Congressional Record, Volume 153 Issue 62 (Wednesday, April 18, 2007)
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`Page 1 of 4
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`[Congressional Record Volume l53, Number 62
`[Extensions of Remarks]
`[Pages ?773—?775]
`From the Congressional Record Online through the Government Printing Office [www.c’o.“ev]
`
`(Wednesday, April 18, 2007)]
`
`THL11 PATENT REFORM ACT OF 2007
`
`HON. HOWARD L. BERMAN
`
`of california
`
`in the house of representatives
`
`Wednesday, April 18, 2007
`
`introduce “The Patent Reform Act
`I
`today,
`Mr. BERMAN. Madam Speaker,
`of 2007",
`a product of both bicameral and bipartisan effort to reform
`the patent system to meet
`the challenges of the Zlst century.
`I would
`especially like to thank Senator Leahy for his dedication to addressing
`many of the inadequacies in our current patent system. Furthermore,
`I
`appreciate my past and present partners in this area-—especially
`Congressman Rick Boucher, with whom I've worked closely to increase
`patent quality for the past several years, and Congressman Lamar Smith,
`who championed this issue last Congress.
`Introduction of this legislation follows a number of recent judicial
`opinions and many hearings conducted over the past several years by the
`Subcommittee on Intellectual Property which ascertained that the
`current patent system is flawed. Over
`the last 5 years,
`there have been
`numerous attempts to define the
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`challenges facing the patent system today. Among the most notable
`contributions to this discourse are the Patent and Trademark Office's
`1
`Twenty—First Century Strategic Plan,
`the Federal Trade Commission's
`report entitled “To Promote Innovation:
`‘he Proper Balance of
`Competition and Patent Law and Policy," The National Research
`Council's compilation of articles “A Patent System for the 21st
`Century" and the book titled “Innovation and Its Discontents,“
`authored by two respected economists. These studies offer a number of
`recommendations for increasing patent quality and ensuring that patent
`protection promotes~—rather than inhibits--economic growth and
`scientific progress. Consistent with the goals and recommendations of
`those reports, and based on past patent bills,
`the Patent Reform Act
`contains a number of provisions designed to improve patent quality,
`deter abusive practices by patent holders, provide meaningful,
`low~cost
`alternatives to litigation for challenging the patent validity and
`harmonize U.S. patent law with the patent law of most other countries.
`Past attempts at achieving comprehensive patent reform have met with
`stiff resistance. However,
`the time to reform the system is way past
`due. The New York Times has noted, “Something has gone very wrong with
`the United States patent system." The Financial Times has stated, “It
`is time to restore the balance of power in U.S. patent law."
`Therefore, we are introducing this bill as a first step to restoring
`the necessary balance in our patent system.
`I firmly believe that robust patent protection promotes innovation.
`However,
`I also believe that the patent system is strongest, and that
`incentives for innovation are greatest, when patents protect only those
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`Congressional Record, Volume 153 Issue 62 (Wednesday, April 18, 2007)
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`Page 2 of 4
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`the
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`inventions that are truly innovative. When functioning properly,
`patent system should encourage and enable inventors to push the
`boundaries of knowledge and possibility. If the patent system allows
`questionable patents to issue and does not provide adequate safeguards
`against patent abuses,
`the system may stifle innovation and interfere
`with competitive market forces.
`This bill
`represents our latest perspectives in an ongoing discussion
`about legislative solutions to patent quality concerns, patent
`litigation abuses, and the need for harmonization. We have considered
`the multitude of comments received concerning prior patent bills and
`over the course of numerous negotiations between the parties. We
`acknowledge that the problems are difficult and, as yet, without
`agreed-upon solutions. It is clear, however,
`that introduction and
`movement of legislation will focus and advance the discussion. It is
`also clear that the problems with the patent system have been
`exacerbated by a decrease in patent quality and an increase in
`litigation abuses. With or without consensus, Congress must act to
`address these problems. Thus, we introduce this bill with the intent of
`passage in the llOth Congress.
`to include in
`There are a number of issues which we have chosen not
`the bill, primarily because we hope they will be addressed without the
`need for legislation. For instance,
`the Supreme Court recently resolved
`questions regarding injunctive relief.
`In that category, we include
`amendments to Section 27l(f) and the obviousness standard as both
`issues are currently before the Supreme Court, If either of those
`issues are left unresolved, Congress may need to reevaluate whether to
`include them in a patent bill.
`The bill does contain a number of initiatives designed to harmonize
`U.S.
`law with the law of other countries,
`improve patent quality and
`limit iitigation abuses,
`thereby ensuring that patents remain positive
`forces in the marketplace.
`I will highlight a number of them below.
`Section 3 converts the U.S. patent system from a first~to~invent
`system to a first-inventor-to file system. The U.S.
`is alone in
`granting priority to the first inventor as opposed to the first
`inventor to file a patent. There is consensus from many global
`companies and academics that the switch in priority mechanisms provide
`the U.S. with greater international consistency, and eliminate the
`costly and complex interference proceedings that are currently
`necessary to establish the right to obtain a patent. While cognizant of
`the enormity of the change that a “first inventor to file" system may
`have on many small inventors and universities, we have maintained a
`grace period to substantially reduce the negative impact to these
`inventors. However, we need to maintain an open dialogue to ensure that
`the patent system will continue to foster innovation from individual
`inventors.
`
`Section 5 addresses both the topic of apportionment and wilfullness.
`Patents are provided to promote innovation by allowing owners to
`realize the value of their inventions. However, many have argued that
`recent case law has tilted towards overcompensation, which works
`against the primary goal of promoting innovation. “3xcessive damages
`awards effectively allow inventors to obtain proprietary interests in
`products they have not invented, promote patent speculation and
`litigation and place unreasonable royalty burdens upon producers of
`high technology products. Such consequences may ultimately slow the
`process of technological
`innovation and dissemination the patent system
`is intended to foster." While preserving the right of patent owners to
`receive appropriate damages,
`the bill seeks to provide a formula to
`ensure that the patent owner be rewarded for the actual value of the
`patented invention.
`Furthermore,
`this Section seeks to curb the unfair incentives that
`currently exist for patent holders who indiscriminately issue licensing
`letters. Patent proprietors frequently assert that another party is
`using a patented invention and for a fee, offer to grant a license for
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`Congressional Record, Volume 153 Issue 62 (Wednesday, April 18, 2007)
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`law does little to dissuade patent holders from
`such use. Current
`mailing such licensing letters. Frequently these letters are vague and
`fail to identify the particular claims of the patent being infringed
`and the manner of infringement.
`In fact,
`the law tacitly promotes this
`strategy since a recipient, upon notice of the letter, may be liable
`for treble damages as a willful infringer. Section 5 addresses this
`situation by ensuring that recipients of licensing letters will not be
`exposed to liability for willful infringement unless the letter clearly
`states the acts that allegedly constitute infringement and identifies
`each particular patent claim to the product or process that the patent
`owner believes is being infringed.
`Section 6 provides a needed change to the inter—partes reexamination
`procedure. Unfortunately,
`the inter—partes reexamination procedure is
`rarely used, but the changes we introduce should encourage third
`parties to make better use of the opportunity to request that the PTO
`Director reexamine an issued patent of questionable validity. Primarily
`though, Section 6 creates a post—grant opposition procedure.
`In an
`effort to address the questionable quality of patents issued by the
`USPTO,
`the bill establishes a check on the quality of a patent
`immediately after it is granted, or in circumstances where a party can
`establish significant economic harm resulting from assertion of the
`patent. The post-grant procedure is designed to allow parties to
`challenge a granted patent through a expeditious and less costly
`alternative to litigation. Many have expressed concerns about the
`possibility of harassment of patent owners who want
`to assume quiet
`title over their invention.
`In an effort to address those concerns,
`bill prohibits multiple bites at the apple by restricting the
`cancellation petitioner to opt for only one window one time. The bill
`also requires that the Director prescribe regulations for sanctions for
`abuse of process or harassment. During the legislative process we will
`likely provide more statutory guidance for the Director in establishing
`regulations guiding the post—grant opposition. We appreciate that this
`is an extremely complicated and new procedure and therefore we look
`forward to working with various industries to ensure the proceeding is
`balanced, fair and efficient. Part of the goal of this Section is to
`also address the quality problem in patents which have already been
`issued and are at the heart of the patent reform discussion.
`Section 9 permits third parties a limited amount of time to submit to
`the USPTO prior art references relevant to a pending patent
`application. Allowing such third party submissions will increase the
`likelihood that examiners have available to them the most relevant
`
`the
`
`“prior art," thereby constituting a front-end solution for
`strengthening patent quality.
`The bill also addresses changes to venue to address extensive forum
`shopping, provides for interlocutory appeals to help clarify the claims
`of the inventions early in the litigation process, establishes
`regulatory authority for the USPTO to parallel the authority of other
`agencies, and expands prior user rights to accommodate in part for the
`switch to first—inventor—to-file.
`When considering these provisions together, we believe that this bill
`provides a balanced package of reforms that successfully accounts for
`the interests of numerous stakeholders in the patent system,
`including
`individual inventors, small enterprises, universities, and the varied
`industry groups, and that are necessary for the patent system to
`achieve its primary goal of advancing innovation.
`
`This bill is the latest iteration of a process started many years
`ago. Deserving of thanks are the many constitutional scholars, policy
`advocates, private parties, and government agencies that have and
`continue to contribute their time,
`thoughts, and drafting talents to
`this effort,
`including, of course,
`the legislative counsel.
`I am
`pleased that finally, we have a critical mass of interested parties who
`understand the need for reform.
`
`Though we developed this bill in a highly deliberative manner, using
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`Congressional Record, Volume 153 Issue 62 (Wednesday, April 18, 2007)
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`I do not want to
`many past bills as the foundation for the provisions,
`suggest that it is a “perfect" solution. This bill is merely the
`first step in a process. Thus,
`I remain open to suggestions for
`amending the language to improve its efficacy or rectify any unintended
`consequences. Furthermore,
`there are a host of issues or varied
`approaches to
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`patent reform which are likely not even covered by the bill but may be
`considered at a later time.
`I hope to work with the many cosponsors and
`the diverse industry, university and inventor groups to reach further
`consensus as we move this bill towards final passage.
`As
`I have said previously, “The bottom line in this is there should
`be no question that the U.S. patent system produces high quality
`patents. Since questions have been raised about whether this is the
`case,
`the responsibility of Congress is to take a close look at the
`functioning of the patent system." High patent quality is essential to
`continued innovation. Litigation abuses, especially ones committed by
`those which thrive on low quality patents,
`impede the promotion of the
`progress of science and the useful arts. Thus, we must act quickly
`during the llOth Congress to maintain the integrity of the patent
`system.
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