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`EXHIBIT 2002
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`to
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`PATENT OWNER DISPOSITION SERVICES, LLC’S
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`PRELIMINARY RESPONSE
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`in
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`Case CBM2013-00040
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`Patent 5,424,944
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`March 1, 2011
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`CONGRESSIONAL RECORD — SENATE
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`S1053
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`beyond the jurisdiction of the Judici-
`ary Committee and as a result was not
`considered previously, but I trust it
`will win the support of our colleagues
`on the floor. I am glad that this provi-
`sion has been included in the man-
`agers’ amendment, of which I am a co-
`sponsor.
`My conversations with Rhode Island
`inventors also made clear that the fear
`of protracted litigation also dampens
`innovation. Unfortunately, numerous
`poor-quality patents have issued in re-
`cent years, resulting in seemingly end-
`less litigation that casts a cloud over
`patent ownership. Administrative proc-
`esses that should serve as an alter-
`native to litigation also have broken
`down, resulting in further delay, cost,
`and confusion.
`The America Invents Act will take
`on these problems by ensuring that
`higher quality patents issue in the fu-
`ture. This will produce less litigation
`and create greater
`incentives
`for
`innovators to commit the effort and re-
`sources to create the next big idea.
`Similarly, the bill will improve admin-
`istrative processes so that disputes
`over patents can be resolved quickly
`and cheaply without patents being tied
`up for years in expensive litigation.
`This body must not pass up this
`chance to enhance innovation and en-
`ergize our economy. We must see this
`bill through the Senate, and we must
`work with the House to see it passed
`promptly into law. It is true that the
`bill is a compromise and may not re-
`flect all of everyone’s priorities. Im-
`provements to the bill may still be pos-
`sible. To that end, I expect a produc-
`tive debate on the floor and a construc-
`tive dialog with the House. I look for-
`ward to continuing to work with the
`chairman, my colleagues, and all inter-
`ested parties to craft a bill that gen-
`erates the broadest consensus possible.
`But we must not lose sight of the
`need for action. Our patent system has
`gone 60 years without improvements. It
`needs repair. Now is the time to ener-
`gize our innovation economy, to create
`jobs, and to secure continuing Amer-
`ican leadership in the fields of medi-
`cine, science, and technology. Hard
`work and ingenuity long have been the
`backbone of this country. Let’s not get
`in their way.
`Mr. President, I suggest the absence
`of a quorum.
`The PRESIDING OFFICER. The
`clerk will call the roll.
`The assistant legislative clerk pro-
`ceeded to call the roll.
`Mr. MENENDEZ. Mr. President, I ask
`unanimous consent that the order for
`the quorum call be rescinded.
`The PRESIDING OFFICER (Mr. BEN-
`NET). Without objection, it is so or-
`dered.
`
`f
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`MORNING BUSINESS
`
`Mr. MENENDEZ. Mr. President, I ask
`unanimous consent that the Senate
`proceed to a period for the transaction
`of morning business, with Senators
`
`permitted to speak therein for up to 10
`minutes each.
`The PRESIDING OFFICER. Without
`objection, it is so ordered.
`Mr. MENENDEZ. Mr. President, I
`suggest the absence of a quorum.
`The PRESIDING OFFICER. The
`clerk will call the roll.
`The assistant legislative clerk pro-
`ceeded to call the roll.
`Mr. SCHUMER. Mr. President, I ask
`unanimous consent that the order for
`the quorum call be rescinded.
`The PRESIDING OFFICER. Without
`objection, it is so ordered.
`
`f
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`AMERICA INVENTS ACT
`
`Mr. SCHUMER. Mr. President, I rise
`to speak in support of the America In-
`vents Act generally and about the
`managers’ amendment
`specifically.
`The America Invents Act, also known
`as the patent reform bill, has been
`pending for many years and has been
`the subject of extensive debate, nego-
`tiation, and revisions. In its current
`draft, it does much needed good to help
`protect the American innovation econ-
`omy by updating and modernizing our
`patent system.
`The patent system in the United
`States is designed to protect innova-
`tion and inventions and investment.
`But over the last several decades, the
`Patent and Trademark Office has be-
`come bogged down and overburdened
`by inefficient process and outdated
`law. The result is a heavy burden on
`the innovative work that is the engine
`of our economy.
`I wish to commend Senator LEAHY.
`He has gone the extra mile for this bill
`for many years. I am proud and glad he
`is seeing his work come to fruition as
`we finally debate the bill on the floor.
`Passage of the bill is in sight. I also
`wish to commend the ranking member
`of the Judiciary Committee, Senator
`GRASSLEY, who worked with him, as
`well as Senator KYL, who has taken a
`leading role on the Republican side, for
`their hard work in crafting a bill that
`effectively modernizes the patent sys-
`tem, while paying attention to the
`many and varied demands different
`sectors of the economy exert upon it.
`I am particularly pleased the chair-
`man has decided to adopt the Schumer-
`Kyl amendment on business method
`patents into the managers’ amend-
`ment. It is a critical change that this
`bill finally begins to address the
`scourge of business method patents
`currently plaguing the financial sector.
`Business method patents are anathema
`to the protection the patent system
`provides because they apply not to
`novel products or services but to ab-
`stract and common concepts of how to
`do business.
`Often, business method patents are
`issued for practices that have been in
`widespread use in the financial indus-
`try for years, such as check imaging or
`one-click checkout. Because of the na-
`ture of the financial services industry,
`those practices aren’t identifiable by
`
`the PTO as prior art and bad patents
`are issued. The holders of business
`method patents then attempt to ex-
`tract settlements from the banks by
`suing them in plaintiff-friendly courts
`and tying them up in years of ex-
`tremely costly litigation.
`This is not a small problem. Around
`11,000 new applications for patents on
`business methods are filed every year,
`and financial patents are being liti-
`gated almost 30 times more than pat-
`ents as a whole. This is not right, it is
`not fair, and it is taking desperately
`needed money and energy out of the
`economy and putting it into the hands
`of a few litigants. So I am very pleased
`Congress is going to fight it.
`The Schumer-Kyl amendment, which
`was included in the managers’ package
`we just adopted, will allow companies
`that are the target of one of these friv-
`olous business method patent lawsuits
`to go back to the PTO and dem-
`onstrate, with the appropriate prior
`art, that the patent shouldn’t have
`been issued in the first place. That way
`bad patents can be knocked out in an
`efficient administrative proceeding,
`avoiding costly litigation.
`One of the most critical elements of
`this amendment has to do with the
`stay of litigation while review of the
`patent is pending at the PTO. The
`amendment includes a four-factor test
`for the granting of a stay that places a
`very heavy thumb on the scale in favor
`of the stay. Indeed, the test requires
`the court to ask whether a stay would
`reduce the burden of the litigation on
`the parties and the court. Since the en-
`tire purpose of the transitional pro-
`gram at the PTO is to reduce the bur-
`den of litigation, it is nearly impos-
`sible to imagine a scenario in which a
`district court would not issue a stay.
`In response to concerns that earlier
`versions of the amendment were too
`broad, we have modified it so it is nar-
`rowly targeted. We want to make sure
`to capture the business method patents
`which are at the heart of the problem
`and
`avoid
`any
`collateral
`cir-
`cumstances.
`In conclusion, I believe the amend-
`ment takes an important step in the
`direction of eliminating the kinds of
`frivolous lawsuits the jurisprudence on
`business method patents have allowed.
`I am very grateful to the chairman and
`the ranking member, Senator KYL, and
`I support the managers’ amendment
`and the America Invents Act as a
`whole.
`Finally, I would like to say a few
`words about Senator COBURN’s proposal
`on fee diversion. I think his idea, which
`is
`incorporated
`in the managers’
`amendment, makes a lot of sense; that
`is, to let the PTO keep the fees they
`charge so they are self-funded and we
`don’t have to spend taxpayer money to
`fund them every year.
`Last year, when we were debating the
`Wall Street reform bill, Senator JACK
`REED and I made a similar proposal for
`the SEC, which ultimately didn’t make
`it into the final bill. I just wanted to
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