<DOC> [108 Senate Hearings] [From the U.S. Government Printing Office via GPO Access] [DOCID: f:95176.wais] S. Hrg. 108-557 CONFIRMATION HEARING ON THE NOMINATION OF JONATHAN W. DUDAS, NOMINEE TO BE UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE ======================================================================= HEARING before the COMMITTEE ON THE JUDICIARY UNITED STATES SENATE ONE HUNDRED EIGHTH CONGRESS SECOND SESSION __________ MAY 6, 2004 __________ Serial No. J-108-73 __________ Printed for the use of the Committee on the Judiciary U.S. GOVERNMENT PRINTING OFFICE 95-176 WASHINGTON : DC ____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512ÿ091800 Fax: (202) 512ÿ092250 Mail: Stop SSOP, Washington, DC 20402ÿ090001 COMMITTEE ON THE JUDICIARY ORRIN G. HATCH, Utah, Chairman CHARLES E. GRASSLEY, Iowa PATRICK J. LEAHY, Vermont ARLEN SPECTER, Pennsylvania EDWARD M. KENNEDY, Massachusetts JON KYL, Arizona JOSEPH R. BIDEN, Jr., Delaware MIKE DeWINE, Ohio HERBERT KOHL, Wisconsin JEFF SESSIONS, Alabama DIANNE FEINSTEIN, California LINDSEY O. GRAHAM, South Carolina RUSSELL D. FEINGOLD, Wisconsin LARRY E. CRAIG, Idaho CHARLES E. SCHUMER, New York SAXBY CHAMBLISS, Georgia RICHARD J. DURBIN, Illinois JOHN CORNYN, Texas JOHN EDWARDS, North Carolina Bruce Artim, Chief Counsel and Staff Director Bruce A. Cohen, Democratic Chief Counsel and Staff Director C O N T E N T S ---------- STATEMENTS OF COMMITTEE MEMBERS Page Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah...... 3 prepared statement........................................... 53 Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont. 4 prepared statement........................................... 58 PRESENTER Hyde, Hon. Henry J., a Representative in Congress from the State of Illinois presenting Jonathan W. Dudas, Nominee to be Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office........................... 1 STATEMENT OF THE NOMINEE Dudas, Jonathan W., to be Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office............................................... 5 Questionnaire................................................ 8 QUESTIONS AND ANSWERS Responses of Jonathan W. Dudas to questions submitted by Senators Leahy and Durbin............................................... 26 SUBMISSION FOR THE RECORD Hyde, Hon. Henry J., a Representative in Congress from the State of Illinois, prepared statement................................ 54 CONFIRMATION HEARING ON THE NOMINATION OF JONATHAN W. DUDAS, NOMINEE TO BE UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE ---------- THURSDAY, MAY 6, 2004 United States Senate, Committee on the Judiciary, Washington, DC. The Committee met, pursuant to notice, at 2:37 p.m., in Room SD-226, Dirksen Senate Office Building, Hon. Orrin G. Hatch, Chairman of the Committee, presiding. Present: Senators Hatch and Leahy. Chairman Hatch. Because the Chairman has a vote on over in the House, I will forgo my statement for now, and I hope Senator Leahy will forgive me for starting early, but I know you have to catch a vote. So we are honored to have you here. You have been one of my heroes for a long, long time, and I am just grateful to have you here, Henry, and we look forward to your testimony. PRESENTATION OF JONATHAN W. DUDAS, NOMINEE TO BE UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE, BY HON. HENRY J. HYDE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS Representative Hyde. Thank you very much, Senator. It is a great honor to be in your chambers. It is a pleasure to be here today to support the President's excellent choice for the crucial position of Under Secretary of Commerce, Jon Dudas. I have known Jon for almost a decade. After he graduated from law school at the University of Chicago, he came to Capitol Hill and worked in my Congressional office as legislative counsel. When I first became Chairman of the House Judiciary Committee, Jon moved over as counsel to the Subcommittee on Courts and Intellectual Property, which has jurisdiction over the complex issues of patent law. Shortly thereafter, I named him staff director and deputy general counsel of the full Judiciary Committee. And during those extremely busy and trying years for Congress and the Committee, I came to know Jon very well, and I became personally acquainted with his strong leadership, tremendous loyalty, unwavering integrity and the ability to accomplish his assigned mission under tremendous pressure. When I first got to Congress, I learned a very important lesson. If you want something done, you talk to the Member and then you go to the staffer who makes the Member look good. During his service on Capitol Hill, Jon was one of the people who very often made me look good. In his position on the Judiciary Committee staff, Jon helped me manage the most productive Committee in the Congress, more than one out of five bills considered by the House during the 105th and 106th Congress went through the Judiciary Committee. Our Conference relied upon him to help achieve some of their most important goals during that period. So it is with mixed feelings that I encouraged Jon to leave the Committee staff when the Speaker asked him to serve as his chief floor manager and legal policy advisor to the House Leadership. Jon played a critical role in advancing legislation to support the war on terror. Jon left the Hill when our former colleague, Jim Rogan, was appointed to be Under Secretary of Commerce and Director of the U.S. Patent and Trademark Office. As the assistant secretary immediately under Jim Rogan, Jon played an integral part in implementing the President's management agenda and in developing the 21st Century Strategic Plan--a comprehensive map to move the Patent and Trademark Office from its crisis situation to one of improved quality, quicker issuance of patents and increased deficiency. His ability to relate and work well with others and his good relationship with Members of Congress will be critical in achieving the difficult task of passing the administration's fee bill that will implement the strategic plan. Just as important, because he has been serving as Under Secretary Rogan's right hand for the last 2 years and currently as Acting Under Secretary, Jon will provide the continuity that is necessary at the Patent and Trademark Office. The issue of this Government's position on patents is a critical one in this ever-expanding world of scientific progress. I can think of no one better qualified to lead the Patent and Trademark Office than Jon. I urge the Committee to confirm this fine public servant as Under Secretary of Commerce so that he may continue to serve the best interests of the American people. I thank you again, Senators, both Senators, two very good Senators, I might add--get a commercial in for both of you--but thank you for letting me be here today. Chairman Hatch. Thank you, Chairman Hyde. We are grateful that you took time to come over, and we all respect you over here. We have watched you through the years do so many good things and agree with you. When you were Chairman of the Judiciary Committee over there, they did a massive amount of work and very, very good work at that. So thank you for coming. Senator Leahy. I want to thank you for being here, too, Mr. Chairman. You and I have been friends for so long, probably back even to the days when our hair was dark and I actually had some. [Laughter.] Representative Hyde. You were rather bushy-haired, as I recall. Senator Leahy. Yes, rather. Chairman Hatch. I have been here 28 years, and I do not recall any hair, I will tell you. [Laughter.] Senator Leahy. Henry has been here a long time. But we have been dear friends throughout that time, and I did note one of the things you said about our staff make us look good. Here, in my office, I consider myself merely a constitutional impediment to the staff who really do all of the work and do it extremely well. You honor us by being here. Thank you for coming over. Representative Hyde. Thank you, Senator, and thank you, Senator. Chairman Hatch. We will let you get back to the House. We know how important it is for you. OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM THE STATE OF UTAH Chairman Hatch. Well, we will continue. We are grateful that we have had Chairman Hyde here. We all respect him and think so highly of him. Now, we welcome Jon Dudas to the Committee. I know him well, and I am impressed with his qualifications, and I commend the President for nominating such a fine individual to the post of Under Secretary of Commerce for Intellectual Property and of course Director of the United States Patent and Trademark Office. I also welcome his wife, and his children and family and friends here with us today as well and other guests. Before I continue, I would like to of course express again my regard for Chairman Hyde, and that he would take the time to come over here, that speaks well of you, Mr. Dudas. I know how busy his schedule is, and I know how difficult it is for him or for any Member of the House to come all the way over here. So we are grateful for that. I have reviewed the record of Mr. Dudas, and I find him to be an excellent choice for this position. Permit me just a moment to highlight his distinguished background. Upon graduation from the University of Chicago Law School in 1993, with honors, Mr. Dudas joined the law firm of Neal, Gerber & Eisenberg, LLP. In 1995, he joined the staff of Representative Henry J. Hyde as legislative counsel and then joined the staff of the United States House Judiciary Committee, Subcommittee on Courts and Intellectual Property as a counsel. From 1997 to 2001, he served as a staff director and deputy general counsel to the full United States House Committee on the Judiciary. He then joined Speaker J. Dennis Hastert's staff as counsel for legal policy and the senior floor assistant in 2001. In 2002, he became Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent and Trademark Office. He has since served as the Acting Under Secretary since January 11th, 2004. Now, Mr. Dudas is taking on a very big assignment because intellectual property plays a key role, if sometimes an unappreciated role, in the United States economy. But those of us who deal with it on a daily basis--or at least very, very often--know what a key role this is and how important it is for the country, and we commend you for having the confidence of the President in receiving this nomination. The issuance of patents and trademarks reflect the creative genius of America's inventors. Our Nation is respected worldwide as the leader in technological innovation and product development. It is essential that the Patent and Trademark Office operate efficiently and fairly, and I commend the 7,000- plus dedicated civil servants at USPTO for all of their hard work and valuable contribution. And that is why this Committee acted unanimously last week to pass legislation H.R. 1561 to stop the diversion of patent fees, which we think is very important. I know that Mr. Dudas is committed to make the USPTO run even more effectively than it has in the past, and I am confident that Jonathan W. Dudas will continue to serve this country and the Department of Commerce with distinction, and I certainly look forward to your speedy confirmation. Now, before we turn to Mr. Dudas, we will turn to our Democrat leader on the Committee, Senator Leahy, who I am sure will have some nice things to say. STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM THE STATE OF CONNECTICUT Senator Leahy. Thank you, Mr. Chairman. It is good to see you. We have known each other for a while, not as long as Chairman Hyde and I have known each other, but I have enjoyed working with you, and I am delighted to see your family here. You probably would sit here and think, with children this young, now, are they going to be able to survive all the way through a hearing, but for those of us who have had young children, and now grandchildren, we do not mind how much they act up. I do not want them to hear that. [Laughter.] Senator Leahy. The Patent and Trademark Office plays such an enormous role in the development of new technologies. It is the sort of thing that allows the United States to compete in what is very much an international market. It has to make sure that innovators can profit from what they have done, but it has to make sure those new ideas get deployed to the people who might use them. I think, to do that--it is entirely different than the days, I read an article recently that talked about the old days of the models of every new patent coming in. Well, that was easy, when you would get maybe three, five, six a month, at best. Now, of course, it is different, and you have got to modernize the process and the whole way it is done down at the office. The 21st Century Strategic Plan is a step forward, but of course now you have to implement it. And in that regard, we can either congratulate you or offer you condolences for your new position, but you are a graduate of the University of Illinois, the University of Chicago, practiced law in Chicago before you went with Congressman Hyde. You worked with him there with the Speaker. The last three and a half months, you have been acting director, and it is not as though you get confirmed, walk in the door and say, ``What is this place?'' You are going to have to implement the 21st Century Strategic Plan. I truly believe you can. We are in a situation today, as you know, American corporations are facing retaliatory sanctions. The World Trade Organization says we are discriminating against Cuba and Cuban trademarks through Section 211. There are a couple different bills, one by Senator Baucus, one by Senator Domenici, I believe it is, to address this. I would be anxious to hear what you have to say about that. You are going to be our leading voice on intellectual property policy and practice. Obviously, you have go to coordinate closely with our own Register of Copyrights with the U.S. Trade Representative, the Department of Justice and many others. You have an exciting time ahead of you, but it is more than just getting an appointment. A great deal of what we do in this country and a great deal of our ability to create jobs, to keep the innovative edge America has always been proud of, it is going to rest on your shoulders. Any other statement, I will put in the record, Mr. Chairman. [The prepared statement of Senator Leahy appears as a submission for the record.] Chairman Hatch. Well, thank you so much. Mr. Dudas, if you would stand and raise your right hand, do you swear to tell the truth on the testimony you are about to give, the truth, the whole truth and nothing but the truth so help you God? Mr. Dudas. I do. Chairman Hatch. Thank you. Mr. Dudas, do you have any statement you would care to make? We would like you to introduce your family and your friends who are here with you. STATEMENT OF JONATHAN W. DUDAS, NOMINEE TO BE UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE Mr. Dudas. Absolutely. Thank you. Thank you, Mr. Chairman, Senator Leahy. Just a brief statement. For me, today is a day filled with blessings and responsibilities, as you mentioned, Senator Leahy. It is a great honor and privilege to be here today as President Bush's nominee as Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office. I am very grateful to the President for nominating me to this important post and to Secretary Evans for his recommendation and support. Thank you, Chairman Hatch and Senator Leahy. I am honored by your scheduling of this hearing. I am especially thankful considering the substantial workload before this Committee and the demands placed on it. I am grateful to Chairman Hyde for his introduction. He is a man of great honor and a model of public service. he has my never-ending gratitude for his guidance and support. Finally, Mr. Chairman, I am honored today to have the support of many colleagues and friends here today, bosses, friends and mentors during my time in Washington. And most importantly I recognize the support today of my family, my wife Nicole, and our four children, Joshua, Caroline, Sarah and Caleb. Caleb did act up a little bit too much, so he left the room. He had responsibility for crying during the tough questions, but I think Sarah can step up for that. [Laughter.] Senator Leahy. No pinching her. [Laughter.] Mr. Dudas. In addition, my parents, Ron and Jan Dudas, are here from Phoenix, Arizona. Mr. Chairman, Senator Leahy, I cannot overstate the importance of intellectual property in today's global economy. For over 200 years, intellectual property has fueled our Nation's economic growth and will continue to do so. The United States needs to do all that it can at both the domestic and international levels to promote and protect intellectual property domestically and abroad so it will continue to drive economic growth. The Under Secretary for Intellectual Property plays a significant role in this effort. Not only does the Under Secretary oversee the issuance of patents and trademarks, but he or she also advises the President, through the Secretary of Commerce and other Federal agencies, on all national and international intellectual property issues. I came to the office a little over 2 years ago, then as Deputy Under Secretary, at an important time. Then-Under Secretary Rogan and I quickly realized that the USPTO was an agency that was on an impending crisis. A decade of rapid growth in its workload had overwhelmed the Agency and without decisive action, it would continue along a steady decline. On a relatively short basis, we performed a comprehensive review and developed a long-term strategic plan to stop the decline and stabilize the Agency. I am pleased to say that the legislation associated with that plan was recently approved by the House of Representatives by a vote of 379 to 28 and, as you mentioned, Mr. Chairman, unanimously approved by this Committee last week. This strategic plan and the resources to fund it will improve the quality of patents granted and the quality of trademarks registered and minimize their processing times. USPTO customers deserve a quality product delivered in the shortest possible time that will withstand legal challenge. On the international side, we need to continue to reach out to our foreign trading partners to encourage and, in some cases, to demand support for strong intellectual property laws and enforcement systems. U.S. industries suffer enormous financial losses overseas through piracy and counterfeiting due to an effective enforcement. So, Mr. Chairman and Senator Leahy, the United States does have the best intellectual property system in the world. I am grateful for the opportunity I have had thus far to improve our system as Acting Under Secretary and Deputy Under Secretary to work to improve our system and, if confirmed, I look forward to continuing to work with you to enhance our intellectual property system in the hopes of making it even better. Thank you for holding this hearing and for your consideration of my nomination, and I am certainly pleased to answer any questions you all have. [The biographical information of Mr. Dudas follows.] [GRAPHIC] [TIFF OMITTED] T5176.034 [GRAPHIC] [TIFF OMITTED] T5176.035 [GRAPHIC] [TIFF OMITTED] T5176.036 [GRAPHIC] [TIFF OMITTED] T5176.037 [GRAPHIC] [TIFF OMITTED] T5176.038 [GRAPHIC] [TIFF OMITTED] T5176.039 [GRAPHIC] [TIFF OMITTED] T5176.040 [GRAPHIC] [TIFF OMITTED] T5176.041 [GRAPHIC] [TIFF OMITTED] T5176.042 [GRAPHIC] [TIFF OMITTED] T5176.043 [GRAPHIC] [TIFF OMITTED] T5176.044 Chairman Hatch. Thank you so much. We ar grateful to have you here, and we are grateful you are willing to serve in this very important position. Now, the position for which you have been nominated is an extremely important one to the United State and of particular importance to Senator Leahy and me. We both work very closely together on virtually all intellectual property issues. As you know the Patent and Trademark Office is currently facing the heaviest workload and the longest pendency rate in its 200-year history. It is a time of great challenge, but also opportunity, for the PTO and American Congress. I, personally, feel very confident in your abilities, and I think you will make an excellent director. Just to highlight some of these experiences, you served as counsel to the House Judiciary Subcommittee on Courts and Intellectual Property and then spent 4 years as chief of staff and chief counsel to that Committee. You then went to the work for the Speaker of the House before you became deputy director at PTO, and for the past 4 months, you stepped in as Acting Under Secretary and Director. So I want to commend you for your dedication and service to the Agency. Now, how do you intend to bring your legislative and administrative experiences to bear as Director of PTO? And do you have any general comments regarding your qualifications and perhaps your experience that you would like to share with us? Mr. Dudas. Absolutely. Thank you for the question. I believe right now is a time that is critically important for the Patent and Trademark Office to understand all of Washington, to understand the administration, to understand Congress, and certainly for the intellectual property community to understand that as well. So the experience I have had thus far, in the 2 years I have been at the Patent and Trademark Office, what I found most important was to make certain that I help act with then-Under Secretary Rogan to translate what the intellectual property world is saying to Washington and translate what happens in Washington back to the intellectual property world. In that regard, coming to the Judiciary Committee in the Senate, the Judiciary Committees in the House and even the Appropriations Committees has certainly been very valuable. What I developed over the past 2 years, what I feel I have developed is a better understanding of the office and its processes, what exactly we need to do to implement the strategic plan. We live in a world right now in the Patent and Trademark Office, we live in really two worlds. One world is one where we presume and hope to have the funding that is necessary to run the office and implement the strategic plan in full, but what we have been living in day-to-day now is an office that is in a decline because of the lack of resources. So I think the most important thing I can bring to bear right now to the Patent and Trademark Office is to help pass the fee bill, to help make certain again that Washington understands the needs of the intellectual property community and work closely with all of you. I have found the experiences that have matched well for what I think the Patent and Trademark Office needs. But you put it very well, as did Senator Leahy. There are a great number of opportunities ahead, but there are also a great number of challenges. Chairman Hatch. Thank you. I have tremendous respect for your predecessor, for his character and vision, as he served there. But in the testimony you gave before the House of Representatives Subcommittee on Commerce, Justice, State and the Judiciary Committee on Appropriations in March of this year, you stated that without fundamental changes, the way the PTO operates, average pendency will likely double in certain areas by 2008, and the backlog of applications awaiting a first review by an examiner will grow from the current level of approximately 475,000 to over a million. Now, tell us how you plan to advance the various goals of the 21st Century Strategic Plan set out by the former Under Secretary Rogan in order to avert this escalation. Mr. Dudas. Absolutely. Thank you. The most critical element, the first thing that Under Secretary Rogan and I did was take a comprehensive look at the office from an administrative perspective. At that time, we talked to members of the Senate Judiciary Committee, Appropriations Committee, House Judiciary Committees and Appropriations Committees and folks in the administration, as well as the private sector. What we came to realize, that the first and most important goal is to make sure that quality is the primary goal at the Patent and Trademark Office. We also found, as you noted, that the office is one that, under the current funding levels and under current hiring levels that we have now is one where pendency will grow, timeliness will become almost unbearable in some technologies. As you mentioned, over the next 5 years, without the funding and the strategic plan in place, pendency will more than double in some areas. Some areas today, in some of the cutting-edge technologies, are already double our average pendency. So the question that some may ask in the private sector is at what point will it become meaningless or at what point does it become questionable whether or not you even want to file for patent protection. H.R. 1561, and the administration's solution, was to fully fund the office and involved a great deal of hiring and quality initiatives. So, first and foremost, we have already put in place a number of quality initiatives that we cannot afford under the current resources, and there will be more quality programs in place. How we hire people has changed, how we promote people has changed. There is more testing. There is more training. There is a second pair of eyes program that we have in place where we have examiners looking at examinations as they go out the door a second time. The number of ways we test through the process has more than tripled. So quality is going to come through a number of programs, as well as testing. Pendency, as you talked about, the most important element is passing H.R. 1561 and implementing 1561, which involves hiring and gaining other efficiencies as well. The most important thing I can say about that is, at the end of 5 years, the pendency will be stabilized and going downward. It will be at approximately 28.8 months, under current figures, 28.9 months, excuse me, but it will be going downward. The pendency will be stabilized. In the absence of the fee bill and the strategic plan, it will be at 39 months and growing, and the evidence of that is the backlog, as you mentioned. Rather than controlling the backlog at the end of 5 years, we will have a backlog that could well exceed one million patents. So, to us in the office, it is very clear to the Commissioners, it is clear to all of our professional staff, what we need to do is get the appropriate resources and implement the plan. Chairman Hatch. Thank you. You testified before the Committee on the theft and counterfeiting of intellectual property. I think Senator Specter, I was grateful to him for conducting that particular hearing. But the piracy of global trademark counterfeiting has been estimated at $500 billion-- with a ``b''--billion dollars each year. So could you give us your general thoughts on what both Congress and the PTO should be doing to prevent the alarming costs of global piracy. Mr. Dudas. Absolutely. Thank you. Certainly, at the USPTO, we help coordinate intellectual property policy and enforcement programs. Throughout the world, we are seeing the result of TRIPS, we are seeing the result of WTO, and that is stronger, new intellectual property systems in other nations, but as nations are growing, the piracy and counterfeiting is reaching incredible levels. What we need to be doing is coordinating within the U.S. Government, making certain that we are addressing these issues, particularly at the USPTO. We have relationships with developing nations and developed nations as well with their Patent and Trademark Offices. We conduct training for Supreme Court justices, we conduct training for prosecutors that are from other nations, here in the United States. We travel to other nations and conduct training programs there as well. Much of what we need to do is in coordination with USTR and throughout the Department of Commerce. I can point to China as an example of growing theft, and piracy and counterfeiting. There recently was concluded, with the United States Trade Representative and Secretary of Commerce Don Evans, a Joint Commission on Commerce and Trade meeting, where we had Vice- Premier Wu Yi here. The Chinese have promised, on a number of fronts, how they can improve their system and stop piracy and counterfeiting. What is most important now, from an administration perspective, and Secretary Evans has led the fight on this, is to make sure that we measure results, that we measure exactly how that is being done and how it is carried out. I think what the Judiciary Committee in the Senate is doing, watching the issue, there is legislation in place, continuing to have the U.S. be a model for the rest of the world, as far as piracy and counterfeiting, I think is one of the best things we can do when we travel internationally. When we had problems here in the United States with theft of intellectual property that were not based on financial thefts, this Committee passed the NET Act, which was a model for the world for intellectual property counterfeiting or opposition to that. So there is a great deal that we can do as USPTO within the administration, and there is a great deal still to be done in Congress. I think what is going on right now is exactly right, which is the monitor. Chairman Hatch. Thank you. I will submit any other questions I have in writing. Let us turn to Senator Leahy. Senator Leahy. Thank you, Mr. Chairman. I am just curious. I mentioned that dispute over the treatment of Cuban trademarks in this country. We have one possible solution that Senator Baucus has put forward in a larger bill, Senator Domenici in a stand-alone bill. USTR said they both would allow the U.S. to come into compliance with the recent World Trade Organization opinion against our current policy. What do you believe is the best way, aside from any question of being Cuba or anywhere else, just sound trademark policy, what is the best way for us to deal with this issue, thinking that 10 years from now some successor of yours may be looking at it and see what you did? Mr. Dudas. Well, I, specifically, with the issue of Section 211, the Trade Representative has the lead on trade matters. I can speak briefly on what I understand of that, and then I can get to the heart of your question. My understanding is that the WTO appellate body decision was itself quite narrow and that, while complete repeal of Section 211, which is I think one of the options on the table, could be one response to the WTO's decision, that repeal is neither mandated nor suggested by the decision of the WTO appellate body. I, certainly, on the specifics of Section 211, can consult with the U.S. Trade Representative and give you more of an answer. From a strictly trademark perspective, I can tell you, and there have been cases before the office, and I can only speak in general terms because, in my current position, I operate as a statutory member of the Trademark Trial and Appeal Board, but in general thoughts, what we do at the Patent and Trademark Office, through our Appeal Boards, is really responsibility to apply the law as it has been applied through the court systems. So we look at it strictly on a case-by-case basis with each law as it comes through. Senator Leahy. Well, let me go to that a little bit because you are on that Appeals Board. Now, according to papers released by Governor Bush in Florida, he said you met with him, you were receptive, and responsive to his concerns on this. This has some political problems for him. You were responsive. What arguments did he make, and what did you say that was so responsive? Mr. Dudas. The issue I think you are talking about is a particular dispute between Bacardi and Cuba Export. That is an issue we have gotten letters from Governors, as you mentioned, and from Republican members of Congress, Democratic Senators, and others, all urging the Trademark Trial and Appeal Board to cancel the mark. Senator Leahy. What was it that you told the Governor that gave him such comfort? Mr. Dudas. I don't know that we gave comfort. We gave him the same response that we have given to Members and Senators, which was basically a procedural update. At that time, I was not a statutory member of the Trademark Trial and Appeal Board. So, when they requested the meeting, I took the meeting. What we sent along, and I am happy to provide copies of the letter, it was really a procedural update of what has gone on. In fact, I think what we had said was that this is pending before our Trademark Trial and Appeal Board, and there is not a whole lot to comment on that beyond that. It is a similar response we gave again, even in the previous administration when these issues came up. Senator Leahy. If I could have a copy of that letter, I would appreciate it. Mr. Dudas. Absolutely. Senator Leahy. Until a very short while ago, anyway, you had on the PTO website, you said, while you worked in the House, you guided the enactment of the Digital Millennium Copyright Act, the American Investors Protection Act, the Trademark Counterfeiting Consumer Act, and you point out that where you worked in the House, that is the birthplace of all Federal intellectual property statutory law. They do not need us any more, Orrin. I actually thought some of those came from over here. [Laughter.] Senator Leahy. But I would just note, for whatever it is worth, as recently as last week, this Committee reported out three important intellectual property bills, the PIRATE Act, the CREATE Act, the ART Act. We also reported the PTO Fee Modernization Act, which would increase the fee or Agency charges and then guarantee that those fees will either go to the PTO or they go right back to the people that paid them-- they cannot go to other Federal programs--and called on PTO to initiate a pilot program to test whether private contractors could do some of the searches necessary on patent applications now. Let me ask you a couple of things. The patent pendency times seem to get longer and longer, and I realize you are getting more and more things that are a lot more complex than some simple mechanical device. I would think that a great deal of the increased fee revenue from this ought to go to hiring and training patent examiners. You cannot hire them on Monday and have them working on Tuesday. It takes some work. But your budget does not do that. As I read it, as little of 10 percent of the revenue increases are going to new hires. Where will the rest of it go? Mr. Dudas. Most of the new money under the H.R. 1561, as it exists now and came through the Senate Judiciary Committee, will go into hiring, I think the majority. Much of it will also go into electronic processing. Senator Leahy. But not to examiners. Mr. Dudas. No, it will go to hiring examiners. In fact, the office, under that plan, intends to hire 900 additional examiners in the first year, which would be a record, both in terms of raw numbers and also a record in terms of percentagewise. Twenty-five percent of new--now, that doesn't include attrition. But a fair amount will also go to supporting our electronic processing. As you may know, as we move into the new building, we are not going in with new files, we are going in moving electronically. The Office and Trademarks now has over 60- percent electronic filing and electronic processing. So much of what we are doing is updating the systems and preparing our systems for an environment that ultimately will save a great deal of money, but it requires infrastructure and information costs today. Senator Leahy. Let me ask some follow-up questions on the breakdown of the budget. In your pilot program to test outsourcing of certain PTO jobs, that is going to be evaluated by the Patent Public Advisory Committee. Could not a better, more independent one be done by GAO? Mr. Dudas. GAO, in my understanding, is coming down to look at the office under an inquiry from the House Appropriations and Judiciary Committee. Certainly, we welcome oversight from GAO and others as well. The Patent Public Advisory Committee is made up of a variety of folks who are temporary Government workers, but they are represented in the union, folks from the private sector, both in industry and legal arenas, are represented there. So I think either/or, as far as being able to give an outside view and give ideas to the office are both valuable. Senator Leahy. I understand that WIPO is going to look at a possible treaty regarding the rights of broadcasters since I think 1998. The next WIPO session on that is scheduled for the first week in June. Do you have a position with regard to these negotiations? Mr. Dudas. Yes. The United States' position has been one of a great deal of support for going forward with the Broadcasters' Treaty. We spent a great deal of time at the Patent and Trademark Office working with both the content owners, as well as the broadcasters, to try to come up with a unified position for the United States. So we go in with a position of wanting to get a treaty, but certainly any time, in doing treaty negotiations, being cautious of what is being put on the table. Senator Leahy. I can imagine. Mr. Chairman, I just wonder if we might have Mr. Dudas introduce his family who is here because some day when you go in the dusty archives of the Dudas Memorial Library-- [Laughter.] Senator Leahy. --your kids might be glad to see, and I just realized I think your wife just left, and I apologize for that, but they might like the idea of being able to read in there, you know, that day that we had to sit there forever, and ever, and ever with daddy, we still got our names in there. Besides which, if they are missing school, they can show the teacher where they were. Mr. Dudas. Well, thank you very much. Let me introduce Joshua Matthew Dudas. Can you stand up, please. Thank you. Caroline Nicole Dudas, my father Ronald Edward Dudas. The other half of my family, Nicole Dudas, Sarah Dudas and Caleb Dudas are all gone. Chairman Hatch. We understand. [Laughter.] Senator Leahy. No, we understand. Mr. Dudas. Thank you. Senator Leahy. I just wanted to make sure, and you will get a copy of this to make sure that the names are all spelled right. But they have to be awfully proud of you in being here, and I just wanted to make sure somewhere in the record they had their names to show they were here. Mr. Dudas. Thank you very much. That was kind. Chairman Hatch. Well, thank you, Senator. Senator Leahy. We have the rest of the family or part of the rest of the family coming back in here, too. Chairman Hatch. There is your wife. Mr. Dudas. There is my wife, Nicole Dudas. Chairman Hatch. Well, we are glad to have you here, and your mother as well. Mr. Dudas. I am sorry--my mother, Janice Dudas. Chairman Hatch. That is all right. We are delighted to have you. This is a very, very important position. Both of us know that, and both of us work very closely with the office that you are about to take over. Frankly, we look forward to working with you, and I think we would like to have even more suggestions from you folks there as to how we might be able to do a better job up here because that is one thing that I think we find that we work on very well, in a bipartisan way, and I think we can get a lot done between now and the end of the year, if we can do that. So I intend to try and get you confirmed as soon as we possibly can, and hopefully that will be real soon. Mr. Dudas. Thanks very much. I look forward to continuing to work with you. Certainly, in my capacity as acting, I know there are challenges, and I know you will provide vigorous oversight. I think you can tell by the lack of crying that you were kind to me today, so I appreciate that. [Laughter.] Chairman Hatch. That is great. Well, with that, we compliment you for this job and look forward to your service. We will keep the record open for one week for additional statements and questions. If the questions come in, get your answers back as soon as you can, and we will try and get you up before the Committee and then up on the floor as soon as we possibly can. Mr. Dudas. I appreciate that. Thank you. Chairman Hatch. Thanks, Jon. Good to have you all here, and thanks to all of you for coming and supporting. Mr. Dudas. Thank you. Chairman Hatch. With that, we will recess until further notice. 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