Bob Goodlatte

Mr. GOODLATTE

Mr. GOODLATTE. 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.

Mr. GOODLATTE. I yield to the gentleman from Michigan.

Mr. GOODLATTE. 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. GOODLATTE. Mr. Chairman, I rise in opposition to the amendment and claim the time in opposition to the amendment.

Mr. GOODLATTE. 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 Section 145 is outdated and unnecessary.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.

Mr. GOODLATTE. I reserve the balance of my time.

Mr. GOODLATTE. I reserve the balance of my time.

Mr. GOODLATTE. 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.

Mr. GOODLATTE. 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.

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

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

Mr. GOODLATTE. 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.

Mr. GOODLATTE. 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.

Mr. GOODLATTE. 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.

Mr. GOODLATTE. 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. GOODLATTE. 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. GOODLATTE. 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.

Mr. GOODLATTE. 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.

Mr. GOODLATTE. 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.

Mr. GOODLATTE. Mr. Chairman, I rise in opposition to the amendment and seek the time in opposition.

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

Mr. GOODLATTE. 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. GOODLATTE

Mr. GOODLATTE. Madam Speaker, I yield myself such time as I may consume. Madam Speaker, I did not think that, when I came down here today to debate this 1-page bill for Lawsuit Abuse Reduction Act, it would somehow get linked with the more than 2,000-page monstrosity popularly known, or unpopularly known, as ObamaCare, and told that somehow the promise that was made over and over and over again, that if you like the health insurance you have, you can keep it, was not the fault of the legislation itself, and the people making that promise, but was, rather, the fault of the insurance companies who have to deal with this more than 2,000-page monstrosity, and the more than 20,000 pages of regulations that have been written, and have to rewrite virtually every insurance policy for health care in America because of the mandates and the regulations that are in that legislation; and somehow, the more than 4 million Americans, almost all of whom are the little guys, as I have just heard referenced, that somehow this is the fault of the insurance companies who are doing what they have been required to do under the law, and that is to make changes in the law that necessitates changing all of their policies, that necessitates making sure that things that are mandated by the law are included in their coverage, whether the people who had the policies that they liked could afford these new changes or not. So many, many Americans are forced, by this legislation, to seek new health insurance, in some cases, far more expensive, and they can't afford it. But somehow that is made out to be the fault of the insurance companies, not the people who wrote the law, voted for the law, and then are implementing the law in spite of promises that were made that cannot be kept, not by insurance companies who are abiding by the law, but by others. Now, to compare that to this legislation, which is a 1-page modest bill, to ensure that people who are the victims of frivolous lawsuits and fraudulent lawsuits cannot have justice in our Federal judicial system, I think, is just plain wrong. And the chart that has just been displayed regarding rule 11 filings during the 1983-1993 period, when there was an increase in the number of hearings related to rule 11, that is a spike for justice. That is a spike for the increased opportunity for people who have been subjected to some of the most outrageous lawsuits that were described by the gentleman from Texas, that were described in my opening remarks, and that is their opportunity to seek real justice. That is what this bill is all about, reinstating a spike for justice for the little guy, for the small business person, the individual who finds himself subject to a lawsuit under some of the most ridiculous circumstances you can imagine and saying, you know what, my life has been turned upside down by this lawsuit. I am not getting sleep at night. I am having to spend thousands or tens of thousands or even hundreds of thousands of dollars on attorneys. I am having to do things to change the way I live my life, and it is all because of something that was frivolous and fraudulent, and now I am seeking to have some redress, some redress for that wrong that was done. That is the very basic principle of the American jurisprudence system, that people, when they are harmed, have the right to go to court and seek redress of their grievances. And that is exactly what this provision in this law does under rule 11. It says that if the court finds that the lawsuit is frivolous, then there is a mandatory requirement that the individual who is the victim of that frivolous lawsuit should recover losses. That is, indeed, what this legislation is all about, and I am proud to support it.

Mr. GOODLATTE. I yield to the gentlewoman from Texas.