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Enclosed are the responses to your questions submitted to the U.S. Patent and Trademark Office for inclusion in the record of the authorization hearing held on May 12, 1992. We regret the delay in forwarding these responses, and appreciate your forbearance on the matter.

We have been advised by the Office of Management and Budget that there is no objection to the submission of this report to the Congress from the standpoint of the Administration's program.


Douglas B. Comer

Acting Assistant Secretary

and Acting Commissioner of Patents and Trademarks




Question 1. Commissioner Comer, in your testimony you state that "a fundamental aspect of your authorization request" is that the Office no longer seeks public funding.

Why is the Administration so strong in its opposition to public funding for the Patent Office? Why should the public foot the bill for international negotiations conducted by the office, including some relating to copyrights?

Answer: While we believe that generally it is appropriate for users to pay for Government services that directly benefit them, we also recognize that some programs of the Patent and Trademark Office have a broader impact on the public interest, such as international negotiations. A case can be made that these programs should be funded by the public. Indeed, the President requested $3,300,000 in fiscal year 1992 but received only $1,500,000 to fund our programs that confer such broader public benefits.

But one cannot lose sight of the fact that the underlying scheme for funding the Patent and Trademark Office for fiscal years 1991 through 1995 is the result of a compromise between the Congressional and Administration negotiators reached at the Budget Summit to avoid a fiscal crisis. Both the Congressional and Administration negotiators agreed to finance the Office through user fees, not taxpayer revenues, for the five-year period. To provide significant taxpayer revenues now to the Patent and Trademark Office would require that the compromise be breached.

Question 2. Does the Administration still oppose the current structure of the small entity category?

Answer: No. The Administration never opposed the structure of the small entity subsidy when the subsidy was supported by taxpayer revenues. When these funds were taken away, however, the Administration simply sought a more equitable sharing of the increased user fee support of the Patent and Trademark Office in the 1992 Authorization cycle. We have no intention of questioning the level of the subsidy in light of the recent Congressional action.

Question 3.

Would the Administration support public funding to pay for the small entity category or to cover some of the Office

Answer: Not at this time. While it may be theoretically justifiable to fund the small entity subsidy and the

international activities from general taxpayer revenues, we must recognize the realities of the current budgetary situation. As we stated in response to Question 1, given the budget constraints imposed by the need to deal with the budget deficit, the Administration has not included any request for public funds for these purposes in the PTO's fiscal year 1993 budget request.

Question 4. Mr. Banner, the President of IPO, believes it may be more cost-effective to have the PTO in several sites rather than centrally located with segments of the PTO situated in areas of the country where those industries are predominately located.

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What do you think about this idea?

Does the fact that PTO is located in some 17 buildings, with files stored in other remote sites, impact upon the operational efficiency of PTO?

Answer: We believe that splitting our operations among several sites in different areas of the country would increase our costs and decrease our efficiency, without providing significant benefits to our users.

First, our examiners must be able to search a wide range of technological areas to determine patentability, not just the small portion of the search file that is classified to their technology area. To ensure quality, we would have to replicate and maintain enormous portions of our paper files at each site and/or incur very expensive, high speed telecommunication costs for sending APS images electronically over great distances. Second, the costs to relocate PTO employees to various sites around the country would run into many millions of dollars and many employees would not relocate which would require significant hiring and training of new employees. Third, the services of our Scientific and Technical Information Center would have to be extended to each location. Fourth, we would lose "economies of scale" particularly in the support, training, and processing areas. And fifth, many examiners in emerging technologies, such as biotechnology, would be physically removed from important secondary sources of technological information, such as NIH and NIST.

Thus, our costs would increase dramatically, and, unfortunately, we are not able to identify any significant offsetting savings as suggested by Mr. Banner.

The fact that the Office is located in 15 office buildings, with files stored in other remote sites, does affect our efficiency. This segmentation causes processing delays as people and paper

must move among the various buildings.

Patent examiner productivity is adversely affected. Duplicative central services have to be provided, adding costs to the operations of the Office. Members of the public are inconvenienced when they have to go to several different locations for the services they need.

Question 5. Do you believe there is any need for Congress to reconsider the patent term extension remedies provided under the Drug Price Competition and Patent Term Restoration Act of 1984? Answer: Yes. Although the Drug Price Competition and Patent Term Restoration Act of 1984 represents an intensely negotiated balance between research intensive firms, generic manufacturers, and the public, there are some provisions that narrow the application of its provisions, thereby denying relief to deserving patentees and lowering the incentives for continued research in certain areas. Specifically, under present law, the term of a patent may only be extended once. As a consequence, if a patent that covers more than one new chemical entity is extended once as a result of a regulatory review period for one of those entities, it is not eligible for any further extension, even though another chemical entity covered by that patent underwent an independent review. This consequence denies effective patent protection to those other chemical entities and may well diminish the incentive by industry to commit the enormous resources required to bring secondary pharmaceutical products to market.

Another problem area lies in the general unavailability of patent term extension for patents that claim new uses for products already approved for a particular use in the regulatory process. Some exceptions to this denial are made for certain animal drug products and in the case of products manufactured with recombinant DNA technology. However, the general concept of

denying this benefit to uses that underwent independent regulatory review and that were patented in their own right may also stifle the incentive of research intensive firms and institutions to spend resources on finding new applications for known products.

Question 6. 8. 2130 addresses a deficiency of the Patent Term Restoration Act of 1984 by providing an extension for more than one new chemical entity if the new chemical entity otherwise qualifies for a patent extension under the Act. 8. 2130 would be limited to patents that are conceived or reduced to practice substantially in the performance of work at a qualified nonprofit organization.

Do you agree that this deficiency in the 1984 Act should be

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