Providing for consideration of the bill (H.R. 3309) to amend title 35, United States Code, and the Leahy-Smith America Invents Act to make improvements and technical corrections, and for other purposes; and providing for consideration of the bill (H.R. 1105) to amend the Investment Advisers Act of 1940 to provide a registration exemption for private equity fund advisers, and for other purposes.

Mr. Speaker, I yield myself such time as I may consume.

I rise today in opposition to H.R. 1105, which will create a gaping loophole for private equity fund advisers and deprive investors and regulators of important information about the risk these funds pose.

The Dodd-Frank Act wisely required that advisers to all hedge funds, private equity funds, and other private funds register and file regular reports with the SEC. It did this for two reasons: one, to help regulators better understand the systemic risks that these funds pose to the overall financial system, and to provide investors in these funds with meaningful information about the funds' governance.

This bill would exempt nearly every private equity fund adviser from these important disclosure requirements. Some of my colleagues who support this bill will argue that because private equity funds were not the cause of the last crisis, we should not subject them to these modest transparency and accountability requirements.

But one of the most important lessons we did learn during the financial crisis is that systemic threats seem to always bubble up from the opaque and unregulated sectors of the market. Giving this exemption will allow threats to once again grow in the dark corners of our financial system, only showing themselves when it is too late to prevent serious harm to the American taxpayer.

Supporters of this bill, while well-intended, will point to the provision that ensures advisers to private equity funds with leverage ratios over 2:1 will still have to register. This may sound attractive on its surface until you realize that every private equity fund is basically within that parameter. Private equity funds invest in companies, and it is these portfolio companies that

load up on leverage and that have the potential to take on outside risk, piling on the leverage while the private equity fund itself appears on its surface to be modestly leveraged. A private equity fund could have a leverage ratio well below 2:1, while its portfolio companies are leveraged in excess of 30:1 masking the actual risk that these funds pose. Nearly every private equity fund in existence today would come in below the 2:1 leverage cap. This is a hollow limitation that provides no protection to the funds' investors or to the American taxpayer.

Mr. Speaker, we learned the hard way after the recent financial crisis that systemic risks grow in the dark corners of our financial markets and that the more information we can gather about how the markets work, the safer we will be. The registration and reporting requirements for private equity advisers are modest and narrowly tailored, but they provide investors and regulators with important information. Rolling back these reforms now moves us in the wrong direction. I urge my colleagues to oppose H.R. 1105.

I reserve the balance of my time.

Mr. Speaker, I yield myself 1 minute.

I do want to respond to the gentleman's invoking of the SEC chair, Mary Jo White. Judging from the gentleman's remarks, you would think she might be in favor of this bill. Well, let me talk about what she says about this bill in particular:

Our markets would not be well served by narrowing the scope

of the commission's jurisdiction in oversight of these

advisers.

That is with respect to this bill. She also said:

Private equity investors are in need of the same

protections as other private fund investors.

Lastly, she has also said that the commission has brought enforcement actions, talking about the advisability of having oversight over advisers and having these disclosures made:

The commission has brought enforcement actions against

private equity funds and their advisory personnel involving

unlawful pay-to-play schemes, insider trading, conflicts of

interest, valuation, and misappropriation of assets.

I yield myself another 30 seconds.

Now, when you think about the protections that are necessary for pension funds, especially where these workers have invested their whole lives in these pension funds, you understand the need for this disclosure.

At this time I yield 3 minutes to the gentleman from Minnesota (Mr. Ellison).

I yield the gentleman an additional 1 minute.

I yield the gentleman an additional 20 seconds.

Mr. Speaker, I yield myself 1 minute to respond to some of these allegations.

In respect to sophisticated investors, the Council of Institutional Investors, which is an association representing corporate, union, and public pensions, foundations and endowments, largely very sophisticated investors with combined assets of $3 trillion, opposes this bill. They oppose this bill because of the record of enforcement actions of the SEC to go after risks that do actually exist.

I now yield 3 minutes to the gentleman from Connecticut (Mr. Himes), a cosponsor of the bill.

Mr. Speaker, I yield the gentleman an additional 1 minute.

Mr. Speaker, may I ask how much time is remaining for each side.

Mr. Speaker, at this time I yield 3 minutes to the gentleman from Tennessee (Mr. Cooper).

Mr. Speaker, I yield myself such time as I may consume.

I do want to point out, in response to the gentleman from Tennessee's remarks about this bill going on voice vote in committee, I just want to remind the Members and the public that during that debate there was a need for further work on this bill.

I think, in a moment of bipartisanship, we agreed, both Democrat and Republican, to allow the bill to go by voice vote with the promise to work on some of those issues going forward. So it was an agreement to try to continue to agree and to work on the bill. It was

not a vote in favor of any particular provisions within this bill.

There has been a lot of talk here about the risks that don't exist, and I do want to just point out some of those. As a result of this bill, funds investing more than $300 billion a year, much of which is the retirement savings of workers like teachers, firefighters, police officers, they would no longer be required to provide basic investor protections.

Specifically, H.R. 1105 would deprive investors of basic disclosures about an employee of a fund adviser who, for instance, violated securities law, or the adviser's businesses practices, its fees, any conflict of interest on the part of that adviser.

It would also eliminate a compliance program and code of ethics within the bill, within Dodd-Frank, and would eliminate the need for a chief compliance officer for each fund manager.

H.R. 1105, the bill under consideration here, would also prevent the SEC from conducting compliance exams of private equity fund adviser, even though SEC Chairman Mary Jo White notes that the Commission has already uncovered issues such as unlawful pay-to-play schemes, insider trading that we have all read about recently, conflicts of interest, valuation issues, and misappropriation of assets.

I want to talk about some of these since there has been a complete dismissal of any risk here. I think the record speaks to the risk.

The SEC has brought several enforcement actions against private equity firms. While the defendants do not necessarily represent all private equity firms, they do highlight the need for a strong police officer with the authority to examine all private equity advisers.

Capital formation relies on investor confidence in the underlying assets; and without registration with the SEC, investors will no longer have a cop on the beat that can enforce the rule of law, reducing investor demand.

In Knelman, for example here, there have been broad violations related to fraud, custody, compliance, and reporting. In Knelman Asset Management Group, the SEC found that registered private equity fund-of- funds adviser Knelman Asset Management Group, LLC, and Irving P. Knelman, KAMG's managing director, chief executive officer, and former CCO, violated the Advisers Act's custody, antifraud, compliance, reporting, and books-and-records provisions.

In insider trading enforcement, the Gowrish insider trading case involved an individual who allegedly stole confidential acquisition information, TPG Capital, and sold that information to two friends who made $500,000 in illicit trading profits.

Valuation related enforcement actions, the Oppenheimer/Brian Williamson matters concern an investment adviser and portfolio manager who misrepresented material details about his valuation methodology to his investors.

Recently, the Commission filed a case against Yorkville Advisors, where Yorkville allegedly inflated the values of certain liquid assets. While Yorkville managed hedge funds, the valuation issues are very similar to ones we see in private equity.

Finally, the KCAP valuation case involved alleged overstatements of the value of certain debt securities and CLOs held in the investment portfolio, highlighting the division and AMU's emphasis on pursuing valuation cases.

And in the Ranieri Partners case, the SEC also found that an investment manager knowingly used a sanctioned, unregistered broker- dealer to solicit capital for a pooled investment vehicle.

So all of these illegal activities would be made unavailable to private equity investors under this bill. That is what the risk is. That is not fiction. Those are actual cases that the SEC has introduced enforcement actions on. So there is real risk here for investors and for the markets themselves.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself 2 minutes.

We need not worry about small firms in this. They are already exempt under this bill. They are already exempt. So the concerns about small firms being covered by this, they are already exempt, number one.

Number two, the other scenario that has been posited here is that somehow, by allowing private equity firms the right to keep secret--or to refuse to disclose that their employees have been prosecuted for violating securities laws, by allowing that to remain undisclosed, that somehow that is going to help some single mom go to work, I don't think that is a rational assumption.

Mr. Speaker, I will now enter into the Record letters from the following organizations who are all opposed to this bill: Americans for Financial Reform, the Council of Institutional Investors, the North American Securities Administrators Association, and a Statement of Administration Policy from the Obama administration.

I reserve the balance of my time.

Americans for

Financial Reform,

Washington, DC.

Dear Representative: On behalf of Americans for Financial

Reform, we are writing to express our opposition to HR 1105.

Contrary to its title, this bill is not designed to benefit

small business. Instead, it would exempt private equity fund

advisers--who include some of the wealthiest and most

significant entities on Wall Street--from basic reporting

requirements designed to help regulators

monitor systemic risk in the financial system and protect

investors and the public.

Prior to the Dodd-Frank Act, hedge and private equity funds

received almost no regulatory monitoring, despite the fact

that combined they manage some $3 trillion in assets and

played a significant intermediary role in the financial

crisis. Section 404 of the Dodd-Frank Act created more

transparency for this previously dark portion of the markets,

by requiring advisers to hedge and private equity funds to

report basic financial information relevant to systemic risk

to the Securities and Exchange Commission (SEC). The

experience of the 2008 crisis--where risks emerged from parts

of the markets not being monitored by regulators--clearly

demonstrates the importance of ensuring that regulators can

track financial risks wherever they originate.

The Section 404 reporting requirements as implemented by

the SEC are far from onerous. All advisers with below $150

million in assets under management are completely exempted,

and advisers with up to $1.5 billion in assets under

management must report only limited and basic information

once per year. Advisers to large private equity funds are

required to respond only once per year (advisers to other

large funds report quarterly).

HR 1105 would exempt almost all private equity fund

advisers from reporting requirements to the Securities and

Exchange Commission. The sole requirement for the exemption

is that the fund must not have outstanding borrowings that

exceed twice the fund's invested capital. But this

requirement places little if any real limitation on the

exemption, since the great majority of borrowing connected

with private equity activity is conducted through portfolio

companies, not at the fund level. (That is, companies owned

by private equity funds borrow large amounts as the direction

of the fund, but the fund itself rarely borrows a great

deal).

It is particularly distressing that Congress would consider

granting this exemption at a time when concern is growing

among regulators and market observers about risks created by

a possible bubble in the leveraged loan market, which is

dominated by loans sponsored by private equity firms. Several

warnings have been issued recently by regulators concerning

the risks being created in these markets. As Moody's

investor's service has stated:

``Private equity firms have been exploiting investors''

willingness to lend to speculative-grade companies . . .

Higher yields are drawing investors to riskier structures at

a time when interest rates remain at historical lows.''

Since leveraged loans are also being sold to small retail

investors, a bubble could impact both the stability of the

broader financial system and the retirement savings of retail

investors. The situation in the leveraged loan market clearly

demonstrates the connection between private equity activity

and important risks to financial stability and to investors.

An additional source of concern is the danger that the

exemption granted in HR 1105 could too easily be exploited to

reach beyond private equity firms alone. The distinction

between a hedge fund and a private equity fund is not a

formal legal distinction, it is simply a differentiation

between general investment strategies. While HR 1105 grants

the SEC the ability to define more precisely what a private

equity fund is, if that definition is at all overbroad then

it could be taken advantage of by a wide range of hedge funds

in order to avoid oversight.

Private equity funds already receive significant subsidies

through the tax system, as they are major beneficiaries of

the favorable treatment for `carried interest', as well as

the general tax subsidy to debt costs. It is totally

inappropriate to also grant such funds a blanket exemption

from even the limited and basic Dodd-Frank regulatory

reporting requirements. Such a blanket exemption would make

it more difficult for regulators to monitor systemic risk and

risks to investors, solely in order to exempt wealthy

managers of large private equity funds from a minor

administrative task. HR 1105 should be rejected.

Thank you for your consideration. For more information

please contact AFR's Policy Director, Marcus Stanley.

Sincerely,

Americans for Financial Reform.

Following Are the Partners of Americans for Financial Reform

All the organizations support the overall principles of AFR

and are working for an accountable, fair and secure financial

system. Not all of these organizations work on all of the

issues covered by the coalition or have signed on to every

statement.;

A New Way Forward; AFL-CIO; AFSCME; Alliance For Justice;

American Income Life Insurance; American Sustainable Business

Council; Americans for Democratic Action, Inc; Americans

United for Change; Campaign for America's Future; Campaign

Money; Center for Digital Democracy; Center for Economic and

Policy Research; Center for Economic Progress; Center for

Media and Democracy; Center for Responsible Lending; Center

for Justice and Democracy.

Center of Concern; Center for Effective Government; Change

to Win; Clean Yield Asset Management; Coastal Enterprises

Inc.; Color of Change; Common Cause; Communications Workers

of America; Community Development Transportation Lending

Services; Consumer Action; Consumer Association Council;

Consumers for Auto Safety and Reliability; Consumer

Federation of America; Consumer Watchdog; Consumers Union.

Corporation for Enterprise Development; CREDO Mobile; CTW

Investment Group; Demos; Economic Policy Institute; Essential

Action; Greenlining Institute; Good Business International;

HNMA Funding Company; Home Actions; Housing Counseling

Services; Home Defender's League; Information Press;

Institute for Global Communications; Institute for Policy

Studies: Global Economy Project.

International Brotherhood of Teamsters; Institute of

Women's Policy Research; Krull & Company; Laborers'

International Union of North America; Lawyers' Committee for

Civil Rights Under Law; Main Street Alliance; Move On; NAACP;

NASCAT; National Association of Consumer Advocates; National

Association of Neighborhoods; National Community Reinvestment

Coalition; National Consumer Law Center (on behalf of its

low-income clients); National Consumers League; National

Council of La Raza.

National Council of Women's Organizations; National Fair

Housing Alliance; National Federation of Community

Development Credit Unions; National Housing Resource Center;

National Housing Trust; National Housing Trust Community

Development Fund; National NeighborWorks Association;

National Nurses United; National People's Action; National

Urban League; Next Step; OpenTheGovernment.org; Opportunity

Finance Network; Partners for the Common Good; PICO National

Network.

Progress Now Action; Progressive States Network; Poverty

and Race Research Action Council; Public Citizen; Sargent

Shriver Center on Poverty Law; SEIU; State Voices; Taxpayer's

for Common Sense; The Association for Housing and

Neighborhood Development; The Fuel Savers Club; The

Leadership Conference on Civil and Human Rights; The Seminal;

TICAS; U.S. Public Interest Research Group; UNITE HERE.

United Food and Commercial Workers; United States Student

Association; USAction; Veris Wealth Partners; Western States

Center; We the People Now; Woodstock Institute; World Privacy

Forum; UNET; Union Plus; Unitarian Universalist for a Just

Economic Community.

List of State and Local Affiliates

Alaska PIRG; Arizona PIRG; Arizona Advocacy Network;

Arizonans For Responsible Lending; Association for

Neighborhood and Housing Development NY; Audubon Partnership

for Economic Development LDC, New York NY; BAC Funding

Consortium Inc., Miami FL; Beech Capital Venture Corporation,

Philadelphia PA; California PIRG; California Reinvestment

Coalition; Century Housing Corporation, Culver City CA;

CHANGER NY; Chautauqua Home Rehabilitation and Improvement

Corporation (NY); Chicago Community Loan Fund, Chicago IL.

Chicago Community Ventures, Chicago IL; Chicago Consumer

Coalition; Citizen Potawatomi CDC, Shawnee OK; Colorado PIRG;

Coalition on Homeless Housing in Ohio; Community Capital

Fund, Bridgeport CT; Community Capital of Maryland, Baltimore

MD; Community Development Financial Institution of the Tohono

O'odham Nation, Sells AZ; Community Redevelopment Loan and

Investment Fund, Atlanta GA; Community Reinvestment

Association of North Carolina; Community Resource Group,

Fayetteville A; Connecticut PIRG; Consumer Assistance

Council; Cooper Square Committee (NYC).

Cooperative Fund of New England, Wilmington NC; Corporacion

de Desarrollo Economico de Ceiba, Ceiba PR; Delta Foundation,

Inc., Greenville MS; Economic Opportunity Fund (EOF),

Philadelphia PA; Empire Justice Center NY; Empowering and

Strengthening Ohio's People (ESOP), Cleveland OH;

Enterprises, Inc., Berea KY; Fair Housing Contact Service OH;

Federation of Appalachian Housing; Fitness and Praise Youth

Development, Inc., Baton Rouge LA; Florida Consumer Action

Network; Florida PIRG; Funding Partners for Housing

Solutions, Ft. Collins CO; Georgia PIRG.

Grow Iowa Foundation, Greenfield IA; Homewise, Inc., Santa

Fe NM; Idaho Nevada CDFI, Pocatello ID; Idaho Chapter,

National Association of Social Workers; Illinois PIRG; Impact

Capital, Seattle WA; Indiana PIRG; Iowa PIRG; Iowa Citizens

for Community Improvement; JobStart Chautauqua, Inc.,

Mayville NY; La Casa Federal Credit Union, Newark NJ; Low

Income Investment Fund, San Francisco CA; Long Island Housing

Services NY; MaineStream Finance, Bangor ME.

Maryland PIRG; Massachusetts Consumers' Coalition;

MASSPIRG; Massachusetts Fair Housing Center; Michigan PIRG;

Midland Community Development Corporation, Midland TX;

Midwest Minnesota Community Development Corporation, Detroit

Lakes MN; Mile High Community Loan Fund, Denver CO; Missouri

PIRG; Mortgage Recovery Service Center of L.A.; Montana

Community Development Corporation, Missoula MT; Montana PIRG;

Neighborhood Economic Development Advocacy Project; New

Hampshire PIRG.

New Jersey Community Capital, Trenton NJ; New Jersey

Citizen Action; New Jersey PIRG; New Mexico PIRG; New York

PIRG; New York City Aids Housing Network; New Yorkers for

Responsible Lending; NOAH Community Development Fund, Inc.,

Boston MA; Nonprofit Finance Fund, New York NY; Nonprofits

Assistance Fund, Minneapolis M;

North Carolina PIRG; Northside Community Development Fund,

Pittsburgh PA; Ohio Capital Corporation for Housing, Columbus

OH; Ohio PIRG.

OligarchyUSA; Oregon State PIRG; Our Oregon; PennPIRG;

Piedmont Housing Alliance, Charlottesville VA; Michigan PIRG;

Rocky Mountain Peace and Justice Center, CO; Rhode Island

PIRG; Rural Community Assistance Corporation, West Sacramento

CA; Rural Organizing Project OR; San Francisco Municipal

Transportation Authority; Seattle Economic Development Fund;

Community Capital Development; TexPIRG.

The Fair Housing Council of Central New York; The Loan

Fund, Albuquerque NM; Third Reconstruction Institute NC;

Vermont PIRG; Village Capital Corporation, Cleveland OH;

Virginia Citizens Consumer Council; Virginia Poverty Law

Center; War on Poverty--Florida; WashPIRG; Westchester

Residential Opportunities Inc.; Wigamig Owners Loan Fund,

Inc., Lac du Flambeau WI; WISPIRG.

Small Businesses

Blu; Bowden-Gill Environmental; Community MedPAC;

Diversified Environmental Planning; Hayden & Craig, PLLC; Mid

City Animal Hospital, Pheonix AZ; The Holographic Repatteming

Institute at Austin; UNETO.

Mr. Speaker, could I ask how much time remains on each side.

I yield 2 minutes to the gentlelady from New York (Mrs. Maloney).

I yield the gentlewoman an additional 1 minute.

I yield myself 2 minutes.

Mr. Speaker, I would now like to enter into the Record statements from the following organizations which all oppose H.R. 1105: the AFL- CIO, California Public Employees' Retirement System, and North American Securities Administrators Association.

And regarding reading the bill, I certainly did read the bill, and my point is that the bill does not require public disclosure of those matters, as the gentleman points out. It just goes to the Commission. So it doesn't go to the public. The public doesn't get the information. It stays within the custody of the Commission.

I yield to the gentleman from Texas.

Reclaiming my time, that is right. But those are public investors. They are the ones that need the information.

Mr. Speaker, I yield the balance of my time to the gentlelady from California (Ms. Waters), our ranking member and a real champion of America's working families.

Legislative Proposals to Relieve the Red Tape Burden on Investors and

Job Creators

United States House of Representatives Committee on Financial Services

Subcommittee on Capital Markets and Government Sponsored Enterprises

(Statement of Anne Simpson Senior Portfolio Manager, Investments Director of Global Governance California Public Employees' Retirement

System, May 23, 2013)

Chairman Garrett, Ranking Member Maloney, and Members of

the Committee, on behalf of the California Public Employees'

Retirement System (CalPERS), we thank you for convening this

hearing. CalPERS is pleased to submit testimony for the

record to reassert our strong support for efficient and

effective financial regulation, as enacted by the Dodd-Frank

Wall Street Reform and Consumer Protection Act (``Dodd-

Frank'').

This statement includes a brief overview of CalPERS,

including how we benefit from effective financial markets

regulation and the role that shareowner rights and corporate

governance play in building investor confidence. It also

includes a discussion of our views on HR 1135, HR 1105, and

Mr. Speaker, I yield myself such time as I may consume.

There are many things that my good friend from Florida said that I agree with. I will be discussing some of the merits of these bills, but it is worthwhile to bring forward before discussing what these bills are, what these bills are not.

It has been 159 days and 14 hours since the Senate passed a comprehensive immigration reform bill. This body's failure to act on immigration reform has already cost our economy nearly $6 billion. Each additional day, each day that we delay action costs $37 million in revenue; hundreds of thousands of jobs lost; failure to secure the border; failure to restore the rule of law to our country; countless families torn apart.

While the Judiciary Committee has found the time to move asbestos bills and patent reform bills to the floor with ease, immigration reform remains stagnant. The Judiciary Committee has reported out four immigration reform bills: the Legal Workforce Act, the Agricultural Guestworker Act, the SAFE Act, and the SKILLS Visa Act. They reported these four bills out prior to the asbestos bill which was rushed immediately to the floor and prior to the patent bill which was rushed to the floor after a hearing in the Rules Committee yesterday.

My question to the gentleman from Florida--and I will be happy to yield for a moment--is why we are giving such treatment to asbestos and patent reform when immigration reform would create so many more jobs and reduce our deficit by so much more?

I would like to know if the gentleman from Florida has an answer to that question.

I yield to the gentleman from Florida.

Reclaiming my time, 68 Members of the Senate, including

many Republicans, including former Presidential Republican nominee John McCain, supported the Senate immigration reform bill.

I certainly understand the desire to get it right, but bills don't get right by themselves. These are four bills that have passed in the Judiciary Committee. We in Rules like to make them right by allowing good, thoughtful amendments from colleagues on both sides of the aisle. I hope that next week or when we are back, we will be able to move forward the immigration bills with the same alacrity that we have moved forward asbestos and patent reform.

I hope the same thing happens that as these bills move through Judiciary that we do see them in the Rules Committee and that they ultimately come to this floor for debate.

Mr. Speaker, I do support the underlying bills that are contained under this rule. I support H.R. 1105, the bipartisan Small Business Capital Access and Job Preservation Act. It exempts private equity funds which are very lightly leveraged in helping to grow companies and jobs from costly and unnecessary SEC registration and reporting requirements like venture capital firms that are already exempted and substantially have very similar business models to private equity firms. These registration requirements are an impediment to business and an impediment to job growth and have nothing to do with creating systemic risk in our economy.

Importantly, this bill would only exempt private equity firms with low debt-to-equity ratios leveraged at a ratio of less than 2 to 1. Once you get to talking about much higher debt-to-equity ratios, there is potentially systemic risk if you are talking about funds in the multi-billions of dollars that are highly leveraged. It is still hard to see how that could happen. It had nothing to do with the financial meltdown of '08-'09. But in this case, we are being extremely safe in saying if they are leveraged 2 to 1, they are no systemic risk to the economy.

My State and my district know firsthand the benefits that private equity provides to employees, to companies, to investors, including pensions, and our economy. There are nearly 500 private equity-backed companies headquartered in Colorado, many more that operate with employees, more than 124,000 workers in Colorado facilities. In 2012, there were 67 private equity investments in Colorado totaling over $26 billion that were brought to our State because of this investment mechanism, placing Colorado third in the States receiving the most private equity investment.

The underlying rule also makes in order H.R. 3309, the Innovation Act, which I also support. In 2011, ``patent assertion entities,'' some of whom are bad actors which are sometimes referred to as ``patent trolls,'' who often produce little or nothing and derive their revenue from litigation and licensing, cost significant overhang to other businesses and to consumers for whom many of these costs are passed along in the products or services that we all enjoy. The majority of the targets of patent trolls were start-ups--hospitals, restaurants, retailers, hotels, and other important job-creation engines in our economy.

The reforms made in the America Invents Act, enacted 2 years ago, went a little ways in this regard, but did not do much to halt or put a stop to or reduce patent troll litigation or improve the quality of patents. In the case of software patents, growing patent backlogs, lack of training and resources available to PTO examiners, and ambiguity regarding patentability standards have led to approval of low-quality software patents that have not even stood up when brought to litigation.

Thankfully, the momentum is growing to address patent reform. I want to be clear--and I discussed this with Chairman Goodlatte in the Rules Committee yesterday--this bill is not patent reform. I believe the gentleman, Mr. Goodlatte, agrees this is not patent reform. It may be a few steps in the right direction. It may be a good start. It doesn't fundamentally create an intellectual property protection system for the digital era in the 21st century.

It continues to put, constructively, Band-Aids on a 1913 system, which I do believe it is high time to rethink. I look forward to an upcoming symposium in my district at the University of Colorado this Friday that we will be having on sort of ``blue sky'' intellectual property protection mechanisms for the 21st century in the digital economy to encourage growth and to protect inventors. This bill does not do that. However, it is a step forward in many regards.

While I strongly support many of these patent system improvements, it won't fix our patent system. Patent trolls have targeted every form of business. It should come as no surprise that the Innovation Act enjoys support from Members from both sides of the aisle, from companies, from academics. I submitted a letter from 67 professors at law universities who practice in IP from a broad ideological perspective into the record in our Rules Committee yesterday expressing their support for this bill.

This bill maintains protections for inventors' rights to enforce their patent claims. Specifically, this bill allocates the burden of patent litigation more fairly. It includes a provision that restores financial accountability to the patent system by making it easier for courts to impose sanctions on anyone who brings a frivolous patent suit.

The bill also requires the disclosure of critical details when a patent-holder files a suit, such as what patent and claims are being infringed, so the person or entity receiving the letter can know what is being discussed so that defendants don't need to guess the nature of the allegations against them.

The underlying legislation further requires patent-holders to disclose additional information to the PTO, the court, and the accused infringer, including the patent ownership, who owns the patent, and parties with financial interest in the patent. These provisions will help stop patent trolls who engage in illegitimate litigation campaigns and extortion against start-ups and small businesses.

While I strongly support these patent reforms that are a modest step towards improving our patent system, the litigation reforms alone don't have enough to benefit start-ups and small companies that are targeted by patent trolls who send pre-litigation demand letters. I am very appreciative of the chairman's effort to allow, and the Rules Committee's effort to allow, for the discussion of my amendment, along with Mr. Chaffetz, Mr. Connolly, and Mr. Marino, who have been working in this regard to see stronger language on the issue of pre-litigation demand letters. And I am grateful that we have made in order an amendment to increase accountability in the demand letter process.

We will be discussing that amendment in a more thorough basis shortly; but, in brief, the problem is that before a patent troll even files a suit, it typically sends a demand letter, or many demand letters, demanding some form of payment. Under current law, the sender does not even have to disclose even the most basic information. As such, entities often hide behind numerous shell corporations or send vague or overbroad letters that don't even identify the owner of the patent or the basis of their legal claim, essentially leading particularly small companies to have to hire lawyers or attorneys at great expense. When you have a company that is a $300,000-a-year company, a $500,000-a-year company, and you receive one or more of these notices, you can imagine how that takes away from your growth, your margins, your ability to hire more people, if you have to retain professional counsel to even understand what is being alleged that your company did.

Importantly, the underlying bill requires patent-holders seeking to bring willful infringement claims to provide their targets with a minimum level of disclosure information. The amendment enhances that and builds upon the language and would mandate that demand letters include information identifying the parent entity of the claimant. This language will help ensure that patent trolls can no longer hide under shell companies to conceal their true entity and their legitimacy from the demand letter recipient.

I look forward to discussing these bills further, and I reserve the balance of my time.

And I certainly wish that we had acted on immigration reform. We did pass under Democratic control a DREAM Act, if the gentleman will recall, in the waning days of the 111th Congress, and did take at least one constructive step with an immigration bill that we brought to the full floor of this House and passed.

I would like to yield 3 minutes to the gentleman from Colorado (Mr. Perlmutter), a member of the Financial Services Committee and a former member of the Rules Committee.

I yield an additional 30 seconds to the gentleman.

I yield 1\1/2\ minutes to the gentlewoman from California (Ms. Chu), a member of the Judiciary Committee, one of the key architects and somebody who worked very hard on this bill.

Mr. Speaker, I yield 2 minutes to the gentleman from California (Mr. Cardenas).

Mr. Speaker, I would like to inquire if the gentleman has any other speakers.

Mr. Speaker, I am prepared to close, so I yield myself such time as I may consume.

The gentleman from Georgia (Mr. Collins), rightly asserted that the Democrats did not, in fact, when they were in charge of the legislature in both Chambers, fix our broken immigration system. However, we did pass the DREAM Act. And given that this is football season and I think that my friend, the gentleman from Georgia, perhaps shares affinity for football, that while we did not in fact score a touchdown and fix our broken immigration system, at least the Democrats got a field goal when we were in charge. We are still waiting for the Republicans to match our field goal here if we can't score a touchdown with comprehensive immigration reform, and we look forward to improving these bills that have passed out of the committee before the asbestos bill, before the patent reform bill, and need the work of the full membership of this body to improve them.

Legislation is not like a fine wine, that when it sits in a barrel it improves itself. It needs to be actively worked upon to improve it, and I hope that it is a matter of days or hours or minutes until we can dust off these immigration bills that Chairman Goodlatte and the Judiciary Committee have worked on and improve upon them so that this body can actually move forward and score a field goal, a touchdown or more, and finally replace our broken immigration system with one that reflects our values as Americans, restores the rule of law, reduces our deficit by $200 billion, creates 6 million jobs for American citizens, secures our borders, and implements workplace enforcement of our immigration system. I am confident that we can do that working together, just as we are working together on these bills that are before us today.

As I indicated earlier, that while the patent bill does harvest some low-hanging fruit, there remains a lot of work to be done to create a 21st century intellectual property protection system for our country.

One such effort was an amendment that I offered, Polis amendment 5, that was not allowed under this rule. This amendment reflects a bill that I sponsor with Mr. Marino that regards the Demand Letter Transparency Act. Depending on a start-up's resources, even the recipient of one demand letter can even be a death sentence for a small one-, two-, three-person company. The threat of a demand letter alone can jeopardize a company's ability to raise funds, can scare away potential customers, and, God forbid, actually defending a patent lawsuit can cost hundreds of thousands to millions of dollars in legal bills, which to a one-, two-, or three-person company is simply a matter of shutting the doors because they cannot afford to do that.

At the Rules Committee yesterday, I offered my bipartisan amendment based on legislation that I introduced with Representative Marino and Representative Deutch that would provide a comprehensive approach to increasing transparency and accountability in the demand letter process. While our amendment was not made in order, I am grateful we did include at least some slight provisions regarding who owns shell corporations, amendment 4 was allowed. We plan to continue to press forward on the need to address this issue through meaningful legislation.

Our bill would require certain entities to provide additional disclosure information to the PTO and to the demand letter recipient so that these start-ups and mom-and-pop restaurant owners and stores will know who is sending these demand letters and whether the claims they are making are truthful or grounded at all or just a scam.

Our bill would establish a searchable and accessible public registry of demand letters and clarify that the Federal Trade Commission could use its authority to impose civil penalties to go after patent trolls. While the FTC has announced its intent to investigate PAEs, our bill would clarify the FTC's role to use its enforcement powers against PAEs who engage in unfair and deceptive trade practices to find as a violation the provisions of our bill.

Our amendment would prevent patent trolls from hiding behind anonymous shell companies and empower defendants to take collective action and share information and increase reporting so that the regulatory authorities and the PTL are on alert as to which patents are being frivolously asserted by whom.

In conjunction with litigation reforms that are proposed in this underlying bill, our proposal would produce a more robust patent market and a more productive and predictable and competitive economy.

Our proposal is supported by a diverse group of individuals and organizations, including DISH Network, Public Knowledge, the National Restaurant Association, the Electronic Frontier Foundation, the National Retail Federation, the Direct Marketing Association, the Mobile Marketing Association, the Association of American Advertising Agencies, and the Hotel & Lodging Association, among many others.

Mr. Speaker, for once, this body is moving forward on bipartisan legislation that will help spur innovation and economic growth. The first bill that we are considering with regard to private equity will help increase job growth and job creation in our country by removing a regulatory burden that was put in without the proper justification. Private equity funds had nothing to do with the meltdown in 2008 and 2009, nor do they represent any systemic risk to our economy. They simply allow people to aggregate their resources to buy stock equity in companies. We have a cap on the debt equity ratio of two to one, and they do what they do. People earn money and people lose money, and that is how the economy works, but there is absolutely no systemic risk.

Some of these dollar amounts sound high, but what we talked about in the Rules Committee yesterday is that you might have a private equity fund that is $300 million. That sounds like a lot of money. That is the amount of money they have to invest over a period of years. With $300 million, they invest that over 5, 6, or 7 years. That is not their operational budget. Their operational budget is 2 percent or less of that every year. So a $300 million private equity fund might have an annual budget of $6 million.

Again, $6 million sounds like a lot of money. It certainly is. But when compliance with the SEC reform is $500,000, as has been estimated, you are talking about a sizeable percentage of your annual operating budget. So that means you have to hire a couple of people less. You might not be able to do that extra investment that you didn't have the ability to do the diligence in. You might not be able to invest in that additional company and help it grow and create jobs because of regulatory compliance that has nothing to do with systemic risk.

Mr. Speaker, as this session of Congress comes to a close, the first session of the 113th Congress, there is much that this body has left undone. While the other Chamber across the way has acted on overwhelmingly bipartisan measures that help fix our immigration system, saving $200 billion, creating over 6 million jobs, securing our borders, restoring the rule of law, and uniting families, this body has not passed a single bill in that area.

While the other body has passed a bill that would prevent companies from discriminating against gay and lesbian employees with strong bipartisan support, this body has not even brought such a bill to committee or the floor.

While I am pleased to see the bipartisan Innovation Act and Small Business Capital Access and Job Preservation Act come to the floor today, although I would like to see them with a more open process that allowed more ideas from both sides of the aisle to be introduced as amendments, I only hope that a majority of this body sees fit to hold votes on other issues such as immigration reform and employment nondiscrimination, which I am confident would pass the floor of the House today.

As I talk to many tech companies and small businesses in my district, many of the purported beneficiaries of this modest patent reform bill, they support it, but they support immigration reform more. They say, Good job. Now get immigration reform done. That is what I am hearing from employers and businesses in my district. I hope that my colleagues on the other side of the aisle are hearing the same.

Our Nation cannot afford to maintain a 20th century intellectual property protection system in a digital and biological era. This bill does not correct that. It does not change that. It is a modest step forward and an important part of reforming parts of the process that Democrats, Republicans, and many stakeholders can agree are broken.

The measure contains bipartisan balanced proposals, just as H.R. 15 does, the comprehensive immigration reform bill in the House, with over 190 bipartisan sponsors. And just as this bill will continue to incentivize entrepreneurship, so too--times 10, times 100--would comprehensive immigration reform, which includes a start-up visa that allows entrepreneurs who have already received commitments of investment to come to this country and create their jobs here. We are turning jobs for Americans away every day we fail to act on immigration reform. We can bring H.R. 15 to the Rules Committee and to the floor of the House next week or we can stay the following week and give this body the opportunity to send a bill to President Obama's desk to finally replace our broken immigration system with one that works.

Mr. Speaker, if we defeat the previous question, I will offer an amendment to the rule to bring up House Resolution 424, Ranking Member Slaughter's resolution, that prohibits an adjournment of the House until we adopt a budget conference report. This body should not adjourn until we have completed a budget conference report that could help prevent a second government shutdown and prevent a fiscal crisis.

Mr. Speaker, I ask unanimous consent to insert the text of the amendment in the Record, along with extraneous material, immediately prior to the vote on the previous question.

Mr. Speaker, while I am actively encouraging Members on both sides of the aisle to get behind the Innovation Act and the Small Business Capital Access and Job Preservation Act, I must urge my colleagues to vote ``no'' and defeat the previous question, as well as a ``no'' vote on the restrictive rule.

I hope that we can send the message that we need to bring immigration reform to the floor of this House, rather than let the four bills that have already emerged out of committee stay sitting and aging and not getting any better while we fast-track asbestos and while we fast-track modest patent reforms.

The time has come to act on immigration reform. Please join me on voting ``no'' on the previous question and ``no'' on the rule.

I yield back the balance of my time.

Will the gentleman yield?

It seems more like we have been in a timeout for 3 months since these bills have passed committee.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on H.R. 3309 under consideration.

Madam Chairman, I yield myself such time as I may consume.

Today, we are here to consider H.R. 3309, the Innovation Act. The enactment of this bill is something I consider central to U.S. competitiveness, job creation, and our Nation's future economic security. The bill takes meaningful steps to address the abusive practices that have damaged our patent system and resulted in significant economic harm to our Nation.

During the last Congress, we passed the America Invents Act. Many view the AIA as the most comprehensive overhaul to our patent system since the 1836 Patent Act. However, the AIA was, in many respects, a prospective bill. The problems that the Innovation Act will solve are more immediate and go to the heart of current abusive patent litigation practices.

This bill builds on our efforts over the past decade. It can be said that this bill is the product of years of work. We have worked with Members of both parties in both the Senate and the House, with stakeholders from all areas of our economy, and with the administration and the courts.

To ensure an open, deliberative, and thoughtful process, we held several hearings and issued two public discussion drafts in May and September of this year, which led to the formal introduction of the Innovation Act in October. I strongly believe that the Innovation Act takes the necessary steps to address abusive patent litigation.

Abusive patent litigation is a drag on our economy. Everyone from independent inventors to start-ups to mid-and large-sized businesses face this constant threat. The tens of billions of dollars spent on settlements and litigation expenses associated with abusive patent suits represent truly wasted capital--wasted capital that could have been used to create new jobs, fund R&D, and create new innovations and technologies that ``promote the progress of science and useful arts.''

And that is what innovation is really about, isn't it? If you are able to create something, invent something new and unique, then you should be allowed to sell your product, grow your business, hire more workers, and live the American Dream.

The Innovation Act puts forward reasonable policies that allow for more transparency and brings fundamental fairness to the patent system and the courts.

The Innovation Act is designed to deal with systemic issues surrounding abusive patent litigation as a whole, and includes a number of provisions designed to ameliorate this significant problem.

Within the past couple of years, we have seen an exponential increase in the use of weak or poorly granted patents against American businesses with the hopes of securing a quick payday. Many of these abusive practices are focused not just on larger companies but against small and medium-sized businesses as well. These suits target a settlement just under what it would cost for litigation, knowing that these businesses will want to avoid costly litigation and probably pay up. The patent system was never intended to be a playground for litigation extortion and frivolous claims.

The Innovation Act contains needed reforms to address the issues that businesses of all sizes and industries face from patent troll-type behavior, while keeping in mind several key principles, including targeting abusive behavior rather than specific entities, preserving valid patent enforcement tools, preserving patent rights, promoting invention by independents and small businesses, and strengthening the overall patent system.

Congress, the Federal courts, and the PTO must take the necessary steps to ensure that the patent system lives up to its constitutional underpinnings, and let me be clear about Congress' constitutional authority in this area. The Constitution grants Congress the power to create the Federal courts, and the Supreme Court has long recognized that the prescription of court procedure falls within the legislative function.

To that end, the Innovation Act includes heightened pleading standards and transparency provisions. Requiring parties to do a bit of due diligence up front before filing an infringement suit is just plain common sense. It not only reduces litigation expenses, but saves

the courts' time and resources. Greater transparency and information make our patent system stronger.

The Innovation Act also provides for more clarity surrounding initial discovery, case management, fee shifting, joinder, the common law doctrine of customer stays, and protecting IP licenses in bankruptcy. Further, the bill's provisions are designed to work hand-in-hand with the procedures and practices of the Judicial Conference, including the Rules Enabling Act and the courts, providing them with clear policy guidance while ensuring we are not predetermining outcomes and that the final rules and the implementation in the courts will be both deliberative and effective.

Today, we are taking a pivotal step toward eliminating the abuses of our patent system, discouraging frivolous patent litigation, and keeping laws up to date. The Innovation Act will help fuel the engine of American innovation and creativity, help create new jobs, and grow our economy.

I reserve the balance of my time.

Madam Chairman, it is now my pleasure to yield 1 minute to the gentleman from North Carolina (Mr. Holding), a distinguished member of the Judiciary Committee.

Madam Chairman, I am pleased to yield 1 minute to the gentleman from Texas (Mr. Farenthold), who is a distinguished member of the Judiciary Committee.

Madam Chairman, at this time, it is my pleasure to yield 2 minutes to the gentlewoman from Washington State (Ms. DelBene), a distinguished member of the Judiciary Committee.

Madam Chairman, at this time, it is my pleasure to yield 1 minute to the gentleman from Pennsylvania (Mr. Marino), the vice chairman of the Courts, Intellectual Property, and the Internet Subcommittee.

Madam Chairman, may I ask how much time is remaining on both sides?

At this time, Madam Chairman, it is my pleasure to yield 2 minutes to the gentleman from California (Mr. Cardenas).

Madam Chairman, at this time, it is my pleasure to yield 1 minute to the gentleman from New York (Mr. Jeffries), a distinguished member of the Judiciary Committee.

Madam Chairman, I yield myself 30 seconds to affirm what we have said from the outset: this bill is designed for the little guy, both the innovator, the inventor, and the end-user small business that are getting subjected to these trolling attacks.

No innovator, no inventor, no one who brings a lawsuit to perfect their claim should fear this legislation unless their claim has no reasonable basis in law or fact. It is only then that they would be disadvantaged. In fact, most of the provisions in this bill are designed to lower the cost of litigation.

The big guys can pay all they need to for litigation. The little guys can't afford to. By lowering the cost of litigation, we are going to create greater opportunity, both for the innovators to pursue their good claims and for the little guys on the receiving end who get these outrageous demand letters on the other side who are having to pay outrageous costs or simply pay money.

At this time, Madam Chairman, I am pleased to yield 2 minutes to the gentleman from California (Mr. Issa), a distinguished member of the Judiciary Committee.

Madam Chairman, at this time, it is my pleasure to yield 3 minutes to the gentleman from Nebraska (Mr. Terry) for the purpose of engaging in a colloquy with the gentleman from Utah (Mr. Chaffetz) and myself.

Madam Chairman, I thank the gentleman from Nebraska and the Energy and Commerce Committee for their good work on this issue. He has my commitment to work on this important issue, and we must continue to work to rein in the abuses of these demand letters.

I also look forward to working with Mr. Chaffetz and Chairman Upton of the Energy and Commerce Committee, and I know that we can produce a good product to further address this issue within that committee's jurisdiction.

Madam Chair, I yield myself 30 seconds to respond.

The very provision the gentleman from California references, section 145, is used by these very patent trolls to bypass the process. That is why, working in conjunction with the America Invents Act that has already been passed and this legislation, we will have an effective tool for those legitimate inventors, and we will stop the trolls from getting out from under the bridge.

I yield 1 minute to the gentleman from Texas (Mr. Poe), a distinguished member of the Judiciary Committee.

Madam Chair, it is my pleasure to yield 2 minutes to the gentleman from Ohio (Mr. Chabot), a distinguished member of the Judiciary Committee.

Madam Chairman, it is now my very sincere pleasure to yield 3 minutes to the gentleman from Oregon (Mr. DeFazio), the lead Democratic cosponsor of this legislation who came to me with his ideas at the beginning of this Congress and has worked with me throughout this Congress on this legislation.

Madam Chair, may I inquire as to how much time is remaining on each side.

Madam Chair, it is now my pleasure to yield 1\1/2\ minutes to the gentleman from Colorado (Mr. Polis).

Madam Chairwoman, it is my pleasure to yield 1 additional minute to the gentleman from Utah (Mr. Chaffetz).

Madam Chairwoman, I am pleased to yield an additional 30 seconds to the gentleman from Pennsylvania (Mr. Marino), the vice chair of the Intellectual Property Subcommittee.

Madam Chairman, I yield myself the balance of my time.

In closing, Madam Chairman, I want to thank my fellow Judiciary colleagues and their staffs who have devoted much time, energy, and intellect to this project. We have worked together for the common goal of comprehensive patent litigation reform for the past decade.

While some of us still have differences over individual items, I want these Members to know that I appreciate their contributions to the project and I value their friendship.

I also want to particularly thank Representatives Howard Coble, Zoe Lofgren, and Peter DeFazio for serving as lead sponsors of this legislation and, most particularly, Congresswoman Lofgren, who worked so hard with us in the markup process in the Judiciary Committee.

In the Senate, we have worked closely with Senators Leahy, Grassley, Cornyn, Hatch, Lee, and others. I want to thank them and their staffs for their contributions to this effort.

Furthermore, I would like to thank the White House and the U.S. Patent and Trademark Office for working collaboratively with us and providing important technical assistance.

I also want to thank both my full committee and IP subcommittee staff for all of their hard work on this important legislation, and most particularly, Vishal Amin, counsel to the subcommittee.

This bill is something I consider central to U.S. competitiveness, job creation, and our Nation's future economic security. The Innovation Act is the product of much negotiation and compromise. This bill builds on our efforts over the past decade. It can be said that this bill is the product of years of work. We have worked with Members of both parties in both the Senate and the House, with stakeholders from all areas of our economy, and with the administration and the courts.

To ensure an open, deliberative, and thoughtful process, we held several hearings and issued two public discussion drafts in May and September of this year, which led to the formal introduction of the Innovation Act in October.

The Innovation Act takes meaningful steps to address the abusive practices that have damaged our patent system and resulted in significant economic harm to our Nation. This bill will help grow America's innovation economy.

Madam Chairman, I urge my colleagues to support H.R. 3309, and I yield back the balance of my time.

[Inventors listed on nearly 200 patents call on Congress to pass

legislation to fix the patent troll problem, Nov. 19, 2013]

Patent Holders Urge Comprehensive Patent Reform

San Francisco.--Fifty inventors, technologists and

entrepreneurs joined Engine

Advocacy and the Electronic Frontier Foundation (EFF) today

in requesting that Congress immediately pass meaningful

patent reform legislation to curb the growing patent troll

problem.

The signatories are collectively listed as inventors on

nearly 200 patents, many of which cover software inventions.

They expressed support for patent reform. Congress is

currently pursuing several approaches that have the potential

to curb the chilling effect on innovation posed by trolls and

improve patent quality.

``Broad, vague patents covering software-type inventions--

some of which we ourselves are listed as inventors on--are a

malfunctioning component of America's inventive machinery,''

the inventors write.

``This is particularly the case when those patents end up

in the hands of non-practicing patent trolls.'' The inventors

believe that ``software patents are doing more harm than

good,'' and they urge Congress to pass legislation that would

curb patent troll abuses, which pose an immediate threat to

innovation and the promise of technology.

``It's time to force these trolls to take responsibility

for the damage they cause with their dangerous claims,'' said

inventor Derek Parham, who helped organize the letter. ``We

need legislation that will put a stop to the patent troll

business model once and for all.''

In addition to Derek, many prominent engineers and

entrepreneurs signed the letter, including Twitter cofounder

Evan Williams; Facebook co-founder Dustin Moskovitz; former

Principal Engineer at Qualcomm Ranganathan Krishnan; and

Quantcast's co-founder Paul Sutter.

``The time for meaningful reform is now,'' said Julie

Samuels, EFF Senior Staff Attorney and the Mark Cuban Chair

to Eliminate Stupid Patents. ``We hope Congress will hear

these engineers and inventors and so many others and pass

legislation that ends the patent troll problem once and for

all.''

For the full open letter: https://www.eff.org/ documentinventorslettersupport

patentreform

Contacts:

Julie Samuels, Staff Attorney and The Mark Cuban Chair to

Eliminate Stupid Patents, Electronic Frontier Foundation.

Eva Arevuo; Engine.

Mr. Chairman, I have an amendment at the desk made in order under the rule.

Mr. Chairman, I yield myself such time as I may consume.

The manager's amendment was developed based on discussions with a cross-range of industry stakeholders, the input of Members from the House and Senate, the courts, and the administration, including the U.S. Patent and Trademark Office.

My amendment consists of technical edits and a few modifications that improve the bill. The manager's amendment includes clarifications and edits to the limitations on discovery prior to a Markman or a claim construction hearing. They ensure that the provision works effectively and can be complied with, providing additional discretion for the courts to ensure the provision does not result in reverse gamesmanship.

The amendment also makes clarifications to the bankruptcy provisions so that they work properly, ensuring that U.S. law is followed and not foreign law. Further, it includes modifications to the deadlines for various studies to provide the agencies enough time to prepare and develop their reports. The manager's amendment makes additional clarifications and modifications that, on the whole, make necessary and positive improvements to our patent system.

The Innovation Act targets abusive patent litigation, protects the patent system, increases transparency, prevents extortion, and provides greater clarity.

Mr. Chairman, I urge my colleagues to support the amendment, and I reserve the balance of my time.

Mr. Chairman, I yield myself such time as I may consume.

It is unusual for a party in opposition to oppose a manager's amendment because they don't disagree with the provisions in the amendment but, rather, say that they don't make enough changes. So, even though it is acknowledged that this improves the bill, that still causes opposition.

But I want to address what the gentleman says he wants in the manager's amendment. Section 365(n) of title XI prevents a bankruptcy trustee from terminating licenses to patents and other intellectual property of the debtor. When Congress enacted Section 365(n) in 1989, it recognized that allowing patent and other IP licenses to be revoked in bankruptcy would be extremely disruptive to the economy and damaging both to patent owners and to licensing manufacturers.

Manufacturers often invest billions of dollars in reliance on their right to practice a technology pursuant to a license. Allowing the license to be eliminated in bankruptcy would create commercial uncertainty and would undermine manufacturing investment.

In recent years, some bankruptcy trustees have tried to subvert the protections of section 365(n) for U.S. intellectual property by filing bankruptcy in a foreign country and demanding that U.S. courts extend comity to termination of licenses to U.S. intellectual property in the foreign proceeding.

The provision that the gentleman wants would eliminate important provisions that would eliminate--the underlying bill provisions eliminate this uncertainty and would guarantee that licenses to U.S. patents and other IP will always be protected in U.S. courts. The gentleman wants something that would undermine that.

Failing to include this provision, a manufacturer deciding where to build a new fabrication plant would face a powerful incentive to invest his resources in a foreign country that protects IP licenses instead of in the United States. The gentleman's provision that he would like to see in the manager's amendment would encourage offshoring of U.S. manufacturing.

So I strongly support the language in the manager's amendment and object to the suggestion that his provision that is not in this amendment, which we will also address later in the amendment debate, would enhance the manager's amendment. It would not. It would have the opposite effect. I strongly urge my colleagues to support the manager's amendment.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I yield myself the balance of my time.

Mr. Chairman, the provision that the gentleman from Michigan complains of is supported by the Intellectual Property Owners Association, the 21st Century Coalition, which is a group of manufacturers, the Semiconductor Industry Association. They very strongly support the provision in the bill that is enhanced in the manager's amendment because, otherwise, we would be allowing a foreign trustee, a foreign bankruptcy trustee to liquidate licenses and create great uncertainty in the free market. That is definitely not what is intended by this legislation, and it would create a giant loophole that would create incentives to locate businesses, manufacturing businesses outside the United States rather than inside the United States. The language is very definitely needed, and I urge my colleagues to support the manager's amendment.

Mr. Chairman, I yield back the balance of my time.

Mr. Chairman, I demand a recorded vote.

Mr. Speaker, pursuant to House Resolution 429, I call up the bill (H.R. 1105) to amend the Investment Advisers Act of 1940 to provide a registration exemption for private equity fund advisers, and for other purposes, and ask for its immediate consideration in the House.

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days within which to revise and extend their remarks and submit extraneous material for the Record on H.R. 1105, currently under consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, since Congress was not in session last week, perhaps some of my colleagues missed the front page headline from The Washington Post. I read: ``Among American Workers, Poll

Finds Unprecedented Anxiety About Jobs and Economy.''

According to the report, American workers are living with ``unprecedented economic anxiety.'' More than six in 10 worry that they will lose their jobs. Nearly one in 3 say they worry a lot about losing their jobs.

The article goes on to mention an American named John Stewart who wakes up every morning at 1:30 a.m. for a 2-hour commute to catch two different buses in Philadelphia so he can get to work on time. In the newspaper, he said: ``I can't save money to buy the things I need to live as a human being.''

Mr. Speaker, we don't have to read The Washington Post. All we have to do is listen to our own constituents, since even today millions-- millions--of our fellow countrymen remain unemployed and underemployed.

I hear these stories every week myself. Recently, I heard from Ida in Wills Point, Texas, in the Fifth Congressional District that I represent. She and her 79-year-old husband own a small trucking company. She wrote me that ``because of increasing regulations in taxes in the past 4 years, we have lost all but two of our trucks.'' She goes on to write me: ``My husband is the only driver right now because I can no longer drive. He drives full-time 3,500 miles a week most weeks because we can't live on his Social Security.'' She says: ``We are really stuck in a hole.''

Millions, Mr. Speaker, are ``stuck in a hole.''

Today, we have an opportunity, Mr. Speaker, to do something to help raise many of our fellow countrymen out of that hole of economic anxiety and economic hardship. Today, we have the opportunity to pass H.R. 1105, the Small Business Capital Access and Jobs Preservation Act.

I want to commend the bipartisan group of Members--two Republicans and two Democrats--who introduced the bill: Mr. Hurt of Virginia, Mr. Himes of Connecticut, Mr. Garrett of New Jersey, and Mr. Cooper of Tennessee.

As chairman of the Financial Services Committee, Mr. Speaker, I want to thank all the members of the committee who came together across party lines to approve the bill. Mr. Speaker, nearly one-third of the Democrats who sit on our committee joined with 30 Republicans in supporting H.R. 1105. In short, Mr. Speaker, this is, indeed, a bipartisan jobs bill.

We know that small businesses face an incredible red tape burden. In fact, a recent survey of the National Federation of Independent Business said that ``government regulations and red tape are the single most important challenge that small businesses face in creating and preserving jobs.''

Mr. Speaker, I heard from another small business person in Grand Saline, Texas, in my district. He said because of overregulation ``our business has devolved from one that provides a service for a customer into one that provides that same service as an afterthought while our real efforts go into paperwork.''

Mr. Speaker, we can debate the relative merits or demerits of the Dodd-Frank Act; but even the primary author himself, former Chairman Frank, admitted that perhaps not every aspect of Dodd-Frank achieved perfection. And many of us would argue on a bipartisan basis that the part of the act that requires small business investors who are private equity advisers to register with the SEC is perhaps one of those provisions that is in need of reform.

This is a provision, Mr. Speaker, that many of us believe was aimed at Wall Street, but ends up hurting Main Street. Because of this provision embedded in Dodd-Frank, smaller firms that invest in entrepreneurs and in small businesses face yet one more significant regulatory cost, regulatory burden, more red tape.

As one of the small business investors testified before our committee, it is going to cost his company $200,000 every year to comply with the regulation. He went on to say:

While for some larger firms this is an insignificant cost,

for a medium-sized firm such as ours that offers capital to

small businesses, it is a significant expense.

And pay attention to this, Mr. Speaker. He said:

This money comes directly out of our funds intended for

investment into Main Street.

In today's economy, to help pull these people out of this hole of economic anxiety, we need more private sector, more private equity investment into Main Street. Private equity equals small business jobs.

In fact, Mr. Speaker, between 1995 and 2010, 23,000 different companies across our Nation benefited from private equity investment, employing 3 million different people, and the investments that are made by private equity historically have grown jobs at three times the rate of other companies.

And so what does this look like? I have to tell you, Mr. Speaker, it look likes an outfit called New Mountain Capital that invested in a company named Inmar, a national coupon and reverse logistics processing company. By helping them update their IT with a $100 million investment, they now support 4,200 different employees.

The face of private equity looks like Capital South Partners that invested in a North Carolina firm, Vita Nonwovens, and now they have 95 employees in High Point, North Carolina, and I should add parenthetically, another 55 employees in my native Texas. This is the face of private equity. These are some of the small business jobs that are being created.

Now, we may hear from some that this is needed to somehow battle Wall Street, but let me tell you what private equity is not. Private equity it is not Wall Street. It is not complex derivatives trading. It is not currency swaps. Mr. Speaker, it is not about systemic risk. That is not what this is about. And so, again, this was a provision aimed at Wall Street that, unfortunately, is hitting Main Street.

It is time to make sure that Americans like John in Philadelphia can live like a human being. It is time to make sure that constituents like mine, Ida and her husband, don't have to drive 3,500 miles a week just so they can put food on the table.

Mr. Speaker, it is time, again, for this institution to put jobs first, not regulators first, but jobs first. I urge all of my colleagues to adopt H.R. 1105.

I reserve the balance of my time.

Mr. Speaker, I am now privileged to yield 5 minutes to the gentleman from Virginia (Mr. Hurt), the primary author of this legislation, a real leader on our committee and in this Congress in creating jobs.

Mr. Speaker, at this time I am very happy to yield 4 minutes to the gentleman from New Jersey (Mr. Garrett), a coauthor of the legislation and the chairman of the Capital Markets and GSE Subcommittee.

Mr. Speaker, I am now pleased to yield 2 minutes to the gentleman from Illinois (Mr. Hultgren).

Mr. Speaker, I now yield 1\1/2\ minutes to the gentlewoman from Missouri (Mrs. Wagner).

Mr. Speaker, I yield myself 30 seconds to say that the gentleman from Massachusetts sets up a straw man and then knocks it down. The activities that he describes as illegal continue to be illegal, and I would say that private equity funds provide extensive reporting to investors, including audited annual financial statements.

Private fund equity advisers are subject to the antifraud provisions of the Investment Advisors Act of 1940, whether they are registered or not, and fund offerings are subject to the antifraud provisions of the Securities Act of 1933.

The real choice becomes, are we going to get even greater protections for millionaire investors, or are we going to help struggling single moms trying to find a job in this economy?

Mr. Speaker, at this time I am happy to yield 2 minutes to the gentleman from Ohio (Mr. Stivers).

Mr. Speaker, I am very pleased now to yield 1 minute to the gentleman from Tennessee (Mr. Fincher).

Mr. Speaker, I yield myself 1 minute.

Again, I want to address the gentleman from Massachusetts who, again, I believe, sets up a straw man only to knock it down.

I would urge all Members to actually read the bill. I know that many of my Democratic colleagues now have buyer's remorse from not reading the 2,000-page ObamaCare bill, but, Mr. Speaker, this is a two-page bill, 36 lines.

And I would say to my friend, the gentleman from Massachusetts, that on page 2, that the SEC can ``require investment advisers described in paragraph (1) to maintain such records and provide to the Commission such annual or other reports as the Commission taking into account fund size, governance, investment strategy, risk, and other factors, as the Commission determines necessary.''

So to make the assertion that these records of foul play could never exist is simply not true.

I yield myself an additional 30 seconds.

I would say to my friend, the gentlelady from New York who made the assertion that the SEC is opposed to this bill, that the SEC has not opposed this bill. One member, Mary Jo White, has issued an opinion that she does not support the legislation, but the SEC has taken no official position.

With respect to a threatened veto, I don't recall that when my Democratic colleagues had the majority here that they refused to pass bills simply because President Bush threatened to veto. But I must admit, our committee has produced, I believe it is, at least 10 or 11 bipartisan bills which all received veto threats from a President who says he wants to work on a bipartisan basis. This is most regrettable.

Will the gentleman yield?

By definition, it is private equity. It is not a public fund.

Mr. Speaker, I am very happy to yield 2 minutes to the gentleman from New Jersey (Mr. Garrett), a coauthor of the legislation and the chairman of our Capital Markets and GSE Subcommittee.

I yield the gentleman an additional 30 seconds.

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, listening to some of my colleagues on the other side of the aisle, it is hard not to conclude that some of them have never met a regulation that they didn't like, regardless of what it does to the hopes, dreams, and aspirations of the unemployed and underemployed in America.

As I look over your chair, Mr. Speaker, and see the words, ``In God We Trust,'' I sometimes question whether some Members would like to take down the word ``God'' and replace it with ``regulators'': In Regulators We Trust.

The question has never been, Mr. Speaker, the question between regulation and deregulation. The question is between smart regulation and dumb regulation; and in order to make that determination, one needs to see what cost is being imposed, again, on the hopes and dreams and aspirations of the unemployed and the underemployed.

Why does this underlying regulation need to be there in the first place? Is it systemic risk? Well, even the chairman of the SEC has admitted that private equity played no role in the financial crisis.

We know in terms of the economy, private equity may represent somewhere on the order of 1.5 to 2 percent of GDP. There is no evidence of interconnectedness, which many maintain is at the root of systemic risk.

So what are they trying to protect? Well, investor protection. This is all about giving additional protection to millionaire investors at the expense of single moms trying to make ends meet. I am not really sure that meets the test of smart regulation.

We know already that private equity fund advisers are subject, as they well should be, to the antifraud provisions of the Investment Advisers Act of 1940, whether they are registered or not. Fund offerings are subject to the antifraud provisions of the Securities Act of 1933. The SEC still has the ability to ensure that proper documentation is maintained.

No, we do not want to see any investor, regardless of sophistication or income, be subject to coercion or fraud. But, at the same time, we don't want to deny small businesses--the job engine in America--the funding they need to put America back to work.

There are many companies today that we recognize--Dunkin' Donuts, Baskin-Robbins, Petco, Skype, J.Crew--that all have benefited from private equity. Where would the tens of thousands, if not hundreds of thousands, of jobs they represent be today if private equity had to face yet another burden that is going to cost these small investment firms half a million dollars, a million dollars?

Today, we haven't really heard that much about company likes Entrust or Universal Smart Comp, but maybe they are tomorrow's Petco or tomorrow's Toys ``R'' Us.

And so it really comes down to this, Mr. Speaker, again: Are there going to be additional protections for multimillionaire investors, or are there going to be additional protections and opportunities for unemployed single moms trying to make ends meet?

Our side of the aisle said, Let's help the single mom. Let's pass H.R. 1105, and put America back to work.

I yield back the balance of my time.

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

I yield myself such time as I may consume.

Mr. Speaker, the amendment, regardless of how well-intentioned it may be, functionally guts the bill and is essentially redundant of current law in Dodd-Frank.

And I grant the gentlelady, who is a very senior and thoughtful member of our committee, that her provision is perhaps more articulate than the underlying law, but section 408(n) of Dodd-Frank already says:

In prescribing regulations to carry out the requirements of

this section with respect to investment advisers acting as

investment advisers to mid-sized private funds, the

Commission shall take into account the size, governance,

investment strategy of such funds.

It goes on to say:

The Commission shall provide for registration and

examination procedures with respect to the investment

advisers of such funds which reflect the level of systemic

risk.

So, again, it is essentially redundant of what is already in current law.

According to the Private Equity Growth Council, on average it is taking $1.8 million for the initial Dodd-Frank compliance cost and an additional $1.3 million each year in Dodd-Frank compliance costs. All for what? We already have underlying investor protections in place.

There is no evidence presented whatsoever that this has anything to do with systemic risk, all at the cost of jobs, at a time when, again, Mr. Speaker, tens of millions of our countrymen are struggling. They are underemployed, unemployed.

Again, who are we going to help? Are we going to help regulators? Are we going to help millionaire investors? Are we going to help struggling Americans trying to pay the bills? We should oppose this amendment, Mr. Speaker.

At this time, I would be very happy to yield 2 minutes to the gentleman from Virginia (Mr. Hurt), again, the author of H.R. 1105.

Mr. Speaker, how much time do I have remaining?

I yield myself the balance of my time.

Mr. Speaker, again, historically, private equity has invested in tens of thousands of small businesses, and it has helped create millions of jobs in America.

The question today is: Are we going to put a roadblock in place of private equity--the small business investment engines--so that we can somehow help regulators?

With all due respect to our regulators--and there are many good ones and many great ones at the SEC--I have never met a regulator who turned down the opportunity to regulate more. I have never met him.

So the question is: Are we going to grant an even greater ability to take funds away from small businesses to create a work product that doesn't meet the commonsense test, the jobs test, the smell test--or any other test--at a time when people are still suffering and wondering how are they going to put gas in the tank; how are they going to take their kids to school; how are they going to afford their health care bills since, clearly, they cannot keep their health insurance even if they want to.

How are they going to do this?

We need private equity to fund small business to get America back to work. We need to defeat this amendment. We need to pass the underlying bill. It is time to be pro-jobs.

With that, Mr. Speaker, I yield back the balance of my time.

Madam Chair, I thank the gentleman from Michigan for his leadership, and I likewise thank the chairman for his leadership.

The discourse in debate on the floor of the House is not evidencing the unity, the unanimity that members of the House Judiciary Committee and, I venture to say, of this body have with respect to innovation and competition and the idea of protecting our small inventors. And so I would offer myself and many others as a champion for this concept that we are greatest when we are protecting and coddling and growing the inventive mind of America and our small inventors.

The Innovation Act has a wonderful name, and I congratulate Chairman Goodlatte for his interest and commitment to this process. We have always worked in a collaborative and bipartisan manner on the Judiciary Committee as it relates to intellectual property and competition.

Today, however, our disagreement, if you will, is not on the underlying concept but on a very crucial process that is not in keeping with the mind-set of the Founding Fathers. I imagine that patent law got intimately engaged in the constitutional process because of a young man by the name of Benjamin Franklin, an inventor. He foresaw a great America and the need to be able to encourage those in garages and maybe by candlelight looking to change the landscape of the lives of those who live in that country and now have lived and do live in the greatest Nation in the world.

And so the question is, on H.R. 3309, for all of our friends that are making their decisions, whether or not this is a bill before its time and whether or not this question that we have before us, this bill, truly stops the trolls, as this advertisement that was not placed by me but put in the newspaper to suggest that the trolls may not be the ugly beast, but it may be the way this bill, H.R. 3309, is written.

Because, in fact, the small guy does pay. In fact, the small inventor is not protected. In fact, the pleadings are difficult. In fact, the early days of Madame C.J. Walker, who invented hair lotion for black women; or Frederick McKinley Jones, who invented the automatic refrigeration system for long-haul trucks; or Lewis Latimer, who invented less expensive and more efficient, long-lasting light bulbs; or maybe even the early days of giant companies that are now known to live in places like Silicon Valley, from Yahoo to Google, that started in the earliest moments of their beginning, small, maybe in a Harvard dorm room, or someone else's dorm room, I think the question becomes: Are these individuals protected?

According to the research that we have done, small investors are not protected.

I would just say, Madam Chair, that I would ask for more time; and if we want to do some work, let's pass H.R. 15, comprehensive immigration reform, because that is ready to pass.

Mr. Chairman, I rise to talk about innovation in America--the great job creator that I feel is being put in jeopardy by H.R. 3309, the Innovation Act.

H.R. 3309 is a bill before its time as the America Invents Act was signed into law barely two years ago. Many of the major provisions of this landmark legislation which many on the Judiciary Committee and in this body voted for have not even been put into practice.

It is well documented that our innovation ecosystem--founded on patents--drives economic growth and job creation in the United States. From the hustle and bustle of downtown Houston, Silicon Valley, Chicago, New York, and even here in Washington, D.C., Americans want to keep our cherished system as strong as possible. For the future of our economy, we cannot risk jeopardizing it.

And while the AIA was unquestionably pro-innovator legislation, its post-grant challenge provisions also unquestionably shifted the balance of rights toward implementers and away from patent holders. The only remaining question, brought on by the adolescence of the AIA, is--just how much has that balance shifted?

``Loser pays'', also commonly referred to as the British Rule, mandates that the losing side in a civil dispute pay the legal costs of the other side. Loser pays laws ensure that only the wealthiest members of society or large corporations can afford to undertake a civil action and also unnecessarily punishes individuals with serious and meritorious claims for seeking access to justice.

Loser pays policies fail to recognize that a person or a business can have a legally legitimate dispute regarding fact and law, and yet still ultimately lose the case. Loser pays policy sets a dangerous precedent and may prevent individuals from pursuing even the most meritorious civil liability claims.

For most individuals and small businesses, the financial risk of having to pay the other side's costs and legal fees is one too great to bear, no matter how valid the claim. It creates a situation where experienced corporate defendants with enormous resources and expert legal talent can bully injured plaintiffs into unfair settlements due to the risks associated with losing a potentially successful case.

If ``loser pays'' is implemented it could be a roadblock for people pursuing whistleblower, consumer mortgage, employment discrimination and other civil rights cases. The only losers under a ``loser pays'' system is the small business or individual plaintiff, or the innovator who is discouraged from pursuing her rights due to the chilling effect brought on by the onerous language in H.R. 3309.

This bill tries to discourage patent litigation abuse by patent assertion entities, better known as ``patent trolls''. Trolls use patents of questionable quality to pressure their targets into settlement for an amount that is lower than the legal fees to defend against a lawsuit. Trolls typically have no interest in moving the patented technology into the marketplace. Generally, the troll's target has had a product on the market for some time and the troll's patent covers the targeted product through exceedingly broad claims, often through a broad interpretation of vague claim terms.

In one common tactic, a troll will approach a target with a proposal to license patents with a one-time fee of $50k to $200k, where it might cost the target $15k to $50k for an initial legal opinion on validity and infringement, and it might cost the target $20k to $50k per month in legal fees in litigation proceedings (mainly driven by discovery and motions practice). So the one-time fee may sound appealing as a simple payoff to avoid legal fees that are comparable and inevitable.

In theory, one can discourage the patent troll business model by increasing patent quality, promoting stricter requirements on claim construction, and lowering the cost of litigation (by limiting discovery). Each of these purported remedies has a cost that may be worse than the alleged benefit. That is why it is critical that we carefully consider any and all legislation and policy which looks to improve.

At the outset of considering further changes to our patent system, we must recognize that the time constant of the patent system--the period between new patent application and court decision on a patent infringement claim--is very long. Therefore, the impact of Congress' very recent major change to our patent system has barely begun to be felt.

Moreover, in long time constant systems such as our patent system, over-correction, especially that which leaves scant time for due deliberation, is a major danger.

By the time we realize that an over-correction is apparent, it will be years after the system is badly damaged. If there were ever a case where caution is called for, this is it, and I say that because my constituents in Texas, and particularly in Houston, wanted change in the patent system, and surely every one of them was not satisfied with the Leahy-Smith Act but some changes we can live with.

I would hope that due caution would yield to a deliberative process that takes the time to reach out and listen to all stakeholders, including those who will not be the fastest ones off the mark, and I am sure that some of them exist in Texas. Many small innovators--today's Priceline.coms, Yahoo's, Google's, Facebook's, Eli Lilly's, Twitter's, akin to yesteryears Edisons--have not had time to make their views heard.

Others having various levels of dependence on strong IP rights are just now beginning to consider the prospect of further changes to our patent system. We need to allow these important stakeholders their time to participate.

I look forward to hearing from these witnesses but would hope that this Committee proceeds on any changes with due caution--because the ink on the America Invents Act is barely dry--and another patent bill is before us with changes that are fraught with difficulty for many in our innovation economy.

My amendment modifies the Manager's Amendment to ensure that small businesses that motivated this provision are protected and by expanding the amendment so that businesses with under $25 million are included-- my hope is that it will garner the support.

Under my amendment, the customer stay provision a covered customer is one who is accused of infringing a patent or patents on a covered product or process, and is a small business that has revenue of $25 million or less.

I have modified this amendment from that offered in the Judiciary Committee markup in order to accommodate more businesses who feel they might benefit from the narrowed language while still maintaining the intended consequence of allowing for stays in proceedings. The expanded language might allow some businesses who are past the ``mom and pop'' growth phase but if this will provide medium-sized businesses from going bankrupt, or losing valuable revenues because of litigation, it is a useful expansion.

A number of the provisions in this bill may be well-intentioned, but they have undesirable consequences for the patent system as a whole.

They have the potential to undermine the enforceability of all patent rights, no matter how valuable the patent, and thus potentially incentivize infringement.

That is why I offered three amendments in the Judiciary Committee and three in the Rules Committee yesterday. My first amendment struck section 9(a) of H.R. 3309 which strikes Section 9(a) of the bill which repeals Section 145 of 35 U.S.C. Under this repeal, applicants would be gratuitously denied the fundamental right of de-novo judicial review of adverse patentability determinations by the Patent and Trademark Office when it refuses to consider certain evidence. This is a limiting provision and unfairly prevents a full adjudication of the rights of litigants. The importance of this 170-year-old protective provision is in its restraining effect on PTO's potential abuse of

discretion for all patent applicants--not just for those who would seek judicial review. I attempted to modify my amendment based on a meeting I had with Chief Judge Rader of the Federal Circuit, which hears all patent claims, and is the lodestar for patent litigation.

My second amendment which was made in order by the Rules Committee yesterday evening, modifies the Manager's Amendment to ensure that small businesses that motivated this provision are protected and by expanding the amendment so that businesses with under $25 million are included--my hope is that it will garner the support. Under my amendment, a covered customer is one who is accused of infringing a patent or patents on a covered product or process, and is a small business that has revenue of $25 million or less. I have modified this amendment from that offered in the Judiciary Committee markup in order to accommodate more businesses who feel they might benefit from the narrowed language while still maintaining the intended consequence of allowing for stays in proceedings. The expanded language might allow some businesses who are past the ``mom and pop'' growth phase but if this will provide medium-sized businesses from going bankrupt, or losing valuable revenues because of litigation, it is a useful expansion.

Also made-in-order by the Rules Committee is my third amendment which simply requires the PTO Director, in consultation with other relevant agencies, and interested parties, to conduct a study to examine the economic impact of the litigation reforms contained in the bill (sections 3, 4, and 5 of this Act) on the ability of individuals and small businesses owned by women, veterans, and minorities to assert, secure, and vindicate the constitutionally guaranteed exclusive right to inventions and discoveries by such individuals and small business. This amendment supplements and improves the bill, which requires PTO to conduct 4 studies and submit reports to Congress. The required studies are:

1. Study On Secondary Market Oversight For Patent Transactions To Promote Transparency And Ethical Business Practices.

2. Study On Patents Owned By The United States Government

3. Study On Patent Quality And Access To The Best Information During Examination

4. Study On Patent Small Claims Court

My last amendment was done with Ranking Member Conyers of the Judiciary Committee, strikes Section 3(b) which requires that courts reward attorney's fees and expenses to the prevailing party. I remain convinced that this provision is onerous and prepares us for a slippery slope that leads to more and more restraints against plaintiffs in litigation.

This will have a chilling effect and deter litigation in areas which might lead to more harm being exacted on the public--particularly in areas such as civil rights, environmental protection, and business regulations.

Mr. Chairman, in the name of fairness to the little person--the Davids in the land of the Goliaths, commercially-speaking--and I ask my colleagues to slow the train down and exercise prudence and due caution before we vote on H.R. 3309.

We must act thoughtfully and with great caution as we pursue reforms to a system which took sixty years to change--and then in batting of a Congressional eyelash--look to significantly modify once again. I was here during the long road that led to the path that became Smith-Leahy, or the American Invents Act. That it took so long is somewhat perplexing; but even more interesting is that the bill had a Republican House and a Democratic Senate. Yet we came together in a collaborative fashion and made lemonade out of sixty years of lemons while in the midst of some of the most jarring partisanship we have seen in this great body. Yet H.R. 3309 has been cobbled together in a couple of months--this is no small, technical correction bill Mr. Chairman--it is comprehensive yet potentially pernicious legislation which should be slowed, if not stopped.