Privacy, Business and Law

GATT’s virtues are woefully tainted by plans to slip in major changes to U.S. patent law via imminent GATT-implementing legislation. Claims from Administration officials and a few Congressional staffers to the contrary, the public and industry have not been properly informed of these changes; there have not been appropriate, serious forums to debate them; and their impact is not insignificant. Moreover, despite incorrect information such as a recent Forbes’ editorial and even past messages from the U.S. Trade Representative’s Office to Congress, the planned changes are not required by GATT.

At issue is a proposal to change the term of U.S. patents from 17 years from patent grant to 20 years from filing an application. GATT requires only a minimum term of twenty years from filing. Hence, compliance might be achieved, as has been suggested by Rep. Helen Bentley and Rep. Dana Rohrabacher, by a term 20 years from filing or 17 years from grant, whichever is longer.

It may sound like a trivial difference. The issue wasn’t given a GATT-related congressional forum, and no contrary thoughts from inventors or others were heard, until it was part of an Aug. 12th so-called “joint” judiciary hearing hastily scheduled to ward off criticism. Not a senator was present. At a March Senate hearing on a proposal that included a 20 year from filing term, where the only member present was its chair, Dennis DeConcini, only witnesses who supported the change were allowed to testify. Any mention of the interests of small operators or inventors, none of whom were present, was given with a nod and a wink.

The matter is by no means trivial. Significant delays can occur before commercially important patents are issued. Many firms are extremely alarmed, as patents might take 14 years or more to issue. If the clock runs from filing, that effectively shortens the life of the patent. There are real concerns by inventors and others that well-heeled competitors will develop strategies to delay the issuance of patents. With trade deficits rocketing, why risk shortening the lifespan of U.S. patents, which foreign countries and multinationals have long slandered as trade barriers?

Dr. Robert Rines, founder of the Franklin Pierce Law Center and a member of the Inventors Hall of Fame for patents in high definition radar and sonar, voices capitalization concerns. “It doesn’t matter to large companies, but for small enterprises and startups, there’s a strong connection between secure, definite patent terms and the ability to gain financing from banks and venture capital,” says Rines. “Our patent system, properly functioning, is one of our country’s most egalitarian strengths, and our patent concerns must not end with the concerns of large companies.” Consider also the vital role of small yet growing companies in job creation.

Universities file over 3,000 U.S. patents a year. They properly fear the new term might substantially reduce protection for companies investing in them. Lita Nelsen, who directs technology licensing for M.I.T., notes that for university licenses yielding products, the average market appearance is eight years after the license is signed – longer for biotech. Educational institutions now publish discoveries early, and file early, knowing they can perfect the patent later if needed. Penalizing their patent lifespan will postpone patent filing and public access to knowledge.

Moreover, creations most ahead of their time will be the most penalized. Some vanguard technologies only become commercially viable as patents near expiration. Should we embrace rules that discourage large steps?

Rationales put forth for the change by Patent Commissioner Bruce Lehman at the August 12th hearing include the threat of “submarine” patents, which are said to be purposely delayed by the applicant companies or individuals so their patents will surface years later and be relevant enough to sue unaware companies for patent infringement. As in vogue as handwringing over submarines is, one would think a massive U-Boat invasion is underway. Yet the data shows only a few candidates against the 125,000 or so patents issued each year.

Further, announced on Aug. 16th was an agreement with the Japanese to publish all U.S. applications 18 months after filing. To cynically assert the threat of “submarine patents”, knowing that the Clinton Administration was going to agree with Japan four days later to publish all applications, insults our legislative process. All patents would then be public. All subs, mythical or not, would surface. The cry “submarine” is a distortion unworthy of an office so critical to our economic prospects.

Making the change to prompt more rapid prosecution of patents puts the cart before the horse, as most patent prosecution delays are under the control of the patent office, not the applicant. There is no reason to give the PTO a timer to pressure applicants with legitimate disagreements.

Another motive is Lehman’s January pledge to Japan that he would introduce the new patent term in legislation this summer. The quid pro quo from Japan is that next year applicants in Japan will have two months before having to translate their patents into Japanese. Ill-advised or not as that promise might be, the GATT fast-track is not the place for the Clinton Administration to fulfill it.

Whatever the merits of these stealth IP proposals, which are said to include other changes that also warrant a proper hearing as to their desirability, it is a stain on the legislative process to bury them in a GATT agreement that doesn’t require them. Remove them for proper and considered debate. The fast-track sleight of hand only undermines confidence in our democratic process. This reinforces impressions that the special interest fix is in, impressions President Clinton and Congress can ill-afford.

Don Banner is former U.S. Commissioner of Patents and a patent attorney in Washington. Skip Kaltenheuser is a writer and lawyer in Washington.

by Don Banner and Skip Kaltenheuser