEHMAN: I think your time has expired. MR. IRVING: And so have my comments. Thank you. [Laughter.] COMMISSIONER LEHMAN: You came all the way from Belgium. To give you an extra 30 seconds seemed reasonable. [Laughter.] COMMISSIONER LEHMAN: Next, I would like to call Vincent Castiglione. MR. CASTIGLIONE: Assistant Commissioner, distinguished staff, good morning. My name is Vinc Castiglione. I am a patent attorney with Becton Dickinson and Company, 1 Becton Drive, Franklin Lakes, New Jersey. These comments are being presented on my own behalf and the behalf of a colleague, who spoke yesterday. They are not necessarily the views of our employer. We are very encouraged as to the changes that have been made to harmonize the laws, the U.S. patent laws, in line with those in the world environment and to conform to the GATT and NAFTA obligations. However, we are somewhat concerned and some of the changes that were made are somewhat piecemeal and they, in fact, delay harmonization efforts. The biggest concern we have is the period of effective term, the enforceability. As the changes have been currently promulgated, the effective term of a patent will be measured from the date of issue, although the overall term of a patent will be measured from the date of filing. We do believe that this may result in some discrimination to patentees in that they will not be able to recoup the amount of money they have put in. Unequal enforceability, they will not be able to recoup funds because the terms of effective enforceability will vary. We were informed yesterday that there is a current Senate bill that does have some type of provision of enforceability so that you will be able to get some type of royalty measured from the date of publication if, in fact, publication is implemented. However, to our knowledge, this has not been passed by the Senate. The current House version does not this royalty provision, and in fact, there is no type of provisional remedy at this time. There may be some constitutional arguments to the lack of equal terms because the Constitution in Article I, Section 8, Clause 8, does provide that patentees will be guaranteed for limited times the exclusive right to their respective writings and discoveries. We feel that the patent terms, the so-called limited times, cannot be measured with some degree of specificity and consistency for the entire public at large. It is likely that the law in its current form may face credible constitutional challenges under due process grounds or equal protection grounds. We feel that it is not equitable to measure one patentee's contractual disclosure to the public vis-a-vis another's in a way that would account for inevitable discrepancies in their abilities to reap awards for respective discoveries, particularly whereas substantially summit technology or developments are at issue. Interim protection would go to great lengths to even out the playing field, so to speak, and we are very much in favor of providing some type of interim protection so that at least we could be able to value the assets in a fixed manner, in an equitable manner, so to speak, and inventors in this country would be able to reap a similar reward. At least, as to term. The terms of effective enforceability of patents may vary due to things that are not in the patentee's control at this time. Factors. The length of patent prosecution will vary according to the work load of certain groups, skill levels of certain individual examiners. But really, most importantly, the work loads and talents of the attorneys and agents. And as part of the patent community, we are very well aware that those vary tremendously and do contribute to discrepancies in issue dates, now, which will directly translate to effective terms enforceability when the new law goes into effect. And we don't feel that the patentee should have to suffer for that. We do recognize that the PTO has recognized that there will be problems caused by delays, and in fact have provided provisions for extensions for interferences, secrecy orders, and Federal court and Board of Patent Appeals action. However, instead of trying to identify situations, it would be advisable to have extensions in all areas. This, coupled with the publication of applications of provisional remedies, would go to a great length to rectify the problem of enforceability. I believe that is really the text of the comments. A lot of these were presented yesterday by my colleague in terms of 18-month publication. We just wanted to reinforce the notion that we do feel that provisional remedies should be provided for in the laws, when they are passed. COMMISSIONER LEHMAN: Thank you very much. MR. CASTIGLIONE: Thank you. COMMISSIONER LEHMAN: Next, I would like to call on James Slattery. [No response.] COMMISSIONER LEHMAN: Is Mr. Slattery here? [No response.] COMMISSIONER LEHMAN: If not, the next person on our list is Gary L. Newtson. MR. NEWTSON: My name is Gary L. Newtson. I am a partner with Harness, Dickey & Pierce. My office is located at 888 16th Street N.W., Washington, D.C. 20006. My comments are my own and not made on behalf of a client or my law firm. Mr. Assistant Secretary, distinguished staff of the Patent Office, my comments are directed to the rules relating to the disclosure which will be necessary to comply with the requirements of the Uruguay Round Agreements Act. In many, if not most, technical areas in the mechanical and electrical arts, only one embodiment of the invention is disclosed in a conventional application. Generally, a sketch or a drawing alone with a few additional comments or notes would enable one skilled in the art to make and use that device. Although the fee for filing a provisional application is small, I am concerned about the overall cost of the application to the owner, whether it is an individual or a small or a large entity. In particular, I am concerned that the inventor small entity groups be either required on their own or feel obligated to hire, or intimated into hiring, an attorney to prepare a specification that would disclose more than is absolutely necessary under the first paragraph of 35 U.S.C. 112, to teach one skilled in the art how to make the invented product, device, or machine. In a similar manner, large corporations should not have to bear the expense of preparing a "more than necessary" specification to take advantages of the provisional application. I believe that almost all specifications and drawings of mechanical and electrical invention applications describe more than is absolutely necessary, and I emphasize absolutely, to enable one skilled in the art to make the product disclosed. The rules on which we are commenting today do not detail the substantive material which is needed to comply with the first paragraph of 35 U.S.C. 112. The commentary does state that the disclosure may comprise "nothing more than a written description of the invention and drawings." However, further in the notice, it states that presumably most provisional applications will be filed by a registered practitioner. This will entail costs as the attorney drafts a specification which, in my opinion, would be considerably more detailed than the basic information necessary to enable one skilled in the art to make the device. The cost to the client, whether it is an individual inventor, or small or a large entity, is going to climb to the point where a provisional application costs nearly as much in legal fees and takes as much time in preparing as a conventional patent application. I do not believe that that was the intent of the Act, nor should the Act be interpreted to require such expense. It is my contention that the Act amendments do not require a detailed specification, as set forth above. Section 111(b) states that the application include a specification as described in the first paragraph of Section 112 and a drawing as prescribed by Section 113. The first paragraph of 112 states that the specification -- and these are my words -- need only contain a written description of the invention and the manner and process of making and using it, in terms to enable any person skilled in the art to which it pertains to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out the invention. Nowhere in the referred language does one find a requirement that the object of the invention be set forth, nor that it is necessary to provide any description in excess of what is sufficient to enable any person skilled in the art to make and use the invention. As I said, in many, if not most, mechanical and electrical product industries, sketches of new products are often prepared as the first step in recording a new invention. Sometimes, blueprints are made, or sketches or drawings are made, or other reproductions created, either manually or with computer technology. These sketches or blueprints often disclose all it is necessary for one skilled in the art to know how to make the sketched or drawn product. Some of the sketches or prints have notes or a few comments or sentences to clarify the drawings, but often such notes or sentences are unnecessary to make the construction readily apparent to one skilled in the art. I submit that most inventors, engineers, scientists, businessmen, or anyone making such drawings, know that such drawings, if disclosed to a competitor, that is, one skilled in the art, that it would enable that competitor to easily recognize how to make and use the product or device. I can think of no situation where any prudent inventor or entity would be willing to show such sketches, drawings, or blueprints to a competitor, that is, one skilled in the art, without expecting or worrying that such a skilled person would be enabled to make and use the device. Many invention disclosure forms even include the witness notation, "read and understood by the witness." Such a witness is enabled by the disclosure to make and use it, if necessary. I believe that such disclosures which, although not including a long, written description, but enough information in the form of notes, legends, can enable one skilled in the art to make the device, and sufficient to support claims in a later-filed formal application, disclosing the best mode known to the inventor at the time, would fully comply with the first paragraph of Section 112 and the drawings specified under 113. To paraphrase Section 112, perhaps the Office might consider issuing a written specification format or guideline to enable any inventor or small or large entity to prepare a specification sufficient to comply with the first paragraph of Section 112, and be acceptable to an examiner as sufficient support in a later-filed formal application without spending several thousand dollars. It seems to me that the bottom line of the sufficiency of disclosure in a provisional application is simply that, one, regardless of its written length or drawing content, the disclosure is "sufficient" and not "more than necessary" to enable one skilled in the art to make and use the invention. Two, the best mode known to the inventor at the time of filing the provisional application is disclosed; and three, the disclosed embodiment provides support for any claims in the formal application which rely on the provisional disclosure for priority. Now is the time for the U.S. Patent and Trademark Office to be innovative, creative, set a reasonable standard for the world, and make a real effort in simplicity and reinvent government with the user-customer and his ability, time, and pocketbook being kept, along with Section 112, foremost in your mind. COMMISSIONER LEHMAN: Any questions? [No response.] COMMISSIONER LEHMAN: Thank you very much, Mr. Newtson. We appreciate your help, in helping us reinvent the Patent Office. Next, Robert Armitage. MR. ARMITAGE: My name is Robert A. Armitage. I am appearing here on behalf of the American Intellectual Property Law Association. I am currently the President of that Association. Our address is 2001 Jefferson Davis Highway, in Arlington, Virginia. Assistant Secretary Lehman and distinguished officials of the Patent and Trademark Office: You have heard from several speakers this morning, and I would like you to think back to the very first speaker, Gary Griswold. I am going to be able to shorten my comments mightily, by saying ditto. [Laughter.] Let me begin by congratulating the administration on the enactment of the Uruguay Round Agreements Act. We are, at AIPLA, very pleased that one component of this was the inclusion of a comprehensive system for provisional filing of patent applications. We have long argued that a simplified system of gaining access to the Patent Office at low cost and with few complexities would be in the best interest of U.S. innovators. We have a few comments on the provisional filing scheme, and I think I would like to begin by a comment on fees. We believe that after the Patent Office gains some experience with using the system for provisional filing, that it ought to reassess whether or not the fees charged cover the incremental costs for providing these services. Obviously, when you are in an area such as fees, not every Patent Office service can be provided to the public at an incremental cost or there would not be enough revenue generated in the Office to cover all of the Office's activities. However, we believe that there is a strong enough public policy interest in encouraging provisional filing that this is perhaps a unique area where the Office should consider the lowest possible fee. Particularly independent inventors and small entities, for them this needs to be as optimal a procedure as it can be. Second, we fully endorse the IPO suggestion that some means exist for an applicant not filing a provisional application have a simplified way of disgorging from the patent term calculation that first year. Whether it is a Rule 62 mechanism or a new Rule 62.5 mechanism, we would encourage that the filing of a single paper in the Office with the payment of an appropriate fee be a mechanism whereby prosecution could be continued, with prior to that filing of the paper prosecution being regarded as provisional. We also note that many applicants will enter the U.S. patent system and file continuing applications or perhaps continuation-in-part applications during the first year with the result that their initial priority filing, or initial U.S. filing, will go abandoned within the first 12 months. We would hope that the Patent Office might find a creative way through rulemaking to deem all such applications that go abandoned within one year of the earliest priority date be provisional applications. What this would do by operation of Patent Office rule is exempt these applications from the first year of patent term and, in effect, put U.S. inventors on the same plane as foreign inventors. And obviously, it is provision that in almost every conceivable circumstance would only benefit a U.S. inventor. We believe that there are some problems and complexities associated with inventorship determinations in provisional applications. There is no, to us, clear-cut way in which one can ever really define what it means to be an inventor of an application where there are never claims and there never is intended to be any examination. The bottom line is, we believe that the ultimate solution for the problem of naming inventorship in provisional applications is a system of assignee filing. Indeed, a system of assignee filing would do no more than put U.S. provisional filers on the same plane as foreign filers, both of whom take the benefit of their early filing dates under Section 119, rather than under Section 120. If, indeed, for an interim period of time, it is necessary to designate inventorship in provisional applications, then we would suggest that the Patent and Trademark Office by rule allow both, what I will call the over-naming of inventors and the under-naming of inventors, with some express notion in the rule that it is a proper designation of inventorship for the purpose of provisional applications, if either too few or too many inventors are named. And in particular, one would not be able to challenge an application if there were, for example, eight inventors named, but in no subsequent application was ever an invention claimed that named more than one or two of those inventors. You will recall in the rules, there are provisions for adding, but not removing, inventors. Implying, of course, that this practice is possible. We also think that it is equally desirable for the Office to expressly allow the underdesignating of inventors. Obviously, without a common inventorship, with a later application there can be no benefit of the provisional application, but nonetheless if one or two joint inventors is not named, it ought nonetheless to be possible to claim the benefit of that application in a subsequent application with at least one common inventor. There are, of course, some other, more technical aspects to provisional filing that rulemaking or commentary associated with rulemaking might clarify. You have heard some of these before. One of them is some expressed provision for allowing multiple provisionals to be claimed. Perhaps some commentary in the rules that a provisional application not need to have a one-to-one correspondence in terms of inventions or claims, subject matter with a later-filed application. And perhaps, some clarification as to what the best mode updating obligations are for an applicant using the provisional application. In our view, perhaps the simplest standard would simply be for all Section 119 priority applications to be stated by the Office to be subject to the same requirements in terms of updating best mode. Several of our committees also pointed out that the provisions on identifying provisional applications by virtue of a cross reference contained in a later application might be clarified, particularly so that it would be clear to the Office and clear to someone reading a published application or otherwise, as to what was provisional and what was not. I will move on to just a couple of comments on the 20-year patent term implementing legislation. Yesterday, of course, during testimony on behalf of AIPLA, we indicated that we supported the 20-year patent term. We also supported 18-month publication with the ability to have expansive incorporation by references of technical disclosures, in part to prevent in the Patent Office files the generation of a multiplicity of identical technical disclosures. I continue those comments today by seconding the observations of prior speakers that we need as much as possible to compact prosecution in the Office, not only for the sake of multiplying technical disclosures, but also because of some of the restrictions applicants will be under in enjoying a 20-year patent term. Certainly, the after-final reconsideration practice on the payment of a fee would seem to be something that could be incorporated into 20-year patent term applications generally, not just those in the transition area, and also to provide applicants the option, not the mandate, of continuing prosecution of independent and distinct inventions in a parent application rather than requiring that divisional applications be filed. We have in our written comments a number of other observations, and I would end my oral comments at this time. COMMISSIONER LEHMAN: Thank you very much, Mr. Armitage. If there are no questions, then I would like to call Paul Wolstenholme. MR. WOLSTENHOLME: Thank you. My name is Paul Wolstenholme. I live at 630 Dushane Drive in Bellefontaine, Ohio. I am here on my own behalf, and I am an independent inventor. My day job is as an insurance agent, and my advocation is invention and innovation. The purpose of my testimony is to ask that, when you implement the new 20-year term, that you keep in mind and in the rules the needs of the independent inventors, such as myself. Of limited means and oftentimes, we file patent applications pro se. We are a disorganized group. I think, by definition, the independent inventor is disorganized. I belong to the Central Ohio Inventors' Network, and we are so disorganized I can't even organize a card game among that group. [Laughter.] So that is why there is not many of us here, and that is why we are not organized to have a spokesman, so I have more or less taken it upon myself, for my group, the Central Ohio Inventors' Network. I know what individuals think about the issues of harmonization. They think it is a phony issue and one that is being used by large corporations in other nations to get rule changes that will eliminate the small inventor from getting a piece of the pie. Large corporations hate being told that they cannot use advancements until they get permission from somebody like me. I hold two U.S. patents and one Canadian patent on a highly successful, low-cost grain storage system. I agree that if you stand back and take a broader view of the patent system, you can see that there may be an isolated cancer in the system. Namely, the submarine patent and the road block patent. I had the opportunity yesterday to briefly talk with a senior examiner who had handled several of the limousine patents, which many say fall into this category. In his view, we don't need to change our laws, but we need smarter and better examiners. I think that the PTO should focus like a laser beam on the problem and perform laser micro-surgery so that the rest of the system remains untouched. It seems that the device being used today in a sawed-off shotgun. Bam! Seventeen-year term. Bam! Confidential applications. Bam! First to invent. I fear that before long the PTO building will look like the government buildings in Bosnia and Chechnya. As we speak, the individual American inventor is going over your heads to their members of Congress. Generally, they find their congressmen to be both sympathetic and responsive. I wrote to my representative, David Hobson and asked him to vote for Congressman Rohrabacher's House bill, 359. Last week, I received his response. He said he will not only vote for it, but he will also cosponsor it. At last count, there were over 124 cosponsors in the House of Representatives for the bill. I don't think the Congress wants to micro manage the PTO, but I also don't think that they want to see the individual inventor disappear. Thank you. COMMISSIONER LEHMAN: Thank you very much, Mr. Wolstenholme. Next, I would like to ask Kate Murashige to come forward, please. MS. MURASHIGE: Thank you, Assistant Secretary Lehman, distinguished panel. Good morning. My name is Kate Murashige. I am a partner at Morrison & Foerster, at 2000 Pennsylvania Avenue N.W., here in Washington. I am speaking for myself and on behalf of other members of the Patent Practicing Group. I appreciate the opportunity to comment on these rules. In particular, I wanted to comment on the proposed transitional provisions, and what I am really going to suggest is that they both be simplified and be made permanent, as others have suggested, too. I have often wondered why file wrapper continuations are used to prolong prosecution when really all we are doing is continuing prosecution and paying the additional fees necessary to reimburse the Office for the additional examination. That has been used where a final rejection needs to be responded to and also after a Notice of Allowance where additional art has come to the attention of the applicant and needs to be cited. What I have in mind is that after the applicant has received either a Notice of Allowance or a final rejection, that he could open prosecution simply by filing a form and an additional filing fee, really equivalent to the filing fee that is charged now for a file wrapper continuation. This would permit additional art to be submitted and additional arguments, additional evidence, and so forth. It also has the added benefit, I think, of taking a lot of the pressure off of the objections to the 20-year term because I think the fear of many people, who are in the kind of practice that I am in, are concerned that applications that are already on file won't be able to be finished up with the two bites of the apple that are provided. If we had this mechanism, essentially the retroactive effect of the 20-year term from filing would be mitigated. And I think that would take a lot of the pressure away from going back to a 17-year term from issue, which, I will have to say, would be a great disappointment to me and some of my fellow practitioners who are interested in seeing harmonization take place, because it would be a backward step. If we could remove that sense of pressure, perhaps that would be a good way to mitigate some of it. It seems to me that in addition, the restriction practice transitional provision could also be revised in a similar manner. I understand the convenience of having separate patents for separate inventions, having separate maintenance fees on separate patents for separate inventions, but I don't think that that is inconsistent with having a practice where multiple inventions could be examined for multiple fees in a single application and then issued, not necessarily all at the same time, as separate patents. In most cases where I have run into restriction requirements, at least, it doesn't appear beyond the ability of the examiner to examine all the inventions. I think someone earlier mentioned it is sort of a function of the classification system. In those odd instances where perhaps there really was such a different invention that the same examiner wouldn't be able to examine it, I am sure some provision could be made whereby that could happen, as well. So what I would have in mind there, I think, is just a situation where a restriction requirement could be issued. Either the applicant could pay an additional fee without quarreling, or if he or she objected to the restriction requirement, could petition. If lost the petition, could then pay the additional fee, and there could still be the option for divisional application later. Similarly again, I think this simplifies things. There is no reason really to make the transitional provisions transitional. It seems to me that they could be applicable to all applications, including those filed after the effective date of the GATT Treaty implementing legislation. I understand the concerns that other people have about costs of filing fees and so forth. I agree with the idea that they should be proportional to the burden on the Office, but I think the main focus that I want to emphasize is just simplifying this, making it fair to people who have to continue to prosecute applications that were filed before the Act is effective and essentially streamlining procedure. I have one further comment that is unrelated to the previous ones. It is a straightforward, simple comment. I notice that in the provisional applications, that there still will be a requirement for filing a paper copy of sequences, although not a machine readable copy. I just have to say that it is just as much trouble to make the paper copy as the machine readable copy and it is a fairly expensive procedure for the applicant. Since those applications aren't going to be examined and since it really isn't the purpose of the provisional application to provide a data base, but rather to provide a means for an applicant to get his foot in the door, I think that should be changed so that no formal requirements for sequences should be included. I think that is all my remarks. Thank you. COMMISSIONER LEHMAN: Thank you very much. Next, I would like to ask Rene Tegtmeyer, please, to come forward. MR. TEGTMEYER: My name is Rene Tegtmeyer. I am a partner in the firm of Fish and Richardson. The address is 601 13th Street N.W., Washington, D.C. 20005. My comments today are on behalf of the American Bar Association's Section on Intellectual Property Law. The comments that I am presenting have not been approved by the Board of Governors or the House of Delegates of the American Bar Association, and therefore, do not represent comments of the American Bar Association, but the comments only of the Section on Intellectual Property Law. My comments are going to sound a little like a broken record because I think most of the points I am going to make have been made, although a few of them I have a little additional information on, and I will try and be brief on the ones where I don't. I should compliment the Office on an excellent job of drafting the rules. I think they amazingly cover a lot of the different points that needed to be covered for consistency throughout the whole rules package. One of the points that was raised by a couple of the speakers is the costs and the fact that the fees should be limited to recoup only the average additional costs of the extra work involved in connection with, for instance, the filing of a provisional application or the consideration of additional actions after a final rejection or multiple inventions in a single case. I will note in that respect that the Office, about 10 or 12 years ago, made a proposal to enable applicants to substitute for continuation applications the payment of a fee in order to get an additional action after a final rejection. There wasn't a lot of interest at the time, but there wasn't a 20-year term running against them, either, and there wasn't the prospect or possibility of 18 months publication facing them. So at that point in time, the fee that was proposed was a lower fee than it would have cost to file an additional continuation application to take into account some of the savings in processing by the Office. A second point which, I guess, has not been made by a number of the speakers relates to the requirement in Rule 45(c) where it refers to joint inventors and indicates that joint inventors must have made a contribution to the subject matter disclosed. That seems inconsistent with the statute and probably should be reworded, to be clear that it refers to the invention disclosed. The present rule refers to the subject matter claimed and that does focus in on the invention, so the recommendation is that Rule 45(c) be amended in that manner. Another comment is on what appears to be a relatively minor point, but that is whether or not the provisional application file is maintained with the complete application file subsequently or sent to the Files Repository. And for several reasons, we believe that it should be maintained with the complete application. An examiner may need to refer to it in determining whether the complete application is entitled to the benefit of the provisional application or applications. And also, an 18-month publication, if it comes along subsequently, there will be a demand for accessibility by the public to that at the time of publication, and if it has to be ordered up from the Files Repository, that will cause problems. Another comment relates to the transitional provision in regard to restriction requirements, where the statute when it was amended mandates that the Commissioner shall institute regulations providing for the consideration of multiple inventions in a single application, where the application has been pending for three years or longer. And the Statement of Administrative Action accompanying the legislation referred to an additional condition, which is, that the restriction requirement have been made within two months of the effective date of the legislation or June 8, and that does not appear in the statute and seems consistent with the statutory language. A more logical date would be one of the other alternatives set forth in the rule, and that is, the time at which the examiner has acted on the elected invention after the restriction requirement in a case more than three years old. A number of people have made comments in regard to due diligence, and I will just reiterate their comments. The Section is opposed to consideration of questions of due diligence outside the appeal period or process in a successful appeal situation. That that is not what was intended by the statute. And in addition, also feels that while the rule, itself, has good language to characterize what constitutes a lack of due diligence for the purposes of reducing an extension for a successful appeal, the examples again that are given to explain that language in the rule go far too far in specifying that a request for extension of time or the like would constitute a lack of due diligence, and that would be a severe penalty for something that is not only permitted by statute, but also by existing rules. That concludes my comments. I will be happy to answer any questions. COMMISSIONER LEHMAN: Thank you very much, Mr. Tegtmeyer. Are there any questions? [No response.] COMMISSIONER LEHMAN: If not, I would like to call Kenneth Burchfiel. MR. BURCHFIEL: Good morning. My name is Kenneth Burchfiel. I am a partner at Sughrue, Mion, Zinn, Macpeak & Seas, 2100 Pennsylvania Avenue, in the District. Mr. Commissioner, Madam Solicitor, distinguished staff, I appreciate the chance to come and talk briefly on two or three points that have been raised by the participants in the lectures that I have conducted. I am not speaking on behalf of the firm or my clients, but as a person who has been doing lectures and who has coauthored a book on this topic. The first question that I would like to address is the transitional provision for examination of independent and distinct inventions in applications pending for three years or longer. In response to the statutory requirement, the PTO has proposed 37 C.F.R. 1.129(b), that expressly permits the Office to maintain any restriction requirement made before April 8, 1995, and to require the applicant to file divisional applications after the effective date in such cases. This proposed regulation provides far too little help to industry and the bar, who are forced to adapt to the requirements of this new law very suddenly. A devastating loss of term is going to occur in older cases where divisionals are filed after the effective date or are entitled only to the 20-year term. In order to retain the benefit of a 17-year term, all divisionals from all prior restriction requirements in all applications pending for whatever length of time must be filed before June 8, 1995, or loss of term will be automatic. This is a very heavy penalty on the chemical and pharmaceutical industries who have less than four months to search through all the ancestors of all pending applications and identify all restriction requirements, however phrased, in whatever application they occurred. In areas such as pharmaceuticals where restriction requirements are frequent, a heavy financial burden is also imposed to file all of these applications immediately and to pay a separate fee. This could easily double or quadruple the filing budget that was made by corporations in complete ignorance of the provisions that have now been enacted. It would be better for the rule to state that restriction requirements will not be made or maintained in any application pending for three years on the effective date, without reference to the April 8th cutoff. Also, after the effective date, it will be mandatory for applicants to file simultaneous divisional applications immediately in response to any restriction requirement that is imposed in an application filed after the effective date. Examining groups are going to be flooded with new divisional applications, as applicants seek to preserve as much of the 20-year term as is possible. The PTO should at least consider fundamental change of its customary restriction practice and examination of more than one separately classified invention in a single application to avoid both the administrative burden and the cost to the industry. The second question that I will address is the proposed reduction of appellate extension for lack of due diligence provisions. The PTO has proposed that examples of what may constitute lack of due diligence include requests for extension of time to respond to Office actions and other actions that are expressly permitted by the rules. This is a punitive and harsh standard that erases the minimal protection against PTO delay that is mandated by the statute. How can the due diligence requirement require more than the patent statute and the rules of practice? I can only emphasize, and second, the remarks of the earlier commentators. I want to point out that this rule discriminates particularly harshly against chemical and pharmaceutical industries where we have to synthesize and test new compounds that we don't have on our shelves in order to provide comparative evidence with respect to prior art compounds identified during prosecution. Such testing may require months and at the current practice has required filing not only routine petitions for extension of time, but also continuation applications simply to gain the time necessary to synthesize compounds and test them to provide meaningful comparative evidence. The proposed interpretation further discriminates against foreign applicants who are required to wait for translations, both of the Office action and references going out, and of their foreign language responses in evidence necessary to respond. If this provision stands, it will be necessary to paper applications with lengthy explanations of any period of time required to respond in order to provide the basis for the inevitable petitions to your Office contesting inconsistent, adverse determinations by various examining groups who will be forced to contest adverse or incorrect determinations of extension term in District Court actions in important cases. It will lead to a huge amount of work that is entirely unnecessary, if the provision could be modified to make it more reasonable. I would suggest that in order to reduce the administrative burden and to provide more guidance to the industry with respect to the expiration term of a patent, which is important in other context in infringement, the Office should consider adopting a gross negligence standard that would apply only to delay occurring after the filing of a Notice of Appeal. Those are my remarks. I thank you very much for your attention and consideration. COMMISSIONER LEHMAN: Thank you very much, Mr. Burchfiel. Any questions? [No response.] COMMISSIONER LEHMAN: If not, next I would like to call Orville Litzsinger, please. MR. LITZSINGER: Good morning, and thank you, Mr. Commissioner, for the opportunity to speak. We, too, appreciate this opportunity, which hasn't always been available to us. I represent The Alliance for American Innovation, which is located at 1100 Connecticut Avenue, here in Washington, in Suite 1200. In Washington, The Alliance for American Innovation represents over 3,000 members of the innovative community, focusing primarily on the independent and small business inventors, but we also work in the interests of a number of small businesses, including the biotech people and people in the venture capital area, as well. While Paul Wolstenholme indicated that his group was disorganized, we do represent an organization here locally, and we are a fast-growing organization, and I would like to certify at this time, we are not funded by -- and I am not personally funded by -- anyone that has been accused of being a submarine inventor. Okay? [Laughter.] I would appreciate the same certifications by people speaking in your behalf that speak for associations and other groups, that they certify that in their private business they do not have clients that are of a conflict of interest to what is happening to the United States patent system. After reviewing the documentation supporting this idea, I have some specific points that I will make relative to that. And if I vary, it will be only in response to previous comments made and allowed, and anything superfluous to that will be held to a strict minimum. When we reviewed the rules, of course, one of our main concerns is the fee area. And so what is new, right, with the independent inventors? We have had a problem with the fees for a long time. But specifically, one of the questions that we have is maintenance fees. I fail, and our people fail, to find a specific place where the clock starts ticking on maintenance fees. Are people going to have to pay maintenance fees before their patent is issued in some cases? Or are they going to pay them in six months after issuance? Or when are they going to pay that three-and-a-half-year maintenance fee? We need to know that. Mr. Kirk? MR. KIRK: The maintenance fees would be due exactly as they are, from point of issuance. MR. LITZSINGER: From point of issuance? MR. KIRK: From point of issuance. MR. LITZSINGER: Thank you. That was a question that we had. A question that we had, also, reflects to the package being circulated in support of the effort, which lists about 20 companies or organizations that are on-line. We question the degree of completeness of that, relative to people that are on there, as to whether they still are. I know the Biotech Industries Association was listed as a supporter, and we know that within the past few weeks they had a vote here of the Patent Subcommittee, and the biotech firms voted two to one to support the Rohrabacher-Dole effort that gives the option of 20 years or 17. If we are talking to the list of supporters relative to 20-year term, you could add our name to that list because we do support a 20-year term from date of filing, or 17 years from date of issue. We believe that our proposal has been less severe than the one adopted in response to the GATT enabling legislation. We would like the IPO for their recent alert on submarine patents because they use an example of a 40-year patent and we saw the response prepared by the inventors' people that indicated that that patent had been in the Patent Office for 29 years and ball was only in the court of the inventor for less than 30 months. So if that is the best example that we can get for submarine patents, we are okay. Additionally, I sat in on a meeting last week with people from Phillips Petroleum, with Congressman Rohrabacher's staff, and they brought in two patents. They said, "These are submarine patents. Look, here." By the time they left, they realized, after we examined them closer, that the delays were not caused by the inventor, the delays were caused by divisional actions and interferences. They also left knowing that, under the new system, that their company would have lost $300 million because their patent would have expired before they had a chance to exercise it. I have that in a letter going back to the CEO of Phillips Petroleum that Congressman Rohrabacher sent, and if you desire it, I am sure he would respond with a copy for you. One of the factors on fees that we discussed is the requirements that we have, not only to pay the fees, but to get venture capital. There was a report that was just put out by Oak Ridge National Laboratory on an inventions program that the Department of Energy has for independent inventors. That report says that for every dollar spent by the independent inventor to get to the point where he has a patent or almost to that point, he needs $37.00 after that, to commercialize his product. This is why the National Venture Capital Association is in support of our preference for the optional term, because the venture capitalists across this country will no longer invest in a system where the inventor is not guaranteed a fixed time of return on that money. I note your reference to the Constitution earlier. I note the reference to the Constitution earlier and your reference in a response to an inventor just three days ago, where you brought the subject of the Constitution up. Section 8 of the Constitution has 18 things listed in it that give the Congress powers to do certain actions. Clause No. 8 -- there are 18 clauses -- clause No. 8 says that the Congress shall have the power to promote the progress of science and useful arts by securing for a limited times to authors and inventors the exclusive right to the respective writings and discoveries. The GATT enabling legislation took this right away. It is the only right, out of those 18 clauses, that is no longer in effect in this country. That right has been in existence for 200 years, plus, and it includes other rights, such as forming and maintaining a militia, an army and navy, and making loans, and the things that we say. In a discussion that I had at the White House yesterday, they indicated that the administration position on that was issued as a result of a recommendation from the PTO. Now, we have a situation for the first time in 200 years, the Congress has been influenced to remove a right of the independent inventors in this country. Also, speaking of other difficulties associated with this, beyond that, the insurance underwriters are saying that because of the due diligence effort discussed earlier, that malpractice insurance for patent attorneys will grow tremendously before it will cease to exist because of the liability and the problems associated with the process of the patent for the inventor. The provisional application and the 18-month clock, or 6-month clock as we discussed yesterday. When does the clock start on publication, if, in fact, that bill is passed? Does it mean that an invention is published at six months instead of 18? There are a lot of folks that have some serious problems with that. I want to say, again, thank you for the opportunity to speak. I would be happy to answer any questions that you might have and, of course, I have a written correspondence that I will submit formally. COMMISSIONER LEHMAN: Thank you very much, Mr. Litzsinger. Next, I would like to call Frampton Ellis. MR. ELLIS: I am Frampton Ellis. I am an independent inventor, based here in Arlington, Virginia. My address is 2895 South Abingdon Street, Suite B2. The zip is 22206. I am here on my own, and these are my own comments. I am limiting my comments to the enacted law, as it now exists, but in no way endorse it, and I would like to focus on the transitional provisions proposed by the Patent Office. The PTO states in the Federal Register that it is now proposing to amend the rules of patent practice to implement the Uruguay Round Agreements Act, and "to simplify the rules." I referred to the Federal Register many times before and therefore was very surprised to discover that bureaucrats are now allowed to indulge their taste for humorous remarks in this official publication. Maybe this resulted from some misunderstanding in the administration's effort to reinvent government. In this particular context, however, I have trouble appreciating the humor since the proposed transition provisions have ignored the simplest and fairest approach in order to devise a hugely complicated Rube Goldberg approach that would be arbitrarily unfair. In the short term, meaning the several year transition period, especially between now and June 8th, it seems like we will also generate truly spectacular earnings for patent attorneys. Innovation will take a backseat for at least the next year, while thousands and thousands of clients everywhere work out complex and expense strategies for prosecution and filing, to salvage what they can from their potential patent term for pending applications. Any inventors who have been forced to spend several years or many years unsuccessfully attempting to get reasonable claims allowed by the PTO will suddenly be under enormous time pressure to accept any possible allowable claims or potentially lose years, possibly many years, from their patent term. Bad rules yield arbitrary and senseless results. For example, important inventions will likely be protected by several continuing applications and will end up being protected by several different sets of claims with different terms. I think we should be true to the oft-stated goals of reinventing government to keep things simple. If we must have a new patent term, the only fair transition is the simplest. Patents with a priority date before June 8, 1995, should have a 17-year term after grant. And patents with a priority date of June 8th or after, should have a 20-year term from their priority date. It is a simple rule. End of story. No endless complications. No huge windfall of fees, either. But at least, the rules are not changed unfairly in the middle of the prosecution game. In closing, I guess I have to admit I am a little too unsophisticated to understand why we are really now posed here, to stand on its head, an existing set of patent rules with a proven innovation effectiveness in an attempt to stop the supposedly egregious effect of a tiny number of submarine patents. Ignoring for a moment that no one has demonstrated in any rigorous fashion the existence of these egregious effects, what are the tradeoffs? Is there any possibility that by sinking submarine patents, we also seek innovation, far more generally? Has anyone thought seriously about this? Just in final closing, the one other comment I would like to make is, this seems to be a typical government approach for which it receives the heaviest criticism. Which is, to focus a set of rules that apply to everyone, to go after the 1 percent problem area that is alleged. That's it. Do you have any questions? [No response.] COMMISSIONER LEHMAN: Next, I would like to call Mr. Harold C. Wegner. MR. WEGNER: Thank you, Mr. Assistant Secretary, Deputy Commissioner, Deputy Assistant, and Madam Solicitor. Thank you for this opportunity to appear. My name is Harold Wegner. I am Professor of Law and Director of the Intellectual Property Law Program at the George Washington University National Law Center; Director of the Dean Dinwoodey Center for Intellectual Property Studies; and of counsel to the law firm of Foley & Lardner. My address for this hearing is Foley & Lardner, Suite 500, 3000 K Street N.W., Washington, D.C. 20007. All of the comments I make today are on my own personal behalf and do not necessarily reflect the views of any organization with which I may be associated. First, if these proposed rules were final rules, they would be the best example of positive rulemaking that the Office has had in many, many years, reflective of both the talent and attitude of a superb staff that you put together in just the last couple years. So if these were final rules, they would be excellent. They are only provisional rules, and you have given us the opportunity of looking at options and variations. I think most of the possible weak spots that could exist have been explained in your proposed rulemaking and have been adequately addressed by the several commentators who have taken time to diligently make comments. With our permission, in these remarks I would like to discuss some of the points that strike out, which strike me, which have struck many of the people here today. Kate Murashige maybe said it best: Why is it that we have had Rule 62 practice in so many continuing cases? And, why couldn't we simplify this earlier? The reason we couldn't encourage voluntary refiling of cases earlier was, the public has a right to have a time to practice an invention. Now, we have a cap at 20 years. Now, we can liberalize. What we are talking about, basically today, is fees and beans. Fees for the office and bean counting. Why did the strict, hard-ball approach evolve in the late 1970s to force refilings of cases? This goes back to the late era of Edward Brenner, when he went to Congress and said, we are cutting the back log, we are cutting the pendency. And pendency was counted, bean counting was counted from the actual time of pendency of an application. So if you had a first application pending for 10 years and then had a continuation that was pending only six months, the pendency was six months for the bean counting. Now is the time to make a sea change and get away from the bean counting. To start fresh, to start counting how we are doing, measuring from the first filing date. Let's replay the down, let's start the game over, and let's look at accounting procedures that measure the term of the patent from the first filing date. Let's also get rid of the bean counting in terms of promoting examiners by how many refilings they can force, and let's see their actual production. How many cases can be allowed? These reforms are essential. Otherwise, it will never work, to say let's have a more liberalized practice to permit continued prosecution because examiners, the bread on their home table, their promotions, are based upon how many disposals, how many cases they have. So every time a continuation is filed, they get another disposal widget, another credit. We have to replay the down, start all over again, and have a new system. Having said that -- and let's do that -- then, let's abolish Rule 62 altogether, and replace it by a simple form. Just like you pay a certain fee for a Notice of Appeal, you would pay a certain fee to erase finality and maybe set a three-month period, to make a voluntary amendment, to start procedures all over again. We can do that, now, because we have the 20-year cap, so let's take advantage of that and move forward. Also, the constructive suggestions of several of the speakers on restriction practice should be noted and taken into account. I very much value the opinions of Richard Donaldson and what he said about measuring the diligence during the appeal period. He is on all-fours. He is exactly right, and that was very constructive. Mr. Irving talked about the Patent Office giving guidance on Hilmer. With due respect, you don't have the authority to do that. That is up to the courts to decide. The best you can do is to give a warning, to say there is an uncertainty, here. And with due respect to this noted speaker, there are other arguments that can be made the other say, and whether he or I favor a particular solution, we are limited in what we can do in the rulemaking, in the comments, by what the statute permits. I would only say, the Hilmer problem with respect to provisionals, is a serious remaining problem and should be dealt with by legislation. I am not proposing what that legislation should be. I do agree with Mr. Irving that, if it is his suggestion, that a PTC application filed anywhere in the world, but actually filed before June 8th, this is under the old law and 35 U.S.C. 363 makes this absolutely clear, and there is no dispute on this issue so I would think one sentence to this effect is very good, because this is fine. Some people are talking about how we are losing rights under the Constitution. The Constitution is best served by a strong system. Investments are best served by having certainty. That includes certainty as the third party rights. That includes having everyone get their patents granted as soon as possible. What we have in this legislation is really a net 21-year term, when we count the provisional filing year. And the net pendency today is much less than 21 years, so what we are doing is giving a bonus to the diligent who push their applications through. There are some who suggest that it is not bad if we have patents expiring 30 or 40 years after the filing date. Let's look at the cost. In addition to the problems that are raised for industry, the uncertainties. Maybe a Phillips made $300 million in the bonus round by having this extension. What happened to American industry during that period? Where did competitors go? Did they go to Holland? Did they go to Japan, to Taiwan, to compete for the world market because patents were expired in those countries? Why should we punish American industry? If we want to encourage American jobs, we should encourage jobs at home. So when patents expire abroad, how dare we let these patents linger on for 30 or 40 year? But let's look at administrative costs. If we are going to stretch a patent out an extra 20 years through this gamesmanship, this means that the prosecution is churning for 20 years. We, the taxpayers, are paying for that. We, who have our applications held up because of a backlog, can thank the people who are letting their cases linger in the Patent Office for 20 or 30 years for this benefit. Mr. Newtson made a very important comment. We must simply. I think the problem is more macroscopic. It is not limited to provisionals. The first thing we should do is find a big trash barrel and take this big volume known as the Manual of Patent Examining Procedure, or Nightmare from Hell: How to Reject the Case, and throw it away. Throw it away, and let's reinvent the manual, and let's teach examiners and attorneys, alike, how to allow cases. How they should construct their cases. We refer to objects of the invention. Those aren't statutory requirements for anything. Let's just take the manual and get a trash barrel and throw it away. Mr. Armitage was the first speaker to touch on inventorship. That is a very important point and I am supplying my comments separately on this. Germany doesn't require inventorship nomination for 16 months. There is no reason we should punish applicants by requiring an accurate inventorship nomination any earlier than the Germans do. Submarine patents, Mr. Wolstenholme mentioned an isolated cancer. It is a cancer, I think it probably is a minority of the cases, but it is growing. It must be cut out. This is a cancer on the Constitution. It is a cancer on our patent system. Finally, Mr. Litzsinger raised some very interesting points. We must protect the rights of the individual inventors. We do that best by following the suggestion of Mr. Newtson and simplifying applications. We do that best by having an open prosecution with sunshine. There are abuses by applicants, some attorneys, and examiners, alike. Let's have sunshine prosecution. Let's have the 18-month bill put into law. Let's have open prosecution. Let's expose the frauds where they exist. Let the chips where they may. Let's get patents in the hands of the inventors cheaply, efficiently, without forcing them to go through the harassment and problems of patent persecution. Let's get the cases allowed quickly. But we must have a fixed term that expires at a certain date. The U.S. Congress itself, in a predecessor to 35 U.S.C. 102(d), enacted a law that capped U.S. patent terms under certain circumstances to expire as of the earliest counterpart foreign patent expiration date. The idea is, at some point in time, there will be a generic industry. If there is a generic industry, there will be a generic industry, let that be in the United States and not abroad. There is a case called Ex Parte Mushettes application, where one of your predecessors, about 124 years ago, 125 years ago, denied a patent extension in one case because he said that if he granted an extension of steel making process patent in the United States, the patent had already expired in the United Kingdom, and then all generic competition would go abroad. Steel would be made abroad, instead of here at home. Isn't that crazy? Isn't that anti-American? So let's honor the Constitution, let's strengthen the patent system, and let's proceed with the simplification of the system. And I applaud your legislative and rulemaking initiatives. Thank you very much for your time. Do you have any questions, sir? [No response.] COMMISSIONER LEHMAN: Thank you very much, Mr. Wegner. MR. WEGNER: Thank you. COMMISSIONER LEHMAN: We had one witness who was not here when he was called. That was Mr. Slattery, I believe. If he is here, now, he can come forward. MR. SLATTERY: Good morning. My name is James Slattery. I am a partner with the firm of Birch, Stewart, Kolasch & Birch. Our address is at 8110 Gatehouse Road, in Falls Church, Virginia. Thank you, Commissioner, Assistant Commissioner, Deputy Commissioner, Deputy Assistant Commissioner, and Madam Solicitor. I have, basically, four issues to discuss. These issues are really my own opinion. Our firm has not fully reviewed all of them because the GATT legislation was on the fast track and, similarly, the rulemaking is somewhat of a fast track. But I think it is good for all of us to review these changes that are being proposed, and I have four things that I want to address. One relates to the patent term. Presently, all of us can calculate the patent term. It is 17 years. And any of the patents that are issued prior to June 8, 1995, we can all calculate the patent term. It will be 20 years from the date of filing or 17 years from the date of grant. But my request is to, for all patents issued after June 8, 1995, to print the patent term on the front of the patent. Some patents will have an extension of the patent term, based on either appeal process or interference, and it will be impossible to know the patent term unless you order up the file history and check to see if any extension has been granted. Now, in the most recent of the AIPLA Bulletin, under the section on relations with PTO affairs, it did indicate, of course, you are going to print on the Notice of Allowance, what you think the patent term extension might be. And of course, the applicant will have the Notice of Allowance. And the applicant will have the right to appeal or somehow try to extend that period, if she or he thinks it is necessary. But according to the publication by the AIPLA, the PTO will be printing the term of the patent on the front of the patents? Because it states here, the PTO will determine the appropriate length of the patent term extension before issue -- MR. GOFFNEY: We will print the extensions on the front. MR. SLATTERY: The extensions. MR. GOFFNEY: Yes, that is the number of days. MR. SLATTERY: Number days. So then, we will be able to calculate from the front of the patent. MR. GOFFNEY: That's right. MR. SLATTERY: Okay. The second point relates to provisional applications. The U.S. Patent Office has made a determination that provisional applications provide an applicant with a 102(e) date; 102(e), I think, is very clear. Section 102(e) says that it has to be an application for a patent. The invention was described in a patent granted on an application for patent filed by another in the United States. Well, by definition, a provisional application cannot be an application for patent. Provisional application will be abandoned at the end of a one-year period, automatically, so therefore, cannot possibly be a 102(e) date. That is, based on my review. Now, what I would suggest is that you amend 102(e) to clearly state that it applies not only to an application for patent, but also applies to a provisional application. Because I think the statute is not going to permit you to have a 102(e) date for a provisional application, and eventually that is going to be litigated, and I think the person that does not want that to be a 102(e) date will prevail. My third point relates to PTC filing dates. Section 102(e) makes it clear that PTC application filed under 35 U.S.C. 371(c) is permitted to have a 102(e) date, as to the date that they comply with the provisions of 371(c). Well, the Patent Cooperation Treaty section of the PTO is extremely strict with regard to what they require on a declaration. We had one recently where the residency of the applicant was not listed and, therefore, we were not given a 102(e) date. We have had other applications that have been pending at the PTC section for eight or nine months and then, finally, they issue a communication to us with a 30-day time period to respond, saying, the declaration is not acceptable because it doesn't identify the foreign priority date or doesn't identify the PTC filing date. Even though, there was a declaration attached to the application. The problem is that 35 U.S.C. 371(c) requires by statute that you have the declaration, and it also requires that the declaration comply with the rules. Well, the rules are even more onerous than the statute. So, nationally filed applications in the Patent Office do not require a declaration to obtain a filing date and to obtain a 102(e) date. So my recommendation would be, that if you are going to be reviewing these statutes and making some changes, that you make sure you review 371(c) and delete it, because I don't think the provisions for the declaration should be requirement for obtaining the filing date. The declaration could always be filed at a later date. And if you want any further information about how onerous this problem is and how much problems we have, I would suggest you talk to Richard Lazarus, who is in charge of the PTC section. I think it is something that he has wanted to change for a number of years. The fourth thing I want to address is the PTC filing date. The Patent Office has made a ruling that if you file a PTC application before June 8, 1995, that that will not qualify for the greater of 20 years from date of filing or 17 years from date of grant. I think it is clear in 35 U.S.C. 363, that the PTC filing date should be the date of filing throughout the world. This problem also occurred a number of years ago, when maintenance fees were enacted in the U.S. Patent Office. All applications filed before December 12, 1980, do not require maintenance fees. At that point in time, the Patent Office made a determination that PTC applications filed before December 12, 1980, do not require the payment of a maintenance fee. So similarly, I think that it would be consistent with not only the statute, but your prior rulings, that any PTC application filed before June 8, 1995, any place in the world, should be accorded the filing date of that date of filing and thus be permitted to have a patent term of either 20 years from the date of filing or 17 years from date of grant. This hearing is not to address the issue of publication? COMMISSIONER LEHMAN: That's right. MR. SLATTERY: Okay. Thank you very much for your time and for permitting me to address the group. COMMISSIONER LEHMAN: Thank you very much, Mr. Slattery. Are there any other witnesses, who signed up, that we didn't have? [No response.] COMMISSIONER LEHMAN: If not, I would just like to make one comment before concluding our hearings this morning. For the benefit of the people who are here and who stayed this whole time, we have obviously a lot of people who are very interested in the well-being of our intellectual property system. I would just like to say that, since I have had the benefit of being at the Patent and Trademark Office for nearly two years, now, it is my observation that the quality of the people who work there, the quality of people who it has produced over the years who have gone on to the private bar, who served the intellectual property system of the United States and the world, has been extremely high. In fact, I would venture to say that it is the highest in the entire world and does great honor to our country. I have had the occasion, in these last two years, which is a very rare one, that very few people have the opportunity to do and that is, to travel around the world and have to deal with foreign governments and foreign systems. One can talk about bureaucrats in the United States and tear down our country, but there is none other better in the world. There is no society that has ever existed in the history of the human race with 250 million people and all of the diverse interests that we have, that works as well as ours does. This hearing, this process that brought us here today, is an example of this. This doesn't take place any place else in this planet. If you want to know what a bureaucrat is like, then I invite you to go deal with some of our foreign counterparts. [Laughter.] I know some comments were made, and part of the bureaucrat's responsibility, the civil servant's responsibility, is to toil tirelessly in our Office and take it when it is dished out to them. But as an appointee of the United States, I don't have to take that, and I want to stand up for those people and I want to tell people here that I don't appreciate it when the motivations and honesty and integrity of our employees at the Patent and Trademark Office are impugned. We will reconvene this afternoon at 1:00 p.m., for a hearing on the restoration issues. [At 11:29 a.m., the public hearing was recessed, to reconvene at 1:00 p.m., on the same day.] AFTERNOON SESSION [1:06 p.m.] COMMISSIONER LEHMAN: I would like to welcome everybody to our afternoon session. For those of you who were not here this morning, let me again introduce myself. I am Bruce Lehman, and I am the Assistant Secretary of Commerce and Commissioner of Patents and Trademarks. To my immediate left is Michael K. Kirk, the Deputy Assistant Secretary and Deputy Commissioner of Patents and Trademarks. To his left is Lawrence J. Goffney, the Assistant Commissioner for Patents, and then, Stephen Kunin, the Deputy Assistant Commissioner for Patent Policy and Projects, and Nancy Linck, the Patent and Trademark Office Solicitor. And finally, Elizabeth Dickinson, Office of General Counsel, of the Food and Drug Administration. We welcome you to the PTO, Ms. Dickinson. This afternoon, we are going to hear from witnesses regarding the effects of the 20-year patent term on patent expiration dates and patent term extension under 35 U.S.C. 156. A request for comments relating to this issue was published on January 17, 1995, in Volume 60 of the Federal Register at pages 3398 and 3399. Let me state, as I did this morning, that a transcript of this hearing also will be prepared and a copy will be made available for purchase by the public approximately 10 days after the hearing. Copies will also be available directly for purchase from the stenographer and the name of the stenographic service is Miller Reporting, and if you want to call them directly, their number is 202/546-6666. Of course, copies are available for examination by the public for absolutely no charge, here in the Patent and Trademark Office, as well. I would like to reiterate that, due to the number of requests to appear orally, we have asked each speaker to try to limit their comments to 10 minutes. Any people who wish to speak and haven't previously told us about their desire, I requested to add their names to the list that is, I think, located on one of the back tables in the rear of the room. You may also pick up at that table, copies of the Federal Register publication noticing the hearing. When you present your comments, I would appreciate it if you would give your name and address and whether the comments presented are your own or whether you have been authorized to present them on behalf of a law firm or a company or an organization, that you might represent. With that, I would like to call forward our first witness this afternoon, who is Don Stone, if he is here. MR. STONE: Thank you. I am Don Stone, with the law firm of McKenna and Cunio, at 1575 I Street N.W., in Washington, D.C. I speak to you this afternoon as counsel for the National Pharmaceutical Alliance and am presenting their position to you. The NPA is an association of more than 155 firms involved in the manufacture and nationwide distribution of pharmaceuticals, including proprietary and generic prescription drugs, over-the-counter medications, and branded proprietary medications. NPA has members in 28 states, Puerto Rico, and Canada. The primary purpose of NPA is to promote the general welfare of the pharmaceutical industry. The Association has a mission of disseminating information concerning the pharmaceutical industry to assure the availability of pharmaceuticals at efficient prices. Your agencies are considering actions they should take to implement the Uruguay Round Agreements Act, or URAA, which made changes to the patent laws that affect brand name and generic drugs. The PTO, in its announcement, has posed seven specific issues for comment. The NPA is pleased to present its views on how the PTO and FDA should respond to those issues. The Association recommendations discuss both the general philosophy embodied in pertinent legislation and the specific statutory language involved. To begin with, a little bit of background in our more general philosophical approach. As we are all aware, numerous nations recently concluded the Uruguay Round of the General Agreement on Tariffs and Trade. Then in December of 1994, Congress passed and the President signed, the URAA legislation implementing those changes. The purposes of both GATT and URAA are to promote competition in international trade and to harmonize relevant legal requirements world wide to carry out that promotional objective. GATT and URAA made several changes to the U.S. patent law. One of those changes effects the terms of some existing and pending U.S. applications. Those terms will, in some cases, be extended. Both GATT and URAA recognized that the term extensions could adversely affect the rights of persons who had begun preparations to compete with products that are currently protected by patents nearing expiration. The legislation struck a critical balance between the rights of the patent owners and the rights of those who had made substantial investment in preparing to compete with those patent owners. That balance granted an extension of the term to some issued patents through the transitional provisions. However, it also limited the rights of those patent owners against person who have made substantial investment by the end of the transitional period, as they prepare to compete with the patented technology. The balance struck allows those persons, which we will call, in our remarks, protected infringers, to market their products during the patent term extension caused by URAA changes. The patent owners' remedies for infringement which occurs, then, are limited to equitable remuneration. Injunctions, damages, and attorneys' fees are not permitted against protected infringers. This balance between patent owners' rights and the rights of competitors who have made a substantial investment must be maintained in all actions taken by the PTO and the FDA, in matters concerning patented brand name and competing generic pharmaceutical products. In 1984, Congress had passed the Drug Price Competition and Patent Restoration Act, which is commonly known as the Waxman-Hatch Act. Waxman-Hatch also struck a careful balance between the rights of owners of patented drug technology and those of competitors producing generic drugs. The Waxman-Hatch Act provides strong protection against competition during the original or the Waxman-Hatch extended term of a patent on a drug product. However, the Waxman-Hatch Act promotes immediate competition upon expiration of that term. The Waxman-Hatch Act permits potential generic competitors to begin preparations for competition with the patented drugs by conducting bioavailability and bioequivalent studies and by filing abbreviated new drug applications, or ANDAs, prior to the expiration of the patent term. Those actions are defined as non-infringing. By taking those permitted actions, the generic drug manufacturers necessarily make a substantial investment in preparing to compete with the patented drug. A similar philosophy and objectives underlay the passage of the Generic Animal Drug and Patent Term Restoration Act in 1988. Actions similar to those for generic human drugs were established as non-infringing, even when they are conducted prior to expiration of the patents. Again, the intention was to promote competition immediately upon expiration of the original or generic animal drug extended patent term. The transitional provisions of both GATT and URAA clearly contemplate that competition should and will exist during any patent term extended by URAA, if the competitor has made a timely substantial investment, which would otherwise be detrimentally affected. Generic drug applicants who have either commenced bioequivalents or bioavailability studies, or who have filed an ANDA or abbreviated new animal drug application, ANADA, by June 8, 1995, should be treated as having made the necessary substantial investment. Their applications, if otherwise satisfactory, should be approved to permit them to compete as protected infringers during the URAA extended patent term. The patent owner is not left helpless. The owner is entitled to equitable remuneration for the resulting infringement. We strongly urge that all actions, by both the PTO and the FDA, concerning the issues raised for public comment, should be consistent with the achievement of GATT and URAA objectives. In particular, PTO and FDA should not take any action which would frustrate legitimate competition between patent owners and protected infringers during URAA extended patent terms. Let me now move to respond to your specific issues. Issue No. 1, what should be done in the orange and Green Books? NPA believes that FDA should revise the Orange Book and the Green Book to provide two critical patent dates for each effected, listed patent, granted before December 8, 1994. The first date should be the patent expiration date under the law prior to URAA. The second date should be the pertinent patent expiration date, taking into account any URAA extension. Both are dates which have been valid, correct expiration dates under the patent law. NPA believes that both meet the requirements for publication by FDA, established in Sections 505(b)(1) and (c)(2), and 512(b)(1) and (c)(3), of the Food, Drug and Cosmetic Act. Publication of both dates will define clearly that portion of the patent term during which competition would be allowed under the URAA transitional provisions. Publication of both dates serves the interests of all parties. Publication of only a single date would be misleading to the public, in our opinion. Permanent retention of the original expiration date would not inform potential generic drug applicants and others that equitable remuneration might be due to a patent owner, if they had sales before the extended expiration date. Revision of the information to provide only the extended date would misinform the public and applicants about when generic equivalent products might be available or approvable. On your second issue, should the PTO certify, NPA believes that the PTO should certify new patent expiration dates to NDA and NADA holders. NPA does not believe that the certification should be limited to those patents currently listed. Similar certification should be provided to patent owners who wish to list additional patents with FDA in the future. The reason that we believe that certification is important is that the determination of patent expiration dates under URAA changes will be more complicated than under prior law. Determination of the patent term will require references to previously filed applications. Patents issued on applications filed after June 8, 1995, of course, will also require reference to term extensions caused by interferences, secrecy orders, or appellate review. NPA encourages the Patent Office to develop a system for printing the expiration date, assuming of course that all applicable fees are paid, on the first page of patent copies. NPA believes that the PTO should certify that date for any patent which does not, on its face, already show that date. On your third issue, NPA believes that NDA holders and NADA holders should submit revised patent expiration dates to FDA for those patents already listed. Future listing information should be required to contain two dates, those two dates I spoke of earlier. We believe that the listing should only be after the PTO has certified the dates. I will indicate very briefly that the remainder of my remarks are in written form before all of you. I apologize that the time has run so fast. We have also submitted written copies to both the PTO and FDA of all of these dates, and copies will be available for anyone who would like them after the meeting. Thank you. COMMISSIONER LEHMAN: Thank you very much, Mr. Stone, for accommodating our time restrictions. Are there any questions of Mr. Stone? [No response.] COMMISSIONER LEHMAN: If not, I would like to ask Robert Milanese, President of the National Association of Pharmaceutical Manufacturers, to come forward, please. MR. MILANESE: Thank you. My name is Robert Milanese. I am President of the National Association of Pharmaceutical Manufacturers, located at 320 Old Country Road, in Garden City, New York. NAPM is pleased to present its views concerning the potential adverse impact on U.S. generic pharmaceutical industry, U.S. consumers, and Federal and State pharmaceutical reimbursement agencies, caused by URAA. NAPM is the national trade association representing independent generic pharmaceutical manufacturers and supplies of bulk drug chemicals to the U.S. generic drug manufacturing industry. PTO has requested comments regarding the possible changes to the U.S. drug approval system related to the 20-year patent term contained in URAA. URAA extends the patent term for all patents filed with the PTO on or after June 8, 1995, to 20 years from the date of application, rather than the current patent term of 17 years from date of grant. In addition, under a transitional provision, all unexpired patents as of June 8, 1995, may be extended to 20 years from the earliest application filing date, if that term is longer than 17 years from the patent issue date. The difference in term between the 17-year term, from the date of grant, and the 20-year term, from the date of application, is referred to by the PTO as the delta period. If the provisions of GATT, as well as PTO and FDA operative statutes, are not read in proper context and correctly applied by PTO and FDA, the results could very well be a de facto injunction against the approval of generic drug applications during the qualified patent term extensions, i.e., the delta period, which could be granted to over 100 brand name pharmaceutical products. In essence, brand name pharmaceutical patents extended on June 8, 1995, which were issued within the three years of filing, will receive certain additional qualified protection for the difference between the 20-year measuring scheme and the original 17-year measuring scheme. Under URAA transitional provision, however, a company which has made substantial investment in developing a competitive product prior to June 8, 1995, may market the product notwithstanding any additional qualified protection by GATT, with payment to the patent holder of equitable remuneration for such marketing. Under the FD&C Act, the approval of an ANDA or an ANADA for a generic equivalent drug product, except when the validity of the patent is questioned, will not granted until the patent expires on the brand name product. FDA is required to publish patent expiration dates in an official publication known as the Orange Book for human pharmaceuticals and the Green Book for animal drugs. One possible, but impermissible, interpretation of the law could be listing the GATT-extended patents in the Orange Book and Green Book which could act as a complete bar to the approval of the generic product until the GATT-extended patent date expires. This result would be totally inconsistent with the qualified patent protection granted under URAA. Under the enabling legislation, a company which has made substantial investment in developing the competitive product prior to June 8, 1995, is permitted to market the product on the date of the original patent expiration. The patent holder is not allowed to obtain an injunction, nor is it allowed actual damages or attorneys' fees, as is currently provided for by law for patent infringement. Rather, the patent holders' exclusive remedy is equitable remuneration for the marketing of a competitive generic product during the delta period. Nothing more, nothing less. Thus, it is clear that GATT has created a new class of proprietary right in the patent holder which does not fall literally within the language of either FDA's or PTO's operative statutes. Notwithstanding this fact, it is clear that applying the statutes as written and the agencies' implementing regulations would only permit one result. That for patents in effect on June 8, 1995, GATT extensions do not and were not intended to operate as a bar to the marketing of a generic drug once the original pre-GATT period of patent protection had run. In this respect, GATT has mandated no change in the status of the patented drug product. Once the original patent protection has expired, a generic drug may be marketed. There should be no dispute on this point. It is also clear that the exclusive marketing granted by the law -- full, unqualified patent protection -- ends on the date contained in the Orange Book for ANDAs and the Green Book for ANADAs, as they exist today. This was true prior to GATT and it remains true under the renegotiated treaty. It is these dates which determine when a generic drug may come on the market. There should be no dispute on this point, either. URAA was never intended to be an absolute prohibition of the marketing of competitive products during the delta period, and does not, in fact, bar such marketing. NPA strongly urges PTO to work with FDA to establish policies which will continue the approval of ANDAs and ADADAs on the original patent expiration dates as currently reflected in the Orange and Green Books. A contrary result would cost the American consumer, the Federal and State reimbursement agencies, billions of dollars due to the needless delay in the introduction of safe and effective, lower-cost equivalent generic drug products. This result would also provide a substantial windfall to the U.S. holders of pharmaceutical patents that have structured their pricing over the years to recoup all the research and development and other costs by the patent term applicable at the time that the patent for the brand name product was filed. The generic drug industry, through a combination of NAPM and NPA has commissioned a study on the economic impact of this scenario and will supplement the record of this hearing in the very near future, once it is completed. We have a preliminary example of just one drug, Zantac, ranitidine, which will be extended by over 19 months, from December of 1995 to July of 1997. That is going to result in a cost to the American consumer of over $1 billion. That is one drug we have identified, over 100. Let's address some of the questions. Should FDA revise the patent term expiration dates currently listed in the Orange Book and the Green Book? NAPM submits that no dates may be changed from those currently in the Orange Book and the Green Book. We feel that FDA is required to utilize the current patent term dates in the Orange Book and Green Book as effective dates of approval for ANDA and ANADA applicants prior to which the product may not be marketed. The primary difficulty with using GATT-extended patent termination dates for the list of patents in the Orange Book and the Green Book is that, in contravention to the terms of GATT, these GATT-extended dates would become the effective dates of generic drug approvals and thereby operate as an absolute bar to marketing. GATT, however, clearly indicates that the patent extensions granted to it do not operate as a bar to marketing, but rather to the contrary, permit the marketing of generic drug products in which the applicant has made a substantial investment. The only condition established by GATT for such marketing during the GATT extension period is the payment of equitable remuneration to the patent holder. In our view, it would substantially exceed the mandate of GATT to change the current Orange Book and Green Book dates to GATT-extended dates, which would, under FDA's drug approval scheme, operate as a full bar to marketing. NAPM submits that if companies submit such GATT-extended dates to FDA as dates of patent expiration, that such dates, if placed into the Orange Book or Green Book, be clearly marked with a notation that they represent GATT extensions which do not operate as a bar to marketing and that such dates representing only a qualified patent extension do not constitute the type of full patent protection which the statute requires FDA to utilize in setting approval-effective dates. Second question. Should PTO, at the request of NDA or NADA holders, certify? As previously stated, there is only one type of patent certification which is operative for FDA in setting the approval-effective date, and that is the date of expiration of the full, unqualified patent protection. GATT extensions do not constitute such unqualified patent protection and therefore cannot be certified through FDA as dates of patent expiration for purposes of setting a drug approval date. Question three. Should NDA and NADA holders be required to submit to FDA revised patent expiration dates for those patents currently listed in the Orange Book and Green Book that will have a longer term under URAA? GATT-extended patent term expiration dates are not relevant to the drug approval process and therefore have no place in FDA's regulatory scheme. FDA is charged by law to render ANDA and ANADA approvals effective on the date first allowed by law for marketing. These dates were not changed by GATT. GATT merely provided for certain potential periods. The ANDA applicant who has made a substantial investment would be required to provide equitable remuneration to the patent holder. The issue of such equitable remuneration and the conditions and amount of its payment are not issue subject to FDA's determination or jurisdiction. Accordingly, such extension dates should not be a required part of the FDA submission. I am just going to jump to question number six, because my time is up. I think we wanted to get in the concept of what we would consider substantial investment. We submit that, at a minimum, any substantially complete application filed before June 8, 1995, would automatically qualify as a substantial investment. Moreover, if a firm has manufactured pilot batches or has commenced a bioequivalency study prior to June 8, 1995, and subsequently files a substantially complete ANDA, after June 8, 1995, that expenditure of resources should qualify as substantial investment. In conclusion, NAPM respectfully submits that GATT extensions for patents in effect on June 8, 1995, confer not a true, unqualified patent right, but a commercial royalty right which is not subject to FDA's jurisdiction, nor should it properly determine FDA's approval dates, which have been and which continue to be determined by statute, unaffected by GATT. Thank you. COMMISSIONER LEHMAN: I want to ask a question because I am a little confused about the position of the Association. We have heard some discussion here in the last two days about a bill, H.R. 359, in the House of Representatives, which actually would modify the URAA by actually extending indefinitely a provision which would require that a patentee would receive a 17- or 20-year term, whichever is longer. You seem to be concerned about the impact of the transitional provisions here, and yet I am surprised that we haven't heard anything from you about H.R. 359. MR. MILANESE: Well, we were concerned primarily about FDA's quandary about what to do with approvals, and we thought that the focus of this hearing -- COMMISSIONER LEHMAN: So you don't have any problem with the pharmaceutical companies then having under the new system, the benefit of H.R. 359, which is 17 years or 20 years, whichever is longer? MR. MILANESE: We think that a lot of products are going to be impacted by this extension. We are very concerned about it. COMMISSIONER LEHMAN: I am not aware that anybody has heard about that. You know, there are 120 sponsors of that bill in the House of Representatives. I would suggest, if you are concerned about this, you might want to let them know about it because, I think, that is probably considerably more long-term interest to you than these transitional provisions are. MR. MILANESE: They be hearing about it. Yes, thank you. COMMISSIONER LEHMAN: Thank you. By the way, you know, for some strange reason, I think the Pharmaceutical Research and Manufacturing Association actually is opposed to the Rohrabacher bill, so it is sort of surprising that they are in favor of restricting their term and the generic industry isn't. But, there are stranger things that happen. [Laughter.] COMMISSIONER LEHMAN: Next, I would like to ask Roger Foster to come forward, please. MR. FOSTER: Thank you, Commissioner Lehman. My name is Roger Foster. I am Corporate Counsel for Mylan Laboratories, Morgantown, West Virginia, and the testimony I am giving here today is in behalf of Mylan. Mylan develops, manufactures, and markets generic pharmaceutical products and a number of other pharmaceutical products in which we have a proprietary interest. We employ more than 1,200 people in four manufacturing facilities, two distribution centers, and numerous offices. We sell more than five billion dosage units each year and one in every six prescriptions filled in the United States annually is filled with a Mylan-manufactured product. Commissioner Lehman, much of my testimony, or my prepared testimony, has already been given by Bob and Don, and I don't want to bore you with a repetition. I would like to say that we support much, if not all, of what has been said. I would like to amplify one point, and that is, in my reading of URAA and, in particular, the Waxman-Hatch amendments, it is apparent that the intention here is for competitors to have some protected status with respect to practicing the patented invention during the term as extended by URAA. I would point out to you that because of the statutes, 355(j)(4)(A), I believe, in the Federal Food, Drug and Cosmetic Act, there is only one industry, to my knowledge, and one industry alone that is denied that protection, and that is the generic drug industry. And that is because the Food and Drug Administration is prohibited from approving an ANDA during the term of a patent. If an ANDA applicant certifies in the application that it will not sell the product prior to the expiration date of the patent, which is a paragraph 3 certification, FDA will not approve the application until after that date has come and gone. So unless we can get, what I believe to be a very technical and narrow legislative remedy, this problem is going to persist. We think that there is much that the FDA and the PTO can do with respect to this issue, but we also believe that a legislative remedy is called for. And we would ask that the PTO and the FDA lend their support to such a clarification. What we believe to be the ultimate remedy would be a reconciliation of the language of URAA with that of the Federal Food, Drug and Cosmetic Act. With respect to your specific questions, your first question having to do with revising the patent term expiration dates currently listed in the Orange Book and Green Book. We believe that you should continue to list the pre-URAA expiration dates, as well as those dates that are currently listed in the Orange Book. We believe that if you fail to include the original expiration date and only use the URAA date, the extended URAA date, there may be ANDA applicants out there who might not realize that they could benefit from the URAA transition language. With respect to your second question, we believe that the PTO must certify the extended expiration date. URAA makes references to documents which are antecedents to the actual patent issuance and the PTO is far better suited to make a determination with respect to the extended date, due to the frequency and complexity of the prosecution histories of many of these patents. Your third issue is related in some respects to the second one. With respect to the third issue, we simply believe that the revised date should be published upon certification by the PTO of the extended patent expiration date. Question four, we believe that the PTO must certify as to these extended dates to minimize any disputes with respect to the date of expiration. Should FDA fail to require such a certification, it should at a minimum require a sworn statement from the applicant stating the extended expiration date and describing in detail the analysis utilized in documents relied upon to arrive at the date. The applicant should also be required to certify the FDA that no other relevant documents exist with respect to that determination. With respect to question five, we believe that ANDA applicants who have applications on file as of June 8, should not be required to amend the certification set forth in the application. Likewise, no information regarding substantial investment should be required. FDA should regard the commencement of a biostudy, or in the case of those products which don't require a biostudy, the pivotal study with respect to those products as prima facie evidence of a substantial investment. With respect to your sixth question, we don't believe that there is any evidence to support any contention that Congress intended 35 U.S.C. 156 extensions to be treated as anything other than a patent term. Once extended, the term of the patent is just that. It is the term. The term should be treated the same for any and all purposes. Therefore, no distinction should be given or made with respect to a patent term extended under 156, as opposed to an original term. With regard to your last question, the statute with regard to 156 extensions is abundantly clear. No patent term, once extended, can then be extended again. That is under 35 U.S.C. 156(a)(2). The statute makes no distinction as to the source of the first extension. Therefore, one must consider a second extension to be per se impermissible. Thank you very much. COMMISSIONER LEHMAN: Thank you. Are there any questions? [No response.] COMMISSIONER LEHMAN: If not, the next witness, I believe, is Gerald J. Mossinghoff, former Commissioner of Patents and Trademarks. Welcome, Mr. Mossinghoff. MR. MOSSINGHOFF: Thank you, Mr. Secretary. I represent the Pharmaceutical Research and Manufacturers of America, PRMA, as we call it. We are at 15th and L, in downtown Washington. I am very pleased to participate in this very important hearing. In my prepared statement, which I think you have and I hope can be made a part of the record, in the first six pages, I discuss generally how the law should operate. I would say, if I understand the previous testimony given, I tend to agree with it. I think to carry out the desires of the first three spokesmen would require a change in the law, require a legislative change. We thought the focus here was principally on what the law is and how it can be implemented. We think it gives very little room for policy or discretion. It really is a self-executing law that did extent the term of patents. So with that as background, let me go to the questions you specifically asked. Question No. 1, should the FDA revise the patent term expiration dates currently listed in the Orange Book for those patent entitled to a longer term? Our answer is that they must do that. There is no discretion. And indeed, I think the authority of the Secretary to grant a NDA approval is limited by the fact that if it contains an error, significant error of material fact, that that is one of the reasons why the Secretary lacks the power, Secretary of HHS lacks the power. Second answer, should the PTO at the request of an NDA or ANDA holder, certify or verify the expiration dates? The 1984 Hatch-Waxman amendments and the FDA implementing regulations specify that the new drug application or application holders submit patent information to FDA. There is no legal requirement for the Patent and Trademark Office for certification or verification. On the other hand, in the case of disputes about the proper revised patent expiration date -- and it could get complicated, I believe, in some cases -- a verification procedure, we think, by the Patent and Trademark Office would be very helpful and we would even be willing to pay a reasonable fee to have that done, if the Office were willing to do that. Third, should NDA and ANDA holders be required holders be required to submit to FDA revised patent expiration dates for those patents currently listed. By law and regulation, NDA holders must be given an opportunity to submit to FDA revised patent expiration dates for patents currently listed in the Orange Book. While Section 314.53 does not specify a time period for submission of changes, the submission in our view would clearly be considered if it were made any time prior to 30 days after the June 8 cutoff date. Four, if the revised patent term dates are published in the Orange Book and the Green Book, and if PTO does not certify or verify, what if any submission should FDA require to verify the dates? FDA should continue to accept patent information, in our view, directly from the NDA applicants and applicants holders, in accordance with the 1984 law, the Agency's 1994 regulations, and its procedures in place prior to that. The criminal sanctions in Federal law for intentionally filing false information, obviously, would cover this situation. In addition, there is a Patent Information Dispute Resolution Procedure outlined in FDA regulations which we think could come into play in this case. Five, if the revised patent term expiration dates are published, this question addresses what information related to substantial investment be required by FDA? We believe that the decision on whether there has been substantial investment and a decision on whether or not we are in this delta period, is obviously one for the Federal courts to make and not for FDA to make and not for the Patent and Trademark Office to make. The last two questions, should the Patent Office take any action with respect to existing patent term extensions under Section 156? There, we say the patent has received a new expiration date as a result of enactment of the Uruguay Round Amendments. The number of days of the patent term previously granted under the Hatch-Waxman amendments, by law, must be added to the new expiration date. Finally, what approach should the Patent Office take with respect to calculation of new patent term extensions under 156? There, the longer of the 17- or 20-year patent term, under the URAA, must be used in determining patent term extensions under Section 156. We believe that, although there are arguments that can be made to the contrary, we believe that the courts will ultimately hold that the 14-year overall limitation on extensions will continue to apply. Mr. Commissioner, that completes the summary of my statement. COMMISSIONER LEHMAN: Thank you very much. I assume you wouldn't oppose legislation changing that 14-year limitation? MR. MOSSINGHOFF: That 14-year limitation is an important block, I think, and we think that -- COMMISSIONER LEHMAN: It is not an extension to a longer period of time. MR. MOSSINGHOFF: As I say, it is not consistent with extensions done internally. I think we could make a good policy case for legislation which would do that, but it again would require a change in the law. We think, under existing law -- and again, I think an argument can be made to the contrary -- but we think, ultimately, the courts will hold that the 14-year current law limitation would override these others. COMMISSIONER LEHMAN: We have heard a lot of discussion here in the last two days that -- in fact, we have heard it even raised to the level of a constitutional principle -- that all patent applicants should be entitled, basically, to at least a 17-year term. That is, at least, an equal term. In fact, the Patent Office is really committed to doing that. Moving to a 20-year term from filing doesn't in any way suggest that people should get less than 17 years of effective patent protection because, certainly, we ought to be able to process those patents within three years. MR. MOSSINGHOFF: Absolutely. COMMISSIONER LEHMAN: But you are the one industry, it seems to me, where the critics have a point to make and it is not a result of the Uruguay Round implementing legislation. You have been laboring under this for a long time, because as a practical matter, you don't have oftentimes 17 years of patent protection. Now, the Hatch-Waxman legislation attempts to address that, in part, but clearly it doesn't make you completely whole with regard to these, if your measurement of success is that you absolutely, totally, are guaranteed 17 years of protection. So I am just suggesting if we want to respond to these people who, I think, have made some fairly persuasive arguments that we should get full 17 years of protection, perhaps we ought to revisit Hatch-Waxman. MR. MOSSINGHOFF: We would welcome that. At the time, it was an arbitrary limitation of what all other patent holders get, all other inventors get, and we would certainly welcome the idea of making the case to your administration and to the Congress that perhaps it is time to remove that arbitrary limitation in America's most successful high technology industry. COMMISSIONER LEHMAN: Thank you very much. Are there any other questions? [No response.] MR. MOSSINGHOFF: Thank you. COMMISSIONER LEHMAN: Okay, thank you. Next, I would like to ask Donald Barrack to come forward, please. MR. BARRACK: Mr. Secretary and other distinguished members of the panel, my name is Donald Barrack, and I am pleased to present these views on behalf of Bristol-Myers Squibb Company. A health-care and consumer products company, employing approximately 20,000 people in the United States. The headquarters of Bristol-Myers Squibb is located at 345 Park Avenue in Manhattan, New York City. Bristol-Myers Squibb Company is a research-based company, as evidenced by the more than $1 billion it spends each year on research and development. These hearings have been called to receive comments on issues arising from the Uruguay Round Agreements Act. The questions presented in the PTO's notice addressed the interrelationships between the Uruguay Round Agreements Act and the 1984 Hatch-Waxman amendments to the Food, Drug and Cosmetic Act and to the Patent Code. In exploring these interrelationships, it must be appreciated that the Uruguay Round Agreements Act explicitly accords precedence to existing Federal legislation unless it is specifically provided otherwise. The principal focus of my comments today will be the effect of the Uruguay Round Agreements Act on the Food and Drug Administration approval process for abbreviated new drug applications. My premise is a simple one. The Uruguay Round Agreements Act replaces 35 U.S.C. 154 with a new section 154. No other statutory provisions related to the ANDA approval process were amended in a manner that impacted that process. The Hatch-Waxman amendments to the Food, Drug and Cosmetic Act made it possible for ANDA applicants to gain regulatory approval for their products based largely on the safety and efficacy data generated by pioneer NDA filers. At the same time, the FDA was required, for the first time, to acknowledge the existence of patents. If an ANDA applicant seeks approval to market a product while relevant patents are enforced, it must notify the patentee and recognize the possibility of an infringement suit. The ANDA approval process described in the Hatch-Waxman amendments is certainly not, by any stretch of the imagination, a windfall for pharmaceutical patentees. Rather, it is a recognition by Congress that it took valuable rights from NDA holders and from patentees, pharmaceutical patentees, when it allowed ANDA applicants to piggyback the NDA filing, and at the same time, reverse the Federal Circuit's 1984 Roche v. Bolar decision. As we know, that decision was reversed with Section 271(e)(1), which permits ANDA applicants to file and pursue their applications for regulatory approval while the relevant patents remain in force. The language of the Uruguay Round Agreements Act, the Food, Drug and Cosmetic Act, the Patent Code, and the October 1994 FDA rules implementing the Hatch-Waxman amendments leaves no room for doubt that ANDA applicants must submit patent certifications or recertifications with respect to timely filed patent information including revised patent expiration dates. An example of updated patent information used in the preamble to the FDA's October 1994 rules is a patent expiration date that has been extended under 35 U.S.C. 156. The analogy to the redefined expiration dates of the Uruguay Round Agreements Act, Section 154(c) of the Patent Code, could not be clearer. Bristol-Myers Squibb, of course, recognizes that new Section 154(c) contains a provision limiting remedies. In some circumstances, the remedies of 35 U.S.C. 283, 284, and 285 will not be available to a patentee who has benefitted from the redefinition of patent term. The statutory language is specific to these sections of the Patent Code. Nothing in the language limits a patentee's remedies and rights under Section 271(e) and under the Food, Drug and Cosmetic Act. As noted previously, this is entirely reasonable, in view of the benefits derived by ANDA applicants from the 1984 Hatch-Waxman amendments. It cannot reasonably be argued that Congress overlooked the ANDA approval process when it enacted the limitation of remedy section of the Uruguay Round Agreements Act, Section 154(c). To the contrary, Section 271(e) was examined, it seemed, by the conforming amendments and its fundamental provisions remain unchanged. In filing ANDAs and seeking tentative ANDA approvals before patent expiration date, ANDA applicants are availing themselves of the benefits of 35 U.S.C. 271(e). It is unreasonable to argue that ANDA applicants should be afforded the benefits of 271(e)(1), while at the same time denying pharmaceutical patentees the rights afforded by 271(e)(4) and by the patent certification provision of the Food, Drug and Cosmetic Act. All of these provisions were enacted as part of the 1984 Hatch-Waxman amendments and must be given their plain meaning. The PTO raises the issue of what information related to substantial investment should be included in the patent certification by an ANDA applicant. Each ANDA applicant will determine for itself the appropriate certification to make and the appropriate information to include in its notice to the patent and NDA holders. Sufficient information must be included in the notice to allow the patentee to determine whether an infringement action is appropriate. It should be emphasized with respect that it is for the courts, not for the FDA, to interpret the relevance and meaning of substantial investment. Submissions by ANDA applicants to FDA that do address substantial investment are not relevant to any issue that the FDA should be considering. Procedural issues relating to the PTO certification or verification of redefined patent expiration dates for inclusion in the Orange Book are also raised by the PTO notice. Bristol-Myers Squibb appreciates the willing of the PTO to participate in this process and suggests that two avenues be available to NDA and patent holders for having their redefined expiration dates listed in the Orange Book. Either the NDA holder can bring the information to the attention of the FDA in accordance with existing FDA rules or the NDA holder can request the Patent Office to certify or verify the redefined date to the FDA. PTO certification or verification should not, however, be a prerequisite to inclusion of the patent date in the Orange Book. The two avenues suggested are those currently available to NDA and patent holders with respect to 156 extensions. Current practice is for the Patent Office to copy FDA on notices of grant of Section 156 extensions and the FDA revises the Orange Book accordingly. Procedure here is not believed to be the central issue, however. From the perspective of NDA and patent holders, the availability of some procedure that ensures a prompt updating of the Orange Book to reflect patent expiration dates, redefined by the Uruguay Round Agreements Act, is what is needed, followed by implementation of the patent certification and recertification requirements of the Food, Drug and Cosmetic Act and the FDA rules. I was pleased to hear the acknowledgement, what I consider to be an acknowledgement, by the gentleman from Mylan, that the law as it now stands dictates these results. I have no comments on a legislative change, but I respectfully suggest that the law as it now stands is as I have laid it out. If I have some time left, I would also like to address some brief comments to the relationship of patent term extensions under 156 and the redefinition of patent terms under new Section 154. When Congress enacted the Uruguay Round Agreements Act, it substituted a new Section 154 for the present section of the Patent Code. Both the newly enacted and old sections 154 defined the term of a utility patent. New Section 154, now defines a patent's original expiration date. The language of Section 154(c) is all-inclusive and it should not be read as though it excluded one group of patents, i.e, patents that have been previously extended under Section 156, due to regulatory review. There is no statutory justification for such an exclusionary interpretation and no logically consistent position that would support it. Section 156 of the Patent Code, which was not substantively amended by the Uruguay Round Agreements Act provides patent term extensions to a small group of patents. Its purpose was to remedy an inequity in useful patent term between regulated products and unregulated products. The Uruguay Round Agreements Act, Section 154(c), the new Section 154(c), has an entirely different purpose. The purpose is to provide a minimum -- I emphasize the word, minimum -- patent term of 20 years. There is nothing in the Uruguay Round Agreements Act that indicates that the Congress intended to recreate a disparity by defining a new potentially larger term for patents generally, but excluding patents that have been extended under 156. Thank you very much. COMMISSIONER LEHMAN: Thank you very much. If anything, we have been hearing that some people don't think that the 20 years from filing is enough. I am agreeing with your last comment. Next, Robert F. Green. MR. GREEN: Mr. Secretary, distinguished panel. My name is Robert F. Green. I am a partner with the law firm of Lodi, Point & Mer [phonetic], Chicago, Illinois. I am here today on behalf of Novopharm Limited, Canada's largest generic pharmaceutical manufacturer, as well as its U.S. subsidiary, Novopharm, Inc. I wish to address really only two points today. ANDAs filed prior to June 8, 1995, and the question of tacking of a 156 extension onto a GATT term. To put this into context, I have personally looked at the Orange Book, as to all listed patents, and have determined that over 200 listed patents fall into the category of having an extended term as a result of the GATT provisions. This is obviously a significant concern to the generic pharmaceutical industry. There has been a lot of talk here as to what law has changed and what law has not changed, as a result of GATT. I say that to understand answer to that, we have to first understand what the law, in fact, is. How does a patent become an obstacle to approval of an ANDA? I think we all know that there is registration procedure by which an NDA holder registers with the FDA a given patent. Then, when an ANDA applicant comes along, there is a certification requirement under 21 U.S.C. 355(j)(2)(A)(7), and it says that "that ANDA applicant must certify with respect to any patent that is then in existence, the date upon which such patent will expire." That is a quote. The FDA, then, proceeds to examine the ANDA, ultimately determines whether it is approvable or not and then must face the question of what is the effective date of that approval if there is a patent certification under paragraph 3. When an ANDA applicant under paragraph 3 makes a certification, the FDA is then mandated to make an approvable ANDA effective in accordance with the provisions of 21 U.S.C. 355(j)(4)(B)(2), which requires that the approval be made, "effective on the date certified under subclause (3)." Thus, for any ANDA filed prior to June 8, 1995, containing a paragraph 3 certification of expiry based upon that original 17-year patent term, the statute permits the FDA to delay approval only until the passage of that expiry date. This must be taken, I think, also in concert with the provisions of 35 U.S.C. 271(e)(2), the patent infringement provision which states that it is an act of infringement to submit an ANDA, "if the purpose of such submission is to obtain approval to engage in the commercial manufacture, use, or sale of the drug claimed in a patent or the use of which is claimed in a patent before the expiration of such patent." The sole potential act of infringement, then, is the submission of the ANDA. Without a doubt, the submission of an ANDA prior to June 8, 1995, seeking approval to market upon the expiration of that original 17-year patent term is not then an act of infringement. We submit that there is no statutory authority by which the FDA can seek, request, or demand an amended patent certification because the term of a certified patent has been changed through the implementation of subsequent legislation, including the URAA. Congress was conspicuously quiet on this point when it did enact URAA. Accordingly, it is our position that with respect to any ANDA submitted prior to June 8, 1995, seeking approval to market a product, upon expiration of the original 17-year date expiry date of a patent, it is only that expiry date that can govern with respect to that complete ANDA. FDA has no statutory basis upon which to require recertification, as suggested by the gentleman from Bristol-Myers Squibb. New expiration dates would be modified under URAA. The FDA is authorized by statute to delay the effective date of approval for any such ANDA only until the "date certified," by the ANDA applicant, which would the original 17-year expiry date. To take a position otherwise would be to interpret the URAA as requiring a retroactive application which specifically was not authorized by Congress. I would like to quote from a 1994 U.S. Supreme Court decision, Landgraf v. USI Film Products. In this decision, the Court was addressing whether a statute in part should be applied retroactively. From the Court itself: "The presumption against retroactive legislation is deeply routed in our jurisprudence. It embodies legal doctrine centuries older than our Republic. Elementary considerations of fairness dictate that individuals should have an opportunity to know what the law is and to conform their conduct accordingly. Subtle expectations," such as that of an ANDA applicant filed before June 8, 1995, "should not be lightly disrupted. Retroactive legislation presents problems of unfairness that are more serious than those posed by prospective legislation because it can deprive citizens of legitimate expectations and upset subtle transactions." James Madison argued that retroactive legislation also offered a special opportunity for the powerful to obtain special and improper legislative benefits. According to Madison, bills of attainder, ex post facto laws, and laws impairing the obligations of contracts were contrary to the first principles of social compact and to every principle of sound legislation, in part because such measures invited the influential to speculate on public measures to the detriment to the more industrious and less informed part of the community. Continuing, the Court said: "A requirement that Congress first make its intention clear help ensure that Congress itself has determined that the benefits of retroactivity outweigh the potential for disruption or unfairness. Since the early days of this Court, we have declined to give retroactive effect to statutes burdening private rights unless Congress had made clear its intent. If the statute would operate retroactively, our traditional presumption teaches that it does not govern absent clear congressional intent favoring such a result." Our position on that is, it does not exist in this case. If I could have 30 seconds to address the question of the 156 extension? Apples and oranges. I harken back to the days, I can still remember, in high school algebra where, to make the point that you can't add X and Y, the instructor said, "Apples and oranges can't be added together." A Section 156 extension is an extension that is "specific to an approved product." The extended term under GATT is with respect to all claims of a patent but subject to the substantial investment inroad, if you will, that can be made by one who has undertaken a substantial investment prior to June 8, 1995. The rights derived by each are different and can't be added together. I would say, as one point in fact, if you look at the Orange Book for the product, Misoprostol, this patent contains claims that cover the product per se as approved, as well as other claims. It currently is in existence only because of the Section 156 extension. What is the outcome if we add a GATT extension to that? Do the claims in the application that are not directed to the approved product then become reincarnated, again? I think this amply indicates that these are apples and oranges and cannot be added back to back. I would entertain any questions. COMMISSIONER LEHMAN: Could you tell me a little bit about Novopharm? What is the size of the company? MR. GREEN: It is the largest pharmaceutical company, generic pharmaceutical company, in Canada. I think in terms of both dollars, sales, as well as in terms of prescriptions filled. It has a substantial presence here in the United States. COMMISSIONER LEHMAN: What is the annual revenue? MR. GREEN: The President of Novopharm, Inc., is actually in the audience. I would have to defer to him. Bob, if you have an answer? THE PRESIDENT OF NOVOPHARM: The annual sales on a global basis is in excess of $500 million. COMMISSIONER LEHMAN: Does Novopharm have a substantial share of the Canadian market? MR. GREEN: Yes. It is the largest generic pharmaceutical manufacturer. COMMISSIONER LEHMAN: Would you say that more generic pharmaceuticals are sold in Canada than in the United States? MR. GREEN: At this time, I would say that is certainly true because of the compulsory licensing situation that was in Canada prior to -- COMMISSIONER LEHMAN: I would like to leave you with a thought, and that is that at the present time -- we are dealing with intellectual property, here. MR. GREEN: Yes. COMMISSIONER LEHMAN: At the present time, the Government of Canada is applying exemption to the NAFTA Agreement, so-called cultural exemption, to basically discriminate against U.S. program suppliers who are trying to exercise their intellectual property rights there. They have just recently taken the country music channel off Canadian cable. I think they put restrictions on CNN. I would have to say that the United States has an obligation to protect our intellectual property-based industries. Quite clearly, we have had great difficulty with Canada in the past. You referred to the compulsory license that we had. Fortunately, we have gotten rid of that, but obviously there are residual effects. The $500 million in sales that Novopharm is experiencing in Canada are no doubt a result of their ability to seize control through a compulsory license of U.S. patents. And I would say that, under the NAFTA agreement, we are not limited in our ability as we are under GATT, to retaliate against Canada for so-called cultural restrictions that they place on us. So, we will take a very close look at this, but I am glad that you have brought to our attention the existence of Novopharm. I have to say that I am completely unsympathetic -- [Laughter.] COMMISSIONER LEHMAN: -- to a Canadian company who wants to come to the United States when they are trying, and have a history, of trying to keep United States exports out of Canada, and then ask for us to give them favorable regulatory treatment here. I think that, since your CEO is here, he might want to make the Canadian parliament and government aware of that, because I can assure you the United States is not going to look favorably upon Canadian products entering into the United States in any area, particularly that involving intellectual property, when we are receiving this kind of treatment in Canada. Thank you. MR. GREEN: I appreciate that, Mr. Secretary, and simply say that as far as my presentation here is concerned, it certainly is not limited to the fact that Novopharm is a Canadian company. I think the concerns expressed here, as well as the legal analysis applied to any U.S. generic pharmaceutical manufacturer equally. COMMISSIONER LEHMAN: Yes, we might want to take a look at the difference between the two companies. Canada has decided to distinguish between its intellectual property rights holders and others. We can do the same. Okay? MR. GREEN: Again, I would say, don't hold Novopharm to the intent of the Canadian government -- COMMISSIONER LEHMAN: Well, it is not me who is doing it. I am sorry, it is the Canadian government. MR. GREEN: Yes. Thank you. COMMISSIONER LEHMAN: Okay. Next, I would like to call on Lew Engman, please. MR. ENGMAN: Mr. Secretary, members of the panel, my name is Lew Engman. I am the President of the Generic Pharmaceutical Industry Association, which is based in Washington. Our members probably have the most at stake in the outcome of these hearings. They have a very significant number of ANDAs, which are pending and have been filed with the FDA. Al Engleberg, who worked with you and others in helping to fashion the 1984 Act, will make our oral presentation. MR. ENGLEBERG: My name is Alfred Engleberg, and I am an attorney in private practice in Greenwich, Connecticut. I would like to address what I believe are four key issues that arise out of the URAA, in relationship to the 1984 Waxman-Hatch legislation. That are, in order, the status of patent term extensions granted prior to June 8, 1995; the status of pending ANDAs, which are pending before June 8, 1985; what happens to ANDAs which are filed after June 8, 1995; and lastly, the status of the Orange Book. First, with respect to patent term extensions, which apparently have been at the back of everybody else's agenda, and so I moved them up on mine so that we can talk about them. There is no question whatsoever that all of the patent term extensions granted by the Patent Office up to now have been based on the 17-year patent term and based on specific limitations that were calculated based on an expiration date after 17 years. I note specifically that the Patent Office, in its current procedure, issues something called the Notice of Final Determination and a Certificate of Extension, in connection with each application. If you look at those, you will find that in each case, consideration is given to Section 156(c)(3) of the extension provisions which is the so-called 14-year cap, and the number of days which is listed in the Certificate reflects the cap. The important point with respect to that is, that you cannot after June 8th simply take a Certificate of Extension or the days in the Certificate of Extension and tack it onto a 20-year term. It does not work. It would be improper. It would come up with the wrong answer in every many situations. That leads to the question, what is the status of these prior extended patents? Are they entitled to any relief? I think the answer is that when Section 156 was amended in the URAA, no amendment was made to change the limitation that says that a patent can only be extended once. Nor was any amendment made with respect to the question of whether or not an application could be filed after 60 days from the time of an NDA approval. So what we have is a situation where those amendments which were required for retroactivity were simply not made. Now, let me state clearly, because I think it is the fact, that no one who has gotten a patent term extension up to June 8, 1995, is going to be deprived of anything. They got exactly what they were entitled to under Waxman-Hatch and they are going to get exactly what they are entitled to under the URAA. Their patents are going to last for at least 20 years, or 17 years, whichever is longer, and they may indeed last longer than that if the extension lasts longer than that. But if you go back and recalculate and reissue Certificate of Extensions, which is what you would have to do, you will be violating the statute. You will be issuing a second extension. You will be accepting an application after the 60 days from the approval and you will be upsetting the entire scheme that was created. After June 8, 1995, which is often the case when new legislation comes along, people's rights will be different and it will be determined at the time the application is made. But I think you are powerless to do anything, based on the statute. Turning now to pending ANDAs -- COMMISSIONER LEHMAN: Would you expect that there would be litigation? I mean, I assume they could always be litigated. You say we are powerless, I mean -- MR. ENGLEBERG: I think as long as there is a dissatisfied party and enough money at stake, there will be litigation on every issue we are discussing here today. The question is, what should the regulators do in the first instance, giving maximum respect to the language and intent of the two statutes involved? And I think that is all we are discussing. I believe the question can arise when someone tries to lift a date in the Orange Book in some way that the FDA disagrees with. It could arise if the Patent Office ends up certifying the dates, there. There are any number of ways it can arise. But it will arise, we can be sure of that. Now, let me just say, we disagree entirely with those who have said that we need a legislative fix, here. No two statutes ever exquisitely blend together. But if you look at the purpose and you look at the language and you look at what is actually demanded by statute and what has been done by regulation and what can be fixed by regulation, you can come to some very logical conclusions. As to the pending ANDAs, we can all agree that every pending ANDA, that is, every ANDA filed before June 8th, had a correct certification. It was correctly certified under a paragraph 3 certification that a patent would expire as of a certain date. There is absolutely nothing in the Waxman-Hatch legislation, the statute as passed, that requires an amendment to a certification. The rules with regard to an amendment are just that. They are rules and regulations enacted by the FDA, based on their interpretation of what would be consistent and proper in carrying out the conceived purposes of Waxman-Hatch. They now have to look to see if the URAA requires them to make an amendment to their regulations in that area in order to make these two statutes consistent. We get, then, to the question of what date is this pending ANDA entitled to and what date is it entitled to as an effective date for a market date? The answer, I believe, which is somewhat different than what you have today, is that the provisions of Section 532 URAA, which grandfather in the parties who made acts or substantial investment is, in fact, a self-executing statute with respect to pending ANDAs. That there is no discretion. That they are entitled to that statutory license, as a matter of law. Let me tell you why. The Section 154(c)(2) and (3) of URAA really only has two requirements. It says that if you were engaged in acts or you made a substantial investment prior to June 8th, which became infringing by virtue of the law coming into effect on June 8th, you get the relief. Let's look at an ANDA. An ANDA was filed. It was based on certain acts. Let's forget about investment. It was based on certain acts by the applicant, conducted before June 8, 19885. Those acts were not infringing by virtue of 271(e)(1). They were exempted under the so-called Roche v. Bolar exemption. Why? Because the applicants sought approval as of the expiration date of the patent. On June 8th, those acts will become infringing. Why? Because the certification in the ANDA says, "I want approval as of the date I previously certified." That date is no longer the expiration date of the patent and Roche v. Bolar no longer protects them. But, 532 of URAA does, and says, "You are entitled to go on the market." That is the statutory scheme. What does the FDA do about it? The FDA requirements, as they now stand say that a party has to amend a certification if he believes or if his original certification becomes incorrect, or if he believes it is incorrect. Well, it is not incorrect. It correctly certifies that that party wants to go on the market as of the original expiration date because that is precisely what the URAA says he is entitled to. So, I would submit to you that, in fact, the FDA does not even have to amend its regulations. It can interpret the existing regulations to say that no mistake had been made and no correction is required. I would suggest, however, and we think it makes a little more sense, to put it in writing, and for purposes of clarity, to say that those who had pending ANDAs are entitled to the relief of URAA and, therefore, need not recertify. Now, what does this do to the patent owners? Is this unfair? No, it is not unfair because there is nothing in Waxman-Hatch that takes a single Title 35 remedy away from patent owners. If the FDA says that a pending ANDA can go on the market, as of the original patent approval date, the patent owner can sue for patent infringement. He can get a preliminary injunction. He can test the water on whether or not these acts or investments qualify for the statutory relief under URAA, and in fact, this is the only we are going to get this issue to court in a timely fashion. What Pharma and Bristol and others are trying to accomplish here is to create an administrative maze, throw up their hands, say "we got a technical problem; you need a legislative fix," but what they are really trying to do is to moot out the issue by time and to prevent the Geneva generics of the world, who have an approval in-hand today, to go on the market on August 8th. To block that approval, to tie it up in an administrative boggle, so that they get an extra six months, even though the URAA says you are not entitled to that six months. You can't let that happen, if you follow the mandate of the Administrative Procedure Act, and enact regulations that are consistent and harmonize these two statutes. What about ANDAs after June 8th? From June 8th on, every patent has a new expiration date. It is undeniable. That is what the URAA does. It creates a new patent expiration date. And for an ANDA filed after June 8th, it is unclear whether that applicant will be entitled to the benefit of URAA 532, the statutory license, or not. Once before, the FDA was faced with a situation of how to interpret a paragraph 4 certifications and concluded in the instance of inequitable conduct that the statutory scheme of Waxman-Hatch didn't make any sense unless you permitted paragraph 4 certifications for inequitable conduct. I would suggest to you that it wouldn't make any sense in this instance other than to make it a paragraph 4 certification for those who think they made a substantial investment or engaged in acts before June 8th, and it would work very well. Very simply, people would file an application, just as they would certify non-infringement or unenforceability. They could certify non-enforceability by virtue of statutory license. They would put the patent owner on notice at the beginning of the ANDA process, and you would let the courts litigate the issue of substantial investment while the ANDA is pending. It is fair to the patent owners. It is fair to the ANDA holder. It is fair to the public. It resolves the issue at the earliest possible moment. I see my time is up. I have not had time to address the Orange Book issue. I will be happy to answer any questions. COMMISSIONER LEHMAN: You can certainly supply any further information in writing. I would like to ask you a question. That is, Mr. Barrack indicated that, in his view, because Congress chose to attack this problem by restricting the remedies available to the patent holder and leaving them only with certain remedies, mainly the right to equitable remuneration, that therefore clearly every other right that attaches to the extended patent would apply. How do you respond to that? I mean, that would indicate that if you have a 20-year term, you have a 20-year term. MR. ENGLEBERG: What Congress did was say: You have a 20-year term, but you also have a compulsory license for those people who acted in reliance on current law. That is what the statute says. For the interim period, we are going to grant the compulsory license to those people caught in the middle. We are going to grandfather them, and those people are only going to pay equitable remuneration. So the scheme set up by Congress to protect against the retroactive damage that the change in patent law could cause to occur contemplates that there will be competition, contemplates that there will be no exclusivity. And what Mr. Barrack is proposing is that the generic never get up to bat on that issue because the ANDA process and the FDA will bar the door. COMMISSIONER LEHMAN: Yes, that is precisely the point, though. That since they took a very selective -- they used a very surgical drafting technique, I think his point is -- and they did not modify the FDA's powers in this regard. MR. ENGLEBERG: The answer is, they didn't have to modify the FDA's powers as to pending ANDAs because pending ANDA's, as I just said in my remarks, already had correct certifications in them. There is no statutory requirement for amendment. It is a matter of regulation. COMMISSIONER LEHMAN: I understand what your point is. MR. ENGLEBERG: If you want to carry out -- let me just say one thing. There is no statutory history, as we all well know. There was no discussion of drugs. There was no discussion of a carve-out or giving the drug companies back anything that they may or may have lost in 1984. This poor, plain, and simple was a statute enacted due to the requirements of the TRIPS text and the GATT treaty, and to argue that anyone intended any kind of particular benefit for the drug companies, or for anyone else for that matter, is just not the case. I mean, this can and should be harmonized, and it should not be used to create an administrative net for people to hide behind so that these issues cannot be litigated in a prompt fashion and in the public interest. COMMISSIONER LEHMAN: Thank you very much. Next, I would like to ask Robert Armitage to come forward, please. MR. ARMITAGE: Good afternoon. My name is Robert Armitage. I am here on behalf of the American Intellectual Property Law Association. Our address is 2001 Jefferson Davis Highway, in Arlington, Virginia. We are an organization of largely patent lawyers, and we are not in the pharmaceutical business in any significant way. Nonetheless, we are here today because we believe that there are important issues of patent policy. I might begin by making a slight digression to state that the AIPLA strongly opposes H.R. 359. We believe that pharmaceutical companies and others using the patent system should not be given the option of either a 20-year or 17-year patent term, whichever is longer. Having said this, we also have come to realize that in the making of the Uruguay Round Agreements Act, there were certain provisions in Section 156 in the way of technical amendments that were not addressed and should have been addressed and our Association has now come to the conclusion that it is time for the administration to take a close look at the structure of Section 156 beyond the fact that there are technical deficiencies as a result of the Uruguay Round Agreements Act. It is quite clear to us that with the more liberal, in certain respects, extension provisions available in Europe and Japan, and the seeming endless series of special bills in Congress seeking extensions in individual cases that we have in the way of the original 1984 compromise, it is perhaps not now adequate in light of experience in developments over the past decade. Let me say that we come to this, trying to get our compass to point to the north. Having listened now to seven or eight speakers, I find that if you follow all the arguments, you can spin round and round and round. We clearly believe in just a few, simple, basic principles. Namely, that drugs under the Uruguay Round Agreements Act, more or less, should be treated like any other form of patented technology. In the 1984 Waxman-Hatch Act, we believe there was a fairly simple role for the patent information being inserted into NDAs. Namely, under that Act, one was not entitled to get on the market until patents had expired. Therefore, in the NDA application itself, the NDA applicant was required to list those patents whose expiration date was to be relevant. The other seemingly obvious principle, to us, is that the patent certification provisions in the ANDA were simply designed to establish whether the ANDA applicant would be challenging those patents certified or would be content to wait until the patents expired to go on the market. Now, if these are the basic principles that the ANDA Act itself was designed to hold up generic competition under the ANDA law, until patents had expired, then it seems to us that the FDA simply must accept new patent information under the Uruguay Round Agreements Act. This would be the same if a 156 extension were granted. The FDA would need to accept that information. It would be the same if the patentee were forced to file a terminal disclaimer. Certainly, no one would argue that a generic applicant ought to be held up under an outdated certification for a patent that had been terminally disclaimed. Next, we believe that it is obvious, therefore, that the FDA needs to require in order for the public notice provision to be satisfied that there be a prompt submission of new patent information under the URAA. Also, quite clearly, if there is submission of new patent information, it seems to us equally obvious that the FDA should provide notice to ANDA applicants of the need to provide a recertification based on a new patent information in the NDA being referenced. We then come to the suggestion that has been made earlier that there ought to be a double listing of patent expiration dates. We do not believe that this is an ANDA issue, at all. It seems to us that if one wishes to file a complete new drug application, one is entitled to get on the market at any time during the patent term. It is a matter of patent infringement, not a matter of FDA law. However, in a situation where someone seeks the privilege of marketing under the ANDA, the statutory principle again seems to us to be quite clear and that is one must wait until the expiration date of the patent and, therefore, regardless of the level of investment that has been made, substantial or otherwise, it is simply not relevant. Now, one of the main reasons that we decided as a group of patent and other intellectual property lawyers, to testify today, was to make some comments on what the role of the Patent and Trademark Office ought to be in these matters. I can summarize that role in a single word, or perhaps two words. None, or almost none. Basically, the Patent and Trademark Office does not have statutory authority over issued patents. There are certainly special situations, such as interferences and reissues and patent extension provisions, but basically the role of the PTO in these matters, we believe, is a passive rather than an active one. We do believe that the FDA should have the benefit of the expertise of the PTO, if the FDA reaches a point where receiving new patent certifications or receiving new patent information causes ambiguities or uncertainties in terms of how the FDA ought to act, but certainly, in our view, the PTO should not involve itself in a proceeding involving issued patents in which it has no statutory authority. One final comment, I will make, is in terms of the patent expiration date that we believe should be calculated based on the Uruguay Round Agreements Act. Certainly, anyone who has heard the testimony heretofore today, will realize that this is a legal issue that ultimately will be determined by the courts. We believe, however, that the best posture for this, to be determined by the courts, is for the FDA and the Patent Office to recognize that certain statutory principles, namely the following, are involved. One is that under Section 156, patent extensions have been granted for a period of time certain. They are not extensions granted to a date certain. Second, under the Uruguay Round Agreements Act, patents in force on June 8, 1995, were not extended. The statutory terms for those patents were simply reset under the Act. It was not a matter of granting an already extended patent, a second patent extension. Third, we can see no other logical outcome of these two facts, than for the Section 156 extension to apply as it always has applied to the original expiration date, which now would become the expiration date as reset under the URAA. Notwithstanding the comments of Pharma, we further see no basis for the Patent Office, the FDA, or anyone else in a regulatory setting, to arbitrarily chop these pharmaceutical patent terms to 14 years from the date of the regulatory approval. We come to this conclusion because it is clear to us that Congress decided, in its wisdom, that patents across the board would be extended for the greater of 17- to 20-years, affording a number of patentees additional periods of protection of, in some cases, one to two years. And we see nothing in the legislative history and nothing in the statute to suggest that pharmaceutical patents are somehow different and those one- to two-year extensions that applied in the case of other patents, as a result of the resetting of patent terms under the GATT, would not also apply in the pharmaceutical industry. We have, on a question-by-question basis, in our written comments provided answers and, at this point, I would end my oral comments, in the absence of questions. COMMISSIONER LEHMAN: Thank you very much. I apologize. I am trying to consult with Mr. Kirk. Your comments have been really helpful. If I have been talking to him, it is because your comments are so helpful, I am trying to use them to sort through all of this. Are there any other questions? [No response.] MR. ARMITAGE: Thank you. COMMISSIONER LEHMAN: Thank you very much. Next, Mr. Frank Lasaracina. MR. LASARACINA: Thank you, and good afternoon. My name is Frank Lasaracina. I am Vice President of Business Development for Ciba Pharmaceuticals. We are based in Summit, New Jersey. Ciba is a research-based company with interests in agricultural chemicals, pharmaceuticals, as well as industrial chemicals. I would add that on the pharmaceutical side, Ciba has interests in patent protected products, as well as in generics. As a matter of fact, Geneva Pharmaceuticals, which was mentioned a moment ago, is a Ciba company. We certainly appreciate the opportunity to be able to present oral testimony to you this afternoon to talk about the issues surrounding the GATT transition provisions. As we see it, these transitional provisions were designed in such a way so as to permit extension of certain patent rights to patent holders, while at the same time permitting generic products to enter the marketplace. Should the transitional provisions not be able to function, we would be of the opinion that that would not be in agreement with the intent of Congress. And this is what I would like to address in my brief comments. Let me begin by affirming my company's strong reliance on intellectual property rights. These strong intellectual property rights give us the opportunity to grow and sustain our business. Without those rights, we would not be able to. We believe that a strong global system is essential for our company, for our industry, and we believe it is good for the United States economy, in general. For these reasons, we continue to support the provisions embodied in the GATT treaty. The problem we see is where the transitional provisions intersect with Waxman-Hatch. As you know, the ANDA process is governed by Waxman-Hatch and it is where that intersection occurs. The possibility exists that a company which has made a substantial investment prior to June 8th might, because of a certain interpretation, be prohibited from entering the market during this transitional phase. It seems to me that if a generic product company is prohibited from entering the market during the transitional phase, then by definition, for a generic industry, there is no transitional phase. Lacking language to the contrary, we think that all industries were intended to be included. COMMISSIONER LEHMAN: Can I ask you a question to try to clarify how this is going to work? Mr. Armitage said there really isn't a role for the Patent and Trademark Office here, at all. The regulatory role is really at the FDA. MR. LASARACINA: Yes. COMMISSIONER LEHMAN: Because the FDA is the entity which gives marketing approval for the generic product when the patent expires. MR. LASARACINA: Yes. COMMISSIONER LEHMAN: So what is going to happen here is that the FDA, in effect, is going to have to interpret this statute and is going to have to decide what requirements the statute places on it in a situation in which the patentee would arguably be able to say that their patent had been extended and is now a 20-year patent, which is longer than the term that they would have had, under Hatch-Waxman. I always want to say, Wax-Hatchman. I'll bet I have even said that to Senator Hatch, which doesn't go over too well, sometimes. [Laughter.] COMMISSIONER LEHMAN: So the way this is likely to be played out, tell me if I am wrong -- what is going to happen is that at some point -- The FDA has a lot of control here, but let's assume that the FDA takes the position articulated by the generic pharmaceutical association. They will then issue at the time the drug would have become available for marketing under Hatch-Waxman, under the old law, they will say: Okay, you have the right to go on the market. Now, I guess we all agree, that there would be a royalty that would be paid. But the question is, whether they can go on the market at all. At that point, if the patentee doesn't like that result, then he would sue for infringement and say: No, the new law gives me exclusive rights, here, and so you can't go onto the market. Am I interpreting the way this is likely to play out, factually, correctly? MR. LASARACINA: Well, let me clarify, and I apologize. I didn't mention earlier, I am here only representing Ciba. COMMISSIONER LEHMAN: I maybe should have asked Mr. Armitage this. MR. LASARACINA: Our concern, and several of the questions you asked, which I will not address here orally but will be addressed in written testimony and delivered tomorrow, it is possible that one of the ways this may function would be to require recertification of the paragraph 3 in the ANDAs. It is possible that we would be required to take pending ANDAs and recertify as to the later, only, the later date, ignoring the pre-GATT date. Under those circumstances, it seems to me, it might occur that we would be prevented from entering the marketplace in this so-called transitional period, and that is our great concern. COMMISSIONER LEHMAN: You are speaking with your generic hat on, now. MR. LASARACINA: Yes, I am, yes. COMMISSIONER LEHMAN: And if that happens, then I assume that what you will do, or if you decide not to do it because you don't want to litigate it, other companies will do -- well, you wouldn't be the one who would do it. The suit would come from the patentee. They would sue for infringement. And at that point, the courts would resolve this ambiguity. MR. LASARACINA: What we see is, if we were, for example, to recertify, and if we were to recertify only at the extended date, we would not be able to come to the marketplace. Or, I should say, we wouldn't come to the market place prior to expiration of the extended date. COMMISSIONER LEHMAN: But assuming the FDA takes your view, so the way this will be tested is that then there will be an infringement lawsuit and the court -- well, that is my point. MR. LASARACINA: We have got a recommendation. COMMISSIONER LEHMAN: Which is great, but I am just trying to envisualize, you know, what the various -- how this will play out and who has responsibility for what. And it sounds to me like we don't very much responsibility in the Patent Office itself, other than possibly to make some recommendation that might forestall litigation or make perhaps some recommendation to the FDA. Of course, we have the FDA representative, here. MR. LASARACINA: Yes, and we would tend to agree. We would recommend a minor modification to FDA procedure, which if implemented, we believe, would put the pharmaceutical industry, or specifically the generic portion of the pharmaceutical industry, on footing which is equivalent to what we think is the same as every other industry in the United States being effected here. So what we propose is a change to the paragraph 3 certification, under Waxman-Hatch. The ANDA applicant would certify to FDA that a substantial investment had been made prior to the June 8th cutoff date, and would certify further that the applicant had contacted the innovator company to inform them of such investment and such application being made. What this would do is, it would put the onus of clarifying the issue of substantial investment, what is it, has it been made, has it been made in the right time frame, as well as the issue of equitable remuneration, back out into the marketplace where the two parties should work together to amicably, hopefully, resolve those issues. They may end up in litigation, as well, but we don't see that as a PTO issue and we see FDA's involvement being minor, only to the extent that regulation would be altered to allow this changed wording of the paragraph 3 certification, only. And then, we feel that the other forces in the marketplace would prevail. Now, in our written testimony, we are providing illustration of wording which we feel could implement this. This is an option. It is a proposal being made. Certainly, there will be other. What we think is essential, though, is that generic pharmaceuticals be permitted the opportunity to commercialize the investments which have been made pre-June 8, 1995. The mechanics of how we get there, there are people a lot more knowledgeable about that than I am. I may be the only one presenting today who is not a lawyer. The mechanics are important, but I think what is essential is the outcome, as well. So in summary, we believe that the GATT transitional provisions were intended to extend certain patent rights to patent holders, but at the same time, permit generic marketing, if the requirements had been met. I provided you with one option, which we think would function in such a way as to allow the generic industry to enjoy the rights and privileges and obligations that seem to us to have been bestowed on all other industries in the United States, as a result of the GATT implementing legislation. We believe that Congress really didn't intend to treat any one particular industry or industry segment any differently from all the rest. We believe FDA has the authority to make this modification in its procedure. We believe if such modification was to occur, that it would resolve the issue that we think, from Ciba's point of view, is important at this moment in time. As I said earlier, we will be submitting written testimony. It will be coming in tomorrow. It will address the questions which have been posed and more fully describe what I have spoken about, here. Thank you very much. COMMISSIONER LEHMAN: Anybody else have any questions? [No response.] COMMISSIONER LEHMAN: Thank you very much. MR. LASARACINA: Thank you. COMMISSIONER LEHMAN: Brian Foley, please. MR. FOLEY: Good afternoon. Brian Foley, and on behalf of McGovern & Associates, Greenwich, Connecticut. My comments today will be limited to the effect of the patent term extension as a result of Section 156, on the question of whether a patent in force on June 8, 1995, as a result of such extension should have the extension added onto the longer of the 17- or 20-year patent term. In light of some earlier comments, I think I can be relatively brief. First, PTO's assumption is correct that the patents in force on June 8, 1995, are entitled to the longer of the 17 years from the issue date or 20 years from the date of the filing of the application. Second, the URAA uses the language, "patents in force," and does not distinguish the rights of the patent holder whose patent is in force on June 8, 1995, due to an extension under Section 156, in any way. Thus, it is clear that the intent is to treat patents in force as of June 8, 1995, due to a Section 156 extension no differently than any other patents. Thus, patents in force due to extension should be treated no differently and the first approach mentioned in the Commission's notice of this meeting is the correct one, to add the extension issued already by the PTO to the longer of the 17- or 20-year period. Thank you. COMMISSIONER LEHMAN: Thank you. Next, Mr. Sandercock, please. MR. SANDERCOCK: Good afternoon. My name is Colin Sandercock. I am with the law firm of Foley and Lardner in Washington, D.C. We are at 3000 K Street N.W., Washington. I am testifying today on behalf of two of my clients, who are American inventors, American producers, and who have benefitted from the American patent system. I would like to begin by thanking the Commissioner and the distinguished panel and the PTO for this opportunity to comment on the effect of URAA on patents in force on June 8, 1995, which are in force solely by virtue of an existing patent term extension under 35 U.S.C. 156. The Uruguay Round Agreements Act simply implements a new patent term calculation for patents in force on June 8, 1995. That is certainly something that has been echoed by several speakers. Contrary to the suggestions of some, it does not constitute an extension. It should not be characterized as an extension for patents in force. At issue, then, are the terms of several patents that are in force solely because of the 156 extension. The PTO -- COMMISSIONER LEHMAN: Is that the situation of your clients? MR. SANDERCOCK: Yes, sir. COMMISSIONER LEHMAN: You have clients in that category? MR. SANDERCOCK: That is correct. The PTO proposes how to address the question of whether these patents should be treated differently than other patents in force on June 8. Should they essentially receive discriminatory treatment by the PTO simply because they are in force by virtue of their extension? I respectfully submit that there should be no discrimination and that they should be treated no differently. I think the first question is whether they are patents in force, and Section 156 governs the term of a patent. It provides a patent with a new expiration date. During the extension, the patentee can avail himself or herself of the rights of a patentee, including enforcement of the patent. I think, therefore, the patent is clearly in force. COMMISSIONER LEHMAN: Mr. Sandercock, I think I have got this pretty much straight, but I just want to get it completely tied down, now. Because you really have a client who is likely to actually be in this situation. MR. SANDERCOCK: Who is in this situation, sir. COMMISSIONER LEHMAN: Who is in this situation. The only way that a generic company is going to get into the market in this questionable period, between when your patent would have expired under your Hatch-Waxman extension and its new rights, is when the FDA gives approval for it to go on the market. MR. SANDERCOCK: Correct. COMMISSIONER LEHMAN: So to some degree, the FDA -- if the FDA wanted to support your position, they would simply say: Okay, we are going to delay the marketing approval until the longer period of time. MR. SANDERCOCK: I would agree with that, on this point, yes. COMMISSIONER LEHMAN: I mean, then they can't get on the market without FDA approval. So then, you are home free. I suppose there is some -- you know, there is litigation against the FDA that the generic company could bring. Let's assume that the FDA decides to take the other reading that we have heard, though, and it concludes that, it makes its determination to permit the marketing of the generic version of your client's drug at the end of the expiration period under the old system. MR. SANDERCOCK: Correct. COMMISSIONER LEHMAN: Then, I assume what you are going to do is that you are going to probably sue for infringement and you are going to say: No, under the new law, I have a longer term. I mean, maybe that is unfair to ask you a business question like that right now, but you would have that option. Of course, the Patent Office doesn't have any direct control over that. MR. SANDERCOCK: I would agree. The question, as raised by Mr. Armitage is, really, how much authority should the Patent Office exercise. And I believe that -- and I certainly would like to address your question in the written comments -- so I would like to have a little time to think about it and not say something improper or incorrect, here. But I think the question that I came to address today is the question that was set forth in the notice, and that is, what the Patent Office plans to do as far as its interpretation. And so, really, the question you asked is a little bit beyond that scope and I would like to address that in my written comments. COMMISSIONER LEHMAN: On that point, I suppose we could have an interpretation which might carry some weight, or we could say nothing. MR. SANDERCOCK: I would agree 100 percent. And that is where -- you know, you are sitting here with a lot of people who are very concerned on this issue. You will receive a lot of testimony. You have spent a long time considering this issue. And I would urge you to do just that, and that is, take a position, something that could be used in subsequent litigation. COMMISSIONER LEHMAN: Well, thank you for helping me out. I think I am finally getting through to what the essential issue here is. MR. SANDERCOCK: I think what the Patent Office will have to say on it is very important, and so I would urge not a role that is simply passive, but a role that does take an action. COMMISSIONER LEHMAN: Well, I suppose to the extent that the FDA agreed with our position, it might affect their regulatory process, or it might obviously give you a leg up in court, too, if you went to court. MR. SANDERCOCK: I won't deny that. But I think the only remaining question, then, is whether the patents should be treated differently under the URAA. And as some other speakers have mentioned, I think it would require reading a limitation into the legislation which was not there. I don't think there is any demonstrated congressional intent to treat these patents differently, and granted they are in a special area, but there is no congressional intent. There is no language, to which one could point that would justify or suggest a disparate treatment, and I see no reason under the rules of interpretation and construction why the provisions of the URAA would suggest a discrimination of this small group of patents. And so, in concluding, I would urge the PTO to maintain the interpretation that it initially has taken in identifying these patents and that is to consider them as patents in force and to which the 17/20-term will apply, and that the Section 156 extension should be added to the longer of that term. Thank you. COMMISSIONER LEHMAN: Thank you. Are there any other questions? [No response.] COMMISSIONER LEHMAN: Next, Mr. Pelto. MR. PELTO: Thank you and good afternoon. My name is Don Pelto, and I am a patent attorney at the firm of Foley and Lardner, in Washington, D.C. Our address is 3000 K Street N.W. My testimony reflects my personal views, and should not be considered as reflective of those of Foley & Lardner or any of our clients or our colleagues. The impending changes to Title 35 of United States Code relating to patent terms, specifically the provisions of the URAA patent amendments, that recalculate the term of existing patents necessitates an exact and consistent interpretation by the PTO of those amendments to Title 35 for all patents considered to be in force on June 8, 1995, the effective date of the URAA. Turning to the specific issues raised in the OG notice regarding the effect of the URAA on existing patent term extensions, under Section 156, the PTO states that it has assumed for purposes of evaluating the number of extended patents that may be affected by the recalculated term, the patent which expired under its original 17-year term before June 8, 1995, but received a patent term extension under Section 156 for a period beyond June 8th, should be considered a patent in force on the effective date of the URAA. I am here to say that I believe that that assumption is proper and correct. The patent term extension provided in Section 156 extends the patentee's right to exclude others from making, using, or selling the subject invention. Those rights are no different than those of a patentee under the usual 17-year term. Moreover, patents to pharmaceuticals should not be treated any differently than patents to other inventions that are in force on June 8, 1995. Consistency in the protection of those patent rights requires that patents in force beyond June 8, 1995, due to patent term extensions, be treated the same way under the URAA as any other patent in force at that time. The PTO's assumption that such patents are in force for purposes of the URAA is correct, and I urge the PTO to adopt this definition. Referring to the questions raised by the PTO on the effect of the URAA on patent term extensions under 156, I urge that the first interpretation provided by the PTO on the provision of the URAA, which grants the longer of the 17- or 20-year patent term to patents in force on June 8, 1995, be adopted. Specifically, that first interpretation states that the extension already issued by the PTO under Section 156 should simply be added to the longer of the 17- or 20-year patent firm, to patents in force on June 8, 1995, thus requiring no action by the PTO. Again, consistency in protecting the rights of patent holders requires the even-handed application of all provisions of the URAA that recalculate the term of each and every patent that is in force on June 8, 1995. Finally, and although not explicitly mentioned in the OG notice, I want to make it clear that extension of the remedies available to a patent holder as provided in Section 532 of the URAA should also apply to existing patent term extensions under the provisions of the URAA. Specifically, Section 532(c)(2) of URAA sets forth the remedies available to a patent holder for patent infringement under certain circumstances. Under that section, a patent holder may not obtain an injunction or monetary damages for acts which became infringing by reason of the new 20-year provision, which were commenced or for which substantial investment was made, before June 8, 1995. Again, Section 532 provides that the patent holder may only collect an equitable remuneration under any such circumstances. Again, even-handed application of the 20-year patent term under the URAA to all patents in force on June 8, 1995, requires an even-handed application of the provisions of Section 532, also. In summary, the proposed regulations reflect a positive attitude by the PTO and thereby consistency and even-handedness in the application of the URAA. I thank you very much for inviting me to testify on these important issues. COMMISSIONER LEHMAN: Thank you very much. Are there any questions? [No response.] COMMISSIONER LEHMAN: This completes the list of persons who asked in advance to testify. Are there any other people that have signed up? [No response.] COMMISSIONER LEHMAN: If there is no one else who would like to testify, let me mention that written comments can be received until February 17, 1995, and a transcript of the hearing, as I mentioned in the opening statement, will be available, as well as all the written comments received. They can be reviewed probably about March 3, 1995, in Room 520 of Crystal Park 1, which is 2011 Crystal Drive. They will also be available on the Internet through FTP, and the address is FTP.USPTO.GOV. All written comments and the oral comments made here today will be taken into consideration before any final rules are published. Since we are under time limitation, any comments received after February 17, 1995, cannot be assured of consideration. This concludes today's hearing. I want to thank everybody who participated for helping us work through these problems. [Whereupon, at 3:09 p.m., the public hearing was concluded.]
Last Modified: March 1995