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Congressional scrutiny and legislative efforts have provided the necessary framework for the Trademark Office to successfully meet the intent of the Lanham Act. We are confident that Congress will continue and, indeed, increase its efforts to streamline and improve the operations of the Trademark Office for the benefit of the public. USTA is pleased to be a resource to this Committee and will be pleased to assist it in any way in discharging these important responsibilities.

Thank you for your June 17 letter. It was a pleasure to testify before your Subcommittee regarding USTA's views on the Trademark Office's operations, and we are pleased to respond to your written questions enclosed with your letter for inclusion in the hearing record.

1. WHAT IS USTA'S POSITION ON THE PATENT AND TRADEMARK OFFICE AS A GOVERNMENT CORPORATION?

USTA, through its USPTO and U.S. Legislation Committees, has been closely studying the issues involved and the resulting legal, financial and political implications should the USPTO be restructured as a government corporation but has not yet formalized its position as to either the feasibility or the merits of such a restructuring. Of course, our overriding concern here is the prospective treatment of the Trademark Office under such a scenario. At a minimum, any proposed reduction or restriction of the authority or obligations (including the financial responsibilities) of the Assistant Commissioner for Trademarks would be viewed most unfavorably.

Further, USTA notes that the enactment of legislation establishing a USPTO corporation presumably would create the single federal corporation where a governmental (as opposed to a business or commercial) function would be its primary activity. That is, no other entity could be allowed to simultaneously grant a limited monopoly to an inventor or act as the central depository for trademark registrations. Conversely, all existing government corporations engage in more commercial activities that have been deemed by Congress as being unsatisfactorily dealt with in commerce. Thus, it may be fitting to first confirm that no constitutional or other legal barriers exist to the use of a federal corporation for a governmental function rather than predominately commercial purpose.

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2. IS USTA AWARE OF ANY PROBLEMS WITH THE TRADEMARK TRIAL AND APPEAL BOARD SIMILAR TO THOSE RAISED BY MR. SHAW WITH RESPECT TO THE BOARD OF PATENT APPEALS AND INTERFERENCES?

The testimony of Mr. Shaw enumerated alleged instances of undue influence by the Commissioner's Office (prior to the installation of Acting Commissioner Douglas Comer) in obtaining Board of Patent Appeals decisions preferred by the Commissioner's Office.

Under the administration of former USPTO Commissioner Manbeck, the Trademark Trial and Appeal Board (TTAB) overturned its 1983 interpretation of Trademark rule 37 CFR §2.144, overruling the long standing practice of the TTAB of not entertaining a request for reconsideration of a Board decision except from the losing applicant. In the Board's April 1992 reversal of In re McKee Baking Co., 219 USPQ 759, (see In re Ferrero S.p.A., 22 USPQ 2d 1800), it accepted a request by the Trademark Office examining attorney for reconsideration of its reversal of the examining attorney's refusal to register a mark on the Supplemental Register. The rationale offered by the Board is that the Office should have "the same flexibility to correct possibly erroneous decisions" of the TTAB as it has with respect to decisions of the Board of Patent Appeals and Interferences.

Interestingly, the TTAB panel here was comprised of a clear majority (three of five) of White House appointed members (i.e. non-career service officials). Consequently, members of the private trademark bar have expressed alarm not only over the sudden and likely far reaching effects of the new policy but also because it was done by a "non-career" panel.

In my opinion, this is justified for several reasons:

1) the determination that the rule interpretation should be modified was not made after public consideration and comment but by a panel composed of those USPTO officials most likely to acquire greater authority over the decision making processes of the TTAB;

2) such requests by an examining attorney may result less from the examiner's conviction that a TTAB decision should be reconsidered than from the demands of higher ranking politically appointed USPTO officials; and

3) without strict guidelines, the routine honoring of such demands could politicize the quasi-judicial function of the TTAB.

Additionally, it is critical to recognize that significant differences and inconsistencies exist between the policies and practices of the Trademark and Patent Offices. A quick and unforeseen reinterpretation of policy based on the goal of achieving uniformity rather than for unusual or compelling circumstances warrants public consideration. Thus, I believe it is appropriate both as a matter of administrative law and with respect to public policy to obtain public comment before promulgating a new and unanticipated practice which is contrary to

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3. HOW HAS THE TRADEMARK COMMUNITY ACCEPTED THE TRADEMARK LAW REVISION ACT, IN PARTICULAR THE "INTENT TO USE" FILING PROVISIONS? IS USTA AWARE OF ANY KNOWN ABUSES OF THE NEW FILING SYSTEM? HAS THE ASSOCIATION HEARD OF ANY MAJOR COMPLAINTS ABOUT THE SYSTEM OR THE NEW ACT?

To the best of USTA's knowledge and observation, the trademark community is overwhelmingly pleased that Congress enacted the Trademark Law Revision Act (TLRA). Its provisions, including the Intent-To-Use (ITU) provisions, have allowed the Lanham Act to remain a viable instrument in the preservation and promotion of trademarks as instruments of commerce.

USTA understands that because of the "give and take" of the legislative process, draft language implementing the federal anti-dilution and security interest provisions was eliminated just prior to the measure's final passage. We believe as before, however, that amending the Lanham Act to address these issues would further enhance federal trademark practice. Additionally, the possibility of U.S. membership in the Madrid Protocol, which USTA supports in principle, raises the likelihood of additional statutory revisions beyond those of TLRA.

The Association is particularly pleased with the implementation of TLRA's ITU provisions. ITU filings have constituted over 40% of all initial registration applications since they were first accepted in Fiscal Year 1990. They constitute approximately 48% of all registration applications accepted by the Trademark Office in the current fiscal year. While the average time to first action was 5.8 months as late as February 1, 1991, the initial response period has now fallen to 3.4 months.

The January 14, 1992 issue of the Wall Street Journal, in an article entitled "Picking Pithy Names is Getting Trickier as Trademark Applications Proliferate", suggests that the ITU system invites abuse by large companies to "deluge the trademark office" by filing large numbers of applications, thereby hindering competition. However, we understand that the USPTO in reviewing its filing records, has found no evidence to suggest that any company is engaged in any pattern or practice of filing excessive or bogus trademark applications (and USTA has seen or heard nothing that indicates a contrary conclusion). However, as of this date, there have been no reported decisions over the interpretation of "bona fide".

The Wall Street Journal article also inaccurately states that bona fide ITU applications "can sit for up to four years before they're discarded". The maximum allowance for extensions (in six month increments, for good cause and payment of a $100 fee per classification) is three years.

Because the ITU filing system is relatively new, the Trademark Office continues to look for ways to more efficiently respond to trademark owners' desire for increased proficiency in

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handling ITU registrations. In addition, USTA is closely monitoring the operation of the system, both in the USPTO and the courts, to ensure that it is functioning properly and is not being abused and with an eye towards corrective legislation, if necessary. Nevertheless, USTA observes widespread satisfaction with the Trademark Office's ITU operations and the benefits that this system confers.

4. ARE THERE ANY SIGNIFICANT CONCERNS STILL LINGERING ABOUT THE COSTS AND BENEFITS OF THE TRADEMARK AUTOMATION PROGRAM?

At present, the Trademark Office automation program is progressing satisfactorily. For example, it is evident that X-Search, the replacement to the present T-Search system, represents a wholesale leap to a substantively higher quality, more efficient component of the overall automation system. USTA is pleased that its underlying concern, acquiring the most effective system at a reasonable cost, has also become a USPTO concern. It is our understanding that certain projected costs and the ability of X-Search to remain on schedule (e.g. the possibility of placing a terminal in each examiner's office) is dependent on the future financial strength of the Trademark Office. For instance, the latter two phases of XSearch (which are to emphasize the utilization of advanced search techniques to attain still greater efficiencies) have been cancelled due to lack of funding.

The benefits of X-Search will be slow to be realized, even if the current schedule is met. Even so, inattention to related Trademark Office automation issues will also have a marked effect on the USPTO's ability to deliver on its promise of an efficient high caliber automation system for Trademark Office clients. As examples, there are no plans to improve TRAM II; search capabilities will only be marginally improved by new work stations; and XSearch and TRAM data bases will continue to be run on separate host computers denying the examining corps a beneficial communications link. In addition, there is no specific correction program in place for all prior Trademark Office records other than the errors found when converting to the new system.

USPTO may wish to consider taking other steps regarding its automation program; among them:

a) making software available (i.e. CD ROMS) which contain the Trademark Manual of Examining Procedure (TMEP) and TTAB Manual, design search codes and trademark regulations;

b) exploring alternative ways of funding improvements and upgrades of Trademark Office automation efforts (e.g., by selling Trademark Office registration data to trademark search firms at a profit);

c) continuing development of machine readable forms; and

d) improving efficiencies and reducing key punch and retying errors by developing means for direct electronic filing of trademark applications (and other papers), possibly providing incentives for those who utilize such means.