Patrick Leahy

Mr. LEAHY

Mr. LEAHY. Madam President, my colleague and friend from Missouri is correct Prior user rights, if properly crafted and asserted, can be of great benefit to keeping high-paying jobs here at home.

Mr. LEAHY. I thank the Senator.

Mr. LEAHY. Madam President, I will say to my good friend that he is not the first to raise this issue with me and the other Members of the House and Senate Judiciary Committees who have worked on this bill. I have discussed section 5 at length with the distinguished House Judiciary Committee Chairman Lamar Smith. Perhaps I can help provide some of the needed clarity for my colleague concerning what we intend to be within the confines of the definition of ``internal commercial use'' as it is used in section 5 of the bill.

Mr. LEAHY. Yes. My colleague and I are in agreement that it is our intention, as the sponsors of this comprehensive measure, that the prior use right set forth in section 5 of H.R. 1249 shall vest when innovative technology is first put into continuous internal use in the business of an innovator's enterprise with the objective of making a commercializable product.

Mr. LEAHY. I thank my colleague for the question. His understanding is correct. So long as the prior use begins more than 1 year prior to the effective filing date of a subsequent patent or publication by a later inventor, the initiation of continuous internal use in the manufacture of products should guarantee the defense of prior use.

Mr. LEAHY. My colleague is correct in his reasoning and his understanding of what is intended by section 5. The methods used by Edison in producing multiple failures for electric light bulbs were no less commercial uses before the ultimate production of a commercially successful light bulb. Let us agree that internally used methods and materials do qualify for the defense of prior user rights when there is evidence of a commitment to put the innovation into use followed by a series of diligent events demonstrating that the innovation has been put into continuous--into a business activity with a purpose of developing new products for the benefit of mankind.

Mr LEAHY

Mr LEAHY. The senior Senator from Wisconsin is correct. That is also my view of the exception. I understand the Senator has consistently opposed the expansion of prior user rights, but I agree with his analysis of the scope of the exception in section 5 of H.R. 1249. Section 18

Mr. LEAHY

Mr. LEAHY. The proceeding created by Section 18 is modeled on the proposed post-grant review proceeding under Section 6 of the Act. As in other post-grant proceedings, the claims should typically be evaluated to determine whether they, among other things, meet the enablement and written description requirements of the act, and contain patentable subject matter under the standards defined in the statutes, case law, and as explained in relevant USPTO guidance. While the program will generally otherwise function on the same terms as other post-grant proceedings, the USPTO should implement Section 18 in a manner that avoids attempts to use the transitional program against patent owners in a harassing way. Specifically, to initiate a post issuance review under the new post grant or transitional proceedings, it is not enough that the request show a substantial new question of patentability but must establish that ``it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable.'' The heightened requirement established by this bill means that these proceedings are even better shielded from abuse than the reexamination proceedings have been. In fact, the new higher standard for post issuance review was created to make it even more difficult for these procedures to be used as tools for harassment. Therefore, the rule that bars the PTO from reconsidering issues previously considered during examination or in an earlier reexamination still applies. While a prior district court decision upholding the validity of a patent may not preclude the PTO from considering the same issues resolved in that proceeding, PTO officials must still consider the court's decision and deviate from its findings only to the extent reasonable. As a result, I expect the USPTO would not initiate proceedings where the petition does not raise a substantial new question of patentability than those that had already been considered by the USPTO in earlier proceedings. Does that answer my colleague's question?''

Mr. LEAHY. The bill is important for our economy. It is important for job creation. It is a product of bipartisan and bicameral collaboration. It is the way our system is supposed to work. I look forward to passing the bill and sending it directly to the President's desk for his signature. I know my friends both on the Republican side and Democratic side have amendments to this bill, but they are not amendments that should pass. I mentioned the one earlier. I talked about the amendment that would put all our--well, Madam President, which amendment is the first in order?

Mr. LEAHY. Madam President, I yield the floor. I know both Senator Sessions and Senator Grassley wish to speak to that.

Mr. LEAHY. Madam President, I thank the distinguished Senator from Iowa for his strong support of this bill. In a few moments the Senate is going to have the opportunity to make significant reforms to our Nation's patent system for the first time in more than half a century. The America Invents Act is the product of extensive consideration. We have worked on this for four Congresses. We have had dozens of hearings, weeks of committee debate, and I have lost count of the hundreds of other meetings we have had. This bill is an opportunity to show the American people that Democrats and Republicans can come together to enact meaningful legislation for the American people. The time to do that is now. The only remaining issues that stand in the way of this long overdue reform are three amendments. Each of them carries some merit. In the past, I might have supported them. But this is a compromise. No one Senator can have everything he or she may want. The underlying issues have been debated. The bill as written represents a bipartisan, bicameral agreement that should be passed without changes. Any amendment to this bill risks killing it. I would urge all Senators, Republicans and Democrats alike, to join me and join Senator Grassley in opposing these amendments. They are the final hurdles standing in the way of comprehensive patent reform. I ask unanimous consent to have printed in the Record letters from businesses and workers representing the spectrum of American industry and labor urging the Senate to pass the America Invents Act without amendment.

Mr. LEAHY. Madam President, I ask unanimous consent that after the first vote--we have several more votes--the remaining votes be 10- minute votes.

Mr. LEAHY. Have the yeas and nays been ordered?

Mr. LEAHY. The America Invents Act is now going to be the law of the land. I thank all my colleagues who worked together on this.

Mr. LEAHY. Madam President, I understand what the Senator from Oklahoma says, but the Coburn amendment can derail and even kill this bill. So, as I have told the Senator, I will move to table in a moment. But this bill would otherwise help our recovering economy. It would unleash innovation and create jobs. I have worked for years against Patent Office fee diversion, but I oppose this amendment. Its formulation was already rejected by the House of Representatives. They have made it very clear. There is no reason they will change. This amendment can sink years of efforts by both Republicans and Democrats in this body and the other body to pass it. Actually, this amendment could kill the bill over a mere formality: the difference between a revolving fund and a reserve fund. We have worked out a compromise in good faith. The money, the fees-- under the bill as it is here--can only be spent at the PTO, but the only thing is, we actually have a chance to take a look at what they are spending it on, so they could not buy everybody a car or they could not have a gilded palace. They actually have to spend it on getting through the backlog of patents. It will not go anywhere else. It will only go to the Patent Office. So we should not kill the bill over this amendment. We should reject the amendment and pass the bill. It is time for us to legislate. That is what the American people elected us to do. That is what they expect us to do. Let's not kill the bill after all this work over something that will really make no difference in the long run. So I therefore will move to table the Coburn amendment.

Mr. LEAHY. Madam President, because this amendment would kill the bill, I move to table the amendment and ask for the yeas and nays.

Mr. LEAHY. Mr. President, 6 months ago, the Senate approved the America Invents Act to make the first meaningful, comprehensive reforms to the Nation's patent system in nearly 60 years. Today, the Senate has come together once again, this time to send this important, job- creating legislation to the President to be signed into law. Casting aside partisan rhetoric, and working together in a bipartisan and bicameral manner, Congress is sending to President Obama the most significant jobs bill of this Congress. The bill originated 6 years ago in the House of Representatives, when Chairman Smith and Mr. Berman introduced the first patent reform proposals. After dozens of congressional hearings, markup sessions, and briefings, and countless hours of Member and staff meetings, through two Presidential administrations, and three Congresses, patent reform is finally a reality. The Leahy-Smith America Invents Act is a bipartisan bill and a bipartisan accomplishment. This is what we in Washington can do for our constituents at home when we come together for the benefit of the country, the economy, and all Americans. I especially thank Senator Kyl for his work in bringing this bill to the floor of the Senate--twice--and Senator Grassley for his commitment to making patent reform the Judiciary Committee's top priority this year. Chairman Smith, in the other body, deserves credit for leading the House's consideration of this important bill. I look forward to working with him on our next intellectual property priority--combating online infringement. I thank the members of the Senate Judiciary Committee, who worked together to get quorums and get this passed. I thank them for their contribution. Mr. President, I acknowledge several members of my Judiciary Committee staff, specifically Aaron Cooper, who sits here beside me. He spent more hours than I even want to think about, or his family wants to think about, working with me, other Senators, Members of the House, other staff, and stakeholders to preserve the meaningful reforms included in the America Invents Act, as did Susan Davis before him. Ed Pagano, my chief of staff, kept everybody together. I also thank Bruce Cohen, my chief counsel on the Judiciary Committee, who every time I thought maybe we are not going to make it would tell me ``You have to keep going,'' and he was right. Erica Chabot, Curtis LeGeyt, and Scott Wilson of my Judiciary Committee staff have also spent many hours working on this legislation. I also commend the hard-working staff of other Senators, including Joe Matal, Rita Lari, Tim Molino, and Matt Sandgren for their dedication to this legislation. Chairman Smith's dedicated staff deserves thanks as well, including Richard Hertling, Blaine Merritt, Vishal Amin, and Kim Smith. I would also like to thank the majority leader for his help in passing this critical piece of legislation. The America Invents Act is now going to be the law of the land. I thank all my colleagues who worked together on this. In March, the Senate passed its version of the America Invents Act, S. 23, by a 95-5 vote. One of the key provisions of the legislation transitions the United States patent system from a first-to-invent system to a first-inventor-to-file system. The Senate considered and rejected an amendment to strike this provision, with 87 Senators voting to retain the transition. When this body first considered the America Invents Act, some suggested that along with the first-inventor-to-file transition, the legislation should expand the prior user rights defense. The prior user rights defense, in general, is important for American manufacturers because it protects companies that invent and use a technology, whether embodied in a process or product, but choose not to disclose the invention through the patenting process, and instead rely on trade secret protection. The use of trade secrets instead of patenting may be justified in certain instances to avoid, for example, the misappropriation by third parties where detection of that usage may be difficult. These companies should be permitted to continue to practice the invention, even if another party later invents and patents the same invention. In the United States, unlike in our major trading partners, prior user rights are limited to inventions on methods of doing or conducting business. The Senate bill included only a very limited expansion of this defense, and required the Director of the Patent and Trademark Office, ``PTO'', to study and report to Congress on the operation of prior user rights in other countries in the industrialized world, and include an analysis of whether there is a particular need for prior user rights given the transition to a first-inventor-to-file system. The House-originated bill, the Leahy-Smith America Invents Act, which the Senate is considering today, makes important improvements to expand prior user rights beyond just methods of doing business. These improvements will be good for domestic manufacturing and job creation. I agree with the chairman of the House Committee on the Judiciary that inclusion of expanded prior user rights is essential to ensure that those who have invested in and used a technology are provided a defense against someone who later patents the technology. I understand that there is some confusion regarding the scope of the defense in the bill. The phrase ``commercially used the subject matter'' is intended to apply broadly, and to cover a person's commercial use of any form of subject matter, whether embodied in a process or embodied in a machine, manufacture, or composition of matter that is used in a manufacturing or other commercial process. This is important particularly where businesses have made substantial investments to develop these proprietary technologies. And if the technology is embedded in a product, as soon as that product is available publicly it will constitute prior art against any other patent or application for patent because the technology is inherently disclosed. The legislation we are considering today also retains the PTO study and report on prior user rights. I again agree with the chairman of the House Committee on the Judiciary, that one important area of focus will be how we protect those who make substantial investments in the development and preparation of proprietary technologies. It is my hope and expectation that Congress will act quickly on any recommendations made by the PTO. Section 27 of the Leahy-Smith America Invents Act requires a study by the United States Patent and Trademark Office, USPTO, on effective ways to provide independent, confirming genetic diagnostic test activity where gen patents and exclusive licensing for primary genetic diagnostic tests exist. I support this section, which was championed by Ms. Wasserman Schultz, and look forward to the USPTO's report. I want to be clear that one of the reasons I support section 27 is that nothing in it implies that ``gene patents'' are valid or invalid, nor that any particular claim in any particular patent is valid or invalid. In particular, this section has no bearing on the ongoing litigation in Association for Molecular Pathology v. Myriad Genetics, ___ F.3d ___, 2011 WL 3211513 (Fed. Cir. July 29, 2011). In Kappos v. Bilksi, ___ U.S. ___, 130 S. Ct. 3218 (2010), the Court found that the fact that a limited defense to business method patents existed in title 35 undermined the argument that business method patents were categorically exempt from patentability. Specifically, the Court held that a ``conclusion that business methods are not patentable in any circumstances would render Sec. 273 [of title 35] meaningless.'' Bilski, 130 S. Ct. at 3228. But the section 27 study is readily distinguishable from the substantive prior user rights defense codified in title 35 referenced in Bilski. A ``gene patent'' may or may not be valid, and that has no impact on the USPTO study, which mentions the existence of gene patents issued by the USPTO (but still subject to a validity challenge), but focuses on the effect of patents and exclusive licensing of genetic diagnostic tests, regardless of whether there are relevant patents. This study will be useful and informative for policymakers no matter how section 101 of title 35 is interpreted by the courts. There has been some question about the scope of patents that may be subject to the transitional program for covered business method patents, which is section 18 of the Leahy-Smith America Invents Act. This provision is intended to cover only those business method patents intended to be used in the practice, administration, or management of financial services or products, and not to technologies common in business environments across sectors and that have no particular relation to the financial services sector, such as computers, communications networks, and business software. A financial product or service is not, however, intended to be limited solely to the operation of banks. Rather, it is intended to have a broader industry definition that includes insurance,brokerages, mutual funds, annuities, andan array offinancial companies outside of traditional banking. Section 34 of the Leahy-Smith America Invents Act requires a study by the Government Accountability Office, GAO, on the consequences of patent infringement lawsuits brought by non-practicing entities under title 35, United States Code. The legislation requires that GAO's study compile information on (1) the annual volume of such litigation, (2) the number of such cases found to be without merit, (3) the impact of such litigation on the time to resolve patent claims, (4) the related costs, (5) the economic impact, and (6) the benefit to commerce. Following the House passage of H.R. 1249, the Comptroller General expressed concern that Section 34 may require it to answer certain questions for which the underlying data either does not exist, or is not reasonably available. Where that is the case, I want to make clear my view that GAO is under no obligation to include or examine information on a subject for which there is either no existing data, or that data is not reasonably obtainable. Further, GAO is not required to study a quantity of data that it deems unreasonable. In my view, GAO can satisfy its requirements under section 34 by compiling reasonably available information on the nature and impact of lawsuits brought by non-practicing entities under title 35 on the topics outlined in section 34(b). Where it deems necessary, GAO may use a smaller sample size of litigation data to fulfill this obligation. GAO should simply note any limitations on data or methodology in its report. I ask unanimous consent to have printed in the Record a letter from Gene L. Dodaro, Comptroller General of the United States, detailing GAO's possible limitations in complying with section 34.

Mr. LEAHY. Mr. President, I ask for the yeas and nays.

Mr. LEAHY

Mr. LEAHY. Mr. President, today I would like to pay tribute to two dedicated public servants in Vermont who passed away tragically in the floods of Hurricane Irene. Both Michael Garofano Sr. and Michael Garofano Jr. were employees at the Rutland City Water Facility in Rutland, VT, where they served at the interest of their communities until the very end. During the worst hours of Hurricane Irene in Vermont, Michael Sr. and Michael Jr. sought to protect the people of Rutland by inspecting the town's water system infrastructure. In this brave moment, both men unfortunately lost their lives as the waters of Mendon Brook rose to threatening levels. We will always remember them for their everlasting courage, evident by their extreme dedication to protecting their family and beloved community during a crisis. Michael Sr. joined the Rutland City Water Facility as its manager in 1981. He served zealously, ensuring that the water of Rutland City was safe at all times for those living in the region. He was also a member of the American Water Works Association where he was committed to benefitting not only Vermont, but also the country, in its pursuit of clean water. Michael was highly respected and honored by those who worked under his supervision. He was known as one of the best employees the industry had to offer. Michael Sr.'s son, Michael Garofano Jr., also had the interest of water quality at heart. As a water operator at the Rutland City Water Facility, he too braved the elements of Hurricane Irene to serve his family and community. As an independently contracted landscaper, Michael's loyalty to his community was widely recognized. At a mere 24 years of age, both his accomplishments and bravery are of honorable praise. Michael Garofano Sr. and Jr. are survived by wife and mother, Celestine ``Sally''--Sitek--Garofano and son and brother, Thomas Garofano of Rutland, Vermont. My wife Marcelle and I wish to express our deepest condolences to Sally, Thomas, and Michael Sr. and Jr.'s extended family. In the days following the hurricane, many acts of bravery have been displayed throughout our state. All of Vermont can be proud of Michael Sr. and Michael Jr.'s incredible courage and the legacy they both have left behind. I ask unanimous consent that the obituary for Michael Garofano Sr. and Michael Garofano Jr. from the Rutland Herald be printed in the Record so all may recognize two men whose acts of bravery will not soon be forgotten.

Mr. LEAHY

Mr. LEAHY. Mr. President, I ask unanimous consent that the Committee on Banking, Housing, and Urban Affairs, be authorized to meet during the session of the Senate on September 8, 2011, at 10 a.m.

Mr. LEAHY. Mr. President, I ask unanimous consent that the Committee on Environment and Public Works be authorized to meet during the session of the Senate on September 8, 2011, at 10 a.m. in room 406 of the Dirksen Senate Office Building.

Mr. LEAHY

Mr. LEAHY. Madam President, every time I hear discussion about how we balance the budget, especially coming from the other side of the aisle--maybe because I have been here long enough--I remember the last time we did balance the budget during President Clinton's term. We balanced the budget. We created an amazing surplus. We created millions and millions of new jobs. But you know what. Not a single Republican voted for that. It passed in the Senate only because the Vice President of the United States cast the deciding vote. No Republican voted--we actually had to do more than just have a bumper sticker ``Let's Balance the Budget.'' We actually did balance the budget, which required some very tough choices. No Republican voted for that. In fact, they all condemned it saying: This would bring about wrack and ruin, and on and on. It did not. It created an enormous budget surplus and created 22 million new jobs. We were paying down the national debt. We left a very large surplus to President Clinton's successor, President Bush, who immediately wasted it on a needless war in Iraq and tax cuts, both of which I voted against. It is also interesting to be lectured by the other side of the aisle about balancing the budget when they voted to go into two of the longest wars in our history, and for the first time in our history voted to pay for them by borrowing the money. Now look where trillions of dollars will have gone because of Iraq and Afghanistan, and now to be told that to continue to pay for unnecessary wars we must cut out things for Americans such as education, medical care, housing, scientific research, and things such as finding cures for cancer, Alzheimer's, repairing our aging bridges, roads--even hearing a Member of the other body saying: We cannot respond to the tragedies caused by Irene in the distinguished Presiding Officer's home State, mine and others, unless we take the money from other needs in this country. Yet that same Member supported an unnecessary war in Iraq and supports paying for it on the credit card. Come on. Let's be real. Let's start thinking about things in America. The Senate began debate last night on the America Invents Act. Unfortunately, as has happened so many times, we had to invoke cloture on a motion to proceed to something that has strong support. I would note that 93 Senators, Republicans and Democrats alike, voted to invoke cloture on the motion to proceed. This is a bipartisan consensus bill. It is largely similar to the legislation the Senate passed in March. Incidentally, we passed that on a vote of 95 to 5. Some would say these days that we cannot even have a vote like that on a resolution saying the Sun rises in the east. Here Republicans and Democrats came together 95 to 5. The Senate can and should move immediately to pass this bill. It will create good jobs. It will encourage innovation. It will strengthen our recovering economy, and it will not cost the taxpayers anything. I want to commend Senator Hatch, the longtime Republican lead sponsor of this measure; Senator Grassley, the ranking Republican on the Senate Judiciary Committee; and Senator Kyl, the Republican whip, for their support of the bill and for their commitment to making patent reform become a reality. This is an effort we have worked on for nearly 6 years. I sometimes shudder to think of the amount of time my staff and I have spent on this issue. During those 6 years it has become even more important to the economy. The time has come to enact this bipartisan, bicameral legislation. I ask unanimous consent to have printed in the Record the Statement of Administration Policy on H.R. 1249 from the Obama administration.

Mr. LEAHY. The statement describes the bill as a balanced and well- crafted effort to enhance the services to patent applicants and America's innovators provided by the U.S. Patent Office. The Statement of Administration Policy emphasizes the bill supports the USPTO's efforts to improve patent quality, reduce the backlog of patent applications, reducing domestic and global costs for U.S. companies. I underscore these points because they are exactly the goals Chairman Smith of the other body and I set out to achieve when we first introduced patent reform legislation 6 years ago. It has been over half a century since our patent laws were updated. Look at the changes that have occurred during that time. We have become even more of a global economy than ever before. We have become more of an innovative economy than ever before. Improving patent quality will benefit businesses across the economic spectrum. The America Invents Act will improve patent quality by expanding the role of third parties to the patent examination process, creating a streamlined first-window, postgrant review to quickly challenge and weed out patents that never should have been issued in the first place. It improves the funding mechanism for the Patent Office to confront its backlog of nearly 700,000 patent applications. Those are patents that could be creating jobs and improving our economy. For years, low- quality patents have been a drain on our patent system, and in turn our economy, by undermining the value of what it means to hold a patent. Higher quality patents will bring greater certainty in the patent system. That is going to make it easier to get investment in American businesses, create jobs, and grow our economy. This act is bipartisan legislation. It is going to lead to long-needed improvements in our patent system and laws. I would note that no one Senator, no industry, no interest group, got everything it wanted in this bill. I suggested that if we were going to write this bill exactly the way we wanted in this body, we would have 100 separate bills. But we can only pass one. That is the nature of compromise. This bill represents a significant step forward in preparing the Patent Office and, in turn businesses, to deal with the challenges of the 21st century. Support for the bill has grown over time. It is now endorsed by an extensive list of supporters across the political spectrum. Look at who we have here. How often do you see this kind of a breakdown? The National Association of Manufacturers, the United Steelworkers, the U.S. Chamber of Commerce, the Association of American Universities, the American Intellectual Property Law Association, Coalition for the 21st Century Patent Reform, Small Business and Entrepreneurship Council, the National Retail Federation, the Financial Services Roundtable, the American Bar Association, the United Inventors Association of America, the Association of Competitive Technology, the Association of University Technology Managers, the Information Technology Council, American Institute of Certified Public Accountants, and so many more. I cannot remember a time in my years in the Senate where we have seen such a broad coalition come together: business, labor, high-tech, and others, coming together to pass legislation. We should grant this legislation final approval. The Senate and the House have now both considered it. A host of associations, interested parties from the private sector have endorsed passing the bill without further amendment. At a time when we can do something to create jobs and not cost the taxpayers money, every day we wait, every day we delay is another day before those jobs are created. Every day we wait, every day we delay is another day that we hold back the innovative genius of America. Every day we wait, every day we delay is another day we are unable to compete with the rest of the world on a level playing field. Any amendment--any amendment, including ones I might like--would force reconsideration by the House, and more unnecessary delay, and longer before we can create those jobs, longer before we can innovate, longer before we can compete with the rest of the world. I can think of a half dozen amendments that I would like to have in the bill. I will vote against them because it is time to get this done. Patent reform legislation has been debated exhaustively in both the Senate and the House for the past four Congresses. It is the product of dozens of hearings and weeks of committee markups. We should proceed to the bill and pass it. Let's not have any one person feeling they have the magic point everybody else has somehow overlooked. That is not the way the legislative process works. There are 100 here in the Senate and 435 in the House. Nobody gets every single thing they want. But here, the vast majority of Republicans and Democrats in the House and the Senate are getting what they feel is best for America. It is time for the Senate to serve the interests of the American people by passing the legislation before us. We have before us a consensus bill that will facilitate invention, innovation, and job creation today. This can help everybody from startups and small businesses to our largest cutting-edge corporations. Let's put Americans back to work. Let's show the American people that the Congress can actually accomplish something and do it for America. Here is something on which both Republicans and Democrats can come together. Let's not delay any longer. We have taken 6 years to get here. We had a vote yesterday where over 90 Senators voted to proceed, which indicates it is time to get moving, it is time to stop debating, and it is time to vote. Madam President, I yield the floor and suggest the absence of a quorum.

Mr. LEAHY

Mr. LEAHY. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. LEAHY

Mr. LEAHY. Mr. President, I ask unanimous consent the order for the quorum call be rescinded.