Senator DECONCINI. Thank you, Mr. Comer.

We have a number of questions that I would like you to answer for us for the record, but I would like to ask you a couple now.

The chart to your right-in the column under actual 1992, $351 million versus planned for 1993, $419 million. That represents more than inflationary growth. What else is included in there?

Mr. COMER. Included in the 1992 actual figures were those program improvements that were authorized by the committee and were funded out of the fee increase.

Senator DECONCINI. What is included in the plan for 1993?

Mr. COMER. It is basically an extension of current services with a very small percentage for continuing deployment of the automation program.

Senator DECONCINI. What is new in 1993 that is not covered by inflation either through fees or for personnel and other operating expenses?

Mr. COMER. If you refer to the chart on the left, you will see that a very small percentage of the two columns to the right on that chart represent dollars requested above current services.

Senator DECONCINI. That only amounts to

Mr. COMER. It's less than 4 percent.

Senator DECONCINI. But that only amounts to $17 million.
Mr. COMER. That's right. It adds up to about $18 million.

Senator DECONCINI. So if you take $17 million off $486 million, then the difference between that and $419 million is inflation?

Mr. COMER. Inflation and workload, bearing in mind that the workload dollars that come in enable us the fees coming inSenator DECONCINI. The volume of the fees?

Mr. COMER. Exactly.

Senator DECONCINI. You're projecting more income to make up the difference?

Mr. COMER. Right.

Senator DECONCINI. What is that figure?

Mr. COMER. That figure is about $48 million.

Senator DECONCINI. Increase or total?

Mr. COMER. It is total dollars that will come to the office as a result of increase in workload.

Senator DECONCINI. In the growth?

Mr. COMER. Right.

Senator DECONCINI. I see.

Mr. COMER. Then right around $18 million is inflation.

Senator DECONCINI. Inflation would be somewhere in the neighborhood of $20 million or something, then you have $48 million or so for the growth projection. This is really all the new money for which you are asking?

Mr. COMER. That's correct. As you can see, the new money above current services is a very small amount and basically reflects moving forward with deployment of the APS as well as a handful of quality improvements.

Senator DECONCINI. What is the status of your building? There was an effort to buy your own building. I assume that has been set aside for a while. Is your space adequate for what you're doing now? I know you have moved a lot.

Mr. COMER. When you look at the PTO's space requirements just over the last 10 years, you will find that we have grown by a substantial percentage each year. That all has been workload driven. In other words, in order to maintain pendency at a reasonable level, it is necessary to hire the examiners to process the work. So as the workload has gone up, the need for additional examiners has been there, and of course, the need to provide them with space.

As a result of that growth, when we originally moved into Crystal City in 1967 we occupied 2 buildings and today we occupy all or part of 15 buildings in the Crystal City complex.

All of these leases expire essentially at the end of 1996. We have been working closely with GSA to identify our space requirements for the period from 1997 forward. We are anticipating and expect that using reasonable projections for workload increase, based on historical trends, that we're going to need about 2 million square feet of space in 1997.

Senator DECONCINI. What do you have now?

Mr. COMER. About 1.2 million.

Senator DECONCINI. That's a big growth factor. And on what is that based?

Mr. COMER. Historical average over the last 15 to 10 years. The patent application rate has grown at about 4 percent annually and the trademarks about 6 percent. You have three choices. You can either hire the people to handle the workload, find more cost-efficient ways of performing your job, or let pendency and quality slide.

Senator DECONCINI. But automation doesn't reduce your space needs because you have less use of people under automation?

Mr. COMER. We find over the long term, as the APS is fully deployed, that ultimately there will be less need for maintenance of those paper files. In time that would be phased out and we would pick up some space savings there. We also intend and hope that we will achieve some productivity gains as a result of the automated program.

Senator DECONCINI. Is that all built into that 2-million-squarefeet need?

Mr. COMER. Insofar as what we are able to achieve in 1997, the paper file issue is factored in only in terms of-we have made reasonable estimates as to how much space we will be able to surrender in the out-years. We would have the opportunity, for example, of subleasing that space or turning it back to the GSA. We would achieve savings in that way.

Senator DECONCINI. Are you under any negotiations with any other departments, like Commerce or anybody, on arrangements for PTO some long-term financing or what have you?

Mr. COMER. We have had extensive discussions with GSA and the Department of Commerce regarding our space requirements. GSA forwarded to OMB a proposed prospectus for what is called a "design, build, and construct" for a collocated facility for the PTO and

Senator DECONCINI. Is that their main building?

Mr. COMER. Yes.

OMB rejected that prospectus for a variety of reasons and GSA then resubmitted a prospectus for leased facilities. They proposed

a capital lease, that is, at least a 20-year minimum term, which would enable us to obtain the advantages of negotiating in the marketplace for the best possible rates.

OMB has passed that back to GSA with a directive or request to identify from where the dollars would come.

We are concerned that the process may tend to try to push the PTO toward an operating lease that is a 10-year term. In that situation, we would not get the best benefits of the current marketplace conditions.

Senator DECONCINI. When do you think that will be resolved, or do you?

Mr. COMER. It is currently still under discussion between GSA and OMB. I don't anticipate that that will be resolved any time in the next few months. I anticipate it may be several months before something finally comes out of OMB. But we would like to work very closely with the committee and consult with you on this.

Senator DECONCINI. Not being the director or having a Commissioner, so to speak, is probably not too helpful either, is it?

Mr. COMER. I do the best I can to fulfill the responsibilities of the Commissioner's office.

Senator DECONCINI. I'm sure you do. But in your opinion, it would be better if there was a Commissioner confirmed, from the standpoint of dealing with other administration people?

Mr. COMER. I think it would help. That would be a matter up to the Secretary of Commerce and the administration at the White House to determine in due course when and if they will submit a new nomination.

Senator DECONCINI. What is your opinion of converting the PTO to a quasi-government corporation? Have you given any thought to that?

Mr. COMER. I have, Mr. Chairman.

A Government corporation has been evaluated by past administrations and Congress. In 1980, there was a bill that was before this committee that would have proposed creating a quasi-government corporation. Those proposals have not found favor with prior administrations, probably primarily because of the need for close policy coordination between the PTO and the administration.

As you know, the PTO is the primary formulator of intellectual property policy for the administration, both in terms of domestic practices and in terms of the international arena. Just as an example, we are taking a very strong role in current discussions that are going on with regard to the GATT, with regard to the North American Free-Trade Agreement, we did in the past with regard to the Canadian and Mexican trade agreements, and on a number of bilateral agreements that are in progress.

So this kind of deep involvement the PTO has in policy formulation requires close coordination with the administration. I think that is one reason why these proposals have never found favor with the administrations in the past.

There are some aspects of Government corporation proposals which certainly could be positive for the PTO. Just the area in which we have discussed-space, for example. Another area is the possibility of formally structuring advisory committees and things of this nature. But Congress could achieve these things through

legislation separate and apart from the issue of creating a Government corporation.

Senator DECONCINI. Is there a fear that a corporation might be too influenced by the industry, or users, or filers, or anything like that?

Mr. COMER. My personal opinion is that there are some serious issues with regard to potential conflicts of interest between private sector representatives that might sit on a PTO board between their public responsibilities and their business interests. I think that is certainly an important issue at which the Congress would need to look very carefully.

Senator DECONCINI. Is it the view of the PTO that the Board of Patent Appeals and Interferences is not expected to exercise independent judgment in matters that come before them?

Mr. COMER. To the contrary. The Commissioner's office has always encouraged Board members to vote their conscience in cases on which they sit. In fact, both Commissioner Manbeck and myself, on occasions when we have sat on panels, encouraged members that had dissenting views to express those dissenting views.

It is important to remember that the Board must exercise its responsibilities in the larger context of the PTO's role in formulating patent policy. This is why the Commissioner was, by statute, made a member of the Board as well as the deputy. The Commissioner has the statutory authority, as you know, to set practices and policies of the office. The Board, as a corporate body, really functions within that context. The Commissioner has statutory authority to designate panels. It is important to note, too, that the Commissioner has no right of appeal from Board decisions.

So to the extent there may be specific cases arising out of examiners' actions that he believes have serious policy concerns

Senator DECONCINI. How long do the examiners sit? As long as the Commissioner wants them to?

Mr. COMER. The examiners-in-chief are a permanently constituted body within the office. There are approximately 50 examiners-in-chief. They sit on rotating panels. They are generally assigned cases by the chairman and vice chairman in consultation with the Commissioner.

Senator DECONCINI. Does the Commissioner select special panels?

Mr. COMER. There are occasions when particular cases have come before the Board which had particularly profound policy considerations.

Senator DECONCINI. Is that discretionary on your part?

Mr. COMER. It is a discretionary judgment and it is specifically authorized by statute.

As I was going to point out, Mr. Chairman, the Commissioner has no authority to appeal a Board decision.

Senator DECONCINI. Is there any effort to get around an appeal by appointing a special panel?

Mr. COMER. There has never been an effort to circumvent Board actions by appointing special panels. Rather, the process is that in given situations where cases obviously had serious policy issues involved that were of concern to the Commissioner's office, the Commissioner exercised his option to structure a panel

Senator DECONCINI. Prior to the issue being presented?

Mr. COMER. Prior to the decision being rendered. A panel is not actually designated until the decision is mailed out. Consequently, at any point in time up to the point in time when the decision is mailed out, the Commissioner has the flexibility to designate or redesignate a panel.

Senator DECONCINI. Why is there no record of all this kept for the patent applicant?

Mr. COMER. There are records of the designations. They are done in the form of memoranda and so forth from the Commissioner's office. So to that extent

Senator DECONCINI. Are those available to the applicant?

Mr. COMER. I don't believe they become a part of the case file itself. Bearing in mind that the applicant has no vested interest or right in having any particularly constituted panel, any more than an appellant before the court of appeals for the Federal circuit would have a right to request a certain panel.

Senator DECONCINI. I understand that. But do they have a right to the record of the considerations of the panel?

Mr. COMER. I think the only thing that winds up in the record is the determination of the final panel that was made in the case. Senator DECONCINI. In your opinion, is that a fair system?

Mr. COMER. I believe it's fair, Mr. Chairman. I would say in the 2 years I have been in the Patent Office, there have been six cases in which I was personally involved in a designated panel. In all of those cases, there were Board members who had dissenting views that were on those panels. They were encouraged to express any dissenting views, bearing in mind that the applicant always has the opportunity to take the decision up on appeal to the court of appeals for the Federal circuit.

The ultimate policy, obviously, is made by the court of appeals for the Federal circuit. Once a decision is rendered there, it is the job of the PTO to follow the law.

Senator DECONCINI. Do all your patent examiners have personal computers at their desks now?

Mr. COMER. They do not all presently have personal computers. Senator DECONCINI. When will that happen?

Mr. COMER. We anticipate that taking place by the end of fiscal year 1994. Some examiners have them today.

Senator DECONCINI. Those that do have them, do they have access to the messenger system?

Mr. COMER. All examiners have access to the messenger system because that is made available in the groups through specially defined terminals that are available to the examiners in the groups. That is available throughout the office.

Senator DECONCINI. Since 1983, PTO has spent some $400 million on the APS system. Of the five parts of the system, I understand that only one-the full text searching system—is available to all examiners. If I am incorrect, please, correct me. How does the PTO think it can get the next four parts up and running within 10 years at a cost of $555 million? Has that cost changed at all? Mr. COMER. Mr. Chairman, we will have the other four parts up and running within 5 years.

Senator DECONCINI. From today?