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Statement of Mr. John Corcoran, President

Manhole Adjusting Inc.

before the

Senate Judiciary Subcommittee

on Patents, Copyrights and Trademarks

Mr. Chairman, I am John Corcoran, President of Manhole Adjusting Incorporated, a general engineering contractor located in Monterey Park, California and licensed throughout the western United States. We appreciate the opportunity to present testimony today concerning regulatory error, delay and neglect by the federal government which has unfairly denied patent holders for asphalt-rubber (A-R) the right to exclusively market their product during the life of the patent.

Manhole Adjusting, an asphalt rubber patent licensee, created an Asphalt-Rubber division in the early 1980's. Today, that division is known throughout the country for its continuing research on new A-R application processes and its quality job performance. Manhole Adjusting Inc. is the largest turn-key applicator of A-R systems in the western United States.

A-R is an environmentally sound and cost efficient paving material consisting of recycled rubber derived from scrap tires and paving grade asphalt (oil). A-R has been proven to last substantially longer than conventional paving materials and can be applied in far thinner layers making it very cost effective. Since production of A-R depends upon rubber from recycled scrap tires, it is an environmentally appealing alternative to conventional asphalt pavement which has no benefit to the environment. The industry estimates that use of the asphalt rubber process could lead to the disposal of over 267,000,000 scrap tires.

The A-R process is protected by four patents (Nos. 3891585, 4069182, 4021393 and 4085078). The first two patents, which are key to the A-R process, were issued in 1975 and expire in June 1992. The third and fourth patents expire in May 1994, and April 1995, respectively.

A-R patent holders have repeatedly attempted to develop a market for their product. The FHWA, ignoring over 20 years of test projects, experiments and studies showing that A-R is cost effective and technically and environmentally sound, stymied these efforts and unfairly prevented the use of A-R on federallyfunded highway construction projects (with minor exceptions for experimental projects). Recently, the California Department of Transportation (Caltrans), with approval of the FHWA, issued



guidelines for the routine use of Asphalt-Rubber Hot Mix-Gap Graded (ARHM-GG). This action confirms the validity of the more than 20 years of studies of A-R and the unfairness of FHWA's action in preventing its use. Further, FHWA's actions have included:

• apparently contrary to law in 1976 adopting 23 C.F.R. § 635.411 ("CFR") the FHWA's implementation of which effectively prevented the use of asphalt rubber on federally-funded highway projects;

⚫ refusing over more than 16 years of testing and study since adopting the CFR to develop any conclusions concerning the use of A-Ř hot mix as compared to conventional asphaltconcrete, which would allow use of A-R through competitive bidding processes under an exception to the CFR;

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denying, despite repeated appeals from the patent holders, their licensees and state and local transportation agencies, requests to remove A-R's designation as an experimental product so as to allow its widespread use.

A-R is reportedly the only product to remain in the FHWA's experimental category for over 16 years.

• contrary to sound federal procurement policy, refusing to allow the use of A-R hot mix until the patents expire;

foot dragging and delaying the completion of Congressionally mandated studies on asphalt pavement containing recycled rubber including threats to delay the mandated use of asphalt pavements containing recycled rubber; and

repeatedly seeking waivers from attempts by the Environmental Protection Acency (EPA) to require the use of recycled rubber in all Bituminous Concrete on federally supported projects.

These actions by the FHWA effectively eliminated the only avaiable significant market for asphalt paving materials containing recycled rubber, and so curtailed the use of asphalt rubber (A-R) that its use today can legitimately be considered minuscule.

Since federally supported road and highway projects constitute the only significant available market for paving materials, these federal actions have denied A-R patent holders the right to freely market their patented product, as intended under U.S. patent law.

These federal actions have had a chilling effect on the


patent holders ability to market in non-federal markets. For example, the State of Arizona's usage of asphalt rubber went to zero in 1983 following a high of 8,678 tons in 1976.

U.S patent laws grant patent holders 17 years of exclusive use. The intent of these laws is to grant the inventor exclusive marketing of the product for that period of time. Extension of the A-R patents will restore fairness and equity to the patent holders and will ensure that the economic and environmental benefits of A-R are realized.

Further, because A-R patent holders and licensees possess technical expertise and experience, patent extensions for A-R will ensure successful development and application of the product as intended by patent policy. The installation of a quality A-R product is essential to the successful evolvement of section 1038 of the Surface Transportation Act and to assure an estimated 16,000 new jobs in the industry.

Allowing the A-R patents to enter the public domain would likely lead to firms with little or no technical experience producing and installing an inferior product. This is contrary to patent policy which seeks to further refinement of innovations leading to the advancement and development of the patented product.

Where the FHWA had kept the market for A-R and other asphalt pavement containing recycled rubber closed, Congressional action has opened it. Patent holders for A-R rubber are private individuals of modest means who have invested substantially in the development of their product. They deserve, as a matter of fairness and equity, to have life restored to their patents. Patent extensions for A-R will prevent firms and individuals who have not invested in the development of A-R from taking advantage of the substantial investment of resources in the product by the patent holders.

Congress, in the 1991 Surface Transportation Act, relying upon a substantial body of evidence demonstrating the economic and environmental benefits of asphalt pavement containing recycled rubber, mandated its use on an increasing percentage of federally funded highway projects beginning in 1994. Prior to this action, the Federal Highway Administration (FHWA), supported by the conventional paving industry, had ignored the evidence relied upon by Congress and had consistently and unfairly acted to prevent the development of a market for asphalt pavement containing rubber.

Mr. Chairman, because of regulatory error, delay and neglect by the federal government, the A-R patent holders have been unfairly denied the right to exclusively market their product during the life of the patent as intended by patent law.



believe extension of the A-R patents are needed as a matter of fairness and equity to restore life to the patent term and to ensure that the economic and environmental benefits of A-R are realized.

The substantial investment by the A-R patent holders in the development of pavement materials containing recycled rubber were instrumental in establishing Congress' confidence to proceed with this worthwhile endeavor. With out extension of their patents the patent holders will be denied the benefit of their substantial efforts and investment.

Mr. Chairman, we appreciate the opportunity to offer our comments on this issue and stand ready to respond to any questions you may have.

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It is my understanding that the U.S. Senate Judiciary Committee, Subcommittee on Patents, Copyrights, and Trademarks is currently conducting an oversight review of the United Stated patent system. As I stated in my letter of February 21, 1992, I am one of the patent holders of Patent numbers 3891585, 4069182, 4021393, and 4085078. The earliest of these patents are due to expire this month on June 24.

For a variety of reasons, the Federal Highway Administration (FHWA)
has prevented our patented product, asphalt rubber (A-R) from
competing for federally funded highway work. Because, federally
funded highway work is the single largest available market for our
product, we have been prevented from benefitting from our patents.
We are not a large corporation with unlimited resources to fight
government agencies. Nonetheless, we believe there is a
substantial inequity here which must be corrected. It is our
understanding that the purpose of patent law is to encourage
invention and innovation by providing a patent holder the
opportunity to profit from the invention for a 17 year period.
have not had that opportunity.


For that reason, we respectfully request the Subcommittee on Patents, Copyrights and Trademarks to review our case and the difficulties we have faced. We believe, based on considerations of fairness and equity, that our patents should be extended for a period of 10.3 years. This is the same treatment that has becn afforded other aggrieved patent holders. At a minimum, we believe the patents should be extended temporarily until the end of the next session of Congress to afford the Congress an opportunity to fully review our case.

We appreciate any assistance you can offer and stand ready to
answer any questions you may have.
Thank you for your
consideration of our request.

Respectfully submitted,

Cal Jacobson

Carl Jacobson

6751 West Galveston Chandler, Arizona 85226-2512
(602) 268-0874 AZ Watts: 800-829-1144 Watts: 800-528-4548

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