Conservation Reserve Program Tax Fairness Act of 2007

Mr. President, I rise to speak to the monumental and consequential matter regarding the future course of the United States and our courageous men and women in uniform in Iraq.

Today, we are at a profoundly challenging moment in time, and at a critical crossroads with respect to our direction in this war. I know that none of us arrive at this question lightly. In my 28-year tenure in Congress, I have witnessed and participated in debates on such vital matters as Lebanon, Panama, the Persian Gulf, Somalia, Bosnia, and Kosovo. And indisputably, myriad, deeply-held beliefs and arguments were expressed on those pivotal matters--some in concert, some complementary, some in conflict. Yet, without question, all were rooted in mutual concern for--and love of--our great Nation. And there was-- and should not be today--no question about our support for our brave and extraordinary troops.

It is therefore with the utmost respect for our troops that I today introduce a bill which allows them the ability to complete the mission they have selflessly undertaken, while assuring them that their valor shall not be unconditionally expended upon an Iraqi government which fails to respond in kind. This amendment requires that government to actually achieve previously agreed political and security benchmarks while the Baghdad Security Plan--commonly referred to as the ``surge''--is in effect, or face the redeployment of those U.S. troops dedicated to that plan.

Specifically, this legislation would require that, 120 days after enactment--a point in time at which our military commanders have stated that they should know whether the surge will succeed--the Commander of Multi-National Forces, Iraq would report to Congress as to whether the Iraqi government has met each of six political and security-related benchmarks which it has already agreed to meet by that time. These six benchmarks are:

Iraqi assumption of control of its military . . .

Enactment of a Militia Law to disarm and demobilize militias and to ensure that such security forces are accountable only to the central government and loyal to the constitution of Iraq . . .

Completion of the constitutional review and a referendum held on special amendments to the Iraqi Constitution that ensure equitable participation in the government of Iraq without regard to religious sect or ethnicity . . .

Completion of provincial election law and preparation for the conduct of provincial elections that ensures equitable constitution of provincial representative bodies without regard to religious sect or ethnicity . . .

Enactment and implementation of legislation to ensure that the energy resources of Iraq benefit Sunni Arabs, Shia Arabs, Kurds, and other Iraqi citizens in an equitable manner; and

Enactment and implementation of legislation that equitably reforms the de-Ba'athification process in Iraq.

The Iraqi Government must know that any opportunity gained from our increased troop levels in Baghdad is a window that we will soon close if it fails to take urgent action and show tangible results in tandem. If, at the end of 120 days, the Commander of Multi-National Forces, Iraq reports the Iraqi Government has not met the benchmarks, then the Commander should plan for the phased redeployment of the troops we provided for the Baghdad Security Plan, period.

That is why, under this amendment, after 120 days, should the Commander report that the Iraqi Government has failed to meet the benchmarks listed, he will then be required to present a plan for the phased redeployment of those combat troops sent to Iraq in support of the Baghdad Security Plan and to provide plans detailing the transition of the mission of the U.S. forces remaining in Iraq to one of logistical support, training, force protection, and targeted counter- terrorism operations--i.e., those functions set forth in the Iraq Study Group Report. As General Petraeus stated in March, ``I have an obligation to the young men and women in uniform out here, that if I think it's not going to happen, to tell them that it's not going to happen, and there needs to be a change.''

The message must be loud and clear--the Iraqi government must understand in no uncertain terms that our presence is neither open- ended nor unconditional, and I support setting conditions for a phased withdrawal. My concern with the supplemental appropriations bill stems from the fact that it mandates a specific date for troop withdrawal by requiring it to occur within 120 days of passage. This arbitrary timeline would telegraph a precise and immediate departure date to our enemies that I believe would jeopardize the security of our men and women remaining on the ground.

Moreover, this mandated, 120-day timetable does not place the necessary pressure and conditions on the Iraqi government to implement national reconciliation and solidify their own security. Rather, we should require that the Iraqi government complete work within 120 days on the specific, concrete benchmarks they have already agreed to that would lead to national reconciliation. If the Iraqis cannot meet these benchmarks within this 120-day period, our commanders should begin planning for the phased redeployment of the troops we deployed for the Baghdad Security Plan.

My colleagues may recall that I opposed the surge because I did not-- and still do not--believe that additional troops are a substitute for political will and capacity. General Petraeus said last month that a political resolution is crucial because that is what will determine in the long run the success of this effort. I could not agree more. The fact is, America and the world require more than Iraq's commitment to accomplishing the benchmarks that will lead to a true national reconciliation--we must see actual results. The Iraqi Government must find the will to ensure that it represents and protects the rights of every Iraqi.

After our four-year commitment, Iraq's Government should not doubt that we must observe more than incremental steps toward political reconciliation we require demonstrable changes. While limited progress has been made on necessary legislative initiatives such as the Hydrocarbon Law, it is in fact a sheaf of laws and not just a single measure that must pass to ensure that all Iraqis have a share and stake in their government. Chief among these are constitutional amendments which will permit Iraqis of all ethnicities and confessions to be represented at the local level of government. Yet, so far, the review committee has yet to even finish drafts of these critical amendments.

I believe we were all encouraged by the recent Ambassadorial meetings in Baghdad and the follow-on ministerial conference called at the Iraqi government's request. These talks are vital to securing Iraq's border, reversing the flow of refugees, and stemming the foreign interference which exacerbates sectarian divisions. But we also look for the Iraqi government's leadership in dismantling the militias and strengthening the National Army so that it is truly a national institution that can provide the security so desperately desired by all Iraqis in every province.

We are now three months into the surge, and our troops have made gains in reducing the still horrific levels of violence on Baghdad through their heroic efforts. Yet it is deeply concerning to me that-- mirroring the slowness with which the Iraqi government has moved on political reforms--their sacrifice remains by and largely unmatched by their Iraqi counterparts.

Two weeks ago, Leon Panetta, a member of the Iraq Study Group, wrote the following in a New York Times Op-Ed, ``. . . every military commander we talked to felt that the absence of national reconciliation was the fundamental cause of violence in Iraq. As one American general told us, `if the Iraqi government does not make political progress on reforms, all the troops in the world will not provide security.' `` He went on to enumerate the progress or, more to the point, the lack of progress toward the agreed upon benchmarks and concluded that `unless the United States finds new ways to bring strong pressure on the Iraqis, things are not likely to pick up any time soon.'''

In fact, over the past few months, many have come to the realization that political action by the Iraqi government is a paramount precursor to

national reconciliation and stability and, without it, the Baghdad Security Plan is only a temporary, tactical fix for one specific location. And while we are hearing about incremental successes, I agree with Thomas Friedman who said recently in an interview, ``there's only one metric for the surge working, and that is whether we're seeing a negotiation among Iraqis to share power, to stabilize the political situation in Iraq, which only they can do . . . telling me that the violence is down 10 percent or 8 percent here or 12 percent there, I don't really think that's the metric at all.''

To this day, the public looks to the United States Senate to temper the passions of politics and to bridge divides. And if ever there were a moment when Americans are imploring us to live up to the moniker of ``world's greatest deliberative body,'' that moment is upon us.

If I had a son or daughter or other family member serving in Iraq, I would want at least the assurance that someone was speaking up to tell the Iraqi government--and frankly our government as well--that my family's sacrifice must be matched by action and sacrifice on the part of the Iraqi government. I would want to know that the most profound of all issues was fully debated by those who are elected to provide leadership. For those of us who seek success in Iraq, and believe that a strategy predicated on political and diplomatic solutions--not merely increased troop levels--presents the strongest opportunity to reach that goal, let us coalesce around this bill, which will allow us to speak as one voice strong . . . together . . . and united in service to a purpose we believe to be right.

Mr. President, I rise today with my colleague Senator Coleman, to introduce the ``Small Business Regulatory Review Act.'' This is a targeted, non-controversial measure. It would ensure that the Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB) fully consider the impacts of their final rules mandating how small public companies must comply with the internal control requirements of the Sarbanes-Oxley Act.

Our Nation's small stock companies are the cornerstone of our entrepreneurial economy, and it is essential that we carefully address the regulatory barriers that impede their growth.

The Sarbanes-Oxley Act was essential in restoring investor confidence after accounting fraud and massive company deceptions shook the public's trust in U.S. markets. The horrendous debacle of corporate greed from companies like Enron and Worldcom forced not only thousands of employees to lose their jobs, but also wiped out the life savings of many retirees. Now, as we refine Sarbanes-Oxley's regulations, we must carefully preserve investor protections and ensure company transparency and accountability.

In my home State of Maine, small publicly-traded companies are indispensable to the strength and renewal of our economy. However, the fact is that many of these small stock companies are struggling mightily with the cost and regulatory burden imposed by Sarbanes-Oxley compliance, regardless of

their industry. Whether it's a utility company, a dairy pharmaceutical company that makes large animal vaccines, or a community bank that fears being smothered by the combined weight of Sarbanes-Oxley and banking regulations, it is crucial that Maine's home grown companies focus their energies on developing new products, entering new markets, and creating jobs--not on compliance.

This is why I rise today, with Senator Coleman, to introduce the ``Small Business Regulatory Review Act of 2007.'' Our bill would require the SEC to conduct a small business analysis, consistent with the Regulatory Flexibility Act (RFA), before the SEC publishes its final rules on small business internal controls compliance. This non- controversial provision simply restates existing law, ensuring that the SEC conducts a final RFA analysis. As the SEC should already be conducting this analysis as part of its final rulemaking process, this bill will impose no additional delay.

Our bill would also require the SEC to publish a small business compliance guide, consistent with the Small Business Regulatory Enforcement Fairness Act (SBREFA). This compliance guide would explain, in plain language, the small business requirements under the rule. The SEC should publish this small businesses compliance guide when it publishes its final rule, so that small business understand the new requirements. As this non-controversial provision also restates existing law, this measure would impose no additional delay on the SEC's rulemaking process.

Regulations disproportionately affect small businesses and significantly hinder their competitiveness. In 2004, Senator Enzi and I jointly requested that the Government Accountability Office (GAO) study the effects of the Sarbanes-Oxley Act on small public companies' access to capital. The study found that the costs for complying with Sarbanes- Oxley were nine times greater for smaller companies than for large stock companies. We must reduce the burden imposed by Sarbanes-Oxley so that our small stocks in Maine, Minnesota, and across the country can continue to be some of the world's fastest growing and most innovative companies.

Finally, to address this disproportionate regulatory burden on small businesses, our bill would require that the GAO re-analyze the impact of these rules on small public companies two years after final rules are published. The GAO's report would include an assessment of the costs and time commitments the SEC and PCAOB requirements impose on small businesses and whether these costs are expected to decrease or increase in the future. Additionally, the final report would include recommendations, and regulatory alternatives, on how to simplify or improve the process of complying with SEC and PCAOB small company stock requirements. This provision simply ensures that the rules do not impose unintended, undue burdens on small businesses.

The ``Small Business Regulatory Review Act of 2007'' will help to ensure that small stock companies do not suffer from additional unintended consequences which harm their ability to compete, innovate, and grow--and, most importantly, create jobs.

Mr. President, I rise today with my colleague from Indiana, Senator Bayh, to introduce the Nuclear Safeguards and Supply Act of 2007.

The future of the Nuclear Non-Proliferation Treaty and the larger nonproliferation system it supports is in doubt. The existing safeguards regime used by the International Atomic Energy Agency (IAEA) has succeeded in forestalling nuclear weapons programs in the world's advanced industrial states, several of which were weighing the nuclear option 40 years ago. Unfortunately, this regime has failed to keep pace with the increase in the global availability of nuclear weapons technology, especially the technology and equipment for uranium enrichment and spent nuclear reactor fuel reprocessing, which can produce fissile material for weapons. Now the road to nuclear weapons can be traveled by determined countries with only a minimal industrial base. While the number of recognized nuclear weapon states has not dramatically increased over the years, the dangers of proliferation have become all too apparent as demonstrated by the A.Q. Khan network, the Iranian, North Korean, and Libyan examples.

The construction of facilities for the enrichment of uranium and reprocessing of spent nuclear fuel in new states, even for ostensibly peaceful purposes, poses an unacceptable long-term risk to the national security of the United States. The enrichment technology intended to produce fuel for reactors can also be used to create highly-enriched uranium for a nuclear weapon, and the plutonium that is produced from reprocessing spent fuel is also suitable for nuclear weapons and susceptible to diversion to terrorists. The spread of enrichment and reprocessing capabilities will dangerously increase the chances that new nations will develop nuclear weapons and that terrorists might obtain fissile or radiological materials for crude devices. It is therefore incumbent on the United States to lead an international effort to halt the expansion of enrichment and reprocessing to new countries.

We know President Bush shares our assessment of this situation. On February 11, 2004, he stated, ``The world's leading nuclear exporters should ensure that states have reliable access at reasonable cost to fuel for civilian reactors, so long as those states renounce enrichment and reprocessing. Enrichment and reprocessing are not necessary for nations seeking to harness nuclear energy for peaceful purposes.''

The threats posed by new nuclear fuel cycle facilities in new states are made worse by the fact that the use of nuclear power is likely to increase, both in developed and developing countries. As energy costs have soared in recent years, many states are reexamining nuclear power as a potential source of electricity. Importantly, however, the expansion of nuclear power does not require--either technically or economically--the construction of enrichment or reprocessing facilities in countries that do not currently have them.

Senator Bayh and I believe the United States should adopt as a basic nonproliferation principle that countries who give up their own enrichment and reprocessing programs have an assurance, either bilateral or multilateral or both, of nuclear reactor fuel at reasonable prices. Today, the market provides the basic framework for commerce in and access to nuclear fuel, and should not be interrupted by government action, but the exchange of nuclear fuel and fuel services for enrichment and reprocessing capabilities is not currently explicit. This would also require that states agreeing to accept fuel services and leasing of fuel, in return for giving up joining the group of states possessing reprocessing and enrichment capabilities, would also consent to wide access and close monitoring of their nuclear energy activities, exceeding the requirements of the IAEA Additional Protocol. Related efforts in this area should also move forward in the [Nuclear Suppliers Group, where various nations have advocated a criteria-based approach to nuclear fuel supply.

Unfortunately, as the world looks to increase the number of civilian nuclear power plants, the IAEA, charged with ensuring that energy programs do not stray into weapons efforts through the verification of safeguards agreements, operates on a shortsighted budget with old equipment. This situation threatens the institution, and to some degree the nuclear stability that the IAEA's safeguards verification mandate supports. The IAEA is responsible for verifying that states do not violate their obligations under the Nuclear Nonproliferation Treaty (NPT). The IAEA monitors states' nuclear programs through safeguards agreements and additional protocols to ensure that nuclear material, equipment, and technology are used for declared, peaceful purposes.

Last November, I visited the IAEA and its Safeguards Analytical Laboratory (SAL), located just outside Vienna, Austria. Samples collected by IAEA inspectors during inspections are brought to the SAL to verify that safeguards obligations are being met and that there are no undeclared materials and activities. Unfortunately the laboratory's aging equipment and dangerous working conditions will hamper the important work done there, particularly as more samples arrive there and as more states expand their nuclear power infrastructure. Such a situation could, in the future, shut down a critical nonproliferation facility. The IAEA's nuclear materials analysis capability is vulnerable to a single point of failure given the situation at SAL. Laboratory staff is also severely limited in the time they can spend analyzing evidence in the ``hot'' or nuclear part of SAL because of the dilapidated air purification system in one part of the laboratory. Equally disturbing, SAL is still using equipment manufactured in the 1970's. If the IAEA is supposed to be the world's nuclear watchdog, the least we can do is to provide the people who work there with appropriate and effective tools to do their job.

Absent refurbishment of SAL, or the construction of a new IAEA facility with modem equipment, President Ronald Reagan's charge ``trust but verify'' will be abandoned because we have not taken action.

The SAL helped to discover the inconsistencies in Iran's cover-up of its nuclear weapons program. The analysis and questioning by inspectors prompted stonewalling by Tehran. The Iranian failure to provide information and access led the IAEA Board of Governors to refer the matter to the United Nations Security Council. While I wish this might have happened more quickly, the fact is that SAL, the network of laboratories in other Member States, and the IAEA's inspectors provided the evidence necessary to build consensus on Iranian violations.

The Lugar-Bayh legislation works to create both bilateral and multilateral assurances of nuclear fuel supply by specifically authorizing the President to pursue such mechanisms. Importantly, our legislation takes note of the fact that merely ensuring fuel supply is not enough to truly deal with the potential proliferation that could arise as a result of many more nuclear reactors being built around the world. Proliferation of fuel cycle technologies may continue, regardless of the ability of our Nation and others to craft layers of assurance in fuel supply. Our bill makes an important point--that fuel supply for new nuclear power is as important as the safeguards applied to nuclear power.

The Lugar-Bayh legislation makes it the policy of the United States to discourage the development of enrichment and reprocessing capabilities in additional countries, and to encourage the creation of bilateral and multilateral assurances of nuclear fuel supply,

and ensure that all supply mechanisms operate in strict accordance with the IAEA safeguards system and do not result in any additional unmet verification burdens for the system. To ensure that SAL does not cease to function, we authorize an additional $10,000,000 for the refurbishment or possible replacement of the IAEA Safeguards Analytical Laboratory. We also authorize the Secretary of State, in cooperation with the Secretary of Energy and the Directors of the National Laboratories, and in consultation with the Secretary of Defense and the Director of National Intelligence, to pursue a program that will improve nuclear safeguards technology development.

With regard to fuel supply, our bill authorizes the President to create, consistent with existing law, bilateral and multilateral mechanisms to provide a reliable supply of nuclear fuel to those countries and groups of countries that adhere to policies designed to prevent the proliferation of nuclear weapons and that decide to forgo a national uranium enrichment program and spent nuclear fuel reprocessing facilities. Such mechanisms must confront the challenges of international politics, thus the authority contained in the bill is designed to provide a flexible framework, rather than a final set of requirements, for such mechanisms. The bill embraces both bilateral and multilateral fuel supply mechanisms, and calls for a report on the establishment of an International Nuclear Fuel Authority.

The United States cannot fix the IAEA's problems alone, but we must lead. An international diplomatic effort is required to raise the funds necessary to ensure that the IAEA has the resources and leadership it needs to continue its important mission. But the IAEA, its Member States and Board of Governors must also act. The Board must review and revise SAL staffing policies as they apply to professional staff working at SAL to ensure that it attracts and retains key personnel. Current policies are self-defeating and force experts out just as they are accumulating the level of experience and expertise necessary to succeed.

Not only is the existing IAEA infrastructure in desperate need of modernization, but a global nuclear power expansion will require a commensurate increase in IAEA capability. We must strengthen the organization to ensure that multiplying nuclear power facilities are not diverted to weapons work. This can and should be accompanied by better support to our own efforts in verification activities and technologies, such as through the Key Assets Verification Fund at the Department of State and the U.S. Program of Technical Assistance to IAEA Safeguards or POTAS.

If the world is at the dawn of a new nuclear power age, then there will be more facilities and materials for the IAEA to inspect and verify. The IAEA is not prepared for such a future, but there is still time to put the necessary investments in place to ensure that it continues its important role. The United States and other Member States have the ability to plan and make decisions now that will ensure a safer nuclear power option in the future. It is incumbent upon the United States to assist in the construction of the best possible safeguards system to provide for international peace and security. Peaceful uses of nuclear energy are only as good as the means to verify them.

The current budget of the IAEA cannot sustain further stress, nor can the world afford to allow another state to develop nuclear weapons in secret. The IAEA is underfunded to perform its current tasks and would be required to do much more should nuclear energy become more widespread. The Bush Administration must significantly increase funding to the IAEA to improve its ability to exercise its rights and meet its obligations. We hope this legislation will begin that process.

I look forward to working with my colleagues on the Committee on Foreign Relations on these important matters. I thank Senator Bayh for his partnership in this endeavor.

Mr. President, I rise today to introduce with Senate Judiciary Committee Chairman Patrick Leahy the Patent Reform Act of 2007, S. 1145. S. 1145 represents years of careful negotiation and input from a wide-spectrum of stake holders. In fact, the 2006 Hatch- Leahy bill has served as a blueprint for this year's legislation and contains substantially similar language. Chairman Leahy's desire to have a piece of legislation that is both bipartisan and bicameral is a great undertaking and represents a tremendous commitment by Congress to move forward in streamlining and strengthening our patent system.

The patent system is the bedrock of innovation, especially in today's global economy. Last year, more than 440,000 patent applications were filed at the United States Patent and Trademark Office (USPTO). The sheer volume of patent applications reflects the vibrant, innovative spirit that has made America a world-wide leader in science, engineering, and technology. Because America's ingenuity continues to fund our economy, we must protect new ideas and investments in innovation and creativity. Patents encourage technological advancement by providing incentives to invent, invest in, and disclose new technology. Now, more than ever, it is important to ensure efficiency and increased quality in the issuance of patents. This in turn creates an environment that fosters entrepreneurship and the creation of jobs: two significant pillars in our economy. In my home State of Utah alone, there are over 3,200 technology and 500 life science companies, and eight percent year-over-year growth. Utah leads the western States region in creating and sustaining these companies.

Additionally, the concentration of college graduates in Utah is contributing to the State's technological friendliness, attracting growth companies to Utah and creating new ones. There is a large, young adult population in Utah attending not only the two world-class research universities of the University of Utah and Utah State University, but also Brigham Young University, Utah Valley State College and Weber State University. These universities and colleges are strong economic drivers that encourage technology industry growth in my State.

For years, Chairman Leahy and I have been working together to craft meaningful patent reform to address problems that have been identified through a series of hearings and discussions with stake holders. This bill addresses many of the problems with the substantive, procedural, and administrative aspects of the patent system, which governs how entities here in the United States apply for, receive, and eventually make use of patents.

The Patent Reform Act of 2007 includes provisions to improve patent quality. Many complaints about the current patent system deal with the number of suspect and over-broad patents that are issued. Because bad patents are generally of little value to productive companies, in many cases their value is maximized by using them as a basis for infringement suits against deep-pocket defendants. This bill institutes a robust post-grant review process so that third parties can challenge suspect patents in an administrative process, rather than through costly litigation. In the bill we introduced today, Section 6 has been tightened by including an anti-harassment provision to discourage companies from colluding and perpetually harassing one company. I am hopeful this will serve as a deterrent to those who seek to abuse post- grant review process.

In addition, S. 1145 is designed to harmonize U.S. law with the law of other countries by instituting a first-to-file system. The United States is the only significant country following the first-to-invent system, in which the right of the patent lies with the first inventor, rather than the first inventor to file for a patent. The Patent Reform Act of 2007 provides greater certainty because the filing date of an application can very rarely be challenged.

S. 1145 also seeks to provide fair and equitable remedies. Some claim that courts have allowed damages for infringement to be based on the market for an entire product when all that was infringed is a minor component of the product. The bill's language preserves the current rule that mandates that a damages award shall not be less than a reasonable royalty for the infringed patent, and further requires the court to conduct an analysis to ensure that when a reasonable royalty is the award, it reflects only the economic value of the patent's specific contribution over the prior art.

There are a few provisions I believe need further discussion. I was disappointed that the inequitable conduct provision from last year's bill was removed. Attorneys well know that the inequitable conduct defense has been overpleaded and has become a drag on the litigation process. I think last year's language struck the correct balance by focusing on the patentability of the claims in dispute and properly prevented parties from asserting the defense frivolously. Let me hasten to add that I do believe there should be consequences for misconduct. I believe that reforms to the inequitable conduct defense should focus on the nature

of the misconduct and not permit the unenforceability of a perfectly valid patent on a meritorious invention. And, sanctions should be commensurate with the misconduct.

Moreover, establishing inequitable conduct is supposed to require independent proof that: (1) the information at issue was material; and (2) the person who failed to disclose it or made the misrepresentation had the specific intention of misleading the USPTO. The two elements have become linked, and courts often discount the intent requirement by finding that the information is ``highly material.'' In fact, the materiality standard has become so inclusive that virtually anything now is portrayed as material. Information should only be considered material when it causes the USPTO to improperly grant patent claims. Using a standard of whether USPTO examiners would reject the claims is a good approximation of materiality because of the prima facie standard they use to determine whether the claims meet the requirements for patentability. Unfortunately, this bill preserves the status quo.

A provision that would provide attorneys' fees and costs to a prevailing party was also left out of this bill. I included this provision in last year's bill to discourage weak cases from clogging the already-burdened judicial system. This is not a new concept in the realm of intellectual property. In fact, I note, Section 505 of the Copyright Act clearly provides courts the discretion to award attorneys' fees and costs. It seems logical that we would provide the same discretion in S. 1145 and I look forward to discussing this issue with Chairman Leahy.

We opted this year not to include a provision that would repeal Section 271(f) of Title 35, pending a Supreme Court decision that is expected soon. Section 271(f) creates a cause of action for infringement due to foreign sales when a component of a patented invention is supplied from this country, knowing that a component will be combined in an infringing manner outside the United States. In the event of an unfavorable ruling, Chairman Leahy and I are committed to addressing this issue using the legislative process.

Patent law is vital to our Nation's ability to compete in the global economy. S. 1145 is designed to ensure that the United States remains at the forefront of developing and translating new ideas into tangible goods and services through an effective patent review and protection system

This bill represents a commitment from Congress to move forward in streamlining and strengthening our patent system. I am hopeful that further refinements will be made to this bill during the legislative process. I am committed to moving this legislation forward and hope that we can join efforts to refine and enact this important bill.

Mr. President, I rise today to introduce the Best Pharmaceuticals for Children Amendments of 2007, which is a bill to reauthorize the Best Pharmaceuticals for Children Act--BPCA. If Congress doesn't act, this successful program will expire on October I, 2007. I thank my colleagues Senators Kennedy, Harkin, Bingaman, Murray, Clinton and Brown who are joining me as original cosponsors of this important legislation.

I am pleased that Senators Kennedy and Enzi, the distinguished chairman and ranking member of the Health Education Labor, and Pensions--HELP--Committee, have included this bill in the chairman's mark for S. 1082, which is expected to be voted on today in the HELP Committee.

I would also like to recognize the contributions and leadership of former Senator Mike De Wine, a friend and colleague, who always fought to ensure children would not be treated as second-class citizens when it came to drug and device development. He was a champion of BPCA along with me even when it wasn't popular to hold that view.

The story of the Best Pharmaceuticals for Children Act is one of huge success for children and their families. Children with a wide range of diseases such as HIV/AIDS, cancer, allergies, asthma, neurological and psychiatric disorders, and obesity can now lead healthier, more productive lives as a result of new information about the safety and efficacy of drugs they use to treat and manage their diseases where previously there was none.

Children are not simply little adults and results of the drug studies conducted under the BPCA have shown us that they should not be treated as such. Pediatric drug studies conducted. under the BPCA showed that children may have been exposed to ineffective drugs, ineffective dosing, overdosing, or side effects that were previously unknown.

Since the BPCA's passage in 1997 and its reauthorization in 2002, FDA has requested nearly 800 studies involving more than 45,000 children in clinical trials. Useful new pediatric information is now part of product labeling for 119 drugs. By comparison, in the 7 years prior to the BPCA's passage, only 11 studies of marketed drugs were completed. In the past 10 years, there has been a twentyfold increase in the number of drugs studied in infants, children, and adolescents since BPCA was enacted.

Labeling changes resulting from clinical studies under the BPCA have informed physicians of the proper dosing in the examples of Viracept, a protease inhibitor used in a combination therapy for the treatment of HIV, and Neurontin, a pain relief medication used to treat children with chronic pain. For children with epilepsy, the BPCA studies informed physicians that the drugs Keppra and Trileptal could be used safely and effectively at an even earlier age than previously known. Studies of Imitrex as a result of the BPCA showed no better results than placebo for the treatment of migraine headaches in adolescents. These same studies also showed serious adverse events due to Imitrex in pediatric populations and therefore the drug is not recommended to treat migraines in anyone less than 18 years of age.

Recent studies of the BPCA by the Government Accountability Office-- GAO--and by several authors from Duke University in an article which appeared in the Journal of the American Medical Association--JAMA--have demonstrated that the program is a success and have identified opportunities to strengthen the program. Authors of the recent JAMA article found that outside of the BPCA, the FDA is limited in the number and scope of studies for which it can require pediatric data for existing products on the market.

Data from this article showed that only a minority of drugs studied under the BPC, about 20 percent, had more than $1 billion in annual sales. In fact, the median drug granted exclusivity was a small-market drug with annual sales of $180 million and 30 percent of drugs studied had sales less than $200 million. This article went on to say that a universal reduction in the length of pediatric exclusivity from 6 to 3 months would mean that products with small profit margins may not be submitted for pediatric testing.

The BPCA has always tried to strike the right balance between cost to consumers and benefits to children. I believe there is an ongoing need to evaluate the cost of the incentive as it relates to reaching the goal of having medications properly studied and labeled for children. In fact, that is why I strongly support a 5-year sunset of the BPCA.

After 10 years, experience and data has shown us that for a small number of drugs, pediatric exclusivity has far exceeded the ``carrot'' it was intended to provide for manufacturers. As the authors of the recent JAMA article noted, ``our study shows that the Pediatric Exclusivity Program overcompensates blockbuster products for performing clinical trials in children, while other products have more modest returns on investment under this program.''

The bill I am introducing today contains a reasonable, workable proposal to address cost concerns without jeopardizing the extraordinary success of BPCA. I have worked closely with the chairman and ranking member of the HELP Committee to craft this proposal into the form it appears in this legislation and in the bipartisan chairman's mark which is expected to be voted on in the HELP Committee today.

On March 27, the HELP Committee held a hearing, which I chaired, entitled ``Ensuring Safe Medicines and Medical Devices for Children.'' We learned from pediatricians and a parent of five children, four of whom are HIV-positive, Mrs. Susan Belfiore, about the tremendous impact BPCA has had on the quality of life for countless numbers of children and their families. We received testimony with many suggestions for improvements to BPCA which I believe are reflected in this bill. I would also add that in the month since I circulated this bill as a draft, I received comments from several pharmaceutical companies. Some have been strongly supportive of this effort and many of their ideas and suggestions are incorporated in this bill.

The success of the BPCA has transformed the drug development process for children. It is my hope that we will achieve similar success with another piece of legislation I recently introduced called the Pediatric Medical Device Safety and Improvement Act. It is also contained within the chairman's mark to S. 1082 and I thank Chairman Kennedy and Ranking Member Enzi for working with me to ensure that medical devices used in children are safe and are designed specifically for their use.

The BPCA has had a long history of bipartisan support and it has been my longstanding hope that this initiative will continue to be bipartisan as the chairman's mark to S. 1082 moves to the Senate floor. The safety of our Nation's children is not a partisan issue.

As the parent of two young children, I know that it is essential that products used in children's growing bodies, whether they be drugs or devices, are appropriately tested and designed specifically for their use. We must continue the tremendous success of BPCA and its complementary program, the Pediatric Research Improvement Act, of which I am an original cosponsor, by strengthening both programs through the reauthorization process this year. It is essential that we use the past experience of both programs to ensure they will continue to thrive in the future.

I urge my colleagues to support this legislation.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, our patent system is grounded in the Constitution. Among the specifically enumerated powers of Congress in Article I, Section 8, stands the command to ``promote the progress of science and the useful arts, by securing for limited times to authors and inventors the exclusive right to their respective discoveries.'' Those discoveries have, since the founding of our Nation, made us the envy of the world. Our inventors, our research institutions, and the many companies that commercialize those discoveries have brought a wealth of new products and processes to our society; we have all been the beneficiaries of that creativity and hard work.

Vermont has long played an important role in bringing such inventions to the public, combining `Yankee ingenuity' with lots of sweat equity. In fact, the very first U.S. patent was granted to Samuel Hopkins, a farmer in Pittsford, VT, who discovered a process for making potash. That ethic continues to the present day; just last year, inventors in IBM's Essex Junction plant received 360 patents 10 percent of IBM's total U.S. patents.

Vermont is special, of course, but not unique in this regard. American inventors are in every community, every company and school. They are individuals tinkering on the weekends in their garages. They are teams of PhDs in our largest corporations. They are scientists training students in laboratories at our colleges and universities. Our patent laws should support and reward all American innovators-- independent inventors, small businesses, venture capitalists, academic researchers, and large corporations. To do so, we must update our patent laws. Crafted for an earlier time, when smokestacks rather than microchips were the emblems of industry, those laws have served well but need some refinements.

Senator Hatch and I introduced an earlier version of this bill, S. 3818, last August. At that time, I said we had taken the first step down a road to real, constructive patent reform, which could reduce the unnecessary burdens of litigation in the patent system and enhance the quality of patents granted by the Patent and Trademark Office. Senator Hatch wisely noted that we would have to have continuing conversations about issues that remained unresolved. We have spent the time since then hearing from all manner of interested parties, and indeed we have learned as much since we introduced S. 3818 as we had in the two years prior to its introduction.

In this Congress, the partnership is not only bipartisan but bicameral. We have reached not only across the aisle but across the Hill to work out a bill that joins the Senate and the House, Democrats and Republicans, so that today we are introducing a Leahy-Hatch bill in the Senate that mirrors a Berman-Smith bill in the House. The message is both strong and clear: We have a unified and resolute approach to improving the nation's patent system. We will all have time to focus on the bill's many provisions in the weeks to come, but I would highlight three significant changes we have made since last summer, aided by the many stakeholders in this process.

First, the Patent Reform Act of 2007 now includes a pure ``first-to- file'' system, which will inject needed clarity and certainty into the system. The United States stands alone among nations that grant patents in giving priority for a patent to the first inventor, as opposed to the first to file a patent application for a claimed invention. The result is a lack of international consistency, and a complex and costly system in the United States to determine inventors' rights. At the same time, our legislation provides important protections for inventors at universities, by permitting them to discuss publicly their work without losing priority for their inventions.

Second, poor patent quality has been identified as a key element of the law that needs attention. After a patent is issued, a party seeking to challenge the validity and enforceability of the patent has two avenues under current law: by reexamination proceeding at the USPTO or by litigation in federal district court. The former is used sparingly and some see it as ineffective; the latter, district court litigation, can be unwieldy and expensive. S. 3818 had created a new, post-grant review to provide an effective and efficient system for considering challenges to the validity of patents. The Patent Reform Act of 2007 has improved that system, and in particular, we have addressed concerns about misuse of the procedure. Post-grant review will include protections to avoid the possibility of misuse of the post-grant process. The Director is instructed to prescribe rules to prevent harassment or abuse, successive petitions are prohibited, and petitioners are barred from raising the same arguments in court.

Third, we are keenly aware that a sound patent system needs fair and equitable remedies. As products have become more complex, often involving hundreds or even thousands of patented aspects, litigation has not reliably produced damages awards in infringement cases that correspond to the value of the infringed patent. Our bill last summer was our first effort to ensure that damages awards accurately reflected the harm caused by infringement. Subsequent conversations with many affected parties have led us to language that, we believe, better serves that purpose and avoids potential pitfalls.

The Patent Reform Act of 2007 is also significant for what is not included. S. 3818 would have made three considerable changes to the patent laws that, upon further consideration and after listening to the affected parties, we have decided not to make in this year's legislation. First is the requirement that patent applicants not intentionally misrepresent a material fact or fail to disclose material information to the PTO. Candor and truthfulness are the backbone of the patent application system, and are protected by the inequitable conduct doctrine. S. 3818 would have weakened that doctrine, but it is preserved this year. Second, we maintain the traditional rule on attorneys' fees, instead of shifting fees and other expenses to the non-prevailing party as was proposed in S. 3818. Finally, we do not inject Congress into the ongoing litigation over the extra-territorial provision, section 271(f). S. 3818 would have repealed the provision in its entirety; the Patent Reform Act of 2007 does not, while the interpretation of the provision is currently pending before the Supreme Court. If the Court does not resolve that issue, we will revisit it in the legislative process.

If we are to maintain our position at the forefront of the world's economy, if

we are to continue to lead the globe in innovation and production, if we are to continue to enjoy the fruits of the most creative citizens, then we must have a patent system that produces high quality patents, that limits counterproductive litigation over those patents, and that makes the entire system more streamlined and efficient. This bill is an important step towards that goal. I look forward to immediate and intense debate that will inform both the Members of Congress and the public about these improvements, that will allow us to further refine our legislation, and that will lead us to consideration on the Senate floor.

I ask unanimous consent that the text of the bill be printed in the Record.