To specify the priority of the obligations of the United States Government if the debt ceiling is reached, to provide for an emergency appropriation of funds to pay for certain defense and national security obligations during a gap in funding, and for other purposes.

I rise in opposition to the amendment.

Madam Chair, the Conyers amendment to tie the changes proposed in the America Invents Act to future changes that would

be made in foreign law is unworkable. I oppose providing a trigger in U.S. law that leaves our patent system at the mercy of actions to be taken at a future date by the Chinese, Russians, French, or any other country. It is our constitutional duty to write the laws for this great land. We cannot delegate that responsibility to the whims of foreign powers.

I know that this idea has been floated in the past, but after working on several pieces of patent legislation over the past several Congresses, and particularly this year on H.R. 1249, it has become clear that this type of trigger idea is simply not workable and is counterproductive.

The move to a first-inventor-to-file system creates a more efficient and reliable patent system that benefits all inventors, including independent inventors. The bill provides a more transparent and certain grace period, a key feature of U.S. law, and a more definite filing date that enables inventors to promote, fund, and market their technology, while making them less vulnerable to costly patent challenges that disadvantage independent inventors.

Under first-inventor-to-file, an inventor submits an application to the Patent Office that describes their invention and how to make it. That, along with a $110 fee, gets them a provisional application and preserves their filing date. This allows the inventor an entire year to complete the application, while retaining the earlier filing date. By contrast, the cost of an interference proceeding before the PTO often runs to $500,000.

The current first-to-invent system harms small businesses and independent inventors. Former PTO Commissioner Gerald Mossinghoff conducted a study that proves smaller entities are disadvantaged in PTO interference proceedings that arise from disputes over patent ownership under the current system. Independent inventors and small companies lose more often than they win in these disputes, plus bigger companies are better able to absorb the cost of participating in these protracted proceedings.

In addition, many inventors also want protection for their patents outside the United States. If you plan on selling your product overseas, you need to secure an early filing date. If you don't have a clear filing date, you can be shut off from the overseas market. A change to first-inventor-to-file will help our businesses grow and ensure that American goods and services will be available in markets across the globe.

In the last 7 years, only one independent inventor out of 3 million patent applications filed has prevailed over the inventor who filed first. One out of 3 million. So there is no need for this amendment. Independent inventors lose to other applicants with deeper pockets that are better equipped to exploit the current complex legal environment.

So the first-to-file change makes it easier and less complicated for U.S. inventors to get patent protection around the world. And it eliminates the legal bills that come with the interference proceedings under the current system. It is a key provision of this bill that should not be contingent upon actions by foreign powers and delay what would be positive reforms for independent inventors and our patent system.

The first-inventor-to-file provision is necessary for U.S. competitiveness and innovation. It makes our patent system stronger, increases patent certainty, and reduces the cost of frivolous litigation.

However, if you support the U.N. having military control over our troops, or if you support the concept of an international court at The Hague, then you would support this amendment's proposal of a trigger that subjects U.S. domestic law to the whims of governments in Europe, China, or Russia.

It really would be unprecedented to hold U.S. law hostage to legal changes made overseas, and would completely go against what this great country stands for and what our Founders fought for: the independent rights and liberties we have today.

For these reasons, Madam Chair, I am strongly opposed to the amendment.

I yield back the balance of my time.

Madam Chair, this amendment strikes the prior- user rights provision from the bill. I strongly oppose this amendment.

The bill expands prior-user rights--a strong, pro-job, pro- manufacturing provision. This provision will help bring manufacturing jobs back to this country. It allows factories to continue using manufacturing processes without fear of costly litigation. It is absolutely a key component of this bill.

This provision has the strong support of American manufacturers and the support of all the major university associations and technology- transfer associations. These include the Association of American Universities, American Council on Education, Association of American Medical Colleges, Association of Public and Land Grant Universities, Association of University Technology Managers, and the Council on Government Relations representing the vast majority of American Universities. Prior-user rights ensure that the first inventor of a new process or product using manufacturing can continue to do so.

This provision has been carefully crafted between stakeholders and the university community. The language provides an effective exclusion for most university patents, so this provision focuses on helping those in the private sector.

The prior-use defense is not overly expansive and will protect American manufacturers from having to patent the hundreds or thousands of processes they already use in their plants.

After getting initial input from the university community, they recommended that we make the additional changes reflected in this bill to ensure that prior-user rights will work effectively for all private sector stakeholders.

Prior-user rights are important as part of our change to a first-to- file system. I believe it is important to ensure that we include these rights to help our job-creating manufacturers across the United States. The philosophical objections of a lone tech-transfer office in Wisconsin should not counter the potential of this provision for job creation throughout America.

There are potentially thousands or hundreds of thousands of unemployed Americans who are looking for manufacturing jobs and could benefit from this provision. Without this provision, businesses say they may be unable to expand their factories and hire American workers if they are prevented from continuing to operate their facilities the way they have for years.

For many manufacturers, the patent system presents a catch-22. If they patent a process, they disclose it to the world and foreign manufacturers will learn of it and, in many cases, use it in secret without paying licensing fees. The patents issued on manufacturing processes are very difficult to police, and oftentimes patenting the idea simply means giving the invention away to foreign competitors. On the other hand, if the U.S. manufacturer doesn't patent the process, then under the current system a later party can get a patent and force the manufacturer to stop using a process that they independently invented and used.

In recent years, it has become easier for a factory owner to idle or shut down parts of his plant and move operations and jobs overseas rather than risk their livelihood through an interference proceeding before the PTO. The America Invents Act does away with these proceedings and includes the pro-manufacturing and constitutional provision of prior-user rights.

This provision creates a powerful incentive for manufacturers to build new plants and new facilities in the United States. Right now, all foreign countries recognize prior-user rights, and that has played a large role in attracting American manufacturing jobs and facilities to these countries. H.R. 1249 finally corrects this imbalance and strongly encourages businesses to create manufacturing jobs in this country.

The prior-user rights provision promotes job creation in America. Prior-user rights will help manufacturers, small business and other innovative industries strengthen our economy. It will help our businesses grow and allow innovation to flourish.

I strongly support prior-user rights, and so I oppose this amendment.

I yield back the balance of my time.

Will the gentlewoman yield?

Madam Chair, I just want to say to the gentlewoman from Wisconsin that I appreciate her offering the amendment, and I urge my colleagues to support it.

Madam Chair, I claim the time in opposition, although I support the amendment.

Madam Chair, I understand the underlying point of the Member's amendment, and I want to make it clear that my interpretation of this amendment and its intent is to

highlight the problem posed by entities that pose as financial or technological businesses but whose sole purpose is not to create but to sue. I am talking about patent trolls--those entities that vacuum up patents by the hundreds or thousands and whose only innovations occur in the courtroom. This sense of Congress shows how these patent trolls can hurt small businesses and independent inventors before they even have a chance to get off the ground. This bill is designed to help all inventors and ensure that small businesses will continue to be a fountain for job creation and innovation.

For these reasons, Madam Chair, I support the amendment.

I yield back the balance of my time.

Madam Chair, I rise to claim the time in opposition, though I am in favor of the amendment.

Madam Chair, section 23 of the bill requires the PTO Director to establish three or more satellite offices in the United States, subject to available resources. The provision lists criteria that the Director must take into account when selecting each office. This is a good addition to H.R. 1249, and I urge my colleagues to support it. I also hope that one of those offices is in Austin, Texas.

I yield back the balance of my time.

Madam Chair, I understand the underlying point of the Member's amendment, but other legislation and patent reform in particular have taught us that even small changes can have unintended consequences unless they have been vetted and have gone through the regular committee process.

The problem is in the details. This amendment is drafted as a study. I agree with the first part of the amendment but not the second because its objectives are written very much like a piece of legislation. It seeks to create support for a new program whereby taxpayer funds would be used to pay patent fees in foreign countries.

I am strongly committed to helping our small businesses and independent inventors secure their rights and have a level playing field abroad, but I can't support a result that could create a new entitlement program, a new bureaucracy and the transferring of taxpayer dollars directly to the treasuries of foreign governments. We should not use taxpayer funds to pay patent filing fees to foreign governments.

I do agree with the first part of this study, and am interested to see how the PTO, in coordination with other agencies, can figure out ways to help small businesses with international patent protection. I hope that this will be the focus of the study. The results of this study will show that small business outreach and educational and technical assistance programs are the most effective tools for small business and independent inventors.

I think that the PTO needs to continue its efforts to reach out to small businesses and independent inventors. This bill includes a provision which creates a permanent small business ombudsman at the PTO to work with small businesses to help them secure their patent rights. The PTO also conducts small business outreach programs throughout the country, teaching small businesses about IP enforcement and how to protect their intellectual property both at home and abroad.

Though I do not agree with the policy outline in the second part of the study and will strongly recommend that the PTO and SBA determine that such a program should not be established, I will support this amendment to initiate the study, and I hope that the bulk of it will focus on how to better utilize existing government resources for education and technical assistance to help small businesses with international patent protection.

Before I yield back the balance of my time, I hope that the movers of this amendment might be willing to reassure me and others about the intent and goals of this study.

I yield back the balance of my time.

Madam Chair, I rise in opposition to the amendment.

I yield 2 minutes to the gentleman from Virginia (Mr. Goodlatte), who is the chairman of the Intellectual Property Subcommittee of the Judiciary Committee.

Madam Chair, I yield 1 minute to the gentleman from California (Mr. Sherman).

I yield myself the balance of my time.

Madam Chair, I oppose the amendment to change the effective date for the tax strategy method section of the bill.

It is possible to patent tax strategy methods, but it is bad policy. It is not fair to permit patents on techniques regularly used to satisfy a government mandate, such as one that requires individuals and businesses to pay taxes.

Tax preparers, lawyers, and planners have a long history of sharing their knowledge regarding how to file returns, plan estates, and advise clients. They maintain that allowing the patentability of tax strategy methods will complicate the tax filing process and inhibit the ability of preparers to provide quality services for their clients.

The effective date applies to any patent application that is pending on, or

filed on or after, the date of enactment and to any patent that is issued on or after that date.

The gentleman's amendment eliminates the application of this provision to those applications pending on the date of enactment. These applications have not been approved so I disagree with excluding these patents-in-waiting.

It was a mistake for the PTO to issue these patents in the first place, given their potential to harm individual taxpayers and tax return preparers. We shouldn't leave the door ajar by allowing more applications in. This just compounds the very problem we're trying to solve.

I oppose the gentleman's amendment, and I urge my colleagues to vote against it.

I yield back the balance of my time.

Madam Chair, in 2001, a biotech entity called the Medicines Company, or MedCo, submitted an application for a patent extension that the PTO ruled was 1 day late. This application would have extended patent protection for a drug the company developed called Angiomax. In August 2010, a U.S. district court ordered the PTO to use a more consistent way of determining whether the patent holder submitted a timely patent extension application. The PTO is implementing that decision and believes the court's decision resolves the problem for MedCo. Because of this ongoing litigation, the manager's amendment struck language pertaining to MedCo. The Conyers amendment seeks to reinsert that provision.

The Conyers amendment essentially codifies the district court's decision, but it ignores the fact that this case is on appeal. We need to let the courts resolve the pending litigation. It is standard practice for Congress not to interfere when there is ongoing litigation. If the Federal circuit rules against MedCo, generic manufacturers of the drug could enter the marketplace immediately rather than waiting another 5 years. This has the potential to save billions of dollars in health care expenses. While the amendment is drafted so as to apply to other companies similarly situated, as a practical matter, this is a special fix for one company.

Finally, it would be more appropriate for this to be considered as a private relief bill. Private relief bills are designed to provide benefits to a specific individual or corporate entity. The House and the Judiciary Committee have procedures in place to ensure that such bills are properly vetted. This amendment ignores those procedures and denies Members the opportunity to know the consequences of what they are voting on.

To summarize, Madam Chair, we should not interfere with ongoing litigation which may be unprecedented, and we should give this issue regular process in the Judiciary Committee.

I oppose the amendment and urge my colleagues to defeat it.

I yield back the balance of my time.

Madam Chair, I think this is a good amendment. I urge my colleagues to support it.

I yield back the balance of my time.

Madam Chair, I rise to claim the time in opposition, although I support the amendment.

I thank the gentleman for offering the amendment, and I urge my colleagues to support it.

I yield back the balance of my time.

Madam Chair, the gentleman's amendment strikes the first-inventor-to-file provisions from the bill. I strongly oppose the amendment.

The move to a first-inventor-to-file system creates a more efficient and reliable patent system that benefits all inventors, including independent inventors. This provision provides a more transparent and certain grace period, a key feature of U.S. law, and a more definite filing date that enables inventors to promote, fund, and market their technology while making them less vulnerable to costly patent challenges that disadvantage independent inventors.

The first-inventor-to-file system is absolutely consistent with the Constitution's requirement that patents be awarded to the inventor. Former Attorney General Michael Mukasey has stated that the ``provision is constitutional and helps assure that the patent laws of this country accomplish the goal set forth in the Constitution: `to promote the Progress of Science and useful Arts.' ''

Under first-inventor-to-file, patent rights are reserved to someone who

independently conceived of an invention before it was in the public domain. And under the Constitution, that is what is required to be considered an ``inventor.''

In fact, early American patent law, that of our Founders' generation, did not concern itself with who was the first to invent. The U.S. operated under a first-inventor-to-register system for nearly half a century, starting in 1790. The first-inventor-to-register system is similar to first-inventor-to-file, a system that the Founders themselves supported early in our Nation's history.

The courts did not even concern themselves with who was the first person to invent until 1870, with the creation of interference proceedings. Those proceedings are the ones that disadvantage independent inventors and small businesses. And over the years, and in subsequent revisions of the law, those proceedings have morphed into a costly litigation tactic.

Under first-inventor-to-file, an inventor submits an application to the Patent Office that describes their invention and how to make it. That, along with just a $110 fee, gets them a provisional application and preserves their filing date. This allows the inventor an entire year to complete the application, while retaining the earlier filing date. By contrast, the cost of an interference proceeding in today's law could run an inventor $500,000.

Accusations that the bill doesn't preserve the 1-year grace period are simply false. This bill provides a stronger, more transparent and certain 1-year grace period for disclosures. This enhances protection for inventors who have made a public or private disclosure of their invention during the grace period.

The grace period protects the ability of an inventor to discuss or write about their ideas for a patent up to 1 year before they file for patent protection. These simple requirements create a priority date that is fixed and public so that everyone in the world can measure the patent against competing applications and patents and relevant prior art.

In addition, many inventors also want protection for their patents outside of the United States. If you plan on selling your product overseas, you need to secure an early filing date. If you don't have a clear filing date, you can be shut out from the overseas market. A change to a first-inventor-to-file system will help our businesses grow and ensure that American goods and services will be available in markets across the globe.

The current first-to-invent system seriously disadvantages small businesses and independent inventors. Former PTO Commissioner Gerald Mossinghoff conducted a study that proved smaller entities are disadvantaged in PTO interference proceedings that arise from disputes over patent ownership under the current system.

In the last 7 years, only one independent inventor out of 3 million patent applications filed has proved an earlier date of invention than the inventor who filed first.

Madam Chair, let me repeat that: in the last 7 years, only one independent inventor out of 3 million patent applications filed has proved an earlier date of invention than the inventor who filed first. Independent inventors lose to other applicants with deeper pockets that are better equipped to exploit the current complex legal environment.

So the first-inventor-to-file change makes it easier and less complicated for U.S. inventors to secure their patent rights, and it protects their patents overseas. And it eliminates the legal bills that come with interference proceedings under the current system. It is a key provision of this bill.

Madam Chair, the amendment should not be approved, and I urge my colleagues to vote against it.

I yield back the balance of my time.

Madam Chair, I oppose the gentleman's amendment to strike the PTO fee-setting authority from H.R. 1249.

Although the PTO has the ability to set certain fees by regulation, most fees are set by Congress. History has shown that such a scheme does not allow the PTO to respond to the challenges that confront it.

The PTO, most stakeholders, and the Judiciary Committee have agreed for years that the agency must have fee-setting authority to address its growing workload. This need is critical. The agency's backlog exceeds 1 million patent applications. This means it takes 3 years to get a patent in the United States--far too long. The wasted time leads to lost commercial opportunities, fewer jobs, and fewer new products for American consumers. Moreover, the new fee structure will not only retain the existing 50 percent discount for small businesses, it creates a new 75 percent discount for micro entities. This benefit helps independent inventors and small businesses.

The bill allows the PTO to set or adjust all of its fees, including those related to patents and trademarks, so long as they do no more than reasonably compensate the agency for the services performed.

To the charge that we are abandoning our oversight of the process, I urge the Members to review the oversight mechanisms in the bill. For example, prior to setting such fees, the director must give notice to and receive input from the Patent Public Advisory Committee or the Trademark Public Advisory Committee. The director may also reduce fees for any given fiscal year, but only after consultation with the advisory committees.

The bill details the procedures for how the director shall consult with the advisory committees, which includes providing for public hearings and the dissemination to the public of any recommendations made by either advisory committee.

Fees shall be prescribed by rule. Any proposed fee change shall be published in the Federal Register and include the specific rationale and purpose for the proposed change.

The director must seek public comments for no less than 45 days. The director must also notify Congress of any final decision regarding proposed fees. Congress shall have no more than 45 days to consider and comment on any proposed fee, but no proposed fee shall be effective prior to the expiration of this 45-day period.

Congress will remain part of the process, but PTO is better able to respond to their own resource needs, which, after all, will benefit patent holders and subsequently the economy.

I urge my colleagues to oppose the amendment.

Madam Chair, I yield the balance of my time to the gentleman from Virginia (Mr. Goodlatte), the chairman of the Intellectual Property Subcommittee.

Madam Chair, almost everyone in Congress wants to help small businesses. They are the foundation of our economy and are the primary job creators. But this amendment includes certain terms or phrases that have nothing to do with the underlying goal that it purports to achieve.

This amendment appears to focus on small businesses, but in reality the amendment attempts to provide the trial lawyer lobby and patent trolls with an exemption from PTO reexamination, allowing them to continue suing job creators using frivolous or questionable patents. This amendment has nothing to do with small businesses and everything to do with providing an exemption for some of the worst offenders of our patent system.

This amendment will not help independent inventors or small businesses. Small businesses need the PTO reexamination proceedings. Those proceedings strengthen patents, and strong patents are what investors look for when making decisions about whether or not to provide venture capital funding.

The argument that reexam proceedings harass or hurt small businesses is just plain wrong. The reexam proceedings are a cheaper, quicker, better alternative to resolve questions of patentability than costly litigation in Federal court, which can run into the millions of dollars and last for years. This amendment is an immunity agreement for patent trolls, those entities who do not create jobs or innovation but simply game the legal system.

Additionally, this amendment appears to violate our international obligations under the TRIPS agreement. Under TRIPS, we are obligated not to discriminate against any field of technology or categories of patent holders. By providing an exemption from all reexamination proceedings for technological patents granted to patent trolls or nonpracticing entities, this would create a clear violation of our legal obligations.

Our patent system should be designed to ensure that it produces strong patents and patent certainty. The PTO reexamination proceedings help ensure that these important goals are accomplished. This amendment bars any form of reexam for U.S.-owned patents and, thus, would also prevent U.S. inventors themselves from using supplemental examination to even be able to correct errors in the record about their own patents.

This amendment creates a huge loophole in our patent system by exempting entities with 100 or fewer employees. This will not help small businesses but will allow patent troll entities, foreign companies, and foreign governments to manipulate our patent system. It would bar use of the business-methods transitional proceeding against most business-method patents.

This amendment is a recipe for allowing patent trolls and foreign companies and their governments to bypass normal post-grant challenges and enables weak or questionable patents to bypass further scrutiny. There is no legitimate public policy objective in exempting large numbers of those who manipulate our patent system from the rules of the road. It is for these reasons that I strongly oppose this amendment.

I yield the balance of my time to the gentleman from Virginia (Mr. Goodlatte).

I yield myself 1 minute.

Madam Chair, I strongly oppose this amendment. It strikes a useful provision that would provide a way to review the validity of certain business method patents. The proceeding would create an inexpensive and faster alternative to litigation, allowing parties to resolve their disputes rather than spending millions of dollars that litigation now costs. In the process, the proceeding would also prevent nuisance or extortion lawsuits.

This provision is strongly supported by community banks, credit unions, and other institutions that are an important source of lending to homeowners and small businesses. Finally, this bill only creates a new mechanism for reviewing the validity of business method patents. It does not alter the validity of those patents. Under settled precedent, the transitional review program is absolutely constitutional.

Madam Chair, I now yield 1 minute to the gentleman from New York (Mr. Grimm), a member of the Financial Services Committee.

I yield the gentleman an additional 15 seconds.

Madam Chair, I yield 1\1/2\ minutes to the gentleman from New York (Mr. Crowley), who is a member of the Ways and Means Committee.

Mr. Chairman, I yield the balance of my time to the gentleman from Virginia (Mr. Goodlatte).

Mr. Chair, I want to clarify that Section 18 is designed to address the problem of low-quality business method patents that are commonly associated with the Federal Circuit's 1998 State Street decision. Not all business method patents are eligible for review by the patent office under Section 18. Towards that end, Section 18 of the bill specifically exempts ``patents for technological inventions'' from review.

Patents for technological inventions are those patents whose novelty turns on a technological innovation over the prior art and are concerned with a technical problem which is solved with a technical solution. The technological innovation exception does not exclude a patent simply because it recites technology. Inventions related to manufacturing and machines that do not simply use known technology to accomplish a novel business process would be excluded from review under Section 18.

Section 18 would not cover patents related to the manufacture and distribution of machinery to count, sort, and authenticate currency. It is the intention of Section 18 to not review mechanical inventions related to the manufacture and distribution of machinery to count, sort and authenticate currency like change sorters and machines that scan currency whose novelty turns on a technological innovation over the prior art. These types of patents would not be eligible for review under this program.

Mr. Chairman, I demand a recorded vote.

Mr. Speaker, I rise in opposition to the motion.

Mr. Speaker, I oppose the motion to recommit and urge my colleagues to defeat it. The America Invents Act is the culmination of 6 years of effort. During this time, the House and Senate Judiciary Committees conducted 23 hearings on patent reform and brokered numerous negotiations among Members and stakeholders. H.R. 1249 has garnered bipartisan and widespread support. This bill improves patent integrity in PTO operations. The bill helps businesses from a broad range of industries, independent inventors, and universities.

But the biggest winners are the American people. They will get more job opportunities and greater consumer choices. This amendment would mean that U.S. companies and inventors would be discriminated against all over the world when they file. It would be open season on American innovators and businesses. We would no longer be able to sell products abroad, and IP theft of U.S. goods would become rampant.

Mr. Speaker, this motion to recommit also consigns our patent system to the one created in the 1952 Patent Act, an era of landline telephones, TVs that offered three fuzzy black-and-white channels, and the manual typewriter. We need to update our patent system, and we need to do it now.

Oppose the motion to recommit and support H.R. 1249.

I yield back the balance of my time.

Mr. Speaker, I demand a recorded vote.

I have an amendment at the desk.

Madam Chair, as I rise to offer my amendment, I take just a moment of personal privilege to say that, whatever side Members are on on this issue, I know that Members want to protect the genius of America.

I would like to thank my ranking member, Mr. Conyers, for that commitment, as he comes from one of the original genius proponents, and that is the auto industry that propelled America into the job creation of the century, and to the chairperson of the committee, Mr. Smith, who ventured out in efforts to provide opportunities for protecting, again, the opportunities for invention and genius.

My amendment speaks, I think, in particular to the vast population of startups and small businesses that are impacted by this legislation. In particular, it is a reinforcement of Congress' position that indicates that the patent system should promote industries to continue to develop new technologies that spur growth and create jobs across the country, which includes protecting the rights of small businesses and inventors from predatory

behavior that could result in the cutting off of innovation.

We recognize that small and minority businesses and women-owned businesses, which dominate the landscape of America, are really major job creators. Small business is thriving in my own home State of Texas, as well. There were 386,422 small employers in Texas in 2006, accounting for 98.7 percent of the State's employers and 46.8 of its private sector employment. We know that there are a large number of women-owned businesses and as well growing African American and Latino. But we need more growth--with Asian businesses, small businesses, Hispanic, Native American, African American--all forms of businesses that are part of growing this economy.

Small business makes up a large portion of our employer network. It is important to understand how they will be impacted as a result of patent reform. In this first-to-file, for example, small businesses may in fact be concerned about trying to get investors. As they get investors, they may have to disclose. This sense of Congress will put us on notice that we need to be careful that we allow at least the opportunity for these investors, and that we continue to look at the bill to ensure that it responds to that opportunity. We must recognize again, as I said, that small businesses create jobs. And the number of new jobs that they have created are 64 percent of net jobs over the past 15 years. My amendment, again, reinforces the idea that small businesses can survive in this climate.

I did offer an amendment which provided for a transitional review program for 5 years or add for that to be sunsetted. It was all about trying to protect our small businesses. But I believe this amendment, with its firm statement, gathers Congress around the idea that nothing in this bill will inhibit small businesses from being creative. We can as well recognize all of the growth that has come about from the ideas of small businesses.

I think my amendment also reinforces that we do not wish to engage in any undue taking of property because we indicate that we want to see the innovativeness of American businesses continue. I believe this is an important statement, because the bill is about innovation, genius, creation, job creation, and it should be about small businesses. Small businesses should be as comfortable with going to the Patent Office as our large businesses. In years to come, because of this major reform, we should see small businesses creating opportunity for growth as they develop not into small-and medium-sized but huge international companies.

So I am asking my colleagues to support this amendment, and as well I am recognizing that we do have the opportunity to turn the corner and to put a stamp of new job creation on America.

I rise today to offer an amendment to H.R. 1249, the ``America Invents Act.'' My amendment adds a section to the end of the bill expressing the sense of Congress that ``the patent system should promote industries to continue to develop new technologies that spur growth and create jobs across the country, which includes protecting the rights of small businesses and inventors from predatory behavior that could result in the cutting off of innovation.''

We must always be mindful of the importance of ensuring that small companies have the same opportunities to innovate and have their inventions patented and that the laws will continue to protect their valuable intellectual property. Several studies, including those by the National Academy of Sciences and the Federal Trade Commission, recommended reform of the patent system to address what they thought were deficiencies in how patents are currently issued.

The U.S. Department of Commerce defines small businesses as businesses which employ less than 500 employees.

According to the Department of Commerce in 2006 there were 6 million small employers representing around 99.7% of the nation's employers and 50.2% of its private-sector employment.

In 2002 the percentage of women who owned their business was 28% while black owned was around 5%. Between 2007 and 2008 the percent change for black females who were self employed went down 2.5% while the number for men went down 1.5%.

Small business is thriving in my home state of Texas as well. There were 386,422 small employers in Texas in 2006, accounting for 98.7% of the state's employers and 46.8% of its private-sector employment.

In 2009, there were about 468,000 small women-owned small businesses compared to over 1 million owned by men.

88,000 small business owners are black, 77,000 are Asian, 319,000 are Hispanic, and 16,000 are Native Americans.

Since small businesses make up such a large portion of our employer network, it is important to understand how they will be impacted as a result of patent reform.

Given the current state of the economy, we cannot afford to overlook the opportunities for job growth that small businesses create.

According to the Bureau of Labor Statistics, between the 1992 and 2005, small businesses accounted for 65% of quarterly net employment growth in the private sector.

Even in unsteady economic times, small businesses can be counted on for job creation. Between 1992 and 2004, the net job creation rate was the highest at the smallest establishments.

Small Businesses Create Jobs. It is a fact. According to the Small Business Administration, small businesses:

Represent 99.7 percent of all employer firms.

Employ just over half of all private sector employees.

Generated 64 percent of net new jobs over the past 15 years.

Create more than half of the nonfarm private gross domestic product (GDP).

Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).

Made up 97.3 percent of all identified exporters and produced 30.2 percent of the known export value in FY 2007.

Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.

Many successful business owners will credit at least part of their success to the ability to innovate--in technologies, in strategies, and in business models. A huge part of this innovation comes from the ability to create and patent ideas.

According to a study conducted by Business Week, half of all business innovation resources are dedicated to creating new products or services.

Patents are the driving force behind this product innovation, and without strong patent protection, businesses will lack the incentive to attract customers and contribute to economic growth.

While I am happy to be here debating this all important amendment to this bill, it is unfortunate that some of my other amendments supporting small businesses and acknowledging the ``takings clause'' in the U.S. Constitution were not accepted. In yesterday's Rules Committee meeting, I offered a number of amendments:

I offered amendments that ensure the inclusion of minority and women owned businesses in the definition of ``small entities'' to ensure they receive the benefits of reduced user fees.

I also offered an amendment ensuring the inclusion of Historically Black Colleges and Universities and Hispanic Serving Institutions amongst entities that receive fee discounts.

Another pro-small business amendment I offered would have extended the grace period for small businesses from one year to 18 months, enabling them enough time to secure financial support and develop their invention in order to bring it to market.

Section 18 of the bill, which creates a transitional review program for business method patents, has raised concerns about the potential to create situations which could run afoul of the ``takings clause'' in the U.S. Constitution. To address these concerns, I offered a number of amendments:

One of my amendments would have shortened the sunset on Section 18 from 10 years to 5 years.

I also introduced an amendment that would have required the Director of the USPTO to make a determination of whether or not a condition causing an unlawful taking is created by this section.

Lastly, I introduced a sense of Congress amendment that affirms that no provisions in this bill should create a unconstitutional taking.

Despite my concerns with certain provisions in this bill, overall, I believe H.R. 1249 will usher in the reforms needed to improve the patent system, making it more effective and efficient, and therefore encouraging innovation and job creation.

I yield back the balance of my time.

Madam Chair, I demand a recorded vote.

Madam Chair, because of the graciousness of the ranking member, Mr. Conyers, and the chairman, Mr. Smith, of agreeing to my amendment, Jackson Lee No. 5 that was just debated, I ask unanimous consent to withdraw my request for a record vote.

Madam Chairman, I rise in strong opposition to this amendment.

Increasingly, individuals and companies are filing patents to protect tax strategies. When one individual or business is given the exclusive right to a particular method of complying with the Tax Code, it increases the costs and complexity for every other citizen or tax preparer to comply with the Tax Code. It is not difficult to foresee a situation where taxpayers are forced to choose between paying a royalty in order to reap the best tax treatment and complying with the Tax Code in another, less favorable way. Tax strategy patents add additional costs and complications to an already overly complex process, and this is not what Congress intended when it passed the Federal tax laws or the patent laws.

The problem of tax strategy patents has been a growing concern for over a decade. Over 140 tax strategy patents have already been issued, and more applications are pending. Tax strategy patents have the potential to affect tens of millions of everyday taxpayers, many who do not even realize these patents exist. The Tax Code is already complicated enough without also expecting taxpayers and their advisers to become ongoing experts in patent law.

That is why I advocated for inclusion in H.R. 1249 of a provision to ban tax strategy patents. H.R. 1249 contains such a provision which deems tax strategies insufficient to differentiate a claimed invention from the prior art. This will help ensure that no more tax strategy patents are granted by the PTO.

Importantly, the House worked hard to find a compromise that will ensure Americans have equal access to the best methods of complying with the Tax Code, while also preserving the ability of U.S. technology companies to develop innovative tax preparation and financial management solutions. I believe the language in H.R. 1249 does just that.

This amendment would allow any tax strategy patent that was filed as of the date of enactment of the bill to move toward issuance by the PTO. However, tax strategy patents are bad public policy whether they were filed the day before or the day after this bill happens to be enacted. The effective date in the underlying bill rightly applies to any patent applications pending on the date of enactment.

In order to reduce the cost of filing taxes for all Americans and to restore common sense to our patent system, I urge my colleagues to oppose this amendment.

I thank the chairman for yielding.

Madam Chairman, I rise in opposition to this amendment.

The Senate-passed patent bill granted the PTO fee-setting authority into perpetuity. The Senate's goal was laudable. It wanted to allow the PTO to have control over the fees that it charges so that it would have more certainty about rolling out new programs and hiring new examiners to deal with pendency and quality issues. We have, as you know, a very long backlog--3 years, 1 million patents. However, I had strong concerns with granting this much authority to a government agency.

Currently, the PTO must come before Congress to request any fee increases. This forces the PTO to use its current resources in the most efficient manner and also strengthens Congress' hand when it comes to oversight over the agency. Thus, I worked to get a provision into the House bill that would sunset the PTO's fee-setting authority. The bill now terminates the fee-setting authority after 7 years unless Congress proactively acts to extend it. This will allow the PTO sufficient time to structure its fees but will ensure that Congress continues to have a strong influence over that process.

And I might add that the manager's amendment to the bill also strengthens Congress' hand and limits the objective of the PTO to arbitrarily raise its fees because the Congress still appropriates the funds and can only escrow funds--can't divert them to another purpose, but escrows them. PTO will have to come back to the Congress and justify additional funds it receives.

I believe the bill, as it is written right now, strikes the right balance. And I urge Members to oppose this amendment, which would altogether eliminate PTO fee-setting authority.

Madam Chairman, I rise in strong opposition to this amendment, which is a bad idea. Post-grant review is one of the most important provisions in this bill. It allows third parties, for a limited window of 9 months after a patent is issued, to submit evidence that the patent should not have been granted in the first place.

This allows third parties, many of whom will be small businesses themselves who are familiar with the subject matter, to provide a check on patent examiners. If the evidence shows that the patent is indeed invalid, then the patent applicant should never have received the patent in the first place. If the evidence shows that the patent is valid, then the patent is made stronger and more certain by surviving a post-grant review.

The amendment would exempt small businesses from the post-grant opposition proceeding. However, the quality of a patent examination does not hinge on the size of the applicant, whether it was a small business, an independent inventor, or a large corporation. It hinges on the PTO job of scrutinizing that patent. A bogus patent held by an independent inventor is no less deserving of a second look than a bogus patent held by a Fortune 500 company.

For these reasons, I urge opposition to this very bad amendment.

Mr. Chairman, I rise in opposition to this amendment. There is no doubt that the PTO has issued business method patents of questionable merit over the years. Many of these patents are still on the books. Unfortunately, many of these patents are being used by aggressive trial lawyers to extort money from deep pockets. Section 18 of the bill simply creates a process that allows experts at the PTO to reexamine the types of business method patents that the PTO believes to be of the poorest quality. This section was drafted in close coordination with the USPTO and is a pilot program that simply allows them to review certain business methods patents against the best prior art in a reexamination process.

Why would anyone oppose a process that allows low-quality patents, as identified by the USPTO, to be reviewed by the experts?

Business method patents on financial activities are the type of patents that are the subject of lawsuits and abuse most often. They are litigated at a rate 39 times greater than any other patents. Section 18 is designed to correct a fundamental flaw in the system that is costing consumers millions each year. The provision is supported by a broad bipartisan coalition that includes the U.S. Chamber of Commerce.

I urge Members to reject this amendment, which strikes an important litigation reform provision in the underlying bill.

Let's just note that Ms. Lofgren last night presented a case to this body which I felt demonstrated the danger that we have in this law. A move to first-to-file system, which is what this bill would do, without a corresponding 1-year grace period in other countries dramatically undermines the patent protection of American inventors. Some of us believe that's the purpose of this bill because they want to harmonize American law with the weak systems overseas.

Well, without this amendment that we are talking about right now, without the Conyers-Rohrabacher amendment, if an inventor discloses his discoveries, perhaps to potential investors, his right to patent protection is essentially gone. It's not gone from just Americans. Yes, he would be protected under American law; but from all those people in foreign countries without a similar grace period to what we have here in our system, these people are not restricted. Thus, they could, once an American inventor discloses it, at any time they can go and file a patent and steal our inventors' discoveries.

The only way for American inventors to benefit from a grace period here, which this bill is all about, is to ensure that foreign countries adopt the same grace period. And that's what this amendment would do. It would say our bill, which will make our inventors vulnerable to foreign theft, will not go into place until those foreign countries have put in place a similar grace period, which then would prevent them and their citizens from coming in and stealing our technology. Ms. Lofgren detailed last night in great detail how that would work.

I call this bill basically the Unilateral Disclosure Act, if not the Patent Rip-Off Act, because we are disclosing to the world what we've got. And our people can't follow up on it because there's a grace period here, but overseas they don't have that same grace period. So what we're saying is, to prevent foreigners from stealing American technology, this will not go into effect until the President has issued a statement verifying that the other countries of the world have a similar grace period so they can't just at will rip off America's greatest entrepreneurs and inventors.

Madam Chairman, I have an amendment at the desk.

In this debate, Madam Chairman, we have heard over and over and over again about the gridlock at the Patent Office, which is supposedly what we're trying to correct with this legislation, H.R. 1249, which I have been contending is not designed to help the Patent Office, but to harmonize American law with the rest of the world and make it weaker patent protection for our people.

But what does it do about the backlog, if that's really what people are concerned about? H.R. 1249 would actually tremendously add to the PTO backlog by requiring further post-grant review proceedings at the Patent Office, proceedings which would consume even more limited personnel and money. Added procedures add to the gridlock at the PTO, at the Patent Office, and it will also do what? It will break the back of small inventors and startup companies who are trying to get a new product on the market.

It will empower the multinational and foreign corporations who can grind down the little guy, because what we are doing in this bill is adding even further procedures they have to go through, even after they have got their patent issued to them.

This is the big guy versus little guy legislation. That was even pointed out by the Hoover Institution, which did an analysis of this bill and said, ``The American Invents Act will protect large entrenched companies at the expense of market challenging competitors.''

``A patent should be challenged in court, not in the U.S. Patent Office.''

``A politicized patent system will further entrench those companies with the largest lobbying shops on K Street.''

``The bill wreaks havoc on property rights, and predictable property rights are essential for economic growth.''

``If America weakens its patent enforcement at home, it will set a dangerous precedent overseas.''

``The America Invents Act would inject massive uncertainty into the patent system.''

This is a travesty. It is an attack on American well-being, because we depend on our small inventors to come up with the ideas. The Kaptur- Rohrabacher amendment limits this new burden. If we can't get rid of it, at least we can limit this new burden of all these post-grant reviews they are going to add to companies that have more than 100 employees. It frees up the Patent Office personnel to do their job, helps with that gridlock, and protects the small business man and small inventors at the same time.

I would ask my colleagues to support the Kaptur-Rohrabacher amendment.

I yield such time as she may consume to the gentlewoman from Ohio (Ms. Kaptur).

Let me just note, our amendment empowers the Director of the Patent Office to extend this 100-employee standard to other small businesses and individual inventors overseas if this is required by a treaty; yes, small businesses and individual inventors overseas. So our amendment does nothing to violate any treaty obligations by giving our own people special rights over foreign individuals.

What it does do, however, is prevent foreign corporations from grinding down our inventors here, like they grind down their inventors overseas. This is what we are doing to prevent a harmonization of our laws, because we don't want weaker patent protection for our people. They already got it overseas against their foreign corporations that grind them down. We want to protect our own people.

I reserve the balance of my time.

I yield the balance of my time to the gentlewoman from Ohio (Ms. Kaptur).

Madam Chair, I demand a recorded vote.

Madam Chairman, I have an amendment at the desk.

I ask unanimous consent that the gentleman from California, Dana Rohrabacher, be added to this amendment as a cosponsor.

I yield myself 2\1/2\ minutes.

Ladies and gentlemen, this bipartisan amendment adds an important provision to H.R. 1249. It would permit the conversion of the United States to a first-to-file system only upon a Presidential finding that other nations have adopted a similar one-year grace period. This one- year grace period protects the ability of an inventor to discuss or write about his or her ideas for a patent up to a year before he or she actually files for patent protection. And without this grace period, an inventor could lose his or her own patent.

This grace period provision within H.R. 1249 would grant an inventor a one-year period between the time he first publishes his invention to the time when he's required to file a patent. During this time, this would prohibit anyone else from seeing this publication, stealing the idea, and quickly filing a patent behind the inventor's back. Yet the only way for American inventors to benefit from the grace period provision contained in 1249 is to ensure that the foreign countries adopt a similar grace period as well.

The amendment would encourage other countries to adopt a similar period in their patent system consistent with a recommendation by the National Academy's National Research Council. Current law in the United States allows a grace period of 1 year, during which an applicant can disclose or commercialize an invention before filing for a patent. Japan offers a limited grace period, and Europe provides none.

If the first-to-file provision in the bill is implemented, we must ensure that American inventors are not disadvantaged. Small American inventors and universities are disadvantaged abroad in those nations where there is no grace period.

The grace period provision within H.R. 1249 would grant an inventor a one-year period between the time he first publishes his invention to the time when he is required to file a patent.

During this time, this would prohibit anyone else from seeing this publication, stealing the idea, and quickly filing a patent behind the inventor's back.

Yet, the only way for American inventors to benefit from the grace period provision contained in H.R. 1249 is to ensure that foreign countries adopt a grace period, as well.

Small American inventors and universities are disadvantaged abroad in those nations where there is no grace period. As a result, they often lose the right to patent because these other countries do not care about protecting small business and university research.

The United States needs to do more to protect the small inventor and universities not just here but abroad.

Unfortunately, other countries will not do it on their own even though they want the United States to convert to a ``first-to-file'' system.

If H.R. 1249 passes without my Amendment, we will be giving away a critical bargaining chip that we can use to encourage other countries to follow our lead.

My Amendment ensures that the only way to benefit from the grace period in H.R. 1249 is to have foreign countries adopt a grace period.

Without this Amendment, we will be unilaterally transitioning the United States to a ``first-to-file'' system with a weak grace period without any incentive for foreign countries to adopt a grace period.

I should also note that identical language was included in H.R. 1908, the ``Patent Reform Act of 2007,'' which the House passed on September 7, 2007.

Accordingly, I urge my colleagues to support this Amendment.

I yield the balance of my time to the gentleman from California (Mr. Rohrabacher).

Madam Chair, I demand a recorded vote.

This bipartisan amendment makes a technical revision to H.R. 1249. It addresses the confusion regarding the calculation of the filing period for patent term extension applications under the Hatch- Waxman Act. By eliminating confusion regarding the deadline for patent term extension applications, this amendment provides the certainty necessary to encourage costly investments in life-saving medical research. It also is consistent with the only court case to address this issue entitled, The Medicines Co. v. Kappos. As a result of this amendment, all applications and cases will be treated henceforth in the same manner.

I also want to point out that this exact language has passed the House overwhelmingly on a voice vote in the past, and the prior version of the provision was unanimously passed by the House on two previous occasions and was also in another instance voted out by the Senate Judiciary Committee on a bipartisan basis. It was also accepted in a voice vote by the House Judiciary Committee at a markup earlier this year.

Madam Chair, I reserve the balance of my time.

I would like to yield 1 minute to the distinguished gentleman from Massachusetts, Ed Markey, of the Energy and Commerce Committee.

I yield, unfortunately only 75 seconds, to my good friend, also from Massachusetts, Mr. Richard Neal.

Madam Chair, I am proud now to yield 30 seconds to the distinguished gentleman from Kansas, Mike Pompeo.

I yield the balance of my time to the distinguished gentleman from New Jersey, Scott Garrett.