Innovation Act
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…
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.
Madam Chair, I rise in opposition to the amendment.
Madam Chairman, this amendment includes language that we believe is already implicit in the Innovation Act's fee-shifting provision section 3.
The gentleman's amendment adds language that allows a judge to reduce an award in certain circumstances. This amendment is redundant with the provisions in the bill and does not appear to add anything new but, rather, adds extraneous language that simply adds clutter to the section.
The Judiciary Committee considered and rejected this amendment during its markup of the bill. The fee-shifting language in the bill is a carefully crafted compromise that we negotiated on a bipartisan basis in the committee. Mr. Jeffries offered an amendment at the committee that was adopted and included in the bill that modified the fee- shifting language. With that amendment, all but five committee Democrats joined with all voting Republicans of the committee and reported the bill by a vote of 33-5. This amendment upsets that balance and should be rejected.
I yield to the gentleman from North Carolina.
I believe it is both, and it causes confusion in the legislation, and, therefore, I oppose the amendment.
I reserve the balance of my time.
Madam Chairman, I yield such time as she may consume to the gentlewoman from California (Ms. Lofgren).
Madam Chairman, I reiterate my opposition to the amendment and yield back the balance of my time.
I thank the gentleman for his amendment, and I support it.
Contrary to what the previous speaker said, this amendment does exactly that--it helps to determine more fairly and more quickly whether or not there is a valid patent claim. It requires parties sending demand letters who wish to pursue treble damages to disclose their ultimate parent entity.
This amendment improves the provision offered by Mr. Chaffetz and Mr. Deutch in committee, and I support its inclusion in the bill.
Madam Chair, I rise in opposition to this amendment.
Madam Chairman, I yield myself such time as I may consume.
This amendment strikes a key provision of the bill for retailers, restaurants, and grocery stores, among others. This provision is the product of years of discussion with stakeholders and the Patent Office.
This section codifies and provides for the enforcement of the common law doctrine that infringement suits against a customer, retailer, or user of an infringing product should be stayed in favor of an action against the manufacturer of the allegedly infringing product.
Customers and retailers typically are ill-suited to defend against an infringement suit. They often are not familiar with the inner workings of the product and usually have no reason to know whether or not the product infringes a valid patent. Suits against such parties are inherently coercive and have become a tactic employed by patent trolls.
As an infamous recent example, one troll has begun suing cafes, restaurants, and shops that provide wireless Internet access to their customers via routers that they bought off the shelf. These small shops have no idea how the routers work or why they infringe, and they have often paid as little as $40 for them. Now they are being sued for using allegedly infringing products and are being asked to pay thousands of dollars.
The troll could have sued the manufacturer but chose not to because the manufacturer would have vigorously defended against the suit. Coffee shops and other small businesses, however, are more likely to settle for a few thousand dollars rather than the hundreds of thousands it would cost to fight an infringement suit over technology that the coffee shop did not design or develop, and we see the same situation repeated over and over again.
Another troll has sued small businesses, charities, and others just because they use scanners and photocopiers. Again, the troll chose not to sue the manufacturer because the manufacturer understands the technology and would be able to defend against the suit. These types of lawsuits are a little more than a shakedown of small, medium, and large businesses that simply bought technology and are not the true sources of any infringement.
This provision is designed to stay actions against customers when the manufacturer, who is the true source of any infringement, is a party to a co-pending action. The provision effectively pushes infringement claims up the supply chain to the true source of infringement. The provision thereby prevents harassment and the abuse of customers when it is unnecessary for the plaintiff to sue customers.
Despite the Federal circuit precedent of recognizing the customer suit exception, district courts continue to deny stays of customer suits in a wide array of circumstances in which a stay would be appropriate. The stay under section 5 is voluntary. No stay would be entered unless the customer and manufacturer agreed that the manufacturer most appropriately bore the burden of defending against the infringement litigation.
This is a good provision. It is a key provision. It is an essential part of the bill to protect customers and retailers against abusive suits over technology that they did not design or develop. It is for these and many other reasons that I strongly oppose the amendment offered by the gentleman from Kentucky to strike section 5.
I would also point out that former Director Kappos, speaking pre- manager's amendment version of the bill, indicated a concern that has been addressed in the manager's amendment, and we made important improvements to this section in coordination with Senators Leahy and Lee. I think that this provision in the bill is very good and that this amendment is not well-founded, and I oppose it.
I reserve the balance of my time.
Mr. Chairman, may I ask how much time is remaining on both sides.
Mr. Chairman, at this time, it is my pleasure to yield 1 minute to the gentleman from North Carolina (Mr. Coble), the chairman of the Courts, Intellectual Property, and the Internet Subcommittee.
Mr. Chairman, this amendment will considerably harm this bill and the hundreds of organizations and businesses that have supported this bill because they know how important it is that the common law customer stay be applied fairly in jurisdictions across the country.
Concerns have been voiced that an injunction could not be obtained because of this provision against a party that is the supplier of the infringing product. However, the bill expressly requires that all parties, both customers and manufacturers, agree to be bound by any issues decided in the suit against the manufacturer. In other words, if the patent is found valid and infringed, an injunction could also be obtained against any supplier of the product because of this requirement.
I believe that this amendment should be strongly opposed.
I yield back the balance of my time.
Mr. Chairman, I rise in opposition to this amendment.
I yield myself such time as I may consume.
Mr. Chairman, this amendment offers a reformulation of section 5 of the bill. The provision, however, is the product of years of discussions with stakeholders and the Patent Office. This amendment unduly restricts the protections offered by section 5 to customers.
The amendment has been presented as protecting small business, but the
underlying provision already applies to small businesses. What this amendment does is deny protection to larger grocery stores, charities, hospitals, universities, and restaurant chains that are sued on account of technology that they have purchased from others and did not design or develop.
This provision would prevent many customers from benefiting from the important protections of section 5. Customer suits against a party that neither manufactures nor develops the product, accused of infringement, are frequent tactics used by trolls because they know that most customers are not sophisticated in patent laws and, thus, are more vulnerable to extortion. This amendment would eliminate a tool the bill provides to customers to protect themselves from truly abusive patent litigation.
It is for these and many other reasons that I strongly oppose the amendment.
I reserve the balance of my time.
Mr. Chairman, at this time, I yield 1\1/2\ minutes to the gentleman from Pennsylvania (Mr. Marino).
Mr. Chairman, let's use a little common sense here. We have a provision in the common law called ``customer stay,'' which says that a customer can ask to join the manufacturer of the product that it is alleged is infringing because that manufacturer knows a lot more about how the product was manufactured, what licenses and patents were used to do that, and is best able to defend a claim by a patent troll or by a legitimate inventor that a claim is valid or not valid.
What the gentlewoman from Texas does is she says that any small business above $25 million--say the local hospital, the local university, the restaurant chain of, say, 15 or 20 restaurants, the same thing for a retail store, a grocery store chain--they can't avail themselves. So what happens? The patent troll knows that there are certain jurisdictions in this country where the court will not issue the customer stay, notwithstanding the long historic common law doctrine of customer stay.
What we simply say in this bill is that if the customer, regardless of the size, and the manufacturer, regardless of the size, both agree, then the customer stay provision will apply; the manufacturer can come in and defend the case. It is eminently fair to every party involved to get at the core of whether or not the patent is a good patent and a valid patent. And who knows best? The manufacturer.
So this provision in the bill is very important and this amendment is harmful to the interest of small businesses, and I urge my colleagues to oppose it.
I reserve the balance of my time.
Mr. Chairman, I would just say to the gentlewoman there is a wide array of organizations. We have 4 pages with hundreds of organizations, including Americans for Prosperity, Americans for Tax Reform, Public Knowledge. It crosses the spectrum.
Small business innovators like Engine Advocacy that the gentlewoman from California put in their statement, a lengthy statement, listing a whole host of companies that support this legislation. One of the key reasons they support it is because it protects small businesses, both the innovators and the people who are the recipients of these demand letters.
I oppose the amendment and urge my colleagues to join me in doing so.
I yield back the balance of my time.
Mr. Chairman, I demand a recorded vote.
Mr. Chairman, although I am not opposed to the amendment, I ask unanimous consent to control the time in opposition to the amendment.
Mr. Chairman, this amendment provides for a study that the USPTO would conduct to examine the impact of the changes in sections 3, 4, and 5 of the bill on individuals and small businesses owned by women, veterans, and minorities.
The Innovation Act will benefit all businesses, both large and small, regardless of who owns them, including women, veterans, and minorities. This bill has received strong support from independent inventors, small businesses, start-ups, manufacturers, retailers, Realtors, travel agents, hotels, and even a delicatessen.
By bringing transparency and curbing litigation abuses, the Innovation Act will reduce litigation costs for innovators and innovative companies from all across this great land. This will reduce the leverage patent litigation opportunists possess to extort money from legitimate businesses and individuals.
This bill not only lines up with our constitutional authority, but our constitutional duty and will help grow our economy, create jobs, and promote the engine of American ingenuity for decades to come.
I yield to the gentleman from Michigan.
I reserve the balance of my time.
Mr. Chairman, I thank the gentlewoman for her amendment and urge my colleagues to support the underlying bill.
I yield back the balance of my time.
Mr. Chairman, I rise in opposition to the amendment and claim the time in opposition to the amendment.
Mr. Chairman, I strongly oppose the gentleman's amendment to strike the bill's provisions regarding section 145. The bill's provisions are strongly supported by the Patent Office.
The amendment would strike one of the bill's most important reforms for preventing patent trolls from obtaining low-quality patents and bringing extortionate lawsuits. The bill's provisions are necessary because of the Supreme Court's recent decision in Kappos v. Hyatt which construed section 145 to allow an applicant to evade substantive patent examination in the Patent Office and to instead present his evidence of patentability for the first time in Federal district court. A district judge would then be required to make de novo findings of patentability.
Section 145 is outdated and unnecessary. Today, applicants have administrative routes for offering new evidence. Even after a board decision affirming the examiner's rejection, an applicant can file a continuation application and can introduce new evidence of patentability in that continuation.
Ever since 1836, the United States has required that all patent applications be reviewed by patent examiners with a scientific education, people who understand the technology that the patent covers. This helps to ensure that patents are not issued for inventions that are already in the public domain or that would be obvious to a person skilled in the technology.
Under the gentleman from California's amendment, however, an applicant could short-circuit the entire application process and present his evidence of patentability for the first time in district court. Now, I have known many district judges who are expert lawyers, but very few of them have degrees in biotechnology. Very few of them have degrees in electrical engineering; yet under this amendment, these judges would be making the initial determination whether, for example, a purported computer invention is novel and nonobvious and whether it has been properly enabled.
I would ask my colleagues, is there anyone here who believes the United States will issue higher-quality patents if the applications are never, never, never reviewed by an examiner with a
scientific background? Does anyone believe that we will have better semiconductor patents if they are never examined by an electrical engineer? Will we really have better drug patents if they are never reviewed by someone with a degree in chemistry?
I would submit that the gentleman's amendment is nothing more than a recipe book for patent trolls to obtain low-quality patents claiming technology that is already in widespread use.
Finally, we cannot ignore the evidence of who is actually using these section 145 actions. These lawsuits, which seek to obtain a patent without review by technically trained examiners, are heavily used by infamous patent trolls who are trying to obtain patents on computer technology from the 1980s and 1990s. These trolls are still pursuing patent applications that were filed before 1995 when patent terms ran 17 years from when the patent was issued. The most infamous user of section 145 still has hundreds of these applications pending and is trying to obtain patents on computer technology that literally predate Windows and Apple Macintosh. A vote for this amendment is nothing more than a vote to advance that patent troll agenda and allow abuse of the U.S. patent system. I strongly urge my colleagues to vote ``no'' on this amendment.
I reserve the balance of my time.
I reserve the balance of my time.
Mr. Chairman, I yield myself the balance of my time.
I would just say to the gentleman, the Supreme Court doesn't disagree with my position. The Supreme Court is interpreting the current law on the books, a law which has been on the books for a long time, and is superseded by new provisions that have been added into the patent law that give inventors additional ways to have their patents reviewed if they are denied by the Patent Office. So the Supreme Court is interpreting the current law.
What this bill does is it changes the current law because it recognizes that, based on that decision, it enables patent trolls to do some of the most outrageous things and cripples the ability of the Patent Office to actually look at the patent in the form that the law intends, and that is by engineers and scientists, chemists, biologists, people who have training in the field and can identify whether something is indeed a novel idea or not. That is what the amendment would lop off.
The amendment would continue a pathway around the Patent Office that would allow patent trolls to get low-quality patents because they would not be properly examined and continue the problem that we face with patent trolls. So I strongly oppose the amendment.
I yield back the balance of my time.
Mr. Chairman, I rise in opposition to the amendment and seek the time in opposition.
Mr. Chairman, I must strongly oppose this substitute amendment. It is quite simply a poison bill that is designed to kill the Innovation Act. Although the substitute cuts and pastes a few provisions from the current bill, it includes additional provisions that create serious problems and excludes whole sections of the Innovation Act that are vital for America's job creators and innovators.
This substitute does not even include all of the provisions of the Leahy-Lee bill. It omits provisions that are important to our Senate colleagues.
The amendment's transparency provision would require a patent owner to ``disclose to the court and all adverse parties any person known by the patentee to have a financial interest of any kind in a party to the proceeding.''
The bill then defines financial interest in the context of the judicial recusal provision in the law. Under this definition, ``financial interest'' means ``ownership of a legal or equitable interest however small.'' This would clearly appear to include ownership of a single share of stock in a company.
Moreover, this disclosure is required not just to be made with respect to the patentee but, by the terms of the bill, with respect to ``a party to the proceeding.'' This would mean that a patentee would have to disclose all known shareholders of even the defendant or any other party in the lawsuit. This is obviously an absurd requirement. I assume that the sponsors did not intend to require this, but this is what their language requires. Clearly, the substitute needs more work.
Indeed, the substitute's cosponsors have, themselves, admitted that the substitute needs more work and could have serious, unintended consequences.
This substitute's changes to the bill's pleading requirements would also allow patent trolls to hide their identity, denying defendants the right to know who is suing them.
This substitute denies the defendant the right to know what they are being sued on in the first place.
This substitute also denies the defendant the right to know why they are being dragged into Federal court.
This substitute enables patent trolls to create an elaborate web of shell companies that can engage in frivolous litigation, allowing the patent trolls to hide behind them.
This substitute would allow a patent troll to engage in abusive and extortionate patent litigation without any accountability for the costs imposed on defendants.
This substitute would allow trolls to engage in submarine patenting by delaying prosecution and unreasonably extending patent terms far beyond the 20-year term. This substitute would force U.S. courts to follow foreign law and terminate IP licenses for U.S. manufacturers. This substitute would also encourage courts to delay case dispositive motions and prolong litigation. This substitute also allows the issuance of low-quality patents by permitting them to issue without review by technically trained patent examiners. This substitute amendment is a poison pill that will kill any chance at meaningful patent reform in this Congress.
By contrast, the Innovation Act helps to address the issues that businesses of all sizes and industries face from patent troll-type behavior and aims to correct the current asymmetries surrounding abusive patent litigation. Our bill keeps in mind several key principles.
First, we are targeting abusive patent litigation behavior and not specific entities or attempting to eliminate valid patent litigation. When we use the term ``patent troll,'' it is as an adjective describing behavior rather than as a noun. Our goal is to prevent individuals from taking advantage of gaps in the system to engage in litigation extortion.
Second, our bill does not diminish or devalue patent rights. The patent system is integral to U.S. competitiveness, and we have ensured that our legislation strengthens the overall patent system, aligns with our international treaty obligations, and comports with the Constitution.
Third, this bill strikes the right balance of pushing for robust legal reform measures while protecting property rights, promoting invention by independent inventors and small businesses, and strengthening the overall patent system.
Supporters of this bill understand that if America's inventors are forced to waste time with frivolous litigation, they won't have time for innovation. We can no longer allow our economy and job creators to be held hostage to legal maneuvers and the judicial lottery.
American inventors have led the world for centuries in new innovations, from Benjamin Franklin and Thomas Edison to the Wright brothers and Henry Ford. But if we want to continue as leaders in the global economy, we must encourage the innovators of
today to develop the technologies of tomorrow.
This bill holds true to the Constitution, our Founders, and our promise to future generations that America will continue to lead the world as a fountain for discovery, innovation, and economic growth.
I stand in strong opposition to this substitute, and I urge my colleagues to support the underlying bill. Oppose the substitute.
I reserve the balance of my time.
Mr. Chairman, I reserve the balance of my time.
Mr. Chairman, I am pleased to yield 2 minutes to the gentlewoman from California (Ms. Lofgren), who has been a great person to work with on the Judiciary Committee and here on the floor of the House on this legislation.
Mr. Chairman, I yield 1 minute to the gentleman from Pennsylvania (Mr. Marino), the vice chairman of the Courts, Intellectual Property and the Internet Subcommittee.
Mr. Chairman, I yield myself the balance of my time.
Yes, there is some problem with patent trolls, tens of billions of dollars a year in problems with patent trolls. Fifty-five percent of all the demand letters that are sent by these patent trolls go to small businesses.
There are serious problems that require real patent litigation reform, and I am proud that this bipartisan bill, supported by many Members on both sides of the aisle, supported by the administration, and supported by hundreds of organizations that are listed right here-- come by the desk and you can see the huge list of organizations, conservatives, all across the political spectrum support this legislation.
American inventors have led the world for centuries. This bill holds true to the Constitution, our Founders, and our promise to future generations that America will continue to lead the world as a fountain for discovery, innovation, economic growth, and job creation.
I stand in strong opposition to this substitute amendment, and I urge my colleagues to vote for the underlying bill.
Mr. Chairman, I yield back the balance of my time.