A joint resolution relating to the disapproval of the President's exercise of authority to increase the debt limit, as submitted under section 3101A of title 31, United States Code, on August 2, 2011.

Mr. President, I will speak later about the comments made by the distinguished Senator from Alabama. He has been very helpful in getting this patent bill through. He is correct that this amendment he speaks to is one added in the other body, not by us. We purposely didn't have it in our bill. I know Senator Grassley will follow my remarks.

There is no question in my mind that if the amendment of the Senator from Alabama were accepted, it in effect will kill the bill. Irrespective of the merits, it can come up on another piece of legislation or as freestanding legislation. That is fine. But on this bill, after 6 years of effort to get this far, this bill would die because the other body will not take it up again.

Hurricane Irene

Mr. President, I will use my time to note some of the things happening in my own very special State of Vermont, the State in which I was born.

As Vermonters come together and continue to grapple with the aftermath of storm damage from Irene, I wish to focus today on the agriculture disaster that has hit us in Vermont and report to the Senate and our fellow citizens across the Nation about how the raging floodwaters wreaked havoc on our farming lands and infrastructure in Vermont.

It was 12 days ago now that this enormous, slow-moving storm hit Vermont and turned our calm, scenic brooks and creeks into raging gushers. In addition to our roads and historic covered bridges that were destroyed or carried away, we had barns, farmhouses, crops, parts of fields, and livestock washed away in the rising floodwaters. I recall the comments of one farmer who watched his herd of cows wash down the river, knowing they were going to die in the floodwaters.

Now the cameras have begun to turn away, but the cleanup and urgent repairs are underway. For major parts of Vermont's economy, the worst effects of this storm are yet to come. For our dairy farmers, who are the bedrock of our economy and keystones of our communities, the toll of this disaster has been heavy and the crises has lasted longer as they have struggled to take care of their animals while the floodwaters recede.

This is a photograph of East Pittsford, VT, taken by Lars Gange just over a week ago. The water we see is never there. It is there now. Look at this farm's fields, they are destroyed. Look at homes damaged and think what that water has done.

As I went around the state with our Governor and Vermont National Guard General Dubie the first couple of days after the storm hit, we went to these places by helicopter and I cannot tell you how much it tore at my heart to see the state, the birthplace to me, my parents, and grandparents. To see roads torn up, bridges that were there when my parents were children, washed away. Historic covered bridges, mills, barns, businesses just gone and what it has done to our farmers, it is hard, I cannot overstate it.

Our farmers have barns that are completely gone, leaving no shelter for animals. They are left struggling to get water for their animals, to rebuild fencing, to clean up debris from flooded fields and barns, and then to get milk trucks to the dairy farms. Remember, these cows have to be milked every single day. We also have farmers who do not have any feed or hay for their animals because it all washed away. As one farmer told me, the cows need to be milked two or three times every day, come hell or high water. This farmer thought he had been hit with both, hell and high water.

While reports are still coming in from the farms that were affected, the list of damages and the need for critical supplies, such as feed, generators, fuel, and temporary fencing is on the rise. As we survey the farm fields and communities, we know it will be difficult to calculate the economic impacts of this violent storm on our agriculture industry in Vermont.

Many of our farmers were caught by surprise as the unprecedented, rapidly rising floodwaters inundated their crops, and many have had to deal with the deeply emotional experience of losing animals to the fast-moving floodwaters. We have farms where whole fields were washed away and their fertile topsoil sent rushing down river. The timing could not have been worse. Corn, which is a crucial winter feed for dairy cows, was just ready for harvest, but now our best corn is in the river bottoms and is ruined. Other farms had just prepared their ground to sow winter cover crops and winter greens; they lost significant amounts of topsoil.

River banks gave way, and we saw wide field buffers disappear overnight, leaving the crops literally hanging on ledges above rivers, as at the Kingsbury farm in Warren, VT. Vegetable farming is Vermont's fastest growing agricultural sector, and, of course, this is harvest season. Our farmers were not able to pick these crops, this storm picked many fields clean.

Many Vermonters have highly productive gardens that they have put up for their families to get through the winter by canning and freezing. Those too have been washed away or are considered dangerous for human consumption because of the contaminated floodwaters. Vermont farmers have a challenging and precarious future ahead of them as they look to rebuild and plan for next year's crops, knowing that in our State it can be snowing in 1\1/2\ or 2 months.

I have been heartened, however, by the many stories I have heard from communities where people are coming together to help one another. For instance, at the Intervale Community Farm on the Winooski River, volunteers came out to harvest the remaining dry fields before the produce was hit by still rising floodwaters.

When the rumors spread that Beth and Bob Kennett at Liberty Hill Farm in Rochester had no power and needed help milking--well, people just started showing up. By foot, on bike, all ready to lend a hand to help milk the cows. Fortunately for them and for the poor cows, the Vermont Department of Agriculture had managed to help get them fuel and the Kennetts were milking again, so asked the volunteer farm hands to go down the road, help somebody else and they did.

Coping with damage and destruction on this scale is beyond the means and capability of a small State such as ours, and Federal help with the rebuilding effort will be essential to Vermont, as it will be to other States coping with the same disaster. I worry the support they need to rebuild may not be there, as it has been in past disasters, when we have rebuilt after hurricanes, floods, fires and earthquakes to get Americans back in their homes, something Vermonters have supported even though in these past disasters Vermont was not touched.

So I look forward to working with the Appropriations Committee and with all Senators to ensure that FEMA, USDA and all our Federal agencies have the resources they need to help all our citizens at this time of disaster, in Vermont and in all our states. Unfortunately, programs such as the Emergency Conservation Program and the Emergency Watershed Protect Program have been oversubscribed this year, and USDA has only limited funds remaining. We also face the grim fact that few of our farms had bought crop insurance and so may not be covered by USDA's current SURE Disaster Program.

But those are the things I am working on to find ways to help our farmers and to move forward to help in the commitment to our fellow Americans. For a decade, we have spent billions every single week on wars and projects in far-away lands. This is a time to start paying more attention to our needs here at home and to the urgent needs of our fellow citizens.

I see my friend from Iowa on the floor, and I yield the floor.

Mr. President, I thank the distinguished Senator from Iowa for his words, and I join with the Senator from Iowa in opposing the amendment for two reasons. First, as just simply as a practical matter, the amendment would have the effect, if it passed, of killing the bill because it is not going to be accepted in the other body, and after 6 years or more of work on the patent bill, it is gone. But also, on just the merits of it, the provision this amendment strikes, section 37 of H.R. 1249, simply adopts the holding of a recent district court decision codifying existing law about how the Patent and Trademark Office should calculate 5 days for the purpose of considering a patent term extension. So those are the reasons I oppose the amendment to strike it.

The underlying provision adopted by the House is a bipartisan amendment on the floor. It was offered by Mr. Conyers, and it has the support of Ms. Pelosi and Mr. Berman on the Democratic side and the support of Mr. Cantor, Mr. Paul, and Mrs. Bachmann on the Republican side. I have a very hard time thinking of a wider range of bipartisan support than that.

The provision is simply about how they are calculating filing dates for patent extensions, although its critics have labeled it as something a lot more. A patent holder on a drug is entitled by statute to apply for an extension of its patent term to compensate for any delay the Food and Drug Administration approval process caused in actually bringing the drug to market. The patent holder not only has to file the extension within 60 days beginning on the date the product received permission for marketing, but there is some ambiguity as to when the date is that starts the clock running.

Only in Washington, DC, could the system produce such absurd results that the word ``date'' means not only something different between two agencies--the PTO and the FDA--but then it is given two different constructions by the FDA. If this sounds kind of esoteric, it is. I have been working on this for years and it is difficult to understand. But the courts have codified it. Let's not try to change it yet again.

What happens is that the FDA treats submissions to it after normal hours as being received the next business day. But the dates of submissions from the FDA are not considered the next business day, even if sent after hours. To complicate matters, the PTO recently changed its own method of defining what is a ``date.''

If this sounds confusing even in Washington, you can imagine how it is outside of the bureaucracy. Confusion over what constitutes the ``date'' for purposes of a patent extension has affected several companies. The most notable case involves the Medicines Company's ANGIOMAX extension application request.

The extension application was denied by the PTO because of the difference in how dates are calculated. MedCo challenged the PTO's decision in court, and last August the federal district court in Virginia held the PTO's decision arbitrary and capricious and MedCo received its patent term extension.

Just so we fully understand what that means, it means PTO now abides by the court's ruling and applies a sensible ``business day'' interpretation to the word ``date'' in the statute. The provision in the America Invents Act simply codifies that.

Senator Grassley has spoken to this. As he said a few weeks ago, this provision ``improves the patent system fairness through certainty and clarity.''

This issue has been around for several years and it was a controversial issue when it would have overturned the PTO's decision legislatively. For this reason Senator Grassley and others opposed this provision when it came up several years ago. But now that the court has ruled, it is a different situation. The PTO has agreed to accept the court's decision. The provision is simply a codification of current law.

Is there anyone who truly believes it makes sense for the word ``date'' to receive tortured and different interpretations by different parts of our government rather than to have a clear, consistent definition? Let's actually try to put this issue to bed once and for all.

The provision may solidify Medco's patent term extension, but it applies generally, not to this one company, as has been suggested. It brings common sense to the entire filing system.

However, if the Senate adopts the amendment of the Senator from Alabama, it will lead to real conflict with the House. It is going to complicate, delay, and probably end passage of this important bipartisan jobs-creating legislation.

Keep in mind, yesterday I said on the floor that each one of us in this body could write a slightly different patent bill. But we do not pass 100 bills, we pass 1. This bill is supported by both Republicans and Democrats across the political spectrum. People on both sides of the aisle have been working on this issue for years and years in both bodies. We have a piece of legislation. Does everybody get every single thing they want? Of course not. I am chairman of the Senate Judiciary Committee. I don't have everything in this bill I want, but I have tried to get something that is a consensus of the large majority of the House and the Senate, and we have done this.

In this instance, in this particular amendment, the House expressly considered this matter. They voted with a bipartisan majority to adopt this provision the amendment is seeking to strike. With all due respect to the distinguished Senator from Alabama, who contributed immensely to the bill as ranking member of the committee last Congress, I understood why he opposed this provision when it was controversial and would have had Congress override the PTO. But now that the PTO and court have resolved the matter as reflected in the bill, it is not worth delaying enactment of much-needed patent reform legislation. It could help create jobs and move the economy forward.

We will have three amendments on the floor today that we will vote on. This one and the other two I strongly urge Senators, Republicans and Democrats, just as the ranking member has urged, to vote them down. We have between 600,000 and 700,000 patents applications that are waiting to be taken care of. We can unleash the genius of our country and put our entrepreneur class to work to create jobs that can let us compete with the rest of the world. Let's not hold it up any longer. We have waited long enough. We debated every bit of this in this body and passed it 95 to 5. On the motion to proceed, over 90 Senators voted to proceed. It has passed the House overwhelmingly. It is time to stop trying to throw up roadblocks to this legislation.

If somebody does not like the legislation, vote against it. But this is the product of years of work. It is the best we are going to have. Let us get it done. Let us unleash the ability and inventive genius of Americans. Let us go forward.

We have a patent system that has not been updated in over a half century, yet we are competing with countries around the world that are moving light years ahead of us in this area. Let's catch up. Let's put America first. Let's get this bill passed.

I yield the floor.

Amendment No. 595

Mr. President, I suggest the absence of a quorum.

Reserving the right to object, the Senator from Oklahoma knows that the basic thing he is trying to do is something I had supported. As he knows, I put it in the managers' package. He also is aware that my belief is--obviously we disagree--my belief is that the acceptance of his amendment will effectively kill the bill. Even today the leadership in the House told me they would not accept that bill with it. I say this only because tactically it would be to my advantage to object to the amendment. But the distinguished Senator is one of the hardest working members of the Judiciary Committee. He is always there when I need a quorum. Out of respect for him, I will not object.

Mr. President, this is an amendment that can derail and even kill this bill--a bill that would otherwise help our recovering economy, unleash innovation and create the jobs

that are so desperately needed. I have worked for years against Patent Office fee diversion, but oppose this amendment at this time. Its formulation was rejected by the House of Representatives, and there is no reason to believe that the House's position will change. Instead, for ideological purity, this amendment can sink years of effort and destroy the job prospects represented by this bill. So while I oppose fee diversion, I also oppose the Coburn amendment.

I kept my commitment to Senator Coburn and included his preferred language in the managers' amendment which the Senate considered last March. The difference between then and now is that the Republican leadership of the House of Representatives rejected Senator Coburn's formulation. They preserved the principle against fee diversion but changed the language.

The language in the bill is that which the House devised and a bipartisan majority voted to include. It was worked out by the House Republican leadership to satisfy House rules. The provision Senator Coburn had drafted and offers again with his amendment today apparently violates House Rule 21, which prohibits converting discretionary spending into mandatory spending. So instead of a revolving fund, the House established a reserve fund. That was the compromise that the Republican House leadership devised between Chairmen Smith, Rogers and Ryan. Yesterday I inserted in the Record the June letter for Congressmen Rogers and Ryan to Chairman Smith of the House Judiciary Committee. Today I ask consent to insert into the Record the commitment letter from Chairman Rogers to Speaker Boehner.

The America Invents Act, as passed by the House, continues to make important improvements to ensure that fees collected by the U.S. Patent and Trademark Office (USPTO) are used for Patent and Trademark Office activities. That office is entirely fee-funded and does not rely on taxpayer dollars. It has been and continues to be subject to annual appropriations bills. That allows Congress greater opportunity for oversight.

The legislation that passed the Senate in March would have taken the Patent and Trademark Office out of the appropriations process, by setting up a revolving fund that would have allowed the office to set fees and collect and spend money without appropriations legislation and congressional oversight. Instead of a revolving fund, the House formulation against fee diversion establishes a separate account for the funds and directs that they be used for U.S. Patent and Trademark Office. The House Appropriations Chairman has committed to abide by that legal framework.

The House forged a compromise. Despite what some around here think, that is the essence of the legislative process. The Founders knew that when they wrote the Constitution and included the Great Compromise. Ideological purity does not lead to legislative enactments. This House compromise can make a difference and make real progress against fee diversion. It is something we can support and there are many, many companies and organizations that do support this final workout in order to get the bill enacted without further delay, as do I.

The America Invents Act, as passed by the House, creates a new Patent and Trademark Fee Reserve Fund (the ``Reserve Fund'') into which all fees collected by the USPTO in excess of the amount appropriated in a fiscal year are to be deposited. Fees in the Reserve Fund may only be used for the operations of the Patent and Trademark Office. Through the creation of the Reserve Fund, as well as the commitment by House appropriators, H.R. 1249 makes important improvements in ensuring that user fees collected for services are used by the Patent and Trademark Office for those services.

Voting for the Coburn amendment is a vote to kill this bill. It could kill the bill over a formality--the difference between a revolving fund and a reserve fund. It would require the House to reconsider the whole bill again. They spent days and weeks working out their compromise in good faith. And it was worked out by the House Republican leadership. There is no reason to think they will reconsider and allow the original Coburn language to violate their rules and avoid oversight. They have already rejected that language, the very language proposed by the Coburn amendment.

We should not kill this bill over this amendment. We should reject the amendment and pass the bill. The time to put aside individual preferences and ideological purity is upon us and we need to legislate. That is what the American people elected us to do and expect us to do. The time to enact this bill is now. Vote no on the Coburn amendment.

I have listened to the Senator from Oklahoma, and no matter what we say about it, his is an amendment that can derail and even kill this bill. He expresses concern as to why the bill should be sought because somebody objects to the bill. I sometimes ask myself that question. Of course, the distinguished Senator from Oklahoma has objected to many items going forward on his own behalf, but this is an amendment that could derail or even kill the bill. This is a bill that would otherwise help our recovering economy to unleash innovation, create the jobs so desperately needed.

I probably worked longer in this body than anybody against Patent Office fee diversion. As the Senator from Oklahoma knows, I put a provision in the managers' package to allow the fees to go to the Patent Office. Now it is a lobby to keep that in in the other body. Its formulation was rejected by the House of Representatives.

There is no reason to believe the House position will change. I checked with both the Republican and Democratic leaders over there. There is no reason to believe their position will change, but we insist on ideological purities--including something I would like. The amendment would take years of effort, destroy the job prospects represented by this bill. While I oppose the fee diversion, I also oppose this amendment.

Does this bill have every single thing in it I want? No. We could write 100 patent reform legislations in this body where each one of us has every single thing we want, and we would have 100 different bills. We only have one. It does not have all the things I like, but that is part of getting legislation passed.

I did keep my commitment to Senator Coburn. I kept his language in the managers' amendment, and I caught a lot for doing that--I am a member of the Appropriations Committee--but I kept it in there. The difference between then and now is that the Republican leadership of the House of Representatives rejected Senator Coburn's formulation. They preserved the principle against fee diversion but changed the language. In doing that, however, it is not a total rejection. They actually tried to work out a compromise. The language of the bill, which the House devised--a bipartisan majority voted to include--was worked out by the House Republican leadership to satisfy the House rules.

The provision that Senator Coburn has drafted and offers, again, with his amendment today apparently violates House rule 21 which prohibits converting discretionary spending into mandatory spending.

What the House did--and actually accomplished what both Senator Coburn and I and others want--instead of a revolving fund was to establish the reserve fund. That was the compromise that the Republican House leadership devised between Chairman Smith, Chairman Rogers, and Chairman Ryan.

Yesterday, I inserted into the Record the June letter from Congressmen Rogers and Ryan to Chairman Smith to the House Judiciary Committee.

I ask unanimous consent to have printed in the Record the commitment letter from Chairman Rogers to Speaker Boehner.

I would note that it has been suggested somehow the Appropriations chairman is not going to keep his word. Well, Chairman Rogers is a Republican. I have worked with him a lot. He has always kept his word to me, just as we have the most decorated veteran of our military serving in either body as chairman of the Senate Appropriations Committee, the only Medal of Honor recipient now serving, Senator Inouye. Both he and the ranking Republican, Senator Cochran, have always kept their word to me certainly in more than the third of a century I have served on that committee.

The America Invents Act, as passed by the House, continues to make important improvements. It ensures the fees collected by the U.S. Patent and Trademark Office are used for Patent and Trademark Office activities. The one thing in there is that we in the Congress at least have a chance to make sure they are using it the way they are supposed to.

The office is entirely fee funded. It does not rely on taxpayer dollars. It has been and continues to be subject to the annual appropriations bill which allows the oversight that we are elected and paid for by the American people to do.

The legislation we passed in March would have taken the Patent Trademark Office out of the appropriations process by setting up a revolving fund. Instead of a revolving fund, the House formulation against fee diversion established a separate account and directs that account be used only by the U.S. Patent and Trademark Office. The House Appropriations chairman is committed to abide by that legal framework. The Speaker is committed to that. The House forged a compromise. That is the essence of the legislative process.

The Founders knew when they wrote the Constitution to include the Great Compromise. Ideological purity does not lead to legislative enactments. Ideological purity does not lead to legislative enactments.

The House compromise can make a difference. It made real progress against fee diversion, which is something we can support. There are many companies and organizations that do support this in order to get the bill enacted without delay. After 6\1/2\ years, let's not delay any more.

This is going to create jobs. We have 600,000 to 700,000 patents sitting there waiting to be processed. Let's get on with it. For all of these fees and the reserve fund can only be used for the operations of the Patent and Trademark Office. I don't know what more we can do. But I would say I am perfectly willing to accept what the House did because it assures that the fees go to the Patent Office.

I am also well aware that voting for this amendment kills the bill. It could kill the bill over a formality--the difference between a reserve fund and a revolving fund.

I think the House Republican leadership worked out their compromise in good conscience, and I agree with it.

The U.S. Patent and Trademark Office is funded entirely by user fees, and the Leahy-Smith America Invents Act will ensure the PTO has access to the fees it collects. We have heard from a number of organizations which agree with that, and I ask unanimous consent that a sample of these letters from the Business Software Alliance, the Small Business and Entrepreneurship Council, DuPont, and other financial organizations be printed in the Record.

Mr. President, I ask unanimous consent that I be allowed to reserve the remainder of my time, and I suggest the absence of a quorum.

I thank the Senator. I reserve the remainder of my time and suggest the absence of a quorum.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, when the America Invents Act was first considered by the Senate last March, I spoke about the contributions Vermonters have made to innovation in America since the founding of our Nation. The distinguished Presiding Officer and I know about what Vermont has done. I wish to remind everybody that from the first patent ever issued by our government to cutting-edge research and inventions produced today Vermonters have been at the forefront of innovation since the Nation's birth.

Many may think of our Green Mountain State as being an unlikely hotbed of innovation, but we have actually over the last few years issued the most patents per capita of any State in the country-- actually more patents than a lot of States that are larger than we are. It is a small State, to be sure, but it is one that is bursting with creativity.

The rich history of the inventive spirit of Vermont is long and diverse. Vermonters throughout have pursued innovations from the time of the Industrial Revolution to the computer age. Vermont inventors discovered new ways to weigh large objects as well as ways to enjoy the outdoors. They have perfected new ways to traverse rivers and more environmentally friendly ways to live in our homes. Over the years, as America has grown and prospered, Vermont's innovative and creative spirit has made the lives of all Americans better and possibly made them more productive. The patent system in this country has been the catalyst that spurred these inventors to take the risks necessary to bring these ideas to the marketplace.

The story of innovation in Vermont is truly the American story. It has been driven by independent inventors and small businesses taking chances on new ideas. A strong patent system allowed these ideas to flourish and brought our country unprecedented economic growth. These same kinds of inventors exist in Vermont today, as they do throughout our great country.

But these inventors need to be assured that the patent system that served those who came before them so well can do the same today. The America Invents Act will provide that assurance for years to come.

My distinguished colleague from Vermont and I have both spoken several times on the Senate floor since the Senate came back in session about the devastation in Vermont. I cannot help but think of the devastation that Irene has caused in so many of our communities at home. Just as Senator Sanders and Congressman Welch and Governor Shumlin, I have seen the damage and heartbreak firsthand. But I also saw the fruits of innovation that will help bring recovery to communities throughout Vermont: the heavy machinery that helped to clear debris and that will build our roads and our bridges and our homes; the helicopters that brought food and water to stranded residents; and the bottles that allowed safe drinking water to reach them.

The American patent system has helped to develop and refine countless technologies that drive our country in times of prosperity but also in times of tragedy. It is critical we ensure that this system remains the best in the world.

Vermont and the rest of the country deserve the world's best patent system. The innovators of the past had exactly that, but we can ensure that the innovators who are among us today and those who will come in succeeding generations will have it as well by passing the America Invents Act.

I am proud of the inventive contributions that Vermonters have made since the founding of this country. I hope to honor their legacy. I hope to inspire the next generation by securing the passage of this legislation.

I have been here for a number of years, but this is one of those historic moments. The patent system is one of the few things enshrined in our Constitution, but it is also something that has not been updated for over half a century. We can do that. We can do that today with our vote. We can complete this bill. We can send it to the President. The President has assured me he will sign it. We will make America stronger. We will create jobs. We will have a better system. And it will not cost American taxpayers anything. That is something we ought to do.

Mr. President, the America Invents Act is supported by dozens of businesses and organizations, large and small, active in all 50 States.

The America Invents Act is the product of more than 6 years of debate and compromise. The stakeholders have crossed the spectrum--from small businesses to high-tech companies; financial institutions to labor organizations; life sciences to bar associations.

More than 180 companies, associations, and organizations have endorsed the Leahy-Smith America Invents Act. I ask unanimous consent that a list of these supporters be printed in the Record.

I yield the floor.

I suggest the absence of a quorum.

Madam President, my colleague and friend from Missouri is correct Prior user rights, if properly crafted and asserted, can be of great benefit to keeping high-paying jobs here at home.

Madam President, I will say to my good friend that he is not the first to raise this issue with me and the other Members of the House and Senate Judiciary Committees who have worked on this bill. I have discussed section 5 at length with the distinguished House Judiciary Committee Chairman Lamar Smith. Perhaps I can help provide some of the needed clarity for my colleague concerning what we intend to be within the confines of the definition of ``internal commercial use'' as it is used in section 5 of the bill.

Yes. My colleague and I are in agreement that it is our intention, as the sponsors of this comprehensive measure, that the prior use right set forth in section 5 of H.R. 1249 shall vest when innovative technology is first put into continuous internal use in the business of an innovator's enterprise with the objective of making a commercializable product.

I thank my colleague for the question. His understanding is correct. So long as the prior use begins more than 1 year prior to the effective filing date of a subsequent patent or publication by a later inventor, the initiation of continuous internal use in the manufacture of products should guarantee the defense of prior use.

My colleague is correct in his reasoning and his understanding of what is intended by section 5. The methods used by Edison in producing multiple failures for electric light bulbs were no less commercial uses before the ultimate production of a commercially successful light bulb. Let us agree that internally used methods and materials do qualify for the defense of prior user rights when there is evidence of a commitment to put the innovation into use followed by a series of diligent events demonstrating that the innovation has been put into continuous--into a business activity with a purpose of developing new products for the benefit of mankind.

The senior Senator from Wisconsin is correct. That is also my

view of the exception. I understand the Senator has consistently opposed the expansion of prior user rights, but I agree with his analysis of the scope of the exception in section 5 of H.R. 1249.

Section 18

The proceeding created by Section 18 is modeled on the proposed post-grant review proceeding under Section 6 of the Act. As in other post-grant proceedings, the claims should typically be evaluated to determine whether they, among other things, meet the enablement and written description requirements of the act, and contain patentable subject matter under the standards defined in the statutes, case law, and as explained in relevant USPTO guidance. While the program will generally otherwise function on the same terms as other post-grant proceedings, the USPTO should implement Section 18 in a manner that avoids attempts to use the transitional program against patent owners in a harassing way. Specifically, to initiate a post issuance review under the new post grant or transitional proceedings, it is not enough that the request show a substantial new question of patentability but must establish that ``it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable.'' The heightened requirement established by this bill means that these proceedings are even better shielded from abuse than the reexamination proceedings have been. In fact, the new higher standard for post issuance review was created to make it even more difficult for these procedures to be used as tools for harassment. Therefore, the rule that bars the PTO from reconsidering issues previously considered during examination or in an earlier reexamination still applies. While a prior district court decision upholding the validity of a patent may not preclude the PTO from considering the same issues resolved in that proceeding, PTO officials must still consider the court's decision and deviate from its findings only to the extent reasonable. As a result, I expect the USPTO would not initiate proceedings where the petition does not raise a substantial new question of patentability than those that had already been considered by the USPTO in earlier proceedings. Does that answer my colleague's question?''

Madam President, I thank the distinguished Senator from Iowa for his strong support of this bill.

In a few moments the Senate is going to have the opportunity to make significant reforms to our Nation's patent system for the first time in more than half a century.

The America Invents Act is the product of extensive consideration. We have worked on this for four Congresses. We have had dozens of hearings, weeks of committee debate, and I have lost count of the hundreds of other meetings we have had. This bill is an opportunity to show the American people that Democrats and Republicans can come together to enact meaningful legislation for the American people. The time to do that is now.

The only remaining issues that stand in the way of this long overdue reform are three amendments. Each of them carries some merit. In the past, I might have supported them. But this is a compromise. No one Senator can have everything he or she may want.

The underlying issues have been debated. The bill as written represents a bipartisan, bicameral agreement that should be passed without changes. Any amendment to this bill risks killing it.

I would urge all Senators, Republicans and Democrats alike, to join me and join Senator Grassley in opposing these amendments. They are the final hurdles standing in the way of comprehensive patent reform.

I ask unanimous consent to have printed in the Record letters from businesses and workers representing the spectrum of American industry and labor urging the Senate to pass the America Invents Act without amendment.

The bill is important for our economy. It is important for job creation. It is a product of bipartisan and bicameral collaboration. It is the way our system is supposed to work. I look forward to passing the bill and sending it directly to the President's desk for his signature.

I know my friends both on the Republican side and Democratic side have amendments to this bill, but they are not amendments that should pass. I mentioned the one earlier. I talked about the amendment that would put all our--well, Madam President, which amendment is the first in order?

Madam President, I yield the floor. I know both Senator Sessions and Senator Grassley wish to speak to that.

Madam President, I ask unanimous consent that after the first vote--we have several more votes--the remaining votes be 10- minute votes.

Have the yeas and nays been ordered?

Madam President, I understand what the Senator from Oklahoma says, but the Coburn amendment can derail and even kill this bill. So, as I have told the Senator, I will move to table in a moment. But this bill would otherwise help our recovering economy. It would unleash innovation and create jobs.

I have worked for years against Patent Office fee diversion, but I oppose this amendment. Its formulation was already rejected by the House of Representatives. They have made it very clear. There is no reason they will change. This amendment can sink years of efforts by both Republicans and Democrats in this body and the other body to pass it. Actually, this amendment could kill the bill over a mere formality: the difference between a revolving fund and a reserve fund.

We have worked out a compromise in good faith. The money, the fees-- under the bill as it is here--can only be spent at the PTO, but the only thing is, we actually have a chance to take a look at what they are spending it on, so they could not buy everybody a car or they could not have a gilded palace. They actually have to spend it on getting through the backlog of patents. It will not go anywhere else. It will only go to the Patent Office.

So we should not kill the bill over this amendment. We should reject the amendment and pass the bill. It is time for us to legislate. That is what the American people elected us to do. That is what they expect us to do. Let's not kill the bill after all this work over something that will really make no difference in the long run. So I therefore will move to table the Coburn amendment.

Madam President, because this amendment would kill the bill, I move to table the amendment and ask for the yeas and nays.

Mr. President, 6 months ago, the Senate approved the America Invents Act to make the first meaningful, comprehensive reforms to the Nation's patent system in nearly 60 years. Today, the Senate has come together once again, this time to send this important, job- creating legislation to the President to be signed into law.

Casting aside partisan rhetoric, and working together in a bipartisan and bicameral manner, Congress is sending to President Obama the most significant jobs bill of this Congress. The bill originated 6 years ago in the House of Representatives, when Chairman Smith and Mr. Berman introduced the first patent reform proposals.

After dozens of congressional hearings, markup sessions, and briefings, and countless hours of Member and staff meetings, through two Presidential administrations, and three Congresses, patent reform is finally a reality.

The Leahy-Smith America Invents Act is a bipartisan bill and a bipartisan accomplishment. This is what we in Washington can do for our constituents at home when we come together for the benefit of the country, the economy, and all Americans.

I especially thank Senator Kyl for his work in bringing this bill to the floor of the Senate--twice--and Senator Grassley for his commitment to making patent reform the Judiciary Committee's top priority this year. Chairman Smith, in the other body, deserves credit for leading the House's consideration of this important bill. I look forward to working with him on our next intellectual property priority--combating online infringement.

I thank the members of the Senate Judiciary Committee, who worked together to get quorums and get this passed. I thank them for their contribution.

Mr. President, I acknowledge several members of my Judiciary Committee staff, specifically Aaron Cooper, who sits here beside me. He spent more hours than I even want to think about, or his family wants to think about, working with me, other Senators, Members of the House, other staff, and stakeholders to preserve the meaningful reforms included in the America Invents Act, as did Susan Davis before him. Ed Pagano, my chief of staff, kept everybody together. I also thank Bruce Cohen, my chief counsel on the Judiciary Committee, who every time I thought maybe we are not going to make it would tell me ``You have to keep going,'' and he was right. Erica Chabot, Curtis LeGeyt, and Scott Wilson of my Judiciary Committee staff have also spent many hours working on this legislation.

I also commend the hard-working staff of other Senators, including Joe Matal, Rita Lari, Tim Molino, and Matt Sandgren for their dedication to this legislation. Chairman Smith's dedicated staff deserves thanks as well, including Richard Hertling, Blaine Merritt, Vishal Amin, and Kim Smith.

I would also like to thank the majority leader for his help in passing this critical piece of legislation.

The America Invents Act is now going to be the law of the land. I thank all my colleagues who worked together on this.

In March, the Senate passed its version of the America Invents Act, S. 23, by a 95-5 vote. One of the key provisions of the legislation transitions the United States patent system from a first-to-invent system to a first-inventor-to-file system. The Senate considered and rejected an amendment to strike this provision, with 87 Senators voting to retain the transition.

When this body first considered the America Invents Act, some suggested that along with the first-inventor-to-file transition, the legislation should expand the prior user rights defense. The prior user rights defense, in general, is important for American manufacturers because it protects companies that invent and use a technology, whether embodied in a process or product, but choose not to disclose the invention through the patenting process, and instead rely on trade secret protection. The use of trade secrets instead of patenting may be justified in certain instances to avoid, for example, the misappropriation by third parties where detection of that usage may be difficult. These companies should be permitted to continue to practice the invention, even if another party later invents and patents the same invention.

In the United States, unlike in our major trading partners, prior user rights are limited to inventions on methods of doing or conducting business. The Senate bill included only a very limited expansion of this defense, and required the Director of the Patent and Trademark Office, ``PTO'', to study and report to Congress on the operation of prior user rights in other countries in the industrialized world, and include an analysis of whether there is a particular need for prior user rights given the transition to a first-inventor-to-file system.

The House-originated bill, the Leahy-Smith America Invents Act, which the Senate is considering today, makes important improvements to expand prior user rights beyond just methods of doing business. These improvements will be good for domestic manufacturing and job creation. I agree with the chairman of the House Committee on the Judiciary that inclusion of expanded prior user rights is essential to ensure that those who have invested in and used a technology are provided a defense against someone who later patents the technology.

I understand that there is some confusion regarding the scope of the defense in the bill. The phrase ``commercially used the subject matter'' is intended to apply broadly, and to cover a person's commercial use of any form of subject matter, whether embodied in a process or embodied in a machine, manufacture, or composition of matter that is used in a manufacturing or other commercial process. This is important particularly where businesses have made substantial investments to develop these proprietary technologies. And if the technology is embedded in a product, as soon as that product is available publicly it will constitute prior art against any other patent or application for patent because the technology is inherently disclosed.

The legislation we are considering today also retains the PTO study and report on prior user rights. I again agree with the chairman of the House Committee on the Judiciary, that one important area of focus will be how we protect those who make substantial investments in the development and preparation of proprietary technologies. It is my hope and expectation that Congress will act quickly on any recommendations made by the PTO.

Section 27 of the Leahy-Smith America Invents Act requires a study by the United States Patent and Trademark Office, USPTO, on effective ways to provide independent, confirming genetic diagnostic test activity where gen patents and exclusive licensing for primary genetic diagnostic tests exist. I support this section, which was championed by Ms. Wasserman Schultz, and look forward to the USPTO's report.

I want to be clear that one of the reasons I support section 27 is that nothing in it implies that ``gene patents'' are valid or invalid, nor that any particular claim in any particular patent is valid or invalid. In particular, this section has no bearing on the ongoing litigation in Association for Molecular Pathology v. Myriad Genetics,

The America Invents Act is now going to be the law of the land. I thank all my colleagues who worked together on this.

Mr. President, I ask for the yeas and nays.

Madam President, I rise today to say a few words about aspects of the present bill that differ from the bill that passed the Senate in March. I commented at length on the Senate bill when that bill was before this body. Since the present bill and the Senate bill are largely identical, I will not repeat what I said previously, but will simply refer to my previous remarks, at 157 Cong. Rec. 1368-80, daily ed. March 8, 2011, which obviously apply to the present bill as well.

As I mentioned earlier, Mr. Smith negotiated his bill with Senators Leahy, Grassley, and me as he moved the bill through the House of Representatives. The final House bill thus represents a compromise, one which the Senate supporters of patent reform have agreed to support in the Senate. The provisions that Mr. Smith has added to the bill are ones that we have all had an opportunity to consider and discuss, and which I fully support.

Section 19(d) of the present bill adds a new section 299 to title 35. This new section bars joinder of accused infringers as codefendants, or consolidation of their cases for trial, if the only common fact and transaction among the defendants is that they are alleged to have infringed the same patent. This provision effectively codifies current law as it has been applied everywhere outside of the Eastern District of Texas. See Rudd v. Lux Products Corp., 2011 WL 148052. (N.D. Ill. January 12, 2011), and the committee report for this bill at pages 54 through 55.

H.R. 1249 as introduced applied only to joinder of defendants in one action. As amended in the mark up and in the floor managers' amendment, the bill extends the limit on joinder to also bar consolidation of trials of separate actions. When this change was first proposed, I was skeptical that it was necessary. A review of legal authority, however, reveals that under current law, even if parties cannot be joined as defendants under rule 20, their cases can still be consolidated for trial under rule 42. For example, as the district court held in Ohio v. Louis Trauth Dairy, Inc., 163 F.R.D. 500, 503 (S.D. Ohio 1995), ``[e]ven when actions are improperly joined, it is sometimes proper to consolidate them for trial.'' The same conclusion was reached by the court in Kenvin v. Newburger, Loeb & Co., 37 F.R.D. 473 (S.D.N.Y. 1965), which ordered severance because of misjoinder of parties, concluding that the claims against the defendants did not arise out of single transaction or occurrence, but then suggested the desirability of a joint trial, and expressly made its severance order without prejudice to a subsequent motion for consolidation under rule 42(a). Similarly, in Stanford v. TVA, 18 F.R.D. 152 (M.D. Tenn. 1955), a court found that the defendants had been misjoined, since the claims arose out of independent transactions, and ordered them severed. The court subsequently found, however, that a common question existed and ordered the defendants' cases consolidated for trial.

That these cases are not just outliers is confirmed by Federal Practice and Procedure, which comments as follows at Sec. 2382:

Although as a general proposition it is true that Rule

42(a) should be construed in harmony with the other civil

rules, it would be a mistake to assume that the standard for

consolidation is the same as that governing the original

joinder of parties or claims. . . . [M]ore than one party can

be joined on a side under Rule 20(a) only if there is

asserted on behalf of or against all of them one or more

claims for relief arising out of the same transaction or

occurrence or series of transactions or occurrences. This is

in addition to the requirement that there be some question of

law or fact common to all the parties. But the existence of a

common question by itself is enough to permit consolidation

under Rule 42(a), even if the claims arise out of independent

transactions.

If a court that was barred from joining defendants in one action could instead simply consolidate their cases for trial under rule 42, section 299's purpose of allowing unrelated patent defendants to insist on being tried separately would be undermined. Section 299 thus adopts a common standard for both joinder of defendants and consolidation of their cases for trial.

Another set of changes made by the House bill concerns the coordination of inter partes and postgrant review with civil litigation. The Senate bill, at proposed sections 315(a) and 325(a), would have barred a party or his real party in interest from seeking or maintaining an inter partes or postgrant review after he has filed a declaratory-judgment action challenging the validity of the patent. The final bill will still bar seeking IPR or PGR after a declaratory- judgment action has been filed, but will allow a declaratory-judgment action to be filed on the same day or after the petition for IPR or PGR was filed. Such a declaratory-judgment action, however, will be automatically stayed by the court unless the patent owner countersues for infringement. The purpose of allowing the declaratory-judgment action to be filed is to allow the accused infringer to file the first action and thus be presumptively entitled to his choice of venue.

The House bill also extends the deadline for allowing an accused infringer to seek inter partes review after he has been sued for infringement. The Senate bill imposed a 6-month deadline on seeking IPR after the patent owner has filed an action for infringement. The final bill extends this deadline, at proposed section 315(b), to 1 year. High-technology companies, in particular, have noted that they are often sued by defendants asserting multiple patents with large numbers of vague claims, making it difficult to determine in the first few months of the litigation which claims will be relevant and how those claims are alleged to read on the defendant's products. Current law imposes no deadline on seeking inter partes reexamination. And in light of the present bill's enhanced estoppels, it is important that the section 315(b) deadline afford defendants a reasonable opportunity to identify and understand the patent claims that are relevant to the litigation. It is thus appropriate to extend the section 315(b) deadline to one year.

The final bill also extends intervening rights to inter partes and post-grant review. The bill does not allow new matter to be introduced to support claims in IPR and PGR and does not allow broadening of claims in those proceedings. The aspect of intervening rights that is relevant to IPR and PGR is section 252, first paragraph, which provides that damages accrue only from the date of the conclusion of review if claim scope has been substantively altered in the proceeding. This restriction applies even if the amendment only narrowed the scope of the claims. See Engineered Data Products, Inc. v. GBS Corp., 506 F.Supp.2d 461, 467 (D. Colo. 2007), which notes that ``the Federal Circuit has routinely applied the intervening rights defense to narrowing amendments.'' When patent-defeating prior art is discovered, it is often impossible to predict whether that prior art will be found to render the entire invention obvious, or will only require a narrowing amendment. When a challenger has discovered such prior art, and wants to practice the invention, intervening rights protect him against the risk of gong forward--provided, of course, that he is correct in his judgment that the prior art at least requires a substantive narrowing of claims.

The final bill also adds a new subsection to proposed section 257, which authorizes supplemental examination of patents. The new subsection provides that the Director shall refer to the U.S. Attorney General any ``material fraud'' on the Office that is discovered during the course of a Supplemental Examination. Chairman Smith's explanation of this addition, at 157 Cong. Rec. E1182-83 (daily ed. June 23, 2011), clarifies the purpose and effect of this new provision. In light of his remarks, I find the addition unobjectionable. I would simply add to the Chairman's remarks that, in evaluating whether a fraud is ``material'' for purpose of referral, the Director should look to the Federal Circuit's decision in Therasense, Inc. v. Becton, Dickinson and Co., __F.3d__, 2011 WL 2028255 (May 25, 2011). That case holds, in relevant part, that:

[T]he materiality required to establish inequitable conduct

is but-for materiality. When an applicant fails to disclose

prior art to the PTO, that prior art is but-for material if

the PTO would not have allowed a claim had it been aware of

the undisclosed prior art. Hence, in assessing the

materiality of a withheld reference, the court must determine

whether the PTO would have allowed the claim if it had been

aware of the undisclosed reference.

Finally, perhaps the most important change that the House of Representatives has made to the America Invents

Act is the addition of a prior-commercial-use defense. Current law, at section 273, creates a defense of prior-user rights that applies only with respect to business-method patents. The final bill rewrites section 273, creating a PCU defense that applies to all utility patents.

University researchers and their technology-transfer offices had earlier objected to the creation of such a defense. Their principal concern was that the defense would lead to a morass of litigation over whether an infringer was entitled to assert it, and the expense and burden of this litigation would ultimately prevent universities and small companies from enforcing valid patents. The compromise reached in the House of Representatives addresses university concerns by requiring a defendant to show that he commercially used the subject matter that infringes the patent at least 1 year before the patent owner either filed an application or disclosed the invention to the public. The House compromise also precludes assertion of the defense against most university-owned patents.

The PCU defense is similar to the prior-user right that exists in the United Kingdom and Germany. The defense is a relatively narrow one. It does not create a general license with respect to the patented invention, but rather only allows the defendant to keep making the infringing commercial use that he establishes that he made 1 year before the patentee's filing or disclosure. The words ``subject matter,'' as used in subsection (a), refer to the infringing acts of the defendant, not to the entire patented invention. An exception to this limit, which expands the defense beyond what would be allowed in the United Kingdom, appears in subsection (e)(3), which allows the defendant to increase the quantity or volume of the use that he establishes that he made of the invention. Subsection (e)(3) also confirms that the defendant may improve or otherwise modify his activities in ways that do not further infringe the patent, although one would think that this would go without saying.

The PCU defense is principally designed to protect the use of manufacturing processes. For many manufacturing processes, the patent system presents a catch-22: if the manufacturer patents the process, he effectively discloses it to the world. But patents for processes that are used in closed factories are difficult to police. It is all but impossible to know if someone in a factory in China is infringing such a patent. As a result, unscrupulous foreign and domestic manufacturers will simply use the invention in secret without paying licensing fees. Patenting such manufacturing processes effectively amounts to giving away the invention to competitors. On the other hand, if the U.S. manufacturer does not patent the process, a subsequent party may obtain a patent for it, and the U.S. manufacture will be forced to stop using a process that he was the first to invent and which he has been using for years.

The prior-commercial-use defense provides relief to U.S. manufacturers from this Catch-22, allowing them to make long-term use of a manufacturing process without having to give it away to competitors or run the risk that it will be patented out from under them.

Subsection (a) expands the defense beyond just processes to also cover products that are used in a manufacturing or other commercial process. Generally, products that are sold to consumers will not need a PCU defense over the long term. As soon as the product is sold to the public, any invention that is embodied or otherwise inherent in that product becomes prior art and cannot be patented by another party, or even by the maker of the product after the grace period has expired. Some products, however, consist of tools or other devices that are used only by the inventor inside his closed factory. Others consist of substances that are exhausted in a manufacturing process and never become accessible to the public. Such products will not become prior art. Revised section 273 therefore allows the defense to be asserted with respect to such products.

The defense can also be asserted for products that are not used to make a useful end result that is sold to others, but that are used in an internal commercial process. This would include, for example, customized software that is used to run a company's human-resources system. So long as use of the product is integrated into an ongoing commercial process, and not merely fleeting or experimental or incidental to the enterprise's operations, the PCU defense can be asserted with respect to that product.

The present bill requires the defendant to commercially use the invention in order to be able to assert the defense. Chairman Smith has suggested, at 157 Cong. Rec. E1219 (daily ed. June 28, 2011), that in the future Congress should expand the defense so that it also applies when a company has made substantial preparations to commercially use an invention. Some have also suggested that the defense should be expanded to cover not just using, but also making and selling an invention if substantial preparations have been made to manufacture the invention. This would expand the defense to more fully compensate for the repeal of current section 102(g), which allows a party to invalidate a patent asserted against it if the party can show that it had conceived of the invention earlier and diligently proceeded to commercialize it.

On the one hand, universities and others have expressed concern that a ``substantial preparations'' predicate for asserting the PCU defense would lead to expensive and burdensome litigation over whether a company's activities reflect conception and diligent commercialization of the invention. Some argue that it is often the case that different companies and researchers are working on the same problem, and it is easy for the unsuccessful parties to later recharacterize their past efforts as capturing or diligently implementing the successful researcher's invention. Questions have also arisen as to how tentative preparations may be and still qualify as ``substantial preparations.'' For example, if a company had not broken ground for its factory, but had commissioned an architect to draw up plans for it, would that qualify? Would taking out a loan to build the factory qualify as substantial preparations?

On the other hand, proof of conception and diligent commercialization are currently used to apply section 102(g)(2), and I have not heard complaints that the current defense has resulted in overly burdensome litigation.

In the end, however, a substantial-preparations predicate is not included in this bill simply because that was the agreement that was struck between universities and industry in the House of Representatives last summer, and we are now effectively limited to that agreement. Perhaps this issue can be further explored and revisited in a future Congress, though I suspect that many members will want a respite from patent issues after this bill is completed.

The final bill also drops the requirement of a showing of a reduction to practice that previously appeared in subsection (b)(1). This is because the use of a process, or the use of product in a commercial process, will always constitute a reduction to practice.

One change made by the original House bill that proved contentious is the expansion of the personal nature of the defense, now at subsection (e)(1)(A), to also include uses of the invention made by contractors and vendors of the person asserting the defense. The House bill originally allowed the defendant to assert the defense if he performed the commercial use or ``caused'' its performance. The word ``caused,'' however, could be read to include even those uses that a vendor made without instructions or even the contemporaneous knowledge of the person asserting the defense. The final bill uses the word ``directed,'' which limits the provision only to those third-party commercial uses that the defendant actually instructed the vendor or contactor to use. In analogous contexts, the word ``directed'' has been understood to require evidence that the defendant affirmatively directed the vendor or contractor in the manner of the work or use of the product. See, for example, Ortega v. Puccia, 75 A.D. 54, 59, 866 N.Y.S.2d 323, 328 (N.Y. App. 2008).

Subsection (e)(1)(A)'s reference to entities that ``control, are controlled by, or under common control with'' the defendant borrows a term that is used in several federal statutes. See 12 U.S.C. 1841(k), involving bank holding companies, 15 U.S.C. 78c(a)(4)(B)(vi), involving securities regulation, 15 U.S.C. 6809(6), involving financial privacy, and 49 U.S.C. 30106(d)(1), involving motor vehicle safety. Black's Law Dictionary 378 (9th ed. 2009) defines ``control'' as the ``direct or indirect power to govern

the management and policies of a person or entity, whether through ownership of securities, by contract, or otherwise; the power or authority to manage, direct, or oversee.''

A few other aspects of the PCU defense merit brief mention. Subsection (e)(5)(A), the university exception, was extended to also include university technology-transfer organizations, such as the Wisconsin Alumni Research Foundation. Subparagraph (B), the exception to the university exception, is only intended to preclude application of subparagraph (A) when the federal government is affirmatively prohibited, whether by statute, regulation, or executive order, from funding research in the activities in question.

In the course of the recodification of former subsection (a)(2) as new (c)(2), the former's subparagraph (B) was dropped because it is entirely redundant with subparagraph (A).

Finally, subsection (e)(4), barring assertion of the defense if use of the subject matter has been abandoned, should not be construed to necessarily require continuous use of the subject matter. It is in the nature of some subject matter that it will be used only periodically or seasonally. If such is the case, and the subject has been so used, its use has not been abandoned.

I would also like to take a moment to once again address the question of the grace period created by this bill. During the House and Senate debates on the bill, opponents of the first-to-file system have occasionally asserted that they oppose the bill's move to first to file because it weakens the grace period. See 157 Cong. Rec. S1094, S1096, S1112 (daily ed. March 2, 2011), and 157 Cong. Rec. H4424, H4430 (daily ed. June 22, 2011).

Some of these arguments are difficult to understand, in part because opponents of first to file have used the term ``grace period'' to mean different things. Some have used the term to mean the period between the time when the inventor conceives of the invention and the time when he files a full or even provisional application. Obviously, if the ``grace period'' is defined as the first-to-invent system, then the move to first to file eliminates that version of the grace period. Others, however, have suggested that public uses, sales, or ``trade secrets'' will bar patenting under new section 102(b), even if they consist of activities of the inventor during the year before filing.

This is not the case, and I hope that courts and executive officials interpreting this act will not be misled by arguments made by opponents of this part of the bill. The correct interpretation of section 102 and the grace period is that which has been consistently advanced in the 2007 and 2011 committee reports for this bill, see Senate Report 110- 259, page 9, and House Report 112-98, page 43, as well as by both Chairman Smith and Chairman Leahy, see 157 Cong. Rec. S1496-97 (daily ed. March 9, 2011), and 157 Cong. Rec. H4429 (daily ed. June 22, 2011). These two chairmen are the lead sponsors and authorizing chairmen of this year's bills, which are identical with respect to section 102. As Chairman Smith most recently explained in his June 22 remarks, ``contrary to current precedent, in order to trigger the bar in new 102(a) in our legislation, an action must make the patented subject matter `available to the public' before the effective filing date.'' Therefore, ``[i]f an inventor's action is such that it triggers one of the bars under 102(a), then it inherently triggers the grace period in section 102(b).''

When the committee included the words ``or otherwise available to the public'' in section 102(a), the word ``otherwise'' made clear that the preceding items are things that are of the same quality or nature. As a result, the preceding events and things are limited to those that make the invention ``available to the public.'' The public use or sale of an invention remains prior art, thus making clear that an invention embodied in a product that has been sold to the public more than a year before an application was filed, for example, can no longer be patented. Once an invention has entered the public domain, by any means, it can no longer be withdrawn by anyone. But public uses and sales are prior art only if they make the invention available to the public.

In my own remarks last March, I cited judicial opinions that have construed comparable legislative language in the same way. Since that time, no opponent of the first-to-file transition has identified any caselaw that reads this legislative language any other way, nor am I aware of any such cases. I would hope that even those opponents of first to file who believe that supporters of the bill cannot rely on committee reports and sponsors' statements would at least concede that Congress is entitled to rely on the consistent judicial construction of legislative language.

Finally, I would note that the interpretation of 102 that some opponents appear to advance--that nondisclosing uses and sales would remain prior art, and would fall outside the 102(b) grace period--is utterly irrational. Why would Congress create a grace period that allows an invention that has been disclosed to the world in a printed publication, or sold and used around the world, for up to a year, to be withdrawn from the public domain and patented, but not allow an inventor to patent an invention that, by definition, has not been made available to the public? Such an interpretation of section 102 simply makes no sense, and should be rejected for that reason alone.

Let me also address two other misstatements that have been made about the bill's first-to-file system. In remarks appearing at 157 Cong. Rec. S1095 (daily ed. March 2, 2011), it was suggested that a provisional application filed under the first-to-file system will be vulnerable to an attack that the inventor failed to disclose the best mode of the invention. This is incorrect. Section 15 of this bill precludes the use of the best-mode requirement as a basis for cancelling a claim or holding it invalid. It was also suggested, at the same place in the record, that discovery would not be allowed in the derivation proceedings created by section 3(i) of the bill. That is incorrect. Section 24 of title 35 allows discovery in any ``contested case.'' The Patent Office's regulations, at 37 CFR 41.2(2), indicate that contested cases included Board proceedings such as interferences. It is not apparent to me why these laws and regulations would suggest anything other than that discovery will be allowed in derivation proceedings.

Finally, let me close by commenting on section 18 of the bill. Some legitimate interests have expressed concern that non-business-method patents will be subject to challenge in this proceeding. I have been asked to, and am happy to, reiterate that technological inventions are excluded from the scope of the program, and that these technological inventions include inventions in the natural sciences, engineering, and computer operations--and that inventions in computer operations obviously include software inventions.

This does not mean that a patent is ineligible for review simply because it recites software elements or has been reduced to a software program. If that were the case, then very few of even the most notorious business-method patents could be reviewed under section 18. Rather, in order to fall within the technological-invention exclusion, the invention must be novel as software. If an invention recites software elements, but does not assert that it is novel as software, or does not colorably appear to be so, then it is not ineligible for review simply because of that software element. But an actual software invention is a technological invention, and is not subject to review under section 18.

The following Senator is necessarily absent: the Senator from Indiana (Mr. Coats).

The following Senator is necessarily absent: the Senator from Florida (Mr. Rubio).

Mr. President, I wish to talk about an amendment, but also I had one of my colleagues who was sitting in your position as President pro tempore notice an error I made on July 27. Senator Whitehouse questioned my numbers and, in fact, he was right. I said $115 million in regard to the savings on limousines. It was $11.5 million per year, not $115 million. It was $115 million over 10 years. So I wish to stand to put that in the Record that I was in error and Senator Whitehouse as a cordial colleague questioned me on it and I thank him for his accountability.

We have before the Senate now a patent bill. There is no question there is a lot of work we need to do on patents. I know the President pro tempore sits on the committee that I do and we have spent a lot of time on this. But I am very concerned, I have to say, about what we are hearing in the Senate about why we wouldn't do the right thing that everybody agrees we should be doing because somebody doesn't want us to do that in the House, and I think it is the worst answer we could ever give the American people.

When we have a 12-percent approval rating, and the Republicans have worse than that, why would we tell the American people we are not going to do the right thing for the right reason at the right time because somebody in the House doesn't want us to and that we are going to say we are not going to put these corrections into a patent bill that are obviously important and we are going to say it is going to kill the bill when, in fact, it is not going to kill the bill? But that is what we use as a rationalization. So let me describe for a minute what has gone on over the years and what has not happened.

The first point I would make is there has not been one oversight hearing of the Patent Office by the Appropriations Committee in either the House or the Senate for 10 years. So they haven't even looked at it. Yet the objection to, and what we are seeing from an appropriations objection is--and even our chairman of our Committee on the Judiciary, who is an appropriator, supports this amendment but isn't going to vote for it because somebody in the House is going to object to it.

But the point is, we have money that people pay every day. From universities to businesses to individual small inventors, they pay significant dollars into the Patent Office. Do you know what has happened with that money this year? Eighty-five million dollars that was paid for by American taxpayers for a patent examination and first looks didn't go to the Patent Office. Yet we have over 1 million patents in process at the Patent Office, and over 700,000 of those haven't ever had their first look.

So when we talk about our economy and we talk about the fact that we want to do what enhances intellectual property in our country--which is one of our greatest assets--and then we don't allow the money that people actually pay for that process to go for that process and we have backlogged for years now patent applications, we have done two things. One is we have limited the intellectual property we can capture. No. 2 is we have allowed people to take those same patents,

when we have limited ability, especially some of our smaller organizations, and patent them elsewhere. So the lack of a timely approach on that is lacking.

The process is broken. Since 1992, almost $1 billion has been taken out of the Patent Office. So we wonder, why in the world is the Patent Office behind?

The Patent Office is behind because we will not allow them to have the funds the American taxpayers who are trying to get ideas and innovations, copyrights, trademarks, and patents done--we will not allow the Patent Office to have the money.

The amendment I am going to be offering--and I have a modification on it that is trying to be cleared on the other side, and I will not actually call up the amendment at this time until I hear whether that has been accepted. The amendment I have says we will no longer divert the money that American businesses, American inventors, American universities pay to the Patent Office to be spent somewhere else; that it has to be spent on clearing their patents.

I ask unanimous consent to have printed in the Record--and I will submit a copy at this time--a letter I received August 1 from the head of the Patent Office.

I must tell you that we are so fortunate that we have Director Kappos. We have a true expert in patents, with great knowledge, who has made tremendous strides in making great changes at our Patent Office. But he requires a steady stream of money, and he requires the ability to manage the organization in a way where he can actually accomplish what we have asked him to do.

Frankly, I have spent a lot of time working with the Patent Office-- not with everybody else who wants an advantage in the patent system but with the Patent Office--and I am convinced we have great leadership there.

In his letter, he talks about their inability to update their IT because the money is not there because we will not let him have the money--their money, the money from the American taxpayers.

Let me give a corollary. If, in fact, you drive your car into the gas station, you give them $100 for 25 or 28 gallons of gas, and they only give you 12 gallons of gas and they say: Sorry, the Appropriations Committee said you couldn't have all the gas for the money you paid, you would be outraged. If you go to the movie, you pay the fee to go to the movie and you buy a ticket, you walk in, and halfway through the movie they stop the projection and say: Sorry, we are not going to give you the second half of the movie even though you paid for it--inventors in this country have paid the fees to have their patents examined and evaluated and reviewed. Yet we, because of the power struggle, have decided we are not going to let that money go to the Patent Office. The amendment I have says we are going to allow that to happen. If money is paid and it goes into a proper fund that is allocatable only to the Patent Office, it cannot be spent anywhere else and has to go to the Patent Office.

Some of the objections, especially from the House Appropriations Committee, are that there is no oversight.

The reason there is no oversight is because they have not done any oversight and neither have we, so you cannot claim that as an excuse as to why you are afraid. This patent bill will give an authorization for 7 years for the fees. We can change that if we want, but the fact is that we are never going to know if we need to change it if we never do oversight, which we have not done. Nobody has done oversight on patents. I am talking aggressive oversight: What did you start? What was your end? How much did you spend? Where did you spend the money? What is your employee turnover? What is your employee productivity? What should we expect?

None of that has been asked. I believe it is probably pretty good based on the fact that I have a lot of confidence in the management at the Patent Office, especially what I have seen in terms of performance for the last couple of years versus before that, but the fact is that oversight has not been done.

It is not just the Patent Office. It hasn't been done anywhere. Very little oversight has been done by the Senate, and it is one of the biggest legitimate criticisms that can be made of us as a body, that we are lazy in our oversight function. Of the $3.7 trillion that is going to be spent, we are going to have oversight of about $100 billion of the total.

The amendment does a couple of things. Let me kind of detail that for a moment. One of the things is that by returning the money to the Patent Office, the Director thinks he can actually cut the backlog in half. In other words, we have over 700,000 patents that have never been looked at sitting at the Patent Office now, and he believes that in a very short period of time they could cut that to 350,000.

From 1992 through 2011, $900 million has been taken from the PTO. In 2004 Congress diverted $100 million, in 2007 it diverted $12 million, last year it diverted $53 million, and it is $80 million to $85 million that is going to be diverted this year. In 4 years out of the last 10, Congress gave the Patent Office all the money because it was so slow, so lethargic in terms of meeting the needs of inventors. The only thing we have in the current bill is the promise of a Speaker and the promise of a chairman that they will do that. There is nothing in law that forces them to do it. There is nothing that will make sure the money is there. No matter how good we fix the patent system in this country, if there is not the money to implement it, we will not have solved the problems.

In June of 2000, the House debated the PTO funding, and an interesting exchange took place between Representative Roybal-Allard and Representative Rogers, who was a cardinal at the time. Representative Allard discussed the problem of PTO fee diversion and the need for user fees to pay for the work of the agency. She asked--in the documentation of the Congressional Record, she asked Chairman Rogers if 100 percent of the user fees would go to the PTO, and Mr. Rogers stated that the fees would not be siphoned off for any other agency or purpose and remain in the account for future years. But according to the PTO, in fiscal year 2000, $121 million was, in fact, diverted. So when we have the chairman of the committee say we should not doubt the word of the Appropriations Committee, yet we have in the Record the exact opposite of what the Appropriations Committee said was going to happen, we should be concerned and we should fix it to where the money for patent examination goes for patent examination. So we have a clear record of a statement that says it was not going to happen, and, in fact, $121 million was diverted from the Patent Office.

Finally, from 1992 to 2007, $750 million more in patent and trademark fees was collected than was allowed to be spent by the Patent and Trademark Office. Had they had that money, we would have a backlog of about 100,000 patents right now, not 750,000. We would have intellectual property as a greater value in our country, with greater advantage over our trading partners because that money would have been effectively used.

On July 12, former CBO Director Douglas Holtz-Eakin wrote to Senators Reid and McConnell noting:

The establishment of the Patent and Trademark reserve fund

in H.R. 1249 would be ineffective in stopping the diversion

of the fees from the U.S. Patent Office.

In other words, what is in this bill now will not stop the diversion of the fees.

Just so people think I am not just picking on one area, this is a bad habit of Congress. It is not just in the Patent and Trademark Office that we tell people to pay a fee to get something done and we steal the money and use it somewhere else. For example, in the Nuclear Waste Fund at the Department of Energy, utility payments by individual consumers pay for a nuclear waste fee. That money has been spent on tons of other things through the years rather than on the collection and management of nuclear waste. To the tune of $25 billion has been spent on other things.

The Securities and Exchange Commission is a fee-based agency. Since the SEC was established, it has collected money via user fees, charged for various transactions in order to cover the cost of its regulation. The primary fees are for sales of stock, registration of a new stock, mergers, tender offers. It also collects fees for penalty fines, for bad behavior. They go into the Treasury's general fund, and amounts collected above the SEC budget were diverted to other government programs.

In 2002, Congress changed the treatment of the fees of the SEC so they would only go to a special appropriation account solely for the SEC. SEC would not have access to the fees, however, should it collect more than its appropriation.

In the Dodd-Frank bill, Congress again changed the treatment of the fees and required some of the fees to go to the General Treasury and others to the reserve fund. As a result, lots of complaints with the SEC, and they still do not have access to their funds. Thus, like the PTO, if Congress chooses not to provide all the funds in the initial appropriation, they will not have them.

In the 2012 budget justification from the Securities and Exchange Commission, they noted it had significant challenges maintaining a staffing level sufficient to carry out its core mission. From 2005 to 2077, SEC had frozen or reduced budgets that forced reduction of 10 percent of their staff and 50 percent of technology investment. What happened in 2007 in this country? What were the problems? So the diversion of the money from the SEC actually contributed to the problems we had in this country. So it does not work.

Finally, one that is my favorite and that I have fought against every year that I have been here is the Crime Victims Fund, and that is a fund where people who are criminals actually have to pay into a fund to do restitution for criminal victims, and we have stolen billions of dollars from that fund. They are not taxes, they are actually restitution moneys, but the Congress has stolen it and spent it on other areas. The morality of that I don't think leads anybody to question that that is wrong.

Amendment No. 599, as Modified

Now, if I may, let me call up amendment 599. I ask that the pending amendment be set aside and ask that the amendment be modified with the changes at the desk.

I thank the Senator for this. This is a minor technical correction.

I thank the chairman of the Judiciary Committee. I noted earlier, before I came to the floor, he supported it in principle and we have a difference in principle about what would happen to the bill. This is a minimal technical correction that was recommended to us, and I appreciate the Senator for allowing that to be considered.

Let me spend a moment talking about the chairman and his belief that this will not go anywhere. This is a critical juncture for our country, when we are going to make a decision to not do what is right because somebody is threatening that they do not agree with doing what is right and that they will not receive it. In my life of 63 years, that is how bullies operate, and the way you break a bully is you challenge a bully.

The fact is, I have just recorded into the history of the House the statements by the chairman of the Appropriations Committee in the House in terms of his guarantee for protecting the funds for PTO, which he turned around and took $121 million out of the funds that very same year that he guaranteed on the floor that he wouldn't do. So what I would say is we ought not worry about idle threats. What we ought to be worried about is doing what is best and right for our country. What is best and right is to give the money to the Patent Office that people are paying for so the patents will get approved and our technological innovations will be protected. I don't buy the idea the House is not going to take this if we modify it.

Actually, what 95 percent of the people in this country would agree to is that the Patent Office ought to get the money we are paying for patent fees, just as the FDA should get the money paid by drug companies for new applications, just as the Park Service should put the money for the camping sites--the paid-for camping sites--back into the camping sites. Why would we run away from doing the right thing?

I find it very difficult when we rationalize down doing the correct thing that everybody agrees should be done but we will not do it for the right reasons. That is why we have a 12-percent approval rating. That is why people don't have confidence in Congress--because we walk away from the tough challenges of bullies who say they won't do something if we do what is right. I am not going to live that way. I am not going to be a Senator that way. I am going to stand on the position of principle.

This is a principle with which 95 Senators in this body agree. We are going to have several of our leaders try to get them not to do that on the basis of rationalization to a bully system that says: We will not do the oversight, but we still want to be in control.

In fact, in the process of that, America loses because we have 750,000 patents that are pending right now, and there should only be about 100,000.

The bullies have won in the past, and I am not going to take it anymore. I am going to stand up and challenge it every time. I am going to make the argument that if a person pays a fee for something in this country for the government to do, that money ought to be spent doing what it was paid to the government to do. It is outside of a tax; it is a fee. It is immoral and close

to being criminal to not correctly spend that money from that fee.

If our body decides today we are going to table this amendment, the question the American people have to ask is, Where is the courage in the Senate to do what is best for our country? Why are the Senators here if they are not going to do what is best for the country? Why are they going to play the game of rationalization and extortion on principles that matter so much to our future? I will not do that anymore. Everybody knows this is the right thing to do. We are babysitting some spoiled Members of Congress who don't want to carry out their responsibilities in an honorable way and do the oversight that is necessary. What they want to do is complain that they do not have control.

Well, this bill authorizes funds for 7 years. We can change that number of years. We can actually change the actual amount of fees if, in fact, they are not doing a good job. But right now, as already put in the Record, there is no history of significant oversight to the Patent Office, so they would not know in the first place. So what we are asking is to do what is right, what is transparent, what is morally correct and give the Patent Office the opportunity to do for America what it can do for them instead of handcuffing us and handicapping us where we cannot compete on intellectual property in our country.

I have said enough. I will reserve the remainder of my time when I finish talking about one other item.

There is an earmark in this patent bill for The Medicines Company. It ought not be there. This is something that is being adjudicated in the courts right now. Senator Sessions has an amendment that would change it. I believe it is inappropriate to specify one company, one situation on a drug that is significant to this country, and we are fixing the wrong problem. We probably would not win that amendment. I think it is something the American people ought to look at and say: Why is this here? Why is something in this big bill that is so important to our country?

I agree with our chairman. He has worked months, if not years, over the last 6 years trying to get to this process, and now we have this put in. We did not have it in ours. The chairman did not have it in ours. It came from the House.

We ought to ask the question Why is it there? Why are we interfering in something that is at the appellate court level right now? Why are we doing that? None of us can feel good about that. None of us can say it is the right thing to do. Why would we tolerate it?

It is this lack of confidence in America; it is about a lack of confidence in us. When people know and find out what has happened here, they are going to ask the question. The powerful and the wealthy advantage themselves at the expense of everybody else. They have access. Those who are lowly, those who are minimal in terms of their material assets do not. It is the type of thing that undermines the confidence we need to have.

I just wanted to say I am a cosponsor of Senator Sessions' amendment. I believe he is accurate. I think they have won this in court. It is on appeal. They will probably win it on appeal. This will end up being necessary, and there is a way for us to fix it if, in fact, they lose, if it is appropriate to do that. I believe it is inappropriate at this time.

I yield the floor and reserve the remainder of my time.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I wish to respond to my chairman's comments. First of all, what we have proposed came out of the Judiciary Committee in the House 32 to 3. In other words, only three people on the Judiciary Committee in the House objected to this.

The other point I wish to make is the letter from Chairman Rogers does not bind the next Appropriations Committee chairman. I think everybody would agree with that. It only binds him and it only binds him as long as he honors his commitment. I have no doubt he will honor his commitment as long as he is chairman.

The third point I wish to make is what the House has set up doesn't make sure the funds go to the PTO, it just means they can't go somewhere else. That is what they have set up. They do not have to allow all the funds collected to go to the PTO. So they can reserve $200 million or $300 million a year and put it over there in a reserve fund and send it to the Treasury which will cause us to borrow less, but the money won't necessarily go to the PTO. There is nothing that mandates the fees collected go to the Patent and Trademark Office.

I understand my chairman. I understand his frustration with trying to get this bill through, and I understand that he sees this as a compromise. I don't. I understand we are going to differ on that and agree to disagree.

With that, I yield the floor to allow the chairman to speak, and I reserve the remainder of my time.

Madam President, today, I rise to discuss section 18 of H.R. 1249, the Leahy-Smith America Invents Act. Consistent with the statement in the Record by Chairman Lamar Smith on June 23, 2011, I understand that section 18 will not make all business method patents subject to review by the U.S. Patent and Trademark Office. Rather, 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. I further understand that section 18 of the bill specifically exempts ``patents for technological inventions'' from this new review at USPTO.

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 from section 18 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.

For example, 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 paper instruments, including 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.

American innovation is an important engine for job growth and our economic revitalization. To this end, the timely consideration of patent applications and the issuance of quality patents are critical components and should remain

the primary goal of the U.S. Patent and Trademark Office.

Madam President, this is a straightforward amendment that says if you pay into the Patent Trademark Office to have a patent evaluated, that money ought to be spent on the process. We have now stolen almost $900 million from the Patent Office. We have almost a million patents in arrears. We have fantastic leadership in the Patent Office, and we will not send them the money to do their job. It is unconscionable that we will not do this.

I understand the arguments against it, and I reserve the remainder of our time.

Madam President, I think I have reserved my time.

Madam President, I will make the following points, and I would ask for order before I do that.

It is true that the House bill moves the money to where it cannot be spent elsewhere, but there is no requirement that the money be spent in the Patent Office. There is a written agreement between an appropriations chairman and the Speaker that is good as long as both of them are in their positions. This is a 7-year authorization. It will not guarantee that the money actually goes to the Patent Office.

This bill, with this amendment in it, went out of the House Judiciary Committee 32 to 3 in a strong, bipartisan vote. It was never voted on in the Senate because the appropriators objected because of a technical error, which has been corrected in this amendment. So it violates no House rules, it violates no condition and, in fact, will guarantee that the Patent Office has the funds it needs to have to put us back in the place we need to be.

This bill will not be killed because we are going to make sure the money for patents goes to the Patent Office. Anybody who wants to claim that, ask yourself what you are saying. We are not going to do the right thing because somebody says they will not do the right thing? We ought to do the right thing.

I yield back the remainder of my time.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I rise today to speak on a matter of great importance to our country, and that is jobs and our economy. I know the President will be speaking this evening. I want to emphasize the importance that we focus on a long-term strategy to get our economy going. By that I mean a pro-jobs, progrowth economic strategy for our country.

The things that go into that include building the best possible business climate. We have got to have a business climate that will stimulate private investment, that will stimulate entrepreneurship, ingenuity, that will stimulate job creation by businesses small and large across our economy. We need to build a strong business climate. We need a long-term, progrowth economic strategy to do that.

We also need to control our spending and live within our means. We need a comprehensive energy policy. All three of these things go into the right kind of long-term comprehensive approach this country needs to get our economy growing and get people back to work.

I wish to start by taking a minute to look at our current situation, to talk about where we are. If you look at unemployment, unemployment is more than 9 percent, and it has been more than 9 percent for an extended period of time. Weekly jobless claims: more than 400,000. We have more than 14 million people who are out of work. That does not include people who are underemployed or people who are no longer looking for work because they have been discouraged and are not included in the workforce--14 million people we need to get back to work.

We also have a tremendous deficit problem. If you look at our revenues today, we have revenues of about $2.2 trillion. Our spending is at a rate of $3.7 trillion. That is a $1.5 trillion deficit. That is adding up to more than a $14 trillion dollar debt--a $14 trillion debt that weighs on our economy. If we do not deal with it, it is a debt our children will have to pay. That is not acceptable for us and we have to deal with it at the same time we get this economy going.

If you look at our current situation, we are borrowing 40 cents of every dollar we spend, and deficit and our debt is growing at $4 billion a day. I brought some graphs so we can look at it graphically. Here you see revenues and spending.

Unfortunately, the spending line is the red line along the top here. Spending is more than $3.7 trillion a year. At the same time, our revenues are $2.2 trillion. That gap is a $1.5 trillion budget deficit we are accumulating on an annual basis. As I say, it is now leading to a debt that is more than $14 trillion.

If you look at this next chart, we talk about unemployment. Here you see annual unemployment. Currently we are at 9.1 percent. We have been there for an extended period of time. Again, that represents more than 14 million people who are unemployed that we need to get back to work.

The other thing you will notice on this chart is the blue line. This blue line is the chart for my home State. There you will see our unemployment is about 3.2 to 3.3 percent. For the last decade in our State, we have focused on a progrowth, pro-jobs economic strategy. By that I mean building the best possible business climate, making sure we live within our means, and building a comprehensive energy approach to develop all of our energy resources. There is no reason we cannot do the same thing at the Federal level. In fact, we need to do exactly that at the Federal level. So I am here today to talk about some of the things we need to do to make that happen.

The first is that I emphasize by building a good business climate, I mean a legal, tax, and regulatory certainty so businesses know the rules of the road so they can invest. They can invest shareholders' dollars so entrepreneurs can start new businesses, so existing businesses can expand. But to do that, they need to know the rules of the road. They need to know what our tax policy is. Right now we have a tax policy that expires at the end of the next year. So how do you as a business person go out there and start making investments when you do not know what the tax policy is going to be beyond the end of next year? We need tax reform.

How about regulation? We have an incredible regulatory burden. How do you go out there and make an investment, get a business going, hire people, if you do not know what the regulatory requirements are? We need to reduce that regulatory burden.

We need to pass trade agreements so our companies can sell not just here in the United States but they can sell globally. If you look at the history of our country, that is how we have grown this economy, how we have become the most dynamic economic engine in the world. It is through that private investment, that entrepreneurship, that American ingenuity.

The role of government is to create a business climate that unleashes that potential. We have got to roll back the regulatory burden. We have got to create clear, understandable rules and tax policy to follow so these companies can make these investments, get those 14-plus million people back to work, get a growing economy, at the same time that we get a grip on our spending and start living within our means. That is how we not only raise our standard of living and our quality of life, but we make sure we do not pass on a huge debt to our children and our grandchildren.

Let me talk about some of the kinds of laws and legislation we need to pass to make sure that happens.

Not too long ago, President Obama issued an Executive order. I hope it is something he talks about this evening in his address to the joint session of Congress. In that Executive order, he said all of the agencies--all of the Federal agencies--need to look at their regulations, at their existing regulations and any regulations they are putting out, and make sure that if those regulations are costly, burdensome, if they do not make sense, if they are outmoded or outdated, they are eliminated, they are stripped away, so we empower people and companies throughout this great country to do business. He said in that Executive order make sure all of our agencies look at their regulations and eliminate those that do not make sense, that are costly, and that are burdensome, so we can stimulate economic activity and job creation in this country. I think we need to do exactly that. In fact, let's make it a law. Let's make it the law that all of the regulatory agencies need to look at their existing regulations and any regulations they are looking at putting out, to make darn sure they are clear, straightforward, understandable, that they are workable, and not only that our regulations are clear and understandable, that the regulators work with Americans and American companies to make sure they understand them and they are able to meet them so they can pursue their business plans, their business growth, their business investment, and that they hire and put people back to work. That is how it is supposed to work.

Together, Senator Pat Roberts of Kansas, myself, and others have put forward the Regulatory Responsibility for Our Economy Act. That is just what it says. How much more bipartisan can we get than that? The President puts out an Executive order saying we need to roll back some of these regulations that are burdening our business base, and we as Republican Senators say: Okay, here is an act to put that Executive order into law. Let's work together in a bipartisan way to reduce this regulatory burden that is stifling economic growth and job creation in our country.

That is what Congress is supposed to do. That is what we need to do. That is what the people of this country want us to do on a bipartisan basis.

When the President comes to the Capitol this evening and talks about how we get business going, let's get it going by reducing this regulatory burden so private investment can get people back to work in this country. It is not about more government spending, it is about private investment and initiative. We have to create the framework to make it happen. We can do it, and we can do it on a bipartisan basis.

Another example is that the United States has been the leader in aviation throughout its history. Throughout the

history of aviation, since Kitty Hawk, the United States has led the world in aviation, in invention, development, and innovation, and all the things that have gone into the development of aviation. Again, throughout its history, the United States has been the leader. One of the key areas for growth in aviation right now is UAS, unmanned aerial systems or unmanned aircraft. They call them remotely piloted aircraft. Our military uses them to tremendous benefit in Iraq, Afghanistan, and around the world.

Even though our military flies UAS all over the globe, we can't fly them here in the United States together with manned aircraft. Yet if we are going to continue to lead the world in aviation innovation, we have to find a way to fly both manned and unmanned aircraft together in our airspace in the United States.

Others and I have been talking to the FAA and working with the FAA, saying that you have to promulgate rules, set the rules of the road-- or, in this case, the rules of the air--so we can fly both manned and unmanned aircraft together in the U.S. airspace. The FAA has been working on this for I don't know how long but a long period of time. As of yet, they have not come out with those rules so we can fly both manned and unmanned aircraft in our airspace. But we need to, because if we don't, other countries will, and they will move ahead of us-- maybe not in military aviation, where we are flying unmanned aircraft all over the world, but how about in commercial and general aviation and all the other applications it will have for unmanned aircraft.

The FAA bill, which we are now working to complete--a version was passed in the House and a version was passed in the Senate, and we are trying to reconcile the two versions. Again, we need to do this in a bipartisan way. I have included language that authorizes--in fact requires--that the FAA set up airspace in the United States so that manned and unmanned aircraft can be flown concurrently. Again, it is about making sure that we not only maintain our lead in aviation but create those exciting, good-paying jobs of the future. If the agency isn't going to take that step, we as the Congress have to make sure we take that step and move the aviation industry forward.

Another example is how we have to create the environment, the forum that encourages that type of innovation, entrepreneurship, and investment in job creation. That is our role, our responsibility, in this most important of all issues, which is getting the economy going and getting people back to work.

On the free trade agreements, we have three of them pending--one with South Korea, the U.S.-South Korea Free Trade Agreement, another is the Panama Free Trade Agreement, and the other is with Colombia. Those trade agreements have been negotiated for some time. For three years those trade agreements have been pending. It is time to take them from pending to being passed. We need the administration to bring those free trade agreements to the Senate and to the House and we will pass them. We have worked across the aisle in a bipartisan way to make sure that whatever issues needed to be dealt with to bring them to the Congress-- whether it is trade adjustment authority or whatever, we have worked together in a bipartisan way to say, look, we have addressed the issues. Now the administration needs to bring the free trade agreements to the Senate floor. We will pass them.

With just one of those free trade agreements--for example, if we take the South Korea free trade agreement--we are talking about more than $10 billion in trade every year for our U.S. companies.

These free trade agreements reduce tariffs on the order of 85 percent. We are talking more than a quarter of a million jobs that will be created if we pass these agreements. For every 4-percent increase in trade, we are talking about 1 million American jobs that we can create. Again, it is about creating the environment that empowers investment, empowers our entrepreneurs in this country, and empowers businesses large and small to invest and get our economy going.

At the same time we get this economy growing, we have to start living within our means. Right now, as I indicated, we have a $1.5 trillion deficit and a debt that is closing in on $14.5 trillion. So at the same time we get the economy growing, which will grow our revenues--not higher taxes, but grow revenues from a growing economy, and with tax reform that empowers that economic growth, at the same time, we have to get control of our spending and live within our means.

Along with some fellow Senators, we have sponsored a number of pieces of legislation that I believe we can pass in a bipartisan way to make sure we get spending under control. The first is a balanced budget amendment. I come from a State where I was Governor for 10 years. We have a balanced budget amendment. Every year, we are required by our Constitution to balance the budget. States have a balanced budget requirement, and businesses and families and communities all have to live within their means. Our Federal Government has to live within its means.

If you think about it, a balanced budget amendment gets everybody involved. We not only have to pass it in the Senate and in the House with a two-thirds majority, but then it goes out to the States for ratification. What better way to get everybody throughout the country directly involved in making sure that we control our spending. Every State has to deal with a balanced budget amendment. So it is all of us working together as Americans, and it is the Congress going to the people of this great country and saying: Here is a balanced budget amendment, you tell us what you think. Again, what a great way to get everybody involved, the way we should get everybody involved in making sure we live within our means not only today but tomorrow and throughout future generations.

At the same time, we need to pass other tools that can help us get control of our spending. For example, the Reduce Unnecessary Spending Act. This is a bipartisan act that I think was originally sponsored by Senator Tom Carper, a former Governor, a Democrat from Delaware, and Senator John McCain. I am proud to be a cosponsor. One of the key provisions is to give the President a line-item veto. Reaching across the aisle, we are giving our President a tool--a line-item veto--to make sure we cut out waste, fraud, and abuse, and that we control our spending. As a Governor, the most effective tool I had was the line- item veto. We need to make sure our President has it as well.

I think we also need to look at a biennial budget, so that we pass a budget on a two-year cycle--make sure we get it passed and the next year we can come back and make the adjustments we have to make; but at the same time we have time for oversight and making sure spending is going in accordance with the directive of the Congress, and whether it is waste, fraud, abuse, or duplication, that we cut it out. Again, this is absolutely what the American people want us to do.

The third area I will touch on for a minute--and I will go to the next chart--is building the right kind of energy plan, a comprehensive energy policy that will help this country develop all of its energy resources. We did it in North Dakota. I know we can do it at the Federal level.

If you think about it, energy development in this country is an incredible opportunity. It is an opportunity to produce more energy more cost effectively, with better environmental stewardship that will enable all of our industries to compete in a global high-tech economy. In addition, what a great opportunity it is to create high-paying jobs. Again, I go back to what I said before. For our energy companies looking to invest hundreds of millions and billions of dollars, they need to know the rules of the road. It comes back to creating a comprehensive energy policy that sets up those rules of the road so they know what their tax situation is and what the regulation and regulatory requirements are. When they make those investments to produce more energy more cost effectively, with good environmental stewardship, they have to know they are going to be able to get a return. They have to know they can meet the regulatory requirements. Those investments may last 40 and 50 years, and they know they are going to have to be able to recoup those investments.

This first chart gives an example of some of the energy development in our

State. Out West, there is oil and gas. North Dakota is now the fourth largest oil-producing State in the country. We have passed Oklahoma and Louisiana, and people don't realize it. Every State has some kind of energy. If you look at this map, we have oil, gas, coal, and wind. We are in the top 10 wind producers. We have biofuels, biomass, solar--we have all of them. Different States have different strengths. A lot of States have oil, gas, coal, or certainly wind, or they can develop the biofuels.

It comes down to creating that environment that stimulates private investment so companies will come in and do exactly what I am talking about--at the Federal level, as well as at the State level.

This next chart shows what is actually happening at the Federal level. This chart is the cost of major new regulations. What it shows over the last three decades is the cost of regulation by year, over the last 30 years. When the cost of regulation is high, if you go back and check, you will see our economy wasn't doing very well. When the cost of regulation was low, you will see that it was doing much better. Look at the cost of regulation today. It was $26.5 billion in 2010, the cost of meeting the regulatory requirements. That is what I am talking about. That is what is impeding job growth and economic growth and business investment. We have to address that. We have to roll back the regulatory burdens our companies and entrepreneurs face today.

This last chart gives one example of some of the new regulations EPA is putting out that somebody who wants to develop energy has to meet. If you are an energy company or a young person with a good idea to develop a new type of energy, or existing type of energy with a new technology, can you meet all of these requirements? Can you even begin to understand them? Do you have a big enough legal team and scientific team, or a deep enough wallet to try to figure that all out before you put your money or your shareholders' money at risk? That is what is impeding economic growth in our country, and we have to deal with it. Congress has to deal with it.

Again, this is not rocket science, and it is not about spending more Federal dollars. We have to create an environment that will encourage, stimulate, and empower private investment. It is that private investment throughout this land that will get our economy going and get people back to work. We can do it. It has to be a long-term strategy. It can't be a few stopgap measures that we put into place now for the next 90 days or for 1 year at a time. It has to be on a long-term sustained basis. I believe that is what the people want to hear this evening. I think they want to hear that kind of commitment to a long- term strategy, a progrowth, pro-jobs economic strategy that will get this economy going now, tomorrow, and for the long term. It has to be done in a bipartisan way to get it through this Congress and signed by the President. But it is that kind of vision we need for our country.

I yield the floor.

Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Madam President, I rise today to urge this body to complete the extensive work that has been done on the Leahy-Smith America Invents Act and send this bill to the President for signature.

The America Invents Act has been years in the making. The time has come to get this bill done once and for all.

The importance of patent law to our Nation has been evidenced since the founding. The Constitution sets control over patent law as one of the enumerated powers of the Congress. Specifically, it gives the Congress the power ``To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.''

Today we take an important step toward ensuring that the constitutional mandate of Congress is met as we modernize our patent system. This bill is the first major overhaul of our patent laws in literally decades.

My colleagues have spoken at length about the myriad ways the America Invents Act will bring our patent law

into the 21st century. What I want to focus on, of course, is jobs.

The America Invents Act is fundamentally a jobs bill. Innovation and intellectual property has always been and always will be at the heart of the American economy. By rewarding innovators for inventing newer and better products, we keep America's creative and therefore economic core healthy.

Over the last few decades, however, innovation has outpaced our patent system. We have an enormous backlog at the PTO. The result of this backlog is that it is much harder for creators to obtain the property rights they deserve in their inventions. That challenge in turn makes it harder for inventions to be marketed and sold, which reduces the incentive to be innovative. Eventually, this vicious cycle becomes poisonous.

The America Invents Act cuts this cycle by making our patent system more efficient and reliable. By providing the Patent and Trademark Office the resources it needs to reduce the backlog of nearly 700,000 patent applications, the bill will encourage the innovation that will create and protect American jobs. In addition, the bill streamlines review of patents to ensure that the poor-quality patents can be weeded out through administrative review rather than costly litigation.

I am especially pleased that H.R. 1249 contains the Schumer-Kyl provisions that we originally inserted in the Senate to help cut back on the scourge of business method patents that have been plaguing American businesses. Business method patents are anathema to the protection that the patent system provides because they apply not to novel products or services but to abstract and often very common concepts of how to do business. Often business method patents are issued for practices that have been in widespread use for years, such as check imaging or one-click checkout. Imagine trying to patent the one-click checkout long after people have been using it.

Because of the nature of the business methods, these practices aren't as easily identifiable by the PTO as prior art, and bad patents are issued. Of course, this problem extends way beyond the financial services industry. It includes all businesses that have financial practices, from community banks to insurance companies to high-tech startups. Section 18, the Schumer-Kyl provision, allows for administrative review of those patents so businesses acting in good faith do not have to spend the millions of dollars it costs to litigate a business method patent in court.

That is why the provision is supported not only by the Financial Services Roundtable and the Community Bankers, but by the Chamber of Commerce, the National Retail Foundation, and in my home State by the Partnership for a Greater New York.

Madam President, I ask unanimous consent that letters in support of section 18 from all of these organizations be printed in the Record.

A patent holder whose patent is solid has nothing to fear from a section 18 review. Indeed, a good patent will come out of such a review strengthened and validated. The only people who have any cause to be concerned about section 18 are those who have patents that shouldn't have been issued in the first place and who were hoping to make a lot of money suing legitimate businesses with these illegitimate patents. To them I say the scams should stop.

In fact, 56 percent of business patent lawsuits come in to one court in the Eastern District of Texas. Why do they all go to one court? Not just because of coincidence. Why do people far and wide seek this? Because they know that court will give them favorable proceedings, and many of the businesses that are sued illegitimately spend millions of dollars for discovery and everything else in a court they believe they can't get a fair trial in, so they settle. That shouldn't happen, and that is what our amendment stops. It simply provides review before costly litigation goes on and on and on.

Now, my good friend and colleague, Senator Cantwell, has offered an amendment that would change the section 18 language and return to what the Senate originally passed last March. Essentially, Senator Cantwell is asking the Senate to return to the original Schumer-Kyl language. Of course, I don't have an inherent problem with the original Schumer-Kyl language. However, while I might ordinarily be inclined to push my own version of the amendment, I have to acknowledge that the House made some significant improvements in section 18.

First, H.R. 1249 extends the transitional review program of section 18 from 4 to 8 years in duration. This change was made to accommodate industry concerns that 4 years was short enough, that bad actors would just wait out the program before bringing their business method patent suits. The lying-in-wait strategy would be possible under the Cantwell amendment because section 18 only allows transitional review proceedings to be initiated by those who are facing lawsuits.

On a 20-year patent, it is not hard to wait 4 years to file suit and therefore avoid scrutiny under a section 18 review. It would be much harder, however, to employ such an invasive maneuver on a program that lasts 8 years.

Second, the Cantwell amendment changes the definition of business method patents to eliminate the House clarification that section 18 goes beyond mere class 705 patents. Originally, class 705 was used as the template for the definition of business method patents in section 18. However, after the bill passed the Senate, it became clear that some offending business method patents are issued in other sections. So the House bill changes the definition only slightly so that it does not directly track the class 705 language.

Finally, the Cantwell amendment limits who can take advantage of section 18 by eliminating access to the program by privies of those who are sued. Specifically, H.R. 1249 allows parties who have shared interests with a sued party to bring a section 18 proceeding. The Cantwell amendment would eliminate that accommodation.

All of the House changes to section 18 of the Senate bill are positive, and I believe we should keep them. But to my colleagues I would say this in closing: The changes Senator Cantwell has proposed do not get to the core of the bill, and the most profound effect they would have is to delay passage of the bill by requiring it to be sent back to the House, which is something, of course, we are all having to deal with on all three of the amendments that are coming up.

I urge my colleagues to remember that this bill and the 200,000 jobs it would create are too important to delay it even another day because of minor changes to the legislation. I urge my colleagues to vote against the amendment of my good friend Maria Cantwell and move the bill forward.

With that, I yield the floor.

My friend from Illinois is correct. I have previously inserted into the Record a March 3 letter from the Independent Community Bankers of America which stated that ``Under the current system, business method patents of questionable quality are used to force community banks to pay meritless settlements to entities that may have patents assigned to them, but who have invented nothing, offer no product or service and employ no one. . . . The Schumer-Kyl amendment is critical to stopping this economic harm.''

No. Patent holders who have generated productive inventions and have provided large numbers of American workers with good jobs through the development and commercialization of those patents are not the ones that have created the business method patent problem. While merely having employees and conducting business would not disqualify a patent-holder from Section 18 review, generally speaking, it is not the understanding of Congress that such patents would be reviewed and invalidated under Section 18.

Madam President, I would like to clarify the record on a few points related to section 18 of the America Invents Act. Section 18, of which Senator Kyl and I were the authors, relates to business method patents. As the architect of this provision, I would like to make crystal clear the intent of its language.

It is important that the record reflect the urgency of this provision. Just today, while the Senate has been considering the America Invents Act, Data Treasury--the company which owns the notorious check imaging patents and which has already collected over half a billion dollars in settlements--filed suit in the Eastern District of Texas against 22 additional defendants, primarily community banks. These suits are over exactly the type of patents that section 18 is designed to address, and the fact that they continue to be filed highlights the urgency of signing this bill into law and setting up an administrative review program at the PTO.

I would like to elucidate the intent behind the definition of business method patents. Other Members have attempted to suggest a narrow reading of the definition, but these interpretations do not reflect the intent of Congress or the drafters of section 18. For example, in connection with the House vote on the America Invent Act, H.R. 1249, Congressman Shuster submitted a statement in the Record regarding the definition of a ``covered business method patent'' in section 18. 157 Cong. Rec. H4497 (daily ed. June 23, 2011).

In the statement, Mr. Shuster states: ``I would like to place in the record my understanding that the definition of `covered business method patent' . . . is intended to be narrowly construed to target only those business method patents that are unique to the financial services industry.'' Mr. Shuster's interpretation is incorrect.

Nothing in the America Invents Act limits use of section 18 to banks, insurance companies or other members of the financial services industry. Section 18 does not restrict itself to being used by petitioners whose primary business is financial products or services. Rather, it applies to patents that can apply to financial products or services. Accordingly, the fact that a patent is being used by a company that is not a financial services company does not disqualify the patent from section 18 review. Conversely, given the statutory and regulatory limitations on the activities of financial services companies, if a patent is allegedly being used by a financial services company, the patent will qualify as a ``covered business method patent.''

The plain meaning of ``financial product or service'' demonstrates that section 18 is not limited to the financial services industry. At its most basic, a financial product is an agreement between two parties stipulating movements of money or other consideration now or in the future. Types of financial products include, but are not limited to: extending credit, servicing loans, activities related to extending and accepting credit, leasing of personal or real property, real estate services, appraisals of real or personal property, deposit-taking activities, selling, providing, issuing or accepting stored value or payment instruments, check cashing, collection or processing, financial data processing, administration and processing of benefits, financial fraud detection and prevention, financial advisory or management consulting services, issuing, selling and trading financial instruments and other securities, insurance products and services, collecting, analyzing, maintaining or providing consumer report information or other account information, asset management, trust functions, annuities, securities brokerage, private placement services, investment transactions, and related support services. To be eligible for section 18 review, the patent claims must only be broad enough to cover a financial product or service.

The definition of ``covered business method patent'' also indicates that the patent must relate to ``performing data processing or other operations used in the practice, administration, or management'' of a financial product or service. This language makes it clear that section 18 is intended to cover not only patents claiming the financial product or service itself, but also patents claiming activities that are financial in nature, incidental to a financial activity or complementary to a financial activity. Any business that sells or purchases goods or services ``practices'' or ``administers'' a financial service by conducting such transactions. Even the notorious ``Ballard patents'' do not refer specifically to banks or even to financial transactions. Rather, because the patents apply to administration of a business transactions, such as financial transactions, they are eligible for review under section. To meet this requirement, the patent need not recite a specific financial product or service.

Interestingly, Mr. Shuster's own actions suggest that his interpretation does not conform to the plain meaning of the statute. In addition to his statement, Mr. Shuster submitted an amendment to the Rules Committee that would exempt particular types of business-method patents from review under section 18. That amendment was later withdrawn. Mr. Shuster's subsequent statement in the Record appears to be an attempt to rewrite through legislative history something that he was unable to change by amendment.

Moreover, the text of section 18 further demonstrates that section 18 is not limited to patents exclusively utilized by the financial services industry. As originally adopted in the Senate, subsection (a)(1)(B) only allowed a party to file a section 18 petition if either that party or its real parties in interest had been sued or accused of infringement. In the House, this was expanded to also cover cases where a ``privy'' of the petitioner had been sued or accused of infringement. A ``privy'' is a party that has a direct relationship to the petitioner with respect to the allegedly infringing product or service. In this case, it effectively means customers of the petitioner. With the addition of the word ``privy,'' a company could seek a section 18 proceeding on the basis that customers of the petitioner had been sued for infringement. Thus, the addition of the ``privy'' language clearly demonstrates that section 18 applies to patents that may be used by entities other than the financial services industry.

The fact that a multitude of industries will be able to make use of section is evident by the broad based support for the provision, including the U.S. Chamber of Commerce and the National Retail Federation, among many others.

Madam President, I rise in opposition to the amendment of my dear friend, Senator Cantwell.

Business method patents are a real problem. They never should have been patented to begin with. Let me give an example: double click. We double click on a computer or something such as that and after it becomes a practice for awhile, someone files a patent and says they want a patent on double clicking. Because of the way the Patent Office works, the opponents of that never get a chance to weigh in as to whether it should be a patent. The Patent Office has gone way overboard in allowing these business method patents.

One might say: Then you get your day in court. That is true, except 56

percent--more than half--of all the business method patent litigation goes to one district, the Eastern District of Texas, which is known to be extremely favorable to the plaintiffs. It takes about 10 years to litigate. It costs tens of millions of dollars. So the people who are sued over and over for things such as double clicking or how to photograph a check--common things that are business methods and not patents--settle. It is a lucrative business for a small number of people, but it is wrong.

What this bill does is very simple. What the bill does, in terms of this amendment, is very simple. It says the Patent Office will make an administrative determination before the years of litigation as to whether this patent is a legitimate patent so as not to allow the kind of abuse we have seen. It applies to all financial transactions, whether it be a bank or Amazon or a store or anybody else, and it makes eminent sense.

So as much respect as I have for my colleague from Washington, I must strongly disagree with her argument and urge that the amendment be voted down.

I yield back the remainder of my time.