Jon Kyl

Mr. KYL

Mr. KYL. Mr. President, I would like to continue the conversation Senator Domenici and I were engaged in. I assure him that Senator Alexander and I came to the floor this morning to try to do exactly what he suggested; that is, to tell the stories of real Americans who are confronting the challenges of the market that need to be fixed. Senator Alexander and I will do that for a few minutes to demonstrate that this is not a problem that requires a bailout of Wall Street. It is unfortunate that the media has spoken in those terms. We understand the media likes to use shorthand to describe problems, but it can do great damage. It is wrong to call this a bailout of Wall Street. About 3 weeks ago, the Federal Reserve Board and the Department of Treasury did bail out some businesses and Fannie Mae and Freddie Mac. Those were bailouts. They acquired assets, took them over, and they restricted the compensation of the people running the companies and did all the rest. This is something different. It addresses the problem that Senator Domenici has described akin to a big automobile accident in the middle of the freeway. One of those great freeways in the State of the Acting President pro tempore can flow very nicely until there is an accident. Then when there is an accident, particularly involving four or five cars, it stops traffic for a long time, and unless somebody comes and unclogs it, it is stopped dead. That is the analogy he has used to describe the problem in our economy today. I am going to indulge my colleagues for just a moment and go back in time. When my grandmother, who was an immigrant from Holland, was running their household with my grandfather, they never bought anything on credit. Everything was cash. They paid for their modest house when they had the cash to buy it and lived in it the entire time in a small community in Nebraska until they passed away. When they would buy a car, they would not buy it until they had the cash. That was the way a lot of people who lived through the Great Depression had to work because there was no credit during the Great Depression. It is not a bad lesson for all of us to try to have a little more cash on hand when we enter into big financial transactions because America has gotten into a bit of a bad habit. It is the habit of leveraging everything, buying everything on credit and, in effect, creating a situation where you have so many loans, so many credit card debts. You bought your home on credit absolutely to the hilt. You have mortgaged it. Your car is on credit. And, by the way, the day after you drive your new car off the lot, it is worth less than the car loan you have to repay. That is now the situation with a lot of homes because home values have declined to the point that some of the mortgages exceed the real value of the homes. So we found that in our society generally we have far too much debt. It is true, as Senator Domenici said, our country runs on debt. So what happens if all of a sudden the credit that is required to fuel this system dries up--nobody can get a loan anymore, there is not any credit available. Well, it is like the freeway accident that he describes. You have five or six cars in the middle of the freeway, and every car behind them is backed up and is going nowhere. Now, in one car you have a doctor who has to get to the hospital or a nurse or a teacher who needs to get to the school to teach kids or a mom who needs to pick up her kids from school and they are waiting and she cannot get to them. You can just imagine all the other reasons people are in their car trying to get someplace. It is serious business. They need to get going, and they cannot. If they cannot, people are hurt. Likewise, if you view those cars as the loans in our system, they were a nice shiny car until they got into the accident, and now they are not worth as much. They have been wrecked. Somebody has to come and haul those cars away and get rid of them. Well, what if there was not anybody to haul them away? What if nobody could be paid to come to haul them away? Then nobody is going to come and clear the freeway. That is the analogy to our financial system today. People say: Well, we would love to come and haul them away, but we don't know--if we bought those cars, if we took them--that we could resell them for anything. They look kind of damaged to us. Nobody wants to buy this used car, so it is somebody else's problem. None of us like Government involvement in our free market. We want to keep it to as low a level as possible. But in times of crisis, sometimes it is up to the Government to step in and lead the way so the private market can get unclogged and begin to work again. Just as with the freeway, we do call the public ambulance and the public highway patrol, and so on. This is a case where the public, represented by the Members of Congress and by the administration, need to come up with something to get that freeway cleared. Secretary Paulson and President Bush and the administration, as well as the Chairman of the Federal Reserve Board, Ben Bernanke, came to us a week ago and said: We have a huge wreck in the freeway. It is not going to be cleared up by the private sector. The Government has to get involved and clear it or credit in this country will absolutely come to a halt and, as we said, since the country runs to a large extent on credit, everybody will gradually come to a grinding halt in their personal lives and in their businesses in terms of being able to function fiscally. So the plan was to clear the freeway by having the Government come in and buy those cars that are clogging the freeway, buy the assets that do not have full value. We do not know what they are worth, so nobody in the private sector wants to buy them. But the Government could buy them with up to $700 billion in cash, in money to buy them, and we will try to buy them at a price the owner of that car or the owner of this mortgaged-backed security--maybe it is not as much as he would have liked to have gotten for it, but he is willing to take it in order to get some cash out of it and have cash to continue to operate--but at a value that is not so high that when the Government decides to then fix up that car that was in the accident or take this mortgage-backed security--these loans we are talking about--to take them back to the market and sell them, that the Government will not have paid such a high price that it is not getting the money back for the taxpayers. So that is what Secretary Paulson proposed. We will buy those assets at a reduced price, and then we will sell them, hopefully getting our money back, so the American taxpayer will have all the return on that $700 billion. They talk about a $700 billion bailout as if that money is all gone. Well, the idea, if it works, is to get all that money back. One of the good things about the legislation that was drafted is that it all goes to reduce the Federal debt. That is great for the taxpayers. So the legislation was drafted. Everybody realizes now that the House of Representatives failed to pass it yesterday. One of the things Senator Alexander and Senator McConnell and I and Senator Gregg from New Hampshire, who was so involved in the drafting of this plan, spoke to yesterday was the fact that this cannot fail. We have to put Humpty Dumpty back together again and get it passed in the House and the Senate. There seems to be a great deal of goodwill on both sides of the aisle and in both the House and the Senate to get this done and get it done before the end of the week. People are talking about the specific ways in which that might be done. They do not do any damage to the basic idea the Congress and Secretary Paulson worked on and, in fact, I think improve it a little bit. But now, what Senator Alexander and I want to do is talk about a few examples of why this is not about some bank on Wall Street. This is about folks back home. Let me give three examples of correspondence I have gotten in the last few days from people who wrote about their real-life problems. And we could repeat this story over and over with phone calls we have gotten. I have talked to so many people in Arizona who said: You have to do something about this because it is affecting me, it is affecting my family, and we are not going to be able to operate our business, or we are not going to be able to send our child to school or whatever the situation might have been. But let me recount three specific situations. I am going to quote from the correspondence I received. One is from a small businessperson in Arizona, and I am not going to put the names in, but you will get the gist. He said, Senator: I wanted to write to you to provide a real life example of the impact this issue has caused to my business and personal life. We need to be assured you are remembering and representing the foundation of America, the small business owner. We opened our first store in March 2006 and now have 8 stores operating, four in AZ two in TX and two in FL. Two of these stores are corporate stores and 6 are franchise locations. Collectively the operations generate over $3.5M in annual sales and employs 40 people. It is a typical small business in America. He goes on: I hear politicians talking about what could happen if the bailout is not finalized, I want to tell you it has already had significant, negative impact to our business and only getting worst. Let me provide you with a real life example of the issue I am discussing. As with many small businesses we used equity in our home to provide lines of business credit. We conservatively used the credit to address cash flow issues or make investments in goods or capital to expand the business. We were notified about two weeks ago that our credit line has been closed due to the drop in house prices. This has created some manageable challenges but the after effects were more severe. With the credit line capped to our current balance, our debt to available credit percentages went from 30% to 100%. This in turn reduced our credit score from 750 to 680. This has put us under the 720 requirements for prime loans and has disqualified us from certain loans options as a business and on a personal level. We have not missed a payment, our business has not changed, but due to this action we have had a significant drop in our credit score. In fact the business is very healthily as we have realized a 40% increase over last year. We want to expand, hire more employees and create jobs. Without the flow of capital the people that can actually help the economy recover are being left out while the banks use our money to shore up their business. We are told just wait in line, when we are solid we will see if we can help you. Just to interject, that is the message a lot of banks are sending to people, and I do not blame them because they need to hold their cash because of the requirements the law requires. So he concludes: As individual businesses we are nothing in the grand scheme-- By the way, I would choose to disagree. These are the backbone of what makes our country work. But he goes on: but, as a group, we are the most rapid and viable solution to job creation and economic recovery. We want to expand, we want to create jobs and do our part. Help us help you. Well, that is an eloquent statement from an Arizona businessman who appreciates how this crisis can affect everybody else and tells us how it is affecting him. Let me cite one other businessperson in Arizona. I am quoting again: My wife and I live in Arizona, and I want to let you know I support the emergency bailout now in review. I would like to bring one thing to your attention though. Something I have not heard mentioned at all in the media, and I believe is being played out across the Nation. My wife owns a small business in Tucson. Her business is actually up 5 percent from last year. She was unable to get a loan for opening the store 3 years ago and thus we put a Home Equity Line of Credit on our house, and she opened several credit cards who claimed they specialized in small businesses. She has not been late with payments, has not been over limit on the cards, nothing. A decent model of paying your bills on time in line with the card's terms. Yet both the cards have raised her interest rate to 36 percent merely because she is a small business. This in effect doubles her minimum payment, and pushes her business from being able to maintain economic health, to stressed. With the additional stress from the unjustly raised interest rates, she has had to let employees go from the store, adding to the unemployment problem in Arizona today. Now, the third and last example I want to cite is the State of Arizona itself and its municipal and other political subdivisions because governments are hurt by this just as the private sector. The Arizona State treasurer invests the State's and most of the individual localities of the State's day-to-day operating funds in commercial paper. A lot of these are called overnight funds. They get cash in during the day, and they have to have a place to put it overnight before they then use it the next day to disburse it or do whatever they need. They can make a fraction of a percent by putting it in Government commercial paper. Sometimes they put it with a brokerage house or an investment bank, and in Arizona's case some of this fund was put with Lehman Brothers, the entity that collapsed a couple weeks ago. The State, as a result, is going to need to sell as much as $250 million in funds at a loss. This directly affects taxpayers. Here is one of the excerpts from what the State treasurer said: However, with the current headline risk and market uncertainty, they [local governments] will likely flock to insured accounts if they are available. Without the same insurance, state backed investment pools may face a multi- billion dollar run on the bank. Both State and local governments will realize losses. A run on the bank would force assets and holdings to be sold at below par in order to meet redemptions as local governments transfer their investments from state-operated pools . . . The result is taxpayers at all levels would then be liable for losses on investments that are subject to force selling due to redemptions by investors transferring their funds, and losses on yields gained on their local investment dollars since private sector funds generally charge more for managing those investments than state-operated pools on top of the losses incurred at the federal level in the guarantee program. But in regular English, it means they are going to have to sell at a loss. The State will take a loss, these local governments will take a loss, and that will replicate itself throughout both the public sector and the private sector the more this goes on. These are just three examples of why it is important to do something now. It is up to leaders, people such as Senator Domenici, who was speaking earlier, to explain that it is not a bailout; that the legislation that has been put together has numerous taxpayer protections in it; that we would hope to be able to get the taxpayer investment back; that in those situations where there is direct involvement by the Federal Government in the business, they will totally control executive compensation and everything else relating to the executives; that even when they buy assets, if there are significant assets, those corporate executives' salaries will be subject to taxation rules, which will, in effect, remove both their ability and their corporation's ability to deduct these salaries from taxes. The bottom line is, all of the things our constituents have been asking us to do, through painstaking, bipartisan negotiations, have been put into this legislation. What I hope is that whatever modest change, if any, is needed to cause the support for this legislation to be manifested in a positive vote in the House and in the Senate will occur quickly; that we can reassure both the markets, which, as everyone knows, lost over $1 trillion yesterday, and our constituents so that before the end of this week we can pass the legislation through both Houses of Congress and get it to the President. I don't blame anyone in the House of Representatives who voted the other way. The time for blame is gone. We need to fix the problem, not the blame, as the Senator from Tennessee has said. For those who believe there are one or two changes that would cause them to support the legislation, I welcome that, if that is what it takes to get this done. When we talk about over $1 trillion lost in the market yesterday, that is really not the right way to put it. Our constituents--the person who is retired and has money in the stock market, you and me, all of us; over 50 percent of Americans own stock--all of us lost a lot of money yesterday. It is on paper, but, after all, that is where the value is. Thousands and thousands of dollars. Everyone in the gallery who has an investment lost money. All of us here. All of our staff who are participants in the Federal retirement program lost money. This is real money for people in America. We can stop it if we provide the assurance that we are going to address the problem in a sensible way to restore the confidence in the market and the confidence of the American people. If we do not do this, then the warnings of these people from Arizona whom I quoted will surely come to pass. Small businesses will fail, families will be hurt, and America will be on a downturn that could be very difficult to stop at that point. So I wish to thank my colleagues who have worked on this problem in a bipartisan way. They have spent a lot of time and effort. The time to point blame fingers is over. We have proven we can get together and work together as House and Senate Democrats and Republicans and work with an administration that is desperately trying to work on the problem as well. We can get this done before the end of the week. I urge my colleagues to continue their efforts so that we can do our job in representing the people of America who, after all, are counting on us to do what they cannot do but what we are in a position to do. I will close with a comment I am fond of quoting from Theodore Roosevelt, who, as everyone knows, liked to get in and solve problems. I can't think of a more apropos time to cite this quotation where he said that he appreciated the opportunity to work on work worth doing. Well, if this isn't work worth doing, I don't know what is. It is worth it for America, it is worth it for our constituents, and it is worth it for our children and grandchildren for the future. I appreciate the opportunity to be here working on that work, and I compliment all of my colleagues who have done the same.

Mr. KYL

Mr. KYL. Mr. President, reserving the right to object, and I will object, but I would like to make a brief statement. The Senate and House are on the verge of a very historic action to deal with the crisis in our economy, an action that would not have been possible if Democrats and Republicans had not worked together and had worked with the administration. In the Senate, over the last several months, we have had the same kind of work with respect to the unanimous consent request that has just been made. We tried, each of us in our partisan ways, to get something passed that we could send over to the House of Representatives that deals with the so-called tax extenders-- the energy extenders and AMT relief. What we found was that neither side could prevail if we tried to do it our way. As the majority leader has said, we had something like nine separate votes, I believe. We finally concluded that the only way we could, for the good of our constituents, extend these important tax provisions and fix the AMT was to have a series of votes which expressed the will of the Senate, work together to pass in a bipartisan way legislation that we would then send to the House of Representatives. Democrats and Republicans in the Senate agreed that the legislation represented by the consent agreement is an important priority for the American people, and that is why we approved this bipartisan package by an overwhelming vote of 93 to 2. But before the package received the overwhelming approval, the energy tax extenders failed as a stand-alone bill, as I said, nine times. The Senate has spoken clearly. This legislation will pass the Senate if it receives a vote in the same packaged form that passed by the vote of 93 to 2. It is the path we must continue to follow. The majority leader has made that point, the minority leader has made that point, and I reiterate that point again to our colleagues in the House of Representatives. For that reason, I object to the request that has been made.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent. The Senator from Missouri (Mr. Bond), the Senator from Nevada (Mr. Ensign), the Senator from Arizona (Mr. McCain), and the Senator from New Hampshire (Mr. Sununu).

Mr. KYL

Mr. KYL. Madam President, today I wish to describe an important step towards providing the American people with a global, persistent ballistic missile defense system. This step is the space-based interceptor, SBI, study that was recently funded in H.R. 2638, the fiscal year 2009 Continuing Resolution, which contains the fiscal year 2009 appropriations for the Department of Defense. Congress appropriated $5 million for the Secretary of Defense to conduct an independent assessment of a space-based interceptor element of our missile defense system. This is the first time since the Clinton administration and a Democrat-controlled Congress in 1993 cancelled all work towards a space-based layer missile defense system that we have the potential to expand our space-based capabilities from mere space situational awareness to space protection. In the past 15 years, the ballistic missile threat has substantially increased and is now undeniable. Today, at least 27 nations have ballistic missile defense capabilities, and last year alone over 120 foreign ballistic missiles were launched. North Korea and Iran are developing and proliferating ballistic missile technology and continue to be major threats to our allies and our deployed forces. Developments in China, as illustrated in the 2008 Annual Report on Military Power of the People's Republic of China, raise the concern about accidental or unauthorized launches of intercontinental ballistic missiles, ICBMs, by China's military. In addition to the long-established threat of ballistic missiles as a delivery system for weapons of mass destruction, on January 11, 2007, the world witnessed the vulnerability of space assets when China launched a ballistic missile to destroy a satellite. This capability extends beyond China; the Director of National Intelligence recently testified, ``over the last decade, the rest of the world has made significant progress in developing counter space capabilities.'' Every part of our daily lives depends upon the capability and reliability of our space systems. An attack on our space systems would not only adversely affect our military and intelligence systems, but also items such as: the Internet backbone, financial systems, navigation systems, manufacturing inventory control systems, emergency response systems, and weather tracking. Our vulnerabilities have not gone unnoticed; Wang Hucheng, an analyst for the People's Liberation Army has called our space systems the ``soft ribs'' of the U.S. military. The $5 million appropriation for the SBI study allows the Secretary of Defense to enter into a contract with one or more independent entities to review the feasibility and advisability of developing a space-based interceptor element to the ballistic missile defense system. It is clear from the project tables in H.R. 2638, specifically the Program Element numbers in those tables, that Congress understood the importance of funding this study. I have the utmost confidence in Secretary Gates to make the decision about what research and development entity should perform this study. I would like to recommend that an entity like the Institute for Defense Analysis, IDA, lead the study. IDA has the experience and technical expertise to provide policymakers a complete picture of the merits of a space-based interceptor system. The study could lead to the development of new technologies and concepts that would provide the United States, our allies, and our deployed forces protection from the threat of rapidly proliferating ballistic missile technology, as well as the rising threat of attacks on our vulnerable national security space systems. I would like to share the views of a few senior military leaders about what they believe to be the benefits of conducting the space- based interceptor study. GEN Kevin Chilton, Commander of United States Strategic Command, stated: Space based systems have great potential to address many significant global missile defense challenges. The high ground space provides could alleviate many geographic and political challenges. GEN Henry Obering, Director of Missile Defense Agency, stated, the study is ``a pragmatic hedge against an uncertain future, not an acquisition program for space-based missile defenses. It is opportunity to learn--while there is time to learn--what is possible in space against the day when emerging threats may compel us to decide.'' MG Thomas Deppe, Vice Commander of Air Force Space Command stated: Starting the preliminary studies and analysis on a space- based layer now will provide time to understand the potential benefits and technological challenges of such a system. Early studies help to reduce risk and better determine cost and feasibility of any space-based endeavor by identifying required technologies. The United States must study space-based defenses now while we actually have the time to gather the data necessary to make informed policy decisions and before we are forced to make a decision in a time of crisis. I would like to thank Senators Inhofe, Allard, and Sessions for their support in ensuring this important initiative was funded. This study--some in this body have been afraid of--will help Congress understand what a space-based layer in our missile defense system could do to defend this Nation from ballistic missile attacks and threats to our space systems.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL

Mr. KYL. The following Senator is necessarily absent: the Senator from Arizona (Mr. McCain).

Mr. KYL. While the Senator from Alabama is still on the Senate floor, it is with no great pleasure that any of us opposes a continuing resolution. But I associate myself with his remarks. At some point you have to say enough is enough. Unless people object to the process, it is not going to change. I note that when I try to explain to my constituents that is the way business is done in Washington. They say: Then try to stop it. So while it is with great reluctance that we oppose a continuing resolution, I don't know of any other way to make the point that this business as usual has to stop than by voting no. So I appreciate the remarks of my colleague from Alabama.

Mr. KYL. Yes.

Mr. KYL. I thank the Senator very much. Mr. President, I, first, wish to explain a little bit of the process. When I say we oppose a continuing resolution with great reluctance, the reason is that something has to be done to ensure that our Government can operate, the Government programs are funded. Unfortunately, we have ourselves in a bind because the Senate has passed not one single appropriations bill. There are about 13 different appropriations bills that we usually pass each year to fund the Department of Education, the Department of Agriculture, the Department of Defense--all the different things that need to operate with the Government--and we are supposed to have that done by the end of the fiscal year, which is in a couple days. Because we have not passed a single appropriations bill, we have to roll up everything all into one giant bill and either take it or leave it. It is called the continuing resolution. It continues to fund the Government, in this case, for another roughly 6 months. There is no opportunity to amend it. It is a take-it-or-leave-it proposition, and it is wrong. Because what happens is that bills that could not possibly pass on their own are added to this must-pass legislation, putting us in this absolute difficult political bind. The Hobson's choice: If you vote for it, you are saying yes to a broken system, to over 2,000 earmarks, to $34 billion in spending that is added to the national debt above and beyond the budgeted amount that otherwise is necessary to run the Government. So there is the pressure to vote for that. Yet there is no way for us to take each of these items out and say we would have voted to amend them out of the bill if we would have had a chance to do so, except to oppose the entire legislation. Let me give you some illustrations of this. Because this is done on a take-it-or-leave-it basis, I would have to vote against a bill which, first of all, funds the Department of Defense, which I want to fund, and the homeland security and military construction efforts. It funds border enforcement, which is important for my State of Arizona, and, importantly, it removes the moratorium on offshore drilling, which is a policy Republicans have pushed very hard to achieve. So those are good things in the bill that I wish to register my support for. But am I forced to take all the other things in order to register my support for these things? Here is what we are asked to swallow. According to the House Budget Committee, there are 2,627 congressional earmarks. They total $16-plus billion. Now, my colleague, John McCain, has made it clear that if and when he is elected President, this process is going to stop. But Senator Sessions and I wish to make the point that it should stop now. We do not need one last orgy of earmarks before the reformers come to town and say: It is stopped. I am going to veto the legislation. Now, what of these earmarks? Well, there are some very good projects, I suspect. Here is one, for example: $23 million for biomedical research at a particular State university. Now, one of the best biomedical research facilities is in the State of Arizona in Phoenix. I would love to have them be able to bid on that $23 million research grant. They would have a good chance of getting it because they are good. They do great work there. Why does this particular State university get the money instead? There is a $2 million study of animal hibernation. Now, there may well be some scientific reason to understand why animals--I mean, I think I know why they sleep over the winter, but there has to be something about that that is important to some scientists. But do we need to add that to the national debt or could it compete with other kinds of projects? That is the problem with this kind of bill: the take it or leave it. What you would like to do is establish priorities and say: All right, maybe an animal hibernation study is a good thing, but is it so important we need to add it to the national debt? That is the question--no debate, no amendment, take it or leave it. There is $44 million for a drug center for the military that it says it does not need, but it is important for a particular Member's district. Once again, prioritize. Some of these things may be good, but how about if you had them compete with other good things and the best ones are funded and the ones that are not so good do not get added to the national debt? There is a huge amount of money in here for the so-called CDBG disaster funds. Now, these are Community Development Block Grants, ordinarily considered to be long-term projects. In fact, this CDBG funding is to provide assistance for long-term rebuilding of communities, not emergency recovery. We have emergency recovery money in here for various emergencies or disasters, and I do not object to that funding. But why do we need to put in an emergency supplemental that is not paid for but is added to the Federal debt? This long-term spending money, it should not be in here. There is a total of $34 billion, as I said, in this unfunded emergency spending, about $16 billion, as I said, in earmarks. Another one of the elements is about $7.5 billion for the so-called auto bailout loans. There is money to our big auto companies. Now, it may be that you think our big auto companies need a little help from us taxpayers. I am not sure that is true. One of the reasons they say they need help is that the Government has put so many new obligations on them for fuel efficiency standards and other things that they need to retool in order to pay for them. Maybe we should not have put those obligations on them in the first place. But, in any event, there is something eerily familiar about this loan. Do you remember in our financial market problem we are working on over this weekend, part of the issue is the fact that a lot of loans were issued to people with almost no payments due for several years. Low interest or no interest or no principal has to be paid, and then all of a sudden people find out after 5 years they have a big balloon payment they have to make and they cannot afford it. So you come in and foreclose on the home. People criticized the mortgage brokers who enticed them into those kinds of loans. Guess what kind of a loan this is for the auto companies. No principal, no interest for 5 years. What happens after 5 years? They are going to be back in here saying: Thank you for the $25 billion that we have not had to pay interest or principal on. We are going to have a hard time to pay that principal and interest now. Could you give us another hand? We are criticizing these folks who sold mortgages to people who could not afford them by having these no-interest and no-principal payments. Yet that is exactly what we are doing with these auto companies right now. Oh, they are happy to have the money, I know. Then, we have $2.8 billion in emergency funds for LIHEAP. That is above the regular appropriation, which is about twice again as much. So it is over $5 billion. My colleague from Alabama said, there is one little problem with this other than the fact it is a huge amount of money and not paid for, it is also very unfair. We come from States that are more in the South and in the West, and it is not a matter of freezing winters, it is a matter of stifling hot summers. The reality is the fuel oil to fuel heat in the winter is a whole lot cheaper than the electricity bill in Phoenix, AZ, or Yuma, AZ, in the middle of the summer, and people die from situations that arise from the fact that they cannot air-condition their home. However, with all this, Arizona gets a little less than 1 percent of the funding under the formula. Now, the Governor of Arizona, a Democrat, Governor Janet Napolitano, and I have both written letters to our colleagues, Democrats and Republicans, saying this is not fair. Phoenix is the fifth-largest city in the country. Arizona is a big State now, and it gets very hot throughout the summer months, and electricity bills are too high for a lot of people to afford. However, 1 percent is enough. Let me conclude by saying, as I said in the beginning, it is with great reluctance that we oppose a continuing resolution such as this. But there are so many things I have discussed, and more which I could, that require I register an objection and for which I am required to vote no.

Mr. KYL

Mr. KYL. The following Senator is necessarily absent. The Senator from Arizona (Mr. McCain).

Mr. KYL

Mr. KYL. Mr. President, I rise today to comment on S. 3600, the Patent Reform Act of 2008. This bill is based on, but makes a number of changes to, S. 1145, a patent reform bill that was reported out of the Judiciary Committee in 2007 but that was never considered by the full Senate. S. 1145 proposed several salutary and uncontroversial reforms to the patent system, but also included provisions that would rewrite the formula for awarding damages in patent cases and that would create new administrative proceedings for challenging patents. These and other provisions of that bill would have made it much more expensive to hold and defend a patent, would have extended the time for recovering damages for infringement, and would have substantially reduced the amount that the patent holder would ultimately recover for infringement. The changes proposed by S. 1145 went so far that under that bill's regime, it may have proved cheaper in many cases to infringe a patent and suffer the attenuated and reduced consequences of doing so, rather than to pay a license to the holder of the patent. Once such a line is crossed, the incentive to invest in research and development and the commercialization of new technology in this country would be greatly reduced. Such a change would do enormous harm to the U.S. economy in the medium-to-long term. Reputable economists estimate that historically, between 35 and 40 percent of U.S. productivity growth has been the result of innovation. My bill makes substantial changes to those sections of S. 1145 that address damages, post grant review, venue and interlocutory appeals, applicant quality submissions, and inequitable conduct. This bill will not be considered in this Congress. I nevertheless thought that it would be useful to propose alternative approaches to these issues now, to allow Senators and interested parties the time to consider these alternatives as we prepare for the patent reform debate in the next Congress. I hope that my colleagues will work with me in a bipartisan and deliberative manner to construct a bill that will be considered in the next Congress. With those thoughts in mind, allow me to describe the significant changes that this bill makes to S. 1145. I believe that S. 1145 goes too far in restricting a patent owner's right to recover reasonable royalty damages. On the other hand, I also believe that there is room for improvement in current law. Some unsound practices have crept into U.S. patent damages litigation. My staff and I spent several months at the end of last year and the beginning of this year discussing the current state of patent damages litigation with a number of seasoned practitioners and even some professional damages experts. I sought out people with deep experience in the field who had not been retained to lobby on pending legislation. A substantial number of the experts with whom I spoke said that there is nothing wrong with current damages litigation and that Congress should not change the law. Others, however, identified a number of unsound practices that they believe have led to inflated damages awards in a significant number of cases. Different attorneys and experts repeatedly identified the same valuation methods and criteria as being unsound, subject to manipulation, and leading to damages awards that are far out of proportion to an invention's economic contribution to the infringing product. Examples of problematic methodologies that were identified to me include the so-called rule of thumb, under which an infringed patent is presumptively entitled to 40 percent or some other standard portion of all of the profits on a product, the use of the average license paid for patents in an industry as a starting point for calculating the value of a particular patent, and a formula attributed to IBM whereby every high-technology patent is entitled to 1 percent of the revenues on a product. A number of experts also criticized the use of comparables, whereby the value of a patent is calculated by reference to the license paid for a supposedly comparable patent. The views of those experts who were critical of current damages law find some support in the macro evidence. Data collected by PricewaterhouseCoopers and FTI Consulting indicate that the majority of the largest patent-damages awards and settlements of all time have been entered only since 2002. Also, the inflation adjusted value of awards entered since 2000 is more than 50 percent higher than it was during the early 1990s. And it also appears that jury awards tend to be about ten times higher than the average damages award entered by a judge, and that results vary markedly by jurisdiction. These facts suggest that the problems that sometimes lead to inflated damages awards are to some extent systemic. The task of reforming substantive damages standards presents a very difficult legislative question. Damages calculation is an inherently fact-intensive inquiry and requires legal flexibility so that the best evidence of a patent's value may always be considered. Any proposed changes to the law must be evaluated in light of the kaleidoscope of factual scenarios presented by the calculation of damages for different types of patents. I have largely given up on the idea of developing a unified field theory of damages law that solves all problems at once. I also oppose proposals to require a prior-art subtraction in every case. Most measures of a reasonable royalty, such as established royalties, costs of design-arounds, comparisons to noninfringing alternatives, or cost savings produced by use of the patented invention, already effectively deduct the value of prior art out of their estimate of the patented invention's value. To mandate prior-art subtraction when using such measures would be to double count that deduction, effectively subtracting the prior art twice and undervaluing the invention. And for reasons mostly explained in my minority views to the committee report for S. 1145, S. Rep. 110-259 at pages 64-65, I also disagree with the argument that defendants should be allowed to revisit validity questions, such as a patent's novelty or nonobviousness, during the damages phase of litigation. To those comments I would simply add that, if Congress were to desire that patents be defined more specifically and narrowly, then it would need to provide express guidance as to how to do so. Simply using adjectival phrases such as ``specific contribution'' or ``inventive features'' will not suffice. These terms merely express a hope or objective. But legislation needs to be about means, not ends, particularly if it is intended to achieve its results by altering the practices and outcomes of litigation. I should also add that although I have consulted with many neutral experts in the field of patent damages, and many of those experts described to me what they believed to be serious problems with patent damages litigation, none of those experts told me that insufficiently specific claim construction is causing excessive damages awards. If overly broad claim constructions were a major source of problems with damages litigation, I undoubtedly would have come across at least one neutral expert who expressed that view. Discussions that I have had with several proponents of S. 1145 indicated that they understand the principal evil of current damages litigation to be the award of damages as a percentage or portion of the full price of the infringing product. It also appears that some proponents of S. 1145 believe that a statutory instruction to define the invention more narrowly and clearly would prevent parties from seeking damages based on the entire value of the infringing product. The linkage between claim construction and the damages base is not clear to me. Even a concededly limited invention could be fairly valued by using the full product's price as the damages base, so long as the rate applied to that base was appropriately small. Many unjustified and excessive awards certainly do use the full value of the infringing product as the damages base. Indeed, awards that are derived from the rule of thumb almost always are based on the entire value of the infringing product, as is the typical industry averages award. Precluding or sharply limiting the use of net sales price as a damages base certainly would block the path to many of the bad outcomes that are produced by the use of these methodologies. The problem with a rule that bars the use of net sales price as the damages base when calculating a reasonable royalty is that in many industrial sectors, net sales price is routinely used as the damages base in voluntary licensing negotiations. It is favored as a damages base because it is an objective and readily verifiable datum. The parties to a licensing negotiation do not even argue about its use. Instead, they fight over the rate that will be applied to that base. Even if the net sales price of the product is very large and the economic contribution made by the patented invention is small, net sales price can still serve as the denominator of an appropriate royalty if the numerator is made small. Thus in these industries, the initials, NSP, appear frequently and repeatedly in licensing contracts. A legal rule that precluded use of net sales price as the damages base would effectively prevent participants in these industries from making the same royalty calculations in litigation that they would make in an arm's length transaction. Such an outcome would be deeply disruptive to the valuation of patents in these fields. Evidence and techniques whose use is endorsed by the market via their regular use in voluntary negotiations are likely to offer the best means of valuing a patent in litigation. After all, what is an object in commerce worth, other than what the market is willing to pay? We simply cannot enact a law that bars patentees from using in litigation the same damages calculation methods that they routinely employ in arm's length licensing negotiations. The bill that I have introduced today uses what I call an enhanced gatekeeper to address problems with damages awards. The bill strengthens judicial review of expert witness testimony, provides greater guidance to juries, and allows for sequencing of the damages and validity/infringement phases of a trial. The bill also codifies the principle that all relevant factors can be considered when assessing reasonable royalty damages, while adopting guidelines and rules that favor the use of an economic analysis of the value of an invention over rough or subjective methodologies such as the rule of thumb, industry averages, or the use of comparables. Allow me to provide a subsection- by-subsection summary of the bill's revisions to section 284, the basic patent damages statute. Subsection (a) of the bill's proposed section 284 copies and recodifies all of current section 284, including its authorization of treble damages and its admonition that compensatory damages shall ``in no event be less than a reasonable royalty for the use made of the invention.'' Subsection (b) codifies current Federal circuit precedent defining a reasonable royalty as the amount that the infringer and patent owner would have agreed to in a hypothetical negotiation at the time infringement began. It tracks the language of the Rite-Hite case, 56 F.3d 1538 (Fed. Cir. 1995), and follow-on decisions. Some supporters of S. 1145 are critical of the hypothetical negotiation construct and believe that it leads to bad results. Not only is this test established law, however, but it is also inherent in the concept of a ``reasonable royalty.'' That standard requires the trier of fact to determine what would have been--i.e., what the parties would have agreed to. As long as the patent code requires a ``reasonable royalty,'' courts and juries will need to engage in a hypothetical inquiry as to how the invention reasonably would have been valued at the time of infringement. Indeed, it is not apparent by what other means the factfinder might approach the calculation of a reasonable royalty. And in any event, the source of occasional bad results in damages trials is not the mental framework used for approaching the question of a reasonable royalty, but rather the particular evidence and methods used to value some inventions. It would be a noteworthy omission to avoid mention of the hypothetical negotiation concept in a bill that regulates damages analysis to the degree that this one does. This subsection thus codifies the Federal circuit's jurisprudence on the hypothetical negotiation. Subsection (c) simply makes clear that, despite subsection (d), (e), and (f)'s codification and modification of several of the Georgia- Pacific factors, the rest of the Georgia-Pacific factors--as well as any other appropriate factor--may be used as appropriate to calculate the amount of a reasonable royalty. Subsection (d) is probably the most important subsection in the bill's revised section 284. It bars the use of industry averages, rule- of-thumb profit splits, and other standardized measures to value a patent except under particular circumstances. Standardized measures are defined as those methods that, like rule of thumb and industry averages, do not gauge the particular benefits and advantages of the use of a patent. Instead, they are relatively crude, cookie-cutter measures that purport to value all patents--or at least all patents in a class--in the same way, without regard to a particular patent's economic value. These back-of-the envelope methods are occasionally used in arm's-length, voluntary licensing negotiations, as are things such as gut instinct and intuition. But they are rough methods that can produce wildly inaccurate results. Subsection (d) disfavors their use. This subsection restricts the use of Georgia-Pacific factor 12, which largely describes the rule of thumb. Subsection (d)'s general rule cites the rule of thumb and industry averages as important and illustrative examples of standardized measures. But it also expressly applies to other methods that are ``not based on the particular benefits and advantages'' of an invention, to ensure that variations on these examples and other methods that consist of the same evil also are brought within the scope of subsection (d)'s main rule. An example of a standardized measure other than profit splits and industry averages that is also currently in use and that also falls within subsection (d)'s scope is the so-called IBM 1-percent-up-to-5 formula. This formula apparently was used by IBM in the past to license its own portfolio of patents. Under this methodology, each patent receives 1 percent of the revenues on a product until a 5 percent ceiling is reached, at which point the whole portfolio of patents is made available to the licensee. I have heard more than one representative of a high-technology company describe the use of this formula in litigation against his company. Apparently, there exists a stable of plaintiff-side damages expert witnesses who will testify that this formula is appropriate for and is customarily used to calculate the value of any patent in the computer or information-technologies sectors. These experts start at 1 percent and then adjust that number based on the other Georgia-Pacific factors, supposedly to account for the particular aspects of the patent in suit, though these adjustments almost always seem to push the number higher. Obviously, 1 percent of revenues or even profits is a grossly inflated value for many high-technology patents. It is not uncommon for high-technology products to be covered by thousands of different patents, which are of greatly differing value. Not every one of those patents can be worth 1 percent of revenues. Some patents inevitably will be for features that are trivial, that are irrelevant to consumers, or that could be reproduced by unpatented, off-the-shelf noninfringing substitutes. One percent of the sales revenue from, for example, a laptop computer is an enormous sum of money. Many patents are worth nothing near that, and any methodology that starts at that number is likely to produce a grossly inflated result in a large number of cases. It bears also mentioning some of those common methodologies that clearly are not standardized measures. In addition to established royalties, which are afforded an express exemption from this subsection by paragraph (2), there are the methods of calculating the costs of designing around a patent, drawing comparisons to the experience of noninfringing alternatives, or calculating the costs savings produced by use of the invention. All of these factors gauge the benefits and advantages of the use of the invention and therefore are outside the scope of subsection (d). Paragraph (1) of subsection (d) allows parties to use a standardized measure, such as a rule-of-thumb profit split, if that party can show that the patented invention is the primary reason why consumers buy the infringing product. If the patented invention is the primary reason why people buy the product, then the patent effectively is the reason for the commercial success of the product, and its owner is entitled to a substantial share of the profits, minus business risk, marketing, and other contributions made by the infringer. Some have advocated a lower standard than ``primary reason'' for allowing use of profit splits and other standardized measures--for example, using a ``substantial basis'' standard. I rejected the use of a lower standard because a profit split should basically award to the patent owner all of the profits on the product minus those attributable to business risk. Thus the test for allowing such profit splits must be one that only one patent will meet per product, since the bulk of the profits can only be awarded once. If the test were ``substantial basis,'' for example, multiple patents could meet the standard and multiple patent owners could demand all of the profits minus business risk on the product. Paragraph (2) of subsection (d) makes established royalties an express exception to the bar on standardized measures. In earlier drafts, I did not include this exception in the bill because I thought it obvious that an established royalty is based on the benefits and advantages of the use of the invention and is thus outside the scope of the subsection (d) rule. Some parties who reviewed those earlier drafts, however, found the bill ambiguous on this point, and in any event the lack of an exception would have forced parties to litigate the question whether an established royalty was, in fact, based on the benefits and advantages of the use of the patent. Since established royalties are widely considered to be the gold standard for valuing a patent, we should avoid making it harder to use this method. It is thus expressly placed outside the scope of subsection (d)'s restrictions by paragraph (2). Paragraph (3) of subsection (d) allows industry averages to continue to be used to confirm that results produced by other, independently allowable methods fall within a reasonable range. The paragraph speaks of ``independently'' allowable methods in order to make clear that an industry average cannot be used to confirm an estimate produced solely by reference to a ``comparable'' patent. Subsection (e) requires that comparables only be used in conjunction with or to confirm other methods, and thus under this bill comparables are not a method whose use is allowed ``independently'' of other methods. A brief explanation is in order as to why this bill regards industry averages as a potentially unreliable metric and restricts their use. An industry average often will reflect a broad range of licensing rates within a technological sector. Even a licensed patent whose value is included in the calculation of such a range may fall at a far end of that range, producing highly inaccurate results if that average is used as a starting point for calculating the value of that patent. Moreover, many existing patents, though valid and infringed by a product, disclose trivial inventions that add little to the value of the product. But the types of patents that typically are licensed--and that therefore would be a source of available data for calculating an industry average--are the ones that are substantial and valuable. Trivial patents don't get licensed, and their value does not enter into industry average calculations. Thus particularly in the case of a minor patent that has never been and likely never would be licensed, an industry average would provide an inflated estimate of the patent's value. This is because the industry average is not the average licensing rate of all patents in a field, but merely the average of those that have been licensed and for which data is publicly available. Paragraph (4) of subsection (d) creates a safety valve that allows parties to use standardized measures if no other method is reasonably available to calculate a reasonable royalty, and the standardized method is otherwise shown to be appropriate for the patent. Over the course of drafting this bill, I have consulted with a number of experts with broad experience in patent damages calculation. Only a few believed that they had ever seen a case where use of a standardized measure was necessary--that is, where a more precise economic analysis was not feasible. I thus anticipate that this safety valve may almost never need to be used, but I nevertheless include it in the bill, because it is impossible to say with certainty that no situation will ever arise in the future where parties will be unable to calculate a reasonable royalty without use of the rule of thumb or other standardized measures. Suffice to say that if one party to a suit presents appropriate evidence of a patent's value and that evidence falls outside the scope of subsection (d) or within one of the other exceptions, then that method is ``reasonably available'' and paragraph (4) could not be invoked. A word about the need for substantive standards: some critics of S. 1145 have made the argument to me that any problems with damages litigation can be cured through procedural reforms, and that changes to substantive legal standards such as those in subsections (d) through (f) are unnecessary. These parties also have made the related, though different argument that to the extent that litigants are using unreliable evidence or methodologies, this problem should be addressed through cross examination and advocacy. Though I share these critics' displeasure with S. 1145, I do not think that problems such as the overuse of rule of thumb and industry averages will be completely solved through purely procedural reforms. The most likely mechanism for excluding these methodologies would be rule 702. But the use of some of these methods for valuing patents is endorsed by multiple experts. These methods, while ultimately unsound, represent a significant minority view that is backed by some published commentary, albeit sometimes only commentary in journals that are exclusively written by, subscribed to, and read by plaintiff-side damages expert witnesses. In such circumstances, it is no sure thing that a party will be able to exclude under Daubert the testimony of an expert employing these methodologies. These metrics are sufficiently entrenched that the only way to ensure that the courts will disallow them when their use is not appropriate is for Congress to tell the courts to disallow them. As to the second point, it is true that it is the lawyer's duty to identify the flaws in the other side's arguments and to debunk unsound theories. But the reality is that because of the limited expertise and experience of many jurors and the limited time allowed to argue a case at trial, often the trier of fact will not divine the truth of the matter. And some unsound damages methodologies are particularly likely to be appealing to those untutored in the field. An industry average analysis, for example, employs the one statistical concept that is understood by virtually everyone, and this method's use may amount to no more than a simple back-of-the-envelope calculation that requires only one expert to give you the industry average licensing rate and another to calculate the gross revenues on the product. When a complex economic analysis that focuses on noninfringing alternatives to the patented invention or the costs of a design-around is forced to compete for the jury's favor with a simple average-rate-times-sales calculation, many jurors may find the simpler and readily understandable method more intuitively appealing, even if it is less accurate. And of course, when two different and even slightly complex damages calculations are presented to a jury, there always exists a risk that the jury will resolve the dispute by splitting the difference between the two methods. In a high-value case where the patent owner uses an unsound method that produces a wildly inflated number, the risk that the jury will pick the wrong method or even split the difference may easily be unacceptable from a business perspective. In the end, it is the premise of the rules of evidence that some types of evidence are so unsound, so prejudicial, or so likely to produce an unjust result that we do not require the other side's lawyer to debunk this evidence, but rather we require the judge to bar it from the courtroom altogether. If we find that particular methodologies routinely produce inaccurate and unjust results, it is appropriate that we amend the law to directly restrict the use of those methodologies. Subsection (e) restricts and regulates the use of licenses paid for supposedly comparable patents as a means of calculating the value of the patent in suit. The use of comparables is authorized by Georgia- Pacific factor two and can generate probative evidence of a patent's value. Nevertheless, such use is regulated and restricted by this subsection. Comparables are a valuation method that is often abused, both to overvalue and to undervalue patents. When an infringer is sued for infringing an important patent, he often will cite as evidence of a reasonable royalty the license paid for a patent that is in the same field but that is much less valuable than the patent in suit. Similarly, a plaintiff patent owner asserting a trivial patent may cite as ``comparable'' other patents in the same field that are much more valuable than the plaintiff's patent. The fact that another patent is licensed in the same industry should not alone be enough to allow its use as a comparable in litigation. Comparability is a subjective test. By definition, every patent is unique and no two patents are truly comparable. Subsection (e) thus requires that comparables be used only in conjunction with or to confirm the results of other evidence, and that they only be drawn from the same or an analogous technological field. I chose the latter term rather than ``same industry'' because the term ``industry'' is too broad. Parties might define ``industry'' so expansively that every patent in the universe would fall into one of only two or three ``industries.'' Paragraph (2) of subsection (e) sets out guideposts for determining whether a patent is economically comparable to another patent. It suggests requiring a showing that the supposed comparable is of similar significance to the licensed product as the patent in suit is to the infringing product, and that the licensed and infringing products have a similar profit margin. Obviously, a patent that makes only a trivial contribution to a product cannot accurately be valued by reference to a comparable that makes a critical and valuable contribution to its licensed product, or vice versa. And similarity in the profitability of the licensed and infringing products will also generally be important to establishing the economic comparability of two patents. As an economic reality, when the profits on a product are high, the manufacturer will be more generous with the royalties that he pays for the patented inventions that are used by the product. This economic reality is undergirded by the fact that it will typically be the patented inventions used by a product that make that product unique in the marketplace and allow it to earn higher profits. Even if two patents are the principal patent on products in the same field, if one patent's product has a 2-percent profit margin and the other's has a 20-percent profit margin, that first patent evidently is doing less to distinguish that product in its market and to generate consumer demand--and thus has a lower economic value. A thorough analysis of comparability, of course, likely will depend in a given case on many factors beyond those listed here. Subparagraphs (A) and (B) are simply guideposts that describe two factors that are likely to be relevant to comparability. The bill only provides that these two factors may be considered. It does not preclude consideration of other factors, nor does it require that these two factors be considered in every case. A party asserting the propriety of a comparable may be able to show that one or even both of these factors are not appropriate to establishing economic comparability in a given case. Subsection (f) bars parties from arguing that damages should be based on the wealth or profitability of the defendant as of the time of trial. Some lawyers have been known, after making their case for an inflated royalty calculation, to emphasize how insignificant even that inflated request is in light of the total revenues of the defendant infringer. Such arguments do not assist the jury in gauging a reasonable royalty. Rather, they serve to reduce the jury's sense of responsibility to limit a reasonable royalty to the actual value of the use made of the invention. This subsection does not bar all consideration of the financial condition of the infringer. It may be appropriate to consider the infringer's finances at the time of infringement especially if there is some evidence that such information is considered when licensing patents in the relevant industry. But in no case should a court allow such information to be presented when the evident purpose of doing is to tell the jury that the defendant has deep pockets and will not be burdened by an inflated award. Subsection (g) gives either party a presumptive right to demand that validity and infringement be decided before the jury hears arguments about damages. Currently, some plaintiffs will force a premature debate over damages in order to color the jury's view of validity and infringement. For example, in some cases, the same defense witness who testifies as to validity and infringement will also know facts relevant to the patent's value. This may allow the plaintiff's lawyer to question that witness about damages, forcing the defendant to begin arguing about the amount of his liability before the jury has even heard all the arguments as to whether the patent is valid and infringed. A defendant who is already arguing about what a patent is worth will tend to look as if he has already conceded that he owes something, and that the dispute is simply over the amount. This tension also exists even when all validity and infringement arguments are presented before damages are argued. Current law routinely allows the defendant to be forced to argue in the alternative to be made to argue in one breath that he is not liable and in the next that if he is liable, then this is the amount for which he is liable. A presumptive right to have one issue resolved before the other is addressed would cure this tension. This subsection allows only sequencing of the trial, not full bifurcation. It does not require the use of a second jury, and allows all pretrial activity, including that related to damages, to be completed before the validity and infringement case is presented and decided. The jury would decide validity and infringement and then proceed immediately to hear the damages case, if still needed. Subsection (h) requires an expert to provide to the opposing party his written testimony and the data and other information on which his conclusions and methods are based, and to also provide the written testimony to the court. This subsection supplements current law, codifying and enforcing the better interpretation of what is currently required by the rules of procedure. It is necessary because those current rules are sometimes not fully enforced, and experts sometimes are allowed to testify, for example, as to what is customary in an industry without providing the facts and figures or evidence of actual events that are the basis for the expert's view that something is customary. Rule 702 exists to ensure that expert witnesses are not simply allowed to argue from authority. It allows opposing counsel to challenge the expert's methods as unsound, but that right becomes illusory if the expert is allowed to testify without ever disclosing an objective foundation for his conclusions. Requiring the expert's written testimony to also be provided to the judge should allow the judge to prepare himself to consider motions regarding the relevance and admissibility of the expert's testimony. Subsection (i) codifies and reinforces current law allowing a party to seek summary judgment or JMOL on damages issues. It also requires a court to instruct the jury only on those issues supported by substantial evidence, a requirement which, when appropriate motions have been made, should prevent the court from simply reading the laundry list of all 15 Georgia-Pacific factors to the jury. The court's identification of those factors for which there is substantial evidence not only will provide better guidance to the jury, but should also clarify the record and give form to the factfinder's decision, thereby providing a better foundation for an appeal. Section 299A creates a patent-specific and expanded Daubert rule. First, it makes Rule 702 specific to the Federal circuit and patent law. Currently, rule 702 is regarded by the Federal circuit as a procedural rule, and thus in each case the Federal Circuit simply follows the Daubert jurisprudence of the regional circuit whence the district court decision came. Since the regional courts of appeals do not hear patent cases, this system retards the development of a rule 702 jurisprudence that thoroughly considers some of the unique issues presented by patent law and particularly patent-damages law. The current situation also requires the district courts to look only to rule 702 precedent that is based only on nonpatent cases. By embedding rule 702 in the patent code, section 299A will force the development of more consistent and thorough jurisprudence regarding what kinds of reasonable royalty damages calculation methodologies are reliable and what kinds are not. Like subsection (h) above, this section supplements rather than replaces current law. Section 299A also codifies the four indicia of reliability that were announced in the original Daubert v. Merrell Dow Pharmaceuticals decision, 509 U.S. 579 (1993), as well as two other indicia that are not described in Daubert. These two additional reliability indicia, at paragraphs (5) and (6), are based on standards announced in court of appeals decisions that apply Daubert. These decisions are discussed in footnote 30 of section 6266 of Wright and Miller's Federal Practice and Procedure. The first new factor, whether a theory or technique has been employed independently of litigation, should be useful in flushing out methodologies that exist only in litigation expert witness' testimony and are never employed in actual licensing negotiations. Use of this reliability indicator should inject more honesty into the hypothetical negotiation. It should force parties to use methodologies that actually would have been used had the infringer and claimant negotiated a license, rather than metrics that are only ever employed in an expert's imaginary parallel universe. The second new reliability indicator, whether the expert has accounted for readily available alternative theories, should exclude the expert who ignores precise and objective metrics of value in favor of subjective and manipulable methodologies that allow him to produce the result that happens to most favor his client. If there is clear evidence, for example, of the market price of a noninfringing alternative to the infringing product, of the costs of noninfringing substitutes for the invention or the costs of a design-around, or of the cost savings produced by use of the invention, an expert witness should not be allowed to ignore that evidence. He must consider that evidence or at least provide a persuasive account as to why it should not be considered. One common sign of a bad or biased expert witness is his disregard of readily available alternative theories or techniques. Paragraph (6) will help to ensure that Federal courts exercise their gatekeeper role and bar such witnesses from misleading the jury. Finally, subsection (c) of proposed section 299A requires district courts and circuit courts to explain their Daubert determinations, which should facilitate appeal of those decisions. Section 5 of the bill authorizes the creation of post grant review proceedings for challenging the validity of patents. It allows both first- and second-window review of a patent, with procedural restrictions that will limit the time and expense of these proceedings and protect patent owners. The bill uses a procedural model that is favored by PTO and is calculated to allow quick resolution of petitions. Importantly, the bill also imposes procedural limits on when a second-window proceeding may be sought after civil litigation has commenced, and restricts duplicative or second and successive proceedings, preventing infringers from using post grant review as a litigation or delaying tactic. Section 5(a) of the bill repeals the procedures for inter partes reexam effective 1 year after the date of enactment of the bill, while allowing requests for reexam that are filed before that effective date to continue to be considered by the office. Director-initiated reexam is also repealed, out of concern that in the future political pressure may be brought to bear on PTO to attack patents that are a nuisance to politically important businesses. The bill's proposed section 321 authorizes two types of post grant review proceedings, a first-period proceeding in which any invalidity argument can be presented, and a second-period proceeding that is limited to considering arguments of novelty and nonobviousness that are based on patents or printed publications. The first-window proceeding must be brought within 9 months after the patent is issued. The second window is open for the life of the patent after the 9-month window has lapsed or after any first-period proceeding has concluded. The bill uses an oppositional model, which is favored by PTO as allowing speedier adjudication of claims. Under a reexam system, the burden is always on PTO to show that a claim is not patentable. Every time that new information is presented, PTO must reassess whether its burden has been met. This model has proven unworkable in inter partes reexam, in which multiple parties can present information to PTO at various stages of the proceeding, and which system has experienced interminable delays. Under an oppositional system, by contrast, the burden is always on the petitioner to show that a claim is not patentable. Both parties present their evidence to the PTO, which then simply decides whether the petitioner has met his burden. If we expect post grant review proceedings to be completed within particular deadlines, I think that it is obligatory that we consult with the agency that is expected to administer the proceedings. In this case, PTO has expressed a strong preference for an oppositional model, and it believes that it can comply with reasonable deadlines if that model is adopted. The bill's use of an oppositional system thus allows proposed section 329(b)(1) to mandate that post grant review proceedings be completed within one year after they are instituted, with a possible 6-month extension for good cause shown or in the event of second-window joinder. Section 5 also imposes a number of procedural limitations on post grant review proceedings. Proposed section 321 applies a standing requirement that petitioners must have a substantial economic interest adverse to the patent. This is a relatively low threshold that simply requires a showing that some substantial economic activity of the petitioner's is hindered by the express or implied threat of the patent's monopoly. Nevertheless, the requirement does give patentees a measure of control over when they might be forced to defend themselves in a post grant review proceeding. Proposed section 322 includes a number of provisions that are designed to limit the use of post grant review proceedings as a delaying tactic and to mitigate these proceedings' negative impact on efforts to enforce a patent. Subsection (a) provides presumptive immunity from post grant review proceedings to a patent that is enforced in court within three months of its issue. A patent asserted in court this early in its life likely is already the subject of a well-developed commercial dispute. A delay in resolution of the case under these circumstances probably would do unjustified and irreparable harm to one or another party's market share. Such disputes should be resolved as soon as possible, which means hearing all of the case in the one forum capable of hearing all claims, the district court. Paragraph (1) of subsection (b) bars a party that has filed a declaratory-judgment action challenging the validity of a patent from also challenging the patent in a post grant review proceeding. And paragraph (2) requires a defendant in an infringement action who seeks to open a second-window proceeding to do so within 3 months after his answer to the complaint is due. I think that this is a better rule than one requiring that a petition for a second-window proceeding be filed before an infringement action is filed. Such a restriction might cause parties who think that they may be sued but who are not otherwise inclined to seek post grant review to file defensive petitions for second-period review, lest they later be sued and lose the right to request post grant review. Subsection (c) of section 322 bars a party that has already sought a post grant review proceeding against a patent from subsequently seeking another post grant review or a reexam with regard to the same patent. Subsection (d) of section 322 estops a party that has brought a post grant review proceeding against a patent from raising in any subsequent PTO or ITC proceeding or civil action any claim against that patent that it did raise in a post grant proceeding or that it could have raised in a second-window proceeding. A word about privity: subsections (b)(2) and (d) of section 322 bar second-window proceedings from being instituted or claims from being raised if particular proceedings or claims were pursued by privies to the party now seeking to start proceedings or raise claims. The concept of privity, of course, is borrowed from the common law of judgments. The doctrine's practical and equitable nature is emphasized in a recent California Court of Appeals decision, California Physicians' Service v. Aoki Diabetes Research Institute, 163 Cal.App.4th 1506 (Cal. App. 2008), which notes, at page 1521, citations omitted, that: The word ``privy'' has acquired an expanded meaning. The courts, in the interest of justice and to prevent expensive litigation, are striving to give effect to judgments by extending ``privies'' beyond the classical description. The emphasis is not on a concept of identity of parties, but on the practical situation. Privity is essentially a shorthand statement that collateral estoppel is to be applied in a given case; there is no universally applicable definition of privity. The concept refers to a relationship between the party to be estopped and the unsuccessful party in the prior litigation which is sufficiently close so as to justify application of the doctrine of collateral estoppel. It bears noting that not all parties in privity with a would-be petitioner for other purposes or by way of various contracts would also be in privity with the petitioner for purposes of estoppel--that is, for purposes of section 322. This limitation on estoppel privity is usefully highlighted in a decision of the Federal circuit, International Nutrition Co. v. Horphag Research, Ltd., 220 F.3d 1325 (Fed. Cir. 2000), which notes, at page 1329, that: One situation in which parties have frequently been held to be in privity is when they hold successive interests in the same property. See, e.g., Litchfield v. Crane, 123 U.S. 549, 551, 8 S.Ct. 210, 31 L.Ed. 199 (1887) (defining privity to include a ``mutual or successive relationship to the same rights of property''). Thus, a judgment with respect to a particular property interest may be binding on a third party based on a transfer of the property in issue to the third party after judgment. See Restatement (Second) of Judgments Sec. 43 (1982) (``A judgment in an action that determines interests in real or personal property . . . [h]as preclusive effects upon a person who succeeds to the interest of a party to the same extent as upon the party himself.''). A corollary of that principle, however, is that when one party is a successor in interest to another with respect to particular property, the parties are in privity only with respect to an adjudication of rights in the property that was transferred; they are not in privity for other purposes, such as an adjudication of rights in other property that was never transferred between the two. See 18 Wright et al., supra, Sec. 4462. Put another way, the transfer of a particular piece of property does not have the effect of limiting rights of the transferee that are unrelated to the transferred property. See Munoz v. County of Imperial, 667 F.2d 811, 816 (9th Cir.1982) (concluding that non-parties were not in privity with a party to litigation because ``[t]he right which the [third parties] seek to litigate is not one which they obtained through contractual relations with [a party to the previous litigation]. It is a completely independent right[.]''). Proposed section 327 also imposes important limits on post grant review proceedings. Its requirements are designed to protect both patent owners and the PTO. Section 327 establishes a substantial evidentiary threshold for bringing any post grant review proceeding, and it imposes a further elevated threshold against the bringing of a second-period proceeding for a patent that already has become the subject of such a proceeding. Subsection (a) requires that any petition present evidence that, if unrebutted, would show that a claim in the patent is unpatentable. This threshold is designed, among other things, to force a petitioner to present all of his best evidence against a patent up front. His petition itself must present a full affirmative case. It thus reinforces the front-loaded nature of an oppositional system, which is critical to the efficient resolution of proceedings by PTO. This threshold is considerably higher than ``significant new question of patentability,'' and thus, particularly in combination with the mandates of section 329(c), should provide the PTO with sufficient discretion to protect itself against being overwhelmed by a deluge of petitions. Subsection (b) of section 327 is designed to allow parties to use first-window proceedings to resolve important legal questions early in the life of such controversies. Currently, for example, if there is debate over whether a particular subject matter or thing is really patentable, parties who disagree with PTO's conclusion that it is patentable must wait until a patent is granted and an infringement dispute arises before the question can be tested in court. In such a situation, subsection (b) would allow parties with an economic interest in the matter to raise the question early in its life. If PTO is wrong and such a thing cannot be patented, subsection (b) creates an avenue by which the question can be conclusively resolved by the Federal circuit before a large number of improper patents are granted and allowed to unjustifiably disrupt an industry. Obviously, subsection (a) alone would not be enough to test the view that PTO has reached an incorrect conclusion on an important legal question, because subsection (a) requires the petitioner to persuade PTO that a claim appears to be unpatentable, and PTO is unlikely to be so persuaded if it has already decided the underlying legal question in favor of patentability. Subsection (a) is directed only at individual instances of error that PTO itself appreciates, while subsection (b) allows PTO to reconsider an important legal question and to effectively certify it for Federal circuit resolution when it appears that the question is worthy of early conclusive resolution. Subsection (c) of section 327 applies a successive-petition bar of sorts to second or successive petitions for second-period review. It is a rare patent that should be twice subjected to second-window proceedings. Nevertheless, Congress ought not preclude such review entirely. It is possible, for example, that a second-period proceeding may be resolved in a way that suggests that there was some collusion between the petitioner and the patent owner. And PTO may over time identify other circumstances in which even a second or third second- period proceeding is appropriate. Subsection (c) requires that such latter circumstances be exceptional, however. Lengthy and duplicative proceedings are one of the worst evils of other systems of administrative review of patents. During the pendency of such proceedings, a patent owner is effectively prevented from enforcing his patent. Subsection (c) should ensure that second or successive second-period proceedings are few and far between. It would be desirable that, when the Director grants petitions, he identify for the parties those issues that he found to be sufficiently established and those that were not. Such a practice would help to expedite proceedings in many cases, as it would limit the issues, and it would also give the patent owner a sense of what issues are important to the board and where he ought to focus his amendments. Ultimately, though, I decided against requiring such practice in the text of the bill. If a mandate were in the statute, it would create problems for the board in the rare but inevitable case where the board initially identifies one issue as the basis for granting the petition, but it later becomes apparent that a different issue is really the central issue in the case. It is better that these proceedings not become as formal as is certiorari practice in the Supreme Court. Nevertheless, it would be helpful to the process and to the parties if the board were to adopt a practice in the ordinary case of identifying the issues that formed the basis of its grant of the petition. A few words about joinder: section 325 mandates that multiple first- period proceedings be consolidated, and allows multiple second-period proceedings to be so joined. There is no provision in the bill for successive first-period proceedings, so any additional first-period petition that is worthy of being instituted must be joined with the first one. The threshold imposed by section 327, in combination with the mandates of section 329(c), gives the Director the discretion to reject additional first-period petitions that do not add anything new to the case. This section is not intended to make first-period review operate like a notice-and-comment proceeding, in which everyone gets his say and the agency may be buried under an avalanche of repetitive comments. In the case of both first and second-period proceedings, additional petitions can be joined only if, among other things, they are properly filed. The words ``properly filed'' are a term of art that is also employed in section 2244 of title 28 and that has been given content no less than three times during this decade by the U.S. Supreme Court, see Artuz v. Bennett, 531 U.S. 4 (2000), Pace v. DiGuglielmo, 544 U.S. 408, and Allen v. Siebert, 128 S.Ct. 2 (2007). The gist of these decisions is that a petition is properly filed when it is delivered and accepted in compliance with applicable rules governing filings, though particular claims within filings be barred on other procedural grounds, and that time deadlines for filing petitions must be complied with in all cases. Where possible, I have sought to make the intended operation of these provisions clear and evident on their face, but the interaction between sections 325(b), 327, and 329(b)(2) requires some explanation. Under 329(b)(2), a request to join a second-period proceeding must be made within a time period to be set by the Director. If the request is so made, the additional second-period petition may be joined to a pending proceeding at the discretion of the Director if he has determined that the additional petition satisfies the threshold set in section 327(a). If the 329(b)(2) deadline is not met, however, the additional second- period petition can still be joined to a pending proceeding at the discretion of the Director if he determines that the additional petition satisfies the threshold set in section 327(c). Section 325(b) requires that a petition be procedurally in order if it is to be considered for joinder, but there is no time deadline that applies to petitions for second-period proceedings, other than that they not be filed before first-period proceedings are concluded. The deadline set pursuant to 329(b)(2) applies only to the motion for joinder, not to the filing of the additional petition itself, and 327(c) expressly contemplates that successive petitions will be filed outside the 329(b)(2) deadline for seeking joinder. Thus a procedurally proper successive petition for second-period review may be joined to a pending proceeding at the discretion of the Director, even if the 329(b)(2) deadline has not been met, so long as the Director determines that the petition satisfies the threshold set in section 327(c). This is by design. Such a rule encourages petitioners to seek timely joinder to a pending second-period proceeding, but gives the Director discretion to join petitions that meet the successive petition bar even if the request for joinder is untimely. Since an additional petition that satisfies 327(c) would be entitled to its own successive proceeding in any event, it makes sense to allow the Director to join that petition to the pending proceeding, even though joinder was not timely sought. Section 325(c) gives the PTO broad discretion to consolidate, stay, or terminate any PTO proceeding involving a patent if that patent is the subject of a postgrant review proceeding. It is anticipated, for example, that if a second-period proceeding is instituted and reexam is sought, the Director would be inclined to stay the postgrant review during exhaustion of the reexam. On the other hand, if a postgrant review is near completion, the Director may consolidate or terminate any other PTO proceeding that is initiated with regard to that patent. Section 329(a)(5) prescribes discovery standards for first-window proceedings, and section 329(b)(3) sets standards for second-period discovery. The standard for allowing second-period discovery is more limited, out of recognition of the fact that the issues that can be raised in that proceeding are few and thus the need for discovery is less. Also, because a second-period proceeding can be instituted long after the patent has issued, it is more burdensome for the patent owner. Limiting second-window discovery limits that burden. Subparagraph (A) of section 329(b)(3) thus allows depositions of witnesses submitting statements, and subparagraph (B) allows further discovery as necessary in the interest of justice. This latter standard restricts additional discovery to particular limited situations, such as minor discovery that PTO finds to be routinely useful, or to discovery that is justified by the special circumstances of the case. Given the time deadlines imposed on these proceedings, it is anticipated that, regardless of the standards imposed in section 329, PTO will be conservative in its grants of discovery. Let me comment on two arguments and concerns with regard to second- period review that are not addressed in the text of this bill. First, many parties have made the case to me that any postgrant review of a patent should be limited to a first window that can only be opened within a limited period of time after the grant of a patent. There are strong arguments to be made for this view. Any type of second-period proceeding, whether an opposition or inter partes reexam, invariably interferes with and delays litigation. There is simply no avoiding this result. District judges, many of whom do not enjoy adjudicating patent cases, almost always will stay litigation when a second window has been opened and has the potential to terminate the patent. I have decided, however, that it would be too radical a step to try to repeal inter partes reexam and not offer any other type of second- period review in its place. As a political and legislative reality, this decision was made in 1999 and probably cannot be undone. To address some of the concerns about a second window, this bill limits such review to the issues that can be raised in inter partes reexam, and includes provisions that are designed to preclude the kinds of tactical and abusive uses of second-period proceedings that are currently seen in inter partes reexam. Though it does not attempt to put the second-period genie back in the bottle, the bill should be an improvement over current law's inter partes reexam. I would welcome a debate about the desirability of second-window review during the next Congress. Second, a number of parties have expressed concern to me about the current could-have-raised estoppel standard, which I have carried over to second-period proceedings in section 322(d)(2). It is arguable that applying could-have-raised estoppel to the second window does not actually protect the interests that it is designed to vindicate. This estoppel standard's main purpose appears to be to force a party to bring all of his claims in one forum--everything that he ``could have raised''--and therefore to eliminate the need to press any claims in other fora. In this bill, however, the issues that can be raised in the second window are so sharply limited that the goal of flushing out all claims is unattainable. Only 102 and 103 arguments based on patents and printed publications can be raised in the second window. Accused infringers inevitably will have other challenges and defenses that they will want to bring, and those arguments can only be raised in district court. Regardless of the estoppel standard that is applied, the patent owner will almost always be forced to fight in two fora, and the intended goal of could-have-raised estoppel will remain beyond reach. The real reforms in this bill that would protect patent owners from abusive and duplicative proceedings are the various restrictions imposed in section 327 and in subsections (a), (b), and (c) of section 322. These provisions, I think, would be more useful and valuable to patent owners than could-have-raised estoppel. I welcome a broader debate on this issue. At the very least, it would be helpful to me to more clearly understand the interests that proponents and opponents believe are protected or injured by could-have-raised estoppel. Section 8 of the bill addresses venue. It adopts an activities-based test for determining whether a particular district is an appropriate locale for a patent-infringement suit. Under section 8's proposed amendments to 28 U.S.C. section 1400, some significant activity involving either the patent or the infringing product must take place in the district in order for venue to be proper there. This section aims to limit patent litigation to districts with some reasonable connection to the patent, but without generating substantial preliminary litigation over venue. Of course, any change to the venue statute will result in a period of litigation over the new statute's meaning. To the extent possible, section 8 uses terms of art that have a settled meaning in the venue context. Paragraph (2) and subparagraphs (B) and (C) of paragraph (6) refer to acts of infringement and to a product or process that embodies an invention, events or facts whose existence likely will be the subject of the litigation. I considered whether the word ``allegedly'' should be added before ``infringement'' or ``embodies,'' since those facts will not yet have been proven at the time when venue is being determined. Current section 1400(b), however, refers simply to ``acts of infringement.'' I am unaware of any courts that, when applying the current law, have required the plaintiff to demonstrate that infringement has in fact occurred before allowing themselves to be persuaded that venue is proper. I would expect courts and litigants to also use common sense when applying paragraphs (2) and (6), and to not construe the language to require that the merits of the case be litigated before a threshold question may be determined. Paragraph (4) refers to the place where an invention was conceived. This can, of course, be more than one place and can involve collaborative activities. Paragraphs (5) and (6)(A) refer to ``research and development.'' Other patent venue reforms that have been proposed in this Congress have referred to research or development, treating the two words as if they were separate concepts. In most circumstances, however, research and development are treated as one thing and no effort is made to distinguish research from development. Although theoretical distinctions are possible, they become very difficult to apply to actual practical situations. Thus section 8 treats research and development as a unified concept. Paragraphs (5) and (6)(A) also refer to ``significant'' research and development. This bill uses the word ``significant,'' rather than the word ``substantial,'' which is a word that has been used in other legislative proposals made in this Congress. Having reviewed judicial constructions of both terms, it appears to me that ``significant'' means something like ``legitimate,'' and that the significance of an activity can be evaluated on the face of that activity, without reference to the whole of which it is a portion. The word ``substantial,'' on the other hand, appears to measure an activity in light of the whole of which it is a part. Arguably, one cannot know whether particular research-and-development activity is substantial without knowing all of the research-and-development activity that has taken place with regard to the patent in suit. Using the word ``substantial'' here or elsewhere in this section likely would in many cases require discovery to determine just what is the whole of which the activity in question is alleged to be a substantial part. Since the last thing that I would want to be responsible for is a patent law that made discovery and a 2-day evidentiary hearing a routine feature of establishing venue in patent litigation, my bill uses the word ``significant'' rather than ``substantial.'' Paragraph (7) allows venue at the place where a nonprofit organization managing inventions for colleges and universities, including the patent in suit, is principally based. These organizations manage inventions by, among other things, helping the schools to commercialize them. Whether such an organization acts on behalf of a university should not be construed to turn on whether there is an agency relationship between the organization and school. Even an independent contractor acts on behalf of the party that has retained it. A few words about interlocutory appeals: I expressed skepticism in the committee report to S. 1145 about requiring the Federal circuit to accept interlocutory appeals of claim constructions. I noted that such a rule risked allowing a district judge who is insufficiently enthusiastic about his duty to decide patent cases to rid himself of a case by certifying an interlocutory appeal to the Federal circuit, in the hope that the case would go away and never come back. Not only would such an event waste the Federal circuit's resources, it would also force that circuit to decide a claim construction on the basis of what may be an inadequate evidentiary record. And no matter how thin that record may be, once the claim construction was before the Federal circuit and that court were forced to decide it, whatever came back to the district court would be the law of the case. The Federal circuit's claim construction could not be changed by the district court on remand, no matter how obvious it later became in light of a more complete record that the Federal circuit had gotten it wrong. I have heard from more than one patent lawyer that claim construction often is a rolling process. Even when a court holds a Markman hearing and attempts to definitively construe a patent early in a trial, frequently new information comes forward over the course of the trial that sheds new light on claim terms, or it becomes clear that different claim terms constitute the heart of the dispute and must be construed. An interlocutory appeal would prove to be a large waste of time if it later became clear that different claim terms formed the heart of the dispute. And such an appeal could prove to be an utter disaster if the Federal circuit were forced to construe the key claim terms without having all of the necessary information before it and, as a result, that court misconstrued those claims. Because of the great risk of such undesirable outcomes, and the delay that interlocutory appeals would inject into trials, I have not included a proposal to require interlocutory appeals in this bill. Section 10 of the bill addresses applicant quality submissions. PTO believes that all applicants for a patent should be required to conduct a search of prior art and a patentability analysis before they submit their patent application. Such a requirement not only would improve the quality of applications, it would also persuade many would-be applicants not to file in the first place, since they would discover that their invention already is disclosed in the prior art. PTO presents a strong case that the patent system currently is buckling under the volume of applications, and that if present trends continue, in 10 years the system could be brought to the point of collapse. Today, many applications provide little useful information to examiners and are filed without any awareness of the prior art. Some have suggested that PTO simply needs to hire and retain more examiners, but there are natural limits to PTO's ability to hire, train, and assimilate new examiners into the culture of PTO. Already PTO is hiring a significant percentage of every year's graduating class in particular fields of engineering. If something does not change, Congress may find it necessary to mandate across-the-board search-and patentability requirements in the future. PTO urged the adoption of search-and-patentability requirements during this Congress. The ability of such proposals to secure acceptance from the relevant interests ultimately foundered, however, on our inability to answer several key questions about how such a system would function and how much it would cost. The types of searches that PTO performs, for example, are rather specialized. Many patent applicants would want to hire a search firm to conduct such searches rather than learn how to conduct PTO searches themselves. Currently, however, no market exists for such services and no firms exist that offer to conduct searches that would meet PTO's specifications. It is thus impossible at the moment to say with certainty how much patent applicants can expect to pay to have a private firm conduct a search that meets PTO's requirements. It also is unclear exactly what kind of patentability analysis PTO might want. It will probably be necessary for PTO to launch such a system and to adjust it over a period of years before PTO itself discovers what kinds of requirements produce information that is useful to the Office. And finally and most importantly, under the current system, in which statements made by the applicant during prosecution are used to construe the claims of the patent in district court, any requirement that the applicant make additional statements about patentability during prosecution would prove to be very expensive to the applicant. Under the current litigation regime, applicants who can afford to do so would be wise to hire expensive patent lawyers to think through how every statement made to PTO during a patentability analysis might later affect claim construction in an infringement suit. In other words, a patentability analysis requirement likely would result in heavy legal costs for patent applicants. Rather than mandate that all applicants submit a search report and a patentability analysis, section 10 of the bill authorizes PTO to offer incentives to parties who do so, and it makes the prosecution record of a patent that is secured through such a program inadmissible to construe patent claims in later proceedings. This last requirement is both an essential prerequisite to the palatability of a voluntary search-and-patentability program, and is also expected to be a powerful draw to applicants to participate in the program. By effectively providing immunity in later litigation against all information that is in the file wrapper of the patent's prosecution history, this provision allows applicants to speak freely with examiners, without having to constantly think through--or rather, have their lawyers think through-- how each statement might later affect claim scope in subsequent litigation. I also anticipate that the prospect of being able to assert a patent based solely on its claims, without having to litigate over the meaning of every action and statement in the prosecution record, will be a strong inducement to many patent applicants to try to comply with the PTO's voluntary search-and-patentability program. Proposed section 123(b) also authorizes PTO to issue regulations identifying material submitted in an attempt to comply with the search- and-patentability program that also shall receive file-wrapper immunity. Such regulations should encourage applicants to try PTO's system who might otherwise be deterred by fear that if they try to comply with PTO's program and abort the attempt or are unsuccessful and later secure the same patent by the conventional route, the possibly substantial record produced during the failed attempt will later be used in litigation to limit claim scope. And of course, even ultimately successful users of the search-and-patentability program who are not confident that they will complete the program likely would, in the absence of the immunity tendered by such regulations, engage in the very type of defensive and overlawyered discussions with the examiner that the prospect of file-wrapper immunity is designed to prevent. Proposed section 123(a) authorizes PTO to offer various other incentives to parties who participate in a search-and-patentability program. Subsection 10(b) of the bill is intended to preclude a negative implication that because the bill authorizes PTO to offer such incentives, PTO must currently lack the authority to offer incentives to applicants who submit additional information. I should also note that PTO may continue to offer incentives to applicants under existing pilots and programs without issuing regulations. Section 10 of the bill is designed to allow a substantial trial run of a search-and-patentability program. It is my hope that if the incentives offered are powerful enough and if PTO's search-and- patentability demands are reasonable, eventually a major portion of all patent applicants will choose to prosecute their patents under such a system. A well-functioning and heavily used search-and-patentability program not only would help PTO to process its backlog of applications, it also would answer some of the questions that we were unable to answer this year, such as how much would private prior-art searches cost, and will file-wrapper immunity operate as intended in court? I hope that the gathering patent-application storm that PTO perceives will be diverted by the program authorized in this section and by the reforms to the inequitable-conduct doctrine in section 11 of the bill, both of which should encourage applicants to be more frank with PTO and to provide information that is more useful to the Office. If present filing trends continue for another decade, however, and Congress is forced to consider applying search- and patentability-analysis requirements across the board to all applications, it likely will have proven useful to have had a substantial trial run of a search-and- patentability program. Section 11 of the bill addresses the doctrine of inequitable conduct. Under current law, this doctrine allows an accused infringer to have an entire patent declared unenforceable if he can demonstrate that when the patent was prosecuted, the patent applicant intended to deceive the examiner by misrepresenting information that the court deems material under one of a variety of tests, such as whether the information would be important to a reasonable patent examiner in deciding whether to allow the application. See, e.g., Digital Control, Inc. v. Charles Machine Works, 437 F.3d 1309, 1313-14 (Fed. Cir. 2006). This doctrine, which is applied in the course of infringement litigation, is a court-made doctrine that is designed to force patent applicants to be forthcoming and to not mislead the PTO when prosecuting their patents. In practice, however, the doctrine does not fulfill this purpose and instead generates a variety of undesirable consequences. There are two aspects of the current inequitable conduct doctrine that I find particularly troubling. The first is that it is asserted in a majority of all patent lawsuits. As much as one might think ill of the ethics of particular industries, it is simply inconceivable that fraud and other misconduct infects anything close to half of all of the patents issued in this country. One explanation that a number of lawyers have given to me for the high rate at which inequitable conduct is asserted in litigation is that the doctrine gives the accused infringer an opportunity to examine the inventor--often in the jury's presence--and to paint him as deceptive and dishonest. Even the most upright and honest inventor can be made to look sly and shifty under aggressive examination as to why exactly he chose not disclose particular facts or documents to the PTO. And thus even an infringer who has no reasonable hope of prevailing on an inequitable-conduct claim will assert the doctrine simply because it offers an opportunity to cast the inventor and his work in a negative light. This tactic tends to increase the odds that the jury will find the invention obvious and to decrease the jury's estimate of the damages to which the inventor is entitled. The doctrine also carries high transaction costs. It typically is grounds for exhaustive discovery of the inventor's files and for depositions directed at his state of mind at the time of the prosecution--for questioning him as to what did he know and when did he know it, and what was his motive for not disclosing particular pieces of information. The doctrine adds substantially to the expense of litigation. The other aspect of the current doctrine that I find problematic is that it applies a draconian penalty to instances of misconduct whose materiality often appears to be doubtful. Jon W. Dudas, the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, commented on this aspect of the doctrine in his testimony before the Judiciary Committee on June 6, 2007: Under existing case law, courts must hold all of a patent's claims invalid if they find inequitable conduct in any aspect of prosecuting a patent application even if the claims are completely valid and/or the inequitable conduct was irrelevant to prosecution of the claims. Thus, the only remedy available is complete loss of the patent. Inequitable conduct can be found if the applicant deliberately withholds or inaccurately represents information material to patent prosecution. Anything the court deems that a reasonable examiner would find important can be material and the evidence necessary to show intent varies according to the nature of the omission. Accordingly, the inequitable conduct standard is uncertain and the potential penalties severe. For example, any misstatement in an affidavit, or even a failure to disclose a possible source of bias, has been held to be capable of rendering all claims of the patent unenforceable. Because inequitable conduct is a court-enforced doctrine, the assessment of what is material--of what would have been important to a reasonable patent examiner--is made by a U.S. district judge. But district judges very rarely have any firsthand knowledge of the patent- prosecution process or the workings of the PTO and are not in a position to accurately assess what information actually would have been important to a reasonable examiner. The Federal courts' sometimes hair-trigger assessments of materiality are a substantial injustice to those patent owners who lose the right to enforce what is an otherwise perfectly valid patent. This injustice can be particularly acute when the current owner of the patent is a good-faith purchaser who is not even alleged to have engaged in any type of misconduct himself. Judicial enforcement of the doctrine of inequitable conduct also has led to consequences that are of a more general concern. The doctrine's severe penalty, combined with the unpredictability of its application, has led applicants to adopt extreme tactics that are designed to eliminate the risk that their patent will ever be held unenforceable on the ground of inequitable conduct. These tactics, while perhaps effective at minimizing such risk, are inconsistent with sound prosecution practice. They constitute the exact opposite of providing PTO with the information that it needs in order to be able to assess whether a claimed invention is patentable, and they make it harder for PTO to do its job. Under Secretary Dudas commented on this phenomenon in his June 6, 2007 Judiciary Committee testimony: In some other cases, applicants or their attorneys fear that the legal doctrines of inequitable conduct and unenforceability may unfairly punish them with draconian penalties for innocently omitting information. The theory is that, if one does provide information, it must be perfect. Otherwise, the consequence may be loss of the patent and/or disciplinary action (for the applicant's attorney). By way of contrast, failure to share or disclose information has absolutely no adverse legal consequence. * * * * * While the risk of an inequitable conduct finding is low, it is frequently alleged. When alleged, inequitable conduct assertions add substantially to litigation costs and malpractice claims. The ``all or nothing'' result of an inequitable conduct finding understandably has a perverse effect on the actions of applicants and their attorneys with respect to ``risking'' a proper search in the first place. As a result, the doctrine results in counterproductive behavior before the USPTO. It discourages many applicants from conducting a search and leads others to be indiscriminate in the information they submit. In a review two years ago, we found that over 50 percent of submitted applications contained either no information disclosure statement or that such submissions included more than 20 references. The Under Secretary's testimony is consistent with what has been described to me by a number of attorneys and patent applicants. The current state of inequitable conduct enforcement leads applicants to adopt one of two tactics: either they flood the Office with prior-art references but offer no explanation of how the invention is distinguished from that prior art or which prior art is most relevant, since by providing the reference they cannot be accused of concealing it, and by providing no explanation they cannot be accused of misleading the Office or mischaracterizing the information, or applicants provide no information at all with their applications, since providing some information would inevitably mean not supplying other information in the universe of existing information and thus could open the applicant to charges of having concealed something in that universe of information not provided. Both tactics impede the PTO's examination of patent applications. Professor John F. Duffy of George Washington University Law School has made a persuasive case that inequitable conduct that occurs during patent prosecution should be addressed in proceedings before the PTO itself. He notes that the 1940s decisions that are viewed as giving the Supreme Court's imprimatur to judicial enforcement of the doctrine are much more limited in their rulings than the expansive approach to inequitable conduct that has been developed by the Federal circuit. He also points out that the patent system's use of civil litigation to enforce good conduct in dealings with an agency is unique to the patent system. In the case of every other Federal administrative agency, the agency itself polices misconduct and fraud committed in agency proceedings. Professor Duffy also notes that in other administrative contexts, the Federal courts themselves have predicted that judicial supervision of agency proceedings would produce the very consequences that judicial intervention has produced in the PTO. Though Buckman Co. v. Plaintiffs' Legal Committee, 531 U.S. 341, 351 (2001), is a case about the FDA, it might as well be describing the impact of the inequitable-conduct doctrine on patent prosecutions: [F]raud-on-the-[agency] claims inevitably conflict with the [agency's] responsibility to police fraud consistently with the Administration's judgment and objectives. As a practical matter, complying with the [agency's] detailed regulatory regime in the shadow of [the courts' varying fraud standards] will dramatically increase the burdens facing potential applicants * * *. Conversely, fraud-on-the-[agency] claims would also cause applicants to fear that their disclosures to the [agency], although deemed appropriate by the Administration, will later be judged insufficient in * * * court. Applicants would then have an incentive to submit a deluge of information that the Administration neither wants nor needs, resulting in additional burdens on the [agency's] evaluation of an application. As a result, the [agency certification] process could encounter delays, which would, in turn, impede competition * * * and delay [innovation]. Section 11 of the bill that I have introduced proposes a new approach to addressing misconduct in proceedings before the PTO. It effectively shifts enforcement of the doctrine of inequitable conduct from civil litigation to administrative proceedings before the PTO. Under the procedures authorized in proposed sections 298 and 299, PTO will reissue patents if needed to remove any invalid claims, will assess the culpability of any misconduct, and will impose sanctions on any parties that have engaged in inequitable or fraudulent conduct before the Office. I believe that the administrative framework proposed in section 11 is consistent with the principles outlined in the Supreme Court cases that the Federal circuit relies on as the basis for its own inequitable conduct jurisprudence, Precision Instrument Manufacturing Co. v. Automotive Maintenance Machinery Co., 324 U.S. 806 (1945), and Hazel- Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238 (1944). Section 298 would require district courts to order patents that are infected by fraud to go into reissue proceedings, where invalid claims would be removed. Limiting patents to their proper scope serves important public interests. As the court noted in Precision Instrument, at pages 815 to 816, citations omitted: The possession and assertion of patent rights are issues of great moment to the public. As recognized by the Constitution, [a patent] is a special privilege designed to serve the public purpose of promoting the ``Progress of Science and useful Arts.'' At the same time, a patent is an exception to the general rule against monopolies and to the right to access to a free and open market. The far-reaching social and economic consequences of a patent, therefore, give the public a paramount interest in seeing that patent monopolies spring from backgrounds free from fraud or other inequitable conduct and that such monopolies are kept within their legitimate scope. Proposed section 299 would authorize procedures whereby the PTO can receive and assess complaints about misconduct committed by parties to its matters or proceedings, assess the materiality of the misconduct and the mens rea of the malfeasant, and levy appropriate sanctions, including civil fines and, in severe cases, unenforceability of the patent. This section is animated by the principles expressed in Precision Instrument, at page 818, where the court emphasized that: Those who have applications pending with the Patent Office or who are parties to Patent Office proceedings have an uncompromising duty to report to it all facts concerning possible fraud or inequitableness underlying the applications in issue. * * * Public interest demands that all facts relevant to such matters be submitted formally or informally to the Patent Office, which can then pass upon the sufficiency of the evidence. A few provisions of proposed section 299 deserve some commentary and explanation. Subsection (a) authorizes the PTO to issue regulations accepting complaints from any source. It is anticipated, based on preliminary discussions with the Office, that the PTO will accept complaints from a broad range of parties, including those that are third parties to any commercial disputes involving the patent. The scope of such regulations, however, ultimately remains within the Office's discretion, and PTO may later decide to limit who may file a complaint should it discover that allegations of misconduct that originate from particular types of sources are burdensomely voluminous or otherwise unproductive. Though any person may file an allegation of misconduct under section 299, that section only allows such complaints to be filed against individual and entities that are parties to matters or proceedings before the Office. This limitation excludes examiners and other PTO personnel. Prosecutions occasionally become contentious, particularly when examiners fail to appreciate an inventor's revolutionary genius. If section 299 were not limited to complaints against parties, we would run the risk that such proceedings might come to be regarded by a subset of applicants as their final means of appealing an examiner's rejection. Section 299 is not limited, however, to entertaining complaints against applicants and patentees. A party that engages in intentionally deceptive and material misconduct while challenging a patent during a postgrant review proceeding, or even while requesting such a proceeding, also may be sanctioned pursuant to section 299. Some parties have criticized the fact that the proceedings authorized by section 299 will be prosecuted by the PTO alone, without the participation of parties adverse to the patent. PTO prefers it this way. If misconduct has resulted in the grant of claims that are invalid, that patent can still be challenged in court if its owner attempts to enforce it. And to the extent that alleged misconduct has not resulted in the grant of claims that are invalid, the interests principally affected by any misconduct are those of PTO. The primary injury in such a case is to PTO's interest in ensuring that parties are honest and forthcoming in their dealings with the Office and its general interest in the integrity of its proceedings. In such circumstances, it is appropriate that PTO control the prosecution of the misconduct. Subsection (b)(3)(C) of section 299 permits PTO to sanction a patent owner by rendering his patent unenforceable. That penalty, however, is reserved by subparagraph (C) for particularly egregious misconduct that was committed by the current beneficial owner of the patent. This elevated standard is consistent with the standards for unenforceability set in Precision Instrument and Hazel-Atlas Glass, the foundational Supreme Court cases of the modern inequitable-conduct doctrine. In Precision Instrument, an applicant ``gave false dates as to the conception, disclosure, drawing, description and reduction to practice of his invention.'' When his fraud was discovered by the other party to an interference proceeding, the applicant colluded with that other party to assign the false application to the party. The Supreme Court held the patent unenforceable, concluding that ``[t]he history of the patents and contracts in issue is steeped in perjury and undisclosed knowledge of perjury'' and that ``inequitable conduct impregnated [the patentee's] entire cause of action.'' Pages 809, 816, and 819. Similarly, in Hazel-Atlas Glass, the court rendered a patent unenforceable upon ``conclusive proof'' of a ``deliberately planned and carefully executed scheme to defraud not only the Patent Office but the Circuit Court of Appeals.'' The court also emphasized in that case that ``no equities have intervened through transfer of the fraudulently procured patent or judgment to an innocent purchaser.'' Pages 245 and 246. I should also comment on a few other significant changes that this bill makes to S. 1145. My bill's proposed section 102(a)(1) amends the novelty condition of patentability by eliminating public use and the on-sale bar as independent bases of invalidity and instead imposes a uniform test of whether art has been made available to the public. By eliminating confidential sales and other secret activities as grounds for invalidity and imposing a general standard of public availability, this change will make the patent system simpler and more transparent. Whether a patent is valid or not will be determined exclusively on the basis of information that is available to the public. As a result, at the outset of any dispute over a patent, the patentee and potential infringer can develop a full and complete understanding of the information that will determine the novelty and nonobviousness of the claimed invention. This change not only will provide greater certainty and predictability--it should also substantially reduce the need for discovery in patent litigation, since defendants will no longer need to uncover evidence of private sales or offers for sale or other nonpublic information in order to determine whether the patent is valid. It bears mention that the extent of what is deemed to be publicly available is defined in important respects by the doctrine of inherency. Under that doctrine, once a product is sold on the market, any invention that is necessarily present or inherent to the product and that would be recognized as such by a person skilled in the art is itself deemed to be publicly available. Such an invention becomes publicly available art and cannot be patented. See generally Rosco, Inc. v. Mirror Lite Co., 304 F.3d 1373, 1380-81 (Fed. Cir. 2002). To address the possible concern that a uniform available-to-the- public standard might allow secret commercialization of a product followed by belated patenting, I should note that a manufacturer who embarked on such a course would run the risk that, under the first-to- file system, someone else might patent the invention out from under him. Perhaps for this reason, among others, industrialized countries that currently employ this standard do not appear to have experienced significant problems with manufacturers attempting secret commercialization and late patenting of their products. The bill also includes other provisions that would make the patent system more objective and transparent. Section 3(c) eliminates current law's best-mode requirement, and section 15 strikes several provisions of title 35 that require inquiry into a patentee's subjective intent. Any useful information that might be supplied by describing a patent's best mode generally also will be provided while satisfying the written description and enablement requirements. And because the best-mode requirement turns on the patentee's subjective intent, rather than on objective facts, it often becomes grounds for deposition of the inventor and other discovery. Eliminating that requirement will make patent litigation less burdensome. My bill also strikes S. 1145's elimination of the exception to the 18-month publication requirement. Small-patent-owners' groups have persuaded me that the current exception should be preserved. That exception, although used only about 40,000 times annually, is invoked heavily by small-business applicants. These smaller applicants believe that the opt-out of 18-month publication allows them to preserve the market advantage generated by their ingenuity, and prevents their inventions' being appropriated in foreign countries, in the event that their application is not granted or is only granted on a second attempt. Under Secretary Jon Dudas, in his June 6, 2007, Judiciary Committee testimony, also expressed doubt about the wisdom of eliminating the current exception. He noted that serious concerns had been expressed ``by independent inventors and small entities that large entities and foreign interests may misappropriate their inventions upon disclosure and prior to issuance of a patent.'' Sections 12 and 13 of the bill are carried over from S. 1145 as reported by the Judiciary Committee. I have included additions to those sections that I understand that their supporters had intended to adopt and have also made an addition of my own to section 12. The new subsection (c) in that section converts various day-based deadlines in title 35 into month-based deadlines. Month-based deadlines are easier to calculate. The use of months should make it easier to avoid the type of ministerial mistake that apparently is the cause for section 12. It should also save the patent system hundreds of billable hours over the years. Section 2(b) of the bill includes a minor modification to the CREATE Act, Public Law 108-453. This change more closely aligns the text of that act to the PTO's current and uncontested interpretation of that act with regard to who must own the prior art that is regarded as jointly owned by the parties to a joint research agreement pursuant to the CREATE Act. And last, but certainly not least, section 14 of the bill consists of the Coburn amendment, which would create a revolving fund for PTO fees. Under that amendment, all fees paid by patent and trademark applicants and owners to the PTO would remain in the PTO and could not be diverted to unrelated Government programs. According to Senator Coburn, the fees collected by PTO are more than adequate to pay for the costs of all patent examinations and other PTO proceedings. But PTO is not allowed to keep those fees. Instead, the fees are deposited into the U.S. Treasury, and PTO's operations are funded by a congressional appropriation. It is that appropriation that effectively determines on an annual basis what portion of the fees that PTO has collected it will be allowed to keep and use. Since 1992, Congress has diverted over $750 million in PTO fees to other governmental programs. As recently as 2004, over $100 million was diverted from the PTO. Fee diversion unquestionably has a negative impact on the patent system. In recent years, it has hampered PTO's ability to hire an adequate number of examiners. Multiple studies and multiple witnesses at congressional hearings have concluded that fee diversion contributes to the growing backlog and lengthening pendency of patent applications. It currently takes nearly 3 years to get a patent, and 786,000 applications are pending. That means that large numbers of businesses, universities, and other inventors are waiting to learn if they will receive a patent for their invention. Because of recent public outcry over lengthy patent-application pendency periods, the administration and Congress have abstained from diverting PTO fees since 2004. As a result, PTO has been able to hire a record number of new examiners and begin to address its backlog of applications. Unless the Coburn amendment is enacted into law, however, Congress and the administration could easily begin diverting PTO fees again in future years. Certainly, any bill that aspires to deserve the title ``Patent Reform Act'' should include a revolving-fund provision. I thank all of the individuals who have assisted my attempts to understand and find answers to the difficult questions posed by efforts to improve the patent system, and I look forward to next year's congressional debate on patent reform legislation.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from South Carolina (Mr. Graham), the Senator from Arizona (Mr. McCain), and the Senator from Alaska (Mr. Stevens). Further, if present and voting, the Senator from South Carolina (Mr. Graham) would have voted ``nay.''

Mr. KYL

Mr. KYL. Before there is a request propounded, I think it would be useful to have a conversation. I think it ought to be possible for us to work out all of these; that is to say, judges and the IP bill. We need a little more conversation in order to do so. I am personally ready to do it right now if the chairman is willing.

Mr. KYL

Mr. KYL. Mr. President, I rise today to comment on the impending passage of S. 3325, the Enforcement of Intellectual Property Rights Act of 2008/Prioritizing Resources and Organization for Intellectual Property Act of 2008. When I first reviewed the bill, I was concerned that section 301's creation of the intellectual property enforcement coordinator, or IPEC, a presidentially appointed White House officer, might allow political interference with the Justice Department's copyright investigation and enforcement decisions. I am now persuaded, however, that the bill's creation of this new office does not, and was not intended to, influence the exercise of prosecutorial and law enforcement decisionmaking by the Department of Justice and other law enforcement agencies. Criminal law enforcement is a critical component of Federal enforcement of intellectual property rights, and the bill includes language that prevents the IPEC from exercising any control over criminal investigations and prosecutions. These restrictions are consistent with the bill's language, as well as with current Department of Justice and White House policies that guard against improper contacts between the White House and the Department of Justice on prosecutions and investigations. For example, the bill contains several important limitations on the authority of the IPEC. Section 301(b)(2) of the bill provides that the IPEC ``may not control or direct any law enforcement agency, including the Department of Justice, in the exercise of its investigative or prosecutorial authority.'' Section 305(b) further provides that ``nothing in this title shall alter the authority of any department or agency of the United States (including any independent agency) that relates to--(1) the investigation and prosecution of violations of laws that protect intellectual property rights; (2) the administrative enforcement, at the borders of the United States, of laws that protect intellectual property rights.'' Section 306(c) also provides that ``Nothing in this title--(1) shall derogate from the powers, duties, and functions of any of the agencies, departments, or other entities listed or included under section 301(b)(3)(A); and (2) shall be construed to transfer authority regarding the control, use, or allocation of law enforcement resources, or the initiation of prosecution of individuals cases or types of case, from the responsible law enforcement department or agency.'' The foregoing provisions of the bill make clear that the IPEC does not, and was not intended to, have the authority to influence or attempt to influence the law enforcement and prosecutorial decisionmaking of the Department of Justice and its law enforcement partners. Rather, the IPEC's role is limited to general coordination, as defined in the statute, that does not interfere with, or derogate from, the existing prosecutorial and law enforcement authority and responsibilities of the Department of Justice and other law enforcement agencies. With this understanding in mind, I interpose no objection to the Senate's adoption of this bill and will lend my support to its passage.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from South Carolina (Mr. DeMint) and the Senator from Arizona (Mr. McCain).

Mr. KYL. The following Senators are necessarily absent: the Senator from South Carolina (Mr. DeMint) and the Senator from Arizona (Mr. McCain).