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THE WORLD / TRADE : A Policy That Punishes American Ingenuity

November 19, 1995|David Friedman | David Friedman, president of an international business consulting firm, is an urban economist and fellow at the MIT-Japan Program.

At the Asia-Pacific Economic Cooperation forum in Osaka last week, the downsized U.S. negotiating team--the budget crisis kept Bill Clinton in Washington--pursued an international agenda that constituents increasingly mistrust. Seventy percent of Americans now believe that recent free-trade accords are harming the United States. Boeing's growing Asian procurement--utterly ignored two years ago when President Clinton addressed the forum in a 747 hangar--is fueling a major labor dispute. Ballyhooed initiatives, like Commerce Secretary Ronald H. Brown's trip to China last year, do little but transfer big-company technology and manufacturing skills overseas in exchange for token royalties.

Americans' growing perception that Washington's policies only protect profits, not people, is fanning an alarming extremism on both the left and the right. Nowhere is this more evident than in a little-noticed, but critical battle being waged over U.S. patent law.

Invention is one of the things America does best. By offering the strongest patent protection, the United States has stimulated more creativity and new industries than anywhere else--and an annual $30-billion intellectual-property trade surplus. Small wonder that foreign companies, particularly in Japan and Europe, dream of weakening such laws and obtaining breakthrough technologies without rewarding American inventors.

Precisely this opportunity beckoned when Clinton appointed Bruce A. Lehman--a Washington lawyer who represented big companies like Microsoft and Lotus Development but lacked any patent experience--to head the U.S. Patent Office. Lehman quickly concluded the patent system needed a radical overhaul. To achieve it, he cut a deal with Wataru Asou, his Japanese counterpart, in early 1994, a deal that may rank as one of the most lopsided agreements in U.S. history.

Under the Lehman-Asou accord, Japan promised to allow foreigners to file patent applications in English--provided that the much more expensive Japanese translations that Americans long complained of were also filed two months later, subject, of course, to additional fees.

In return, the United States would scrap its 17-year patent-protection term, which runs from the day a patent is granted, in favor of a 20-year term extending from the day an application is filed--with no time credited for any delays that might occur during the interim review period. This was followed by an agreement between Brown and Japanese Ambassador Takakazu Kuriyama, in August, 1994, that U.S. patent applications would be publicly opened 18 months after filing, rather than when the patent was actually granted.

When the dust settled, Lehman and Brown had exchanged U.S. patent revisions that gutted protection of the most complex, time-consuming and thus potentially lucrative American inventions--and handed the multinationals the early access to U.S. technology development they had long craved--in return for only the most trivial administrative concessions from Japan.

The more important an invention--a microchip or a biomedical device, for example--the longer it usually takes for the Patent Office to review an application. Under traditional U.S. rules, inventors can count on a full 17 years of protection from the day their patents are granted. Under the Lehman-Brown accords, a patent that took 15 years to grant--by no means unheard of--would be entitled to just five years of protection.

Congressional hostility to these arrangements seemed to scuttle the patent-revision effort by the middle of 1994. But after the Brown-Kuriyama accord, the Clinton Administration surreptitiously appended language changing U.S. patent terms and publication procedures into enabling legislation for the General Agreement on Tariffs and Trade.

Angry members of Congress of all political stripes demanded hearings on the patent modifications. In November, 1994, Clinton was forced to promise not to veto any subsequent patent legislation Congress might pass as a condition of GATT approval. But when a House bill restoring the 17-year patent term came up last January, corporate and foreign lobbyists attacked with a vengeance. Individuals brave enough to oppose weakening U.S. patent protection were branded by giant corporations as paranoid xenophobes unfit for a world of international cooperation.

Yet, suspicion about how cheaply Washington values the economic interests of ordinary citizens is more than justified. Former Sen. Bob Packwood's recently released diaries, for example, detail how he willingly ambushed an American inventor, during 1989 hearings on alleged Japanese unfair-trading practices, for a Mitsubishi lobbyist's promise to pay his wife a mere $7,500. And when the corporate lobby and the Administration were challenged to justify their changes in long-settled U.S. patent law, all they could muster were vapid anecdotes, if not outright misrepresentations.

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