As you may recall I wrote to you some time ago about how important a patent extension for asphalt rubber is to business and jobs here in Arizona.

The key patents expired on June 24, 1992 and already Texas and Washington contractors have obtained some asphalt rubber jobs here. They plan to use out-of-sale equipment and personnel to do this work.

You may recall that asphalt rubber was developed in Arizona and was restricted in its use by Federal Law until December, 1991. The extension of the patents is the only way that equity can be returned to the developers.

Again we greatly appreciate any help you can give us extending our patents to help our business and ensure jobs here in Arizona.

If you have room in the printed hearing record, you might
consider including the 24-page report by the National Academy of
Public Administration.
A copy is enclosed. This report is
referred to in the answers to our questions and, I believe, was
also referred by Mr. Banner when he testified before the
subcommittee.

Sincerely,

Herbert C. Wamsley
Executive Director

Enclosures (2)

A NONPROFIT ASSOCIATION REPRESENTING PATENT, TRADEMARK AND COPYRIGHT OWNERS

IPO

INTELLECTUAL
PROPERTY
OWNERS, INC.

Responses to Questions Submitted to
Intellectual Property Owners (IPO)

June 1992

1. What benefits, if any at all, does the Patent Office receive from being a part of the Department of Commerce?

Reply: The Patent and Trademark Office receives no benefits from being a part of the Department of Commerce. The Department of Commerce provides certain administrative and support services to the Patent and Trademark Office, for which the Office reimburses the Department, but the Office could perform the functions itself if it were established as an independent government corporation. A principal disadvantage to being in the Department of Commerce is that Commerce officials constitute an unnecessary layer of middle management. Decisions of the Commissioner of Patents and Trademarks on personnel and budgetary matters, and the like are routinely reviewed by employees of the Department of Commerce who occupy positions much lower than the Commissioner. Time-consuming Departmental review often makes it impossible to implement management or administrative changes promptly, and tends to inhibit management innovation by Commissioners of Patents and Trademarks.

2. Your organization supports converting the PTO to a government corporation. In the past your organization has been critical of the PTO's efficiency. In light of that, why would you want to provide the PTO with borrowing authority?

Reply: IPO continues to believe that the efficiency of the Patent and Trademark Office can be improved. The way to enable the PTO to achieve the efficiency and effectiveness of operations that can be realized by private businesses is to enact comprehensive legislation to give the PTO the authority of a government corporation. IPO recommends borrowing authority only as a part of broader legislation that also would provide operating flexibility, a strong voice for PTO users, and strong congressional control of PTO operations. As a part of such a structure for the PTO, we believe borrowing authority would contribute to the efficiency of operations. For example, borrowing authority could be used to pay capital expenditures to automate operations that will provide benefits only to future users. authority could make it practical to construct government-owned buildings for the Office. Borrowing authority also would enable the Patent and Trademark Office to avoid short-term cash flow problems caused by fluctuations in patent and trademark filing rates. PTO borrowing authority, of course, should be subject to controls, and should be done in accordance with long-range plans that would ensure balancing of expenditures and income over a period of several years.

Borrowing

1255 TWENTY-THIRD STREET, N.W., SUITE 850, WASHINGTON, DC 20037

3. Any federal agency, if it had its druthers, would become a independent agency. What functions of PTO make it different than any other agency and thus more worthy of government corporation status? Reply: The National Academy of Public Administration in its 1989 report entitled "Considerations in Establishing the Patent and Trademark Office as a Government Corporation" highlighted attributes of the PTO that make it different from most agencies. The report said the PTO "is clearly revenue producing, is potentially self-sustaining, and must respond to the needs of a market for its services which it does not control." The report noted that Congress has not made the complete recovery of cost through user fees a condition for establishing a government corporation. The report stated:

...the Office of Management and Budget (OMB) and Congress
are less likely to grant operating and financial flexibility
to corporations dependent on Treasury financing than to
those which are self-supporting from their revenues. There
is a tendency to apply traditional rules and regulations to
any program financed in major part by appropriated funds,
particularly where there is no direct relationship between
the amount of user fees and the costs of operations.

Another consideration that supports separating the PTO from the Department of Commerce is that the PTO has little in common with other bureaus of the Department. There is no need for day-to-day coordination between the operations devoted to issuing patents and registering trademarks and other functions in the Commerce Department.

4. What is your association's position on S. 2130?

Reply: IPO has not taken a position on S. 2130.

NAPA

National Academy of Public Administration

CONSIDERATIONS IN ESTABLISHING THE PATENT AND TRADEMARK OFFICE AS A GOVERNMENT

CORPORATION

A Report
for

Intellectual

Property

Owners,

Inc.