Lamar Smith

Mr. SMITH of Texas

Mr. SMITH of Texas. Madam Chair, almost everyone in Congress wants to help small businesses. They are the foundation of our economy and are the primary job creators. But this amendment includes certain terms or phrases that have nothing to do with the underlying goal that it purports to achieve. This amendment appears to focus on small businesses, but in reality the amendment attempts to provide the trial lawyer lobby and patent trolls with an exemption from PTO reexamination, allowing them to continue suing job creators using frivolous or questionable patents. This amendment has nothing to do with small businesses and everything to do with providing an exemption for some of the worst offenders of our patent system. This amendment will not help independent inventors or small businesses. Small businesses need the PTO reexamination proceedings. Those proceedings strengthen patents, and strong patents are what investors look for when making decisions about whether or not to provide venture capital funding. The argument that reexam proceedings harass or hurt small businesses is just plain wrong. The reexam proceedings are a cheaper, quicker, better alternative to resolve questions of patentability than costly litigation in Federal court, which can run into the millions of dollars and last for years. This amendment is an immunity agreement for patent trolls, those entities who do not create jobs or innovation but simply game the legal system. Additionally, this amendment appears to violate our international obligations under the TRIPS agreement. Under TRIPS, we are obligated not to discriminate against any field of technology or categories of patent holders. By providing an exemption from all reexamination proceedings for technological patents granted to patent trolls or nonpracticing entities, this would create a clear violation of our legal obligations. Our patent system should be designed to ensure that it produces strong patents and patent certainty. The PTO reexamination proceedings help ensure that these important goals are accomplished. This amendment bars any form of reexam for U.S.-owned patents and, thus, would also prevent U.S. inventors themselves from using supplemental examination to even be able to correct errors in the record about their own patents. This amendment creates a huge loophole in our patent system by exempting entities with 100 or fewer employees. This will not help small businesses but will allow patent troll entities, foreign companies, and foreign governments to manipulate our patent system. It would bar use of the business-methods transitional proceeding against most business-method patents. This amendment is a recipe for allowing patent trolls and foreign companies and their governments to bypass normal post-grant challenges and enables weak or questionable patents to bypass further scrutiny. There is no legitimate public policy objective in exempting large numbers of those who manipulate our patent system from the rules of the road. It is for these reasons that I strongly oppose this amendment. I yield the balance of my time to the gentleman from Virginia (Mr. Goodlatte).

Mr. SMITH of Texas. Madam Chair, I claim the time in opposition, although I support the amendment.

Mr. SMITH of Texas. Madam Chair, I understand the underlying point of the Member's amendment, but other legislation and patent reform in particular have taught us that even small changes can have unintended consequences unless they have been vetted and have gone through the regular committee process. The problem is in the details. This amendment is drafted as a study. I agree with the first part of the amendment but not the second because its objectives are written very much like a piece of legislation. It seeks to create support for a new program whereby taxpayer funds would be used to pay patent fees in foreign countries. I am strongly committed to helping our small businesses and independent inventors secure their rights and have a level playing field abroad, but I can't support a result that could create a new entitlement program, a new bureaucracy and the transferring of taxpayer dollars directly to the treasuries of foreign governments. We should not use taxpayer funds to pay patent filing fees to foreign governments. I do agree with the first part of this study, and am interested to see how the PTO, in coordination with other agencies, can figure out ways to help small businesses with international patent protection. I hope that this will be the focus of the study. The results of this study will show that small business outreach and educational and technical assistance programs are the most effective tools for small business and independent inventors. I think that the PTO needs to continue its efforts to reach out to small businesses and independent inventors. This bill includes a provision which creates a permanent small business ombudsman at the PTO to work with small businesses to help them secure their patent rights. The PTO also conducts small business outreach programs throughout the country, teaching small businesses about IP enforcement and how to protect their intellectual property both at home and abroad. Though I do not agree with the policy outline in the second part of the study and will strongly recommend that the PTO and SBA determine that such a program should not be established, I will support this amendment to initiate the study, and I hope that the bulk of it will focus on how to better utilize existing government resources for education and technical assistance to help small businesses with international patent protection. Before I yield back the balance of my time, I hope that the movers of this amendment might be willing to reassure me and others about the intent and goals of this study. I yield back the balance of my time.

Mr. SMITH of Texas. Madam Chair, section 23 of the bill requires the PTO Director to establish three or more satellite offices in the United States, subject to available resources. The provision lists criteria that the Director must take into account when selecting each office. This is a good addition to H.R. 1249, and I urge my colleagues to support it. I also hope that one of those offices is in Austin, Texas. I yield back the balance of my time.

Mr. SMITH of Texas. Madam Chair, I understand the underlying point of the Member's amendment, and I want to make it clear that my interpretation of this amendment and its intent is to highlight the problem posed by entities that pose as financial or technological businesses but whose sole purpose is not to create but to sue. I am talking about patent trolls--those entities that vacuum up patents by the hundreds or thousands and whose only innovations occur in the courtroom. This sense of Congress shows how these patent trolls can hurt small businesses and independent inventors before they even have a chance to get off the ground. This bill is designed to help all inventors and ensure that small businesses will continue to be a fountain for job creation and innovation. For these reasons, Madam Chair, I support the amendment. I yield back the balance of my time.

Mr. SMITH of Texas. Madam Chair, I rise in opposition to the amendment.

Mr. SMITH of Texas. Madam Chair, I rise to claim the time in opposition, though I am in favor of the amendment.

Mr. SMITH of Texas. I yield 2 minutes to the gentleman from Virginia (Mr. Goodlatte), who is the chairman of the Intellectual Property Subcommittee of the Judiciary Committee.

Mr. SMITH of Texas. Madam Chair, I yield 1 minute to the gentleman from California (Mr. Sherman).

Mr. SMITH of Texas. I yield myself the balance of my time. Madam Chair, I oppose the amendment to change the effective date for the tax strategy method section of the bill. It is possible to patent tax strategy methods, but it is bad policy. It is not fair to permit patents on techniques regularly used to satisfy a government mandate, such as one that requires individuals and businesses to pay taxes. Tax preparers, lawyers, and planners have a long history of sharing their knowledge regarding how to file returns, plan estates, and advise clients. They maintain that allowing the patentability of tax strategy methods will complicate the tax filing process and inhibit the ability of preparers to provide quality services for their clients. The effective date applies to any patent application that is pending on, or filed on or after, the date of enactment and to any patent that is issued on or after that date. The gentleman's amendment eliminates the application of this provision to those applications pending on the date of enactment. These applications have not been approved so I disagree with excluding these patents-in-waiting. It was a mistake for the PTO to issue these patents in the first place, given their potential to harm individual taxpayers and tax return preparers. We shouldn't leave the door ajar by allowing more applications in. This just compounds the very problem we're trying to solve. I oppose the gentleman's amendment, and I urge my colleagues to vote against it. I yield back the balance of my time.

Mr. SMITH of Texas. I rise in opposition to the amendment.

Mr. SMITH of Texas. Madam Chair, the Conyers amendment to tie the changes proposed in the America Invents Act to future changes that would be made in foreign law is unworkable. I oppose providing a trigger in U.S. law that leaves our patent system at the mercy of actions to be taken at a future date by the Chinese, Russians, French, or any other country. It is our constitutional duty to write the laws for this great land. We cannot delegate that responsibility to the whims of foreign powers. I know that this idea has been floated in the past, but after working on several pieces of patent legislation over the past several Congresses, and particularly this year on H.R. 1249, it has become clear that this type of trigger idea is simply not workable and is counterproductive. The move to a first-inventor-to-file system creates a more efficient and reliable patent system that benefits all inventors, including independent inventors. The bill provides a more transparent and certain grace period, a key feature of U.S. law, and a more definite filing date that enables inventors to promote, fund, and market their technology, while making them less vulnerable to costly patent challenges that disadvantage independent inventors. Under first-inventor-to-file, an inventor submits an application to the Patent Office that describes their invention and how to make it. That, along with a $110 fee, gets them a provisional application and preserves their filing date. This allows the inventor an entire year to complete the application, while retaining the earlier filing date. By contrast, the cost of an interference proceeding before the PTO often runs to $500,000. The current first-to-invent system harms small businesses and independent inventors. Former PTO Commissioner Gerald Mossinghoff conducted a study that proves smaller entities are disadvantaged in PTO interference proceedings that arise from disputes over patent ownership under the current system. Independent inventors and small companies lose more often than they win in these disputes, plus bigger companies are better able to absorb the cost of participating in these protracted proceedings. In addition, many inventors also want protection for their patents outside the United States. If you plan on selling your product overseas, you need to secure an early filing date. If you don't have a clear filing date, you can be shut off from the overseas market. A change to first-inventor-to-file will help our businesses grow and ensure that American goods and services will be available in markets across the globe. In the last 7 years, only one independent inventor out of 3 million patent applications filed has prevailed over the inventor who filed first. One out of 3 million. So there is no need for this amendment. Independent inventors lose to other applicants with deeper pockets that are better equipped to exploit the current complex legal environment. So the first-to-file change makes it easier and less complicated for U.S. inventors to get patent protection around the world. And it eliminates the legal bills that come with the interference proceedings under the current system. It is a key provision of this bill that should not be contingent upon actions by foreign powers and delay what would be positive reforms for independent inventors and our patent system. The first-inventor-to-file provision is necessary for U.S. competitiveness and innovation. It makes our patent system stronger, increases patent certainty, and reduces the cost of frivolous litigation. However, if you support the U.N. having military control over our troops, or if you support the concept of an international court at The Hague, then you would support this amendment's proposal of a trigger that subjects U.S. domestic law to the whims of governments in Europe, China, or Russia. It really would be unprecedented to hold U.S. law hostage to legal changes made overseas, and would completely go against what this great country stands for and what our Founders fought for: the independent rights and liberties we have today. For these reasons, Madam Chair, I am strongly opposed to the amendment. I yield back the balance of my time.

Mr. SMITH of Texas. I rise in opposition to the amendment.

Mr. SMITH of Texas. Madam Chair, this amendment strikes the prior- user rights provision from the bill. I strongly oppose this amendment. The bill expands prior-user rights--a strong, pro-job, pro- manufacturing provision. This provision will help bring manufacturing jobs back to this country. It allows factories to continue using manufacturing processes without fear of costly litigation. It is absolutely a key component of this bill. This provision has the strong support of American manufacturers and the support of all the major university associations and technology- transfer associations. These include the Association of American Universities, American Council on Education, Association of American Medical Colleges, Association of Public and Land Grant Universities, Association of University Technology Managers, and the Council on Government Relations representing the vast majority of American Universities. Prior-user rights ensure that the first inventor of a new process or product using manufacturing can continue to do so. This provision has been carefully crafted between stakeholders and the university community. The language provides an effective exclusion for most university patents, so this provision focuses on helping those in the private sector. The prior-use defense is not overly expansive and will protect American manufacturers from having to patent the hundreds or thousands of processes they already use in their plants. After getting initial input from the university community, they recommended that we make the additional changes reflected in this bill to ensure that prior-user rights will work effectively for all private sector stakeholders. Prior-user rights are important as part of our change to a first-to- file system. I believe it is important to ensure that we include these rights to help our job-creating manufacturers across the United States. The philosophical objections of a lone tech-transfer office in Wisconsin should not counter the potential of this provision for job creation throughout America. There are potentially thousands or hundreds of thousands of unemployed Americans who are looking for manufacturing jobs and could benefit from this provision. Without this provision, businesses say they may be unable to expand their factories and hire American workers if they are prevented from continuing to operate their facilities the way they have for years. For many manufacturers, the patent system presents a catch-22. If they patent a process, they disclose it to the world and foreign manufacturers will learn of it and, in many cases, use it in secret without paying licensing fees. The patents issued on manufacturing processes are very difficult to police, and oftentimes patenting the idea simply means giving the invention away to foreign competitors. On the other hand, if the U.S. manufacturer doesn't patent the process, then under the current system a later party can get a patent and force the manufacturer to stop using a process that they independently invented and used. In recent years, it has become easier for a factory owner to idle or shut down parts of his plant and move operations and jobs overseas rather than risk their livelihood through an interference proceeding before the PTO. The America Invents Act does away with these proceedings and includes the pro-manufacturing and constitutional provision of prior-user rights. This provision creates a powerful incentive for manufacturers to build new plants and new facilities in the United States. Right now, all foreign countries recognize prior-user rights, and that has played a large role in attracting American manufacturing jobs and facilities to these countries. H.R. 1249 finally corrects this imbalance and strongly encourages businesses to create manufacturing jobs in this country. The prior-user rights provision promotes job creation in America. Prior-user rights will help manufacturers, small business and other innovative industries strengthen our economy. It will help our businesses grow and allow innovation to flourish. I strongly support prior-user rights, and so I oppose this amendment. I yield back the balance of my time.

Mr. SMITH of Texas. Madam Chair, the gentleman's amendment strikes the first-inventor-to-file provisions from the bill. I strongly oppose the amendment. The move to a first-inventor-to-file system creates a more efficient and reliable patent system that benefits all inventors, including independent inventors. This provision provides a more transparent and certain grace period, a key feature of U.S. law, and a more definite filing date that enables inventors to promote, fund, and market their technology while making them less vulnerable to costly patent challenges that disadvantage independent inventors. The first-inventor-to-file system is absolutely consistent with the Constitution's requirement that patents be awarded to the inventor. Former Attorney General Michael Mukasey has stated that the ``provision is constitutional and helps assure that the patent laws of this country accomplish the goal set forth in the Constitution: `to promote the Progress of Science and useful Arts.' '' Under first-inventor-to-file, patent rights are reserved to someone who independently conceived of an invention before it was in the public domain. And under the Constitution, that is what is required to be considered an ``inventor.'' In fact, early American patent law, that of our Founders' generation, did not concern itself with who was the first to invent. The U.S. operated under a first-inventor-to-register system for nearly half a century, starting in 1790. The first-inventor-to-register system is similar to first-inventor-to-file, a system that the Founders themselves supported early in our Nation's history. The courts did not even concern themselves with who was the first person to invent until 1870, with the creation of interference proceedings. Those proceedings are the ones that disadvantage independent inventors and small businesses. And over the years, and in subsequent revisions of the law, those proceedings have morphed into a costly litigation tactic. Under first-inventor-to-file, an inventor submits an application to the Patent Office that describes their invention and how to make it. That, along with just a $110 fee, gets them a provisional application and preserves their filing date. This allows the inventor an entire year to complete the application, while retaining the earlier filing date. By contrast, the cost of an interference proceeding in today's law could run an inventor $500,000. Accusations that the bill doesn't preserve the 1-year grace period are simply false. This bill provides a stronger, more transparent and certain 1-year grace period for disclosures. This enhances protection for inventors who have made a public or private disclosure of their invention during the grace period. The grace period protects the ability of an inventor to discuss or write about their ideas for a patent up to 1 year before they file for patent protection. These simple requirements create a priority date that is fixed and public so that everyone in the world can measure the patent against competing applications and patents and relevant prior art. In addition, many inventors also want protection for their patents outside of the United States. If you plan on selling your product overseas, you need to secure an early filing date. If you don't have a clear filing date, you can be shut out from the overseas market. A change to a first-inventor-to-file system will help our businesses grow and ensure that American goods and services will be available in markets across the globe. The current first-to-invent system seriously disadvantages small businesses and independent inventors. Former PTO Commissioner Gerald Mossinghoff conducted a study that proved smaller entities are disadvantaged in PTO interference proceedings that arise from disputes over patent ownership under the current system. In the last 7 years, only one independent inventor out of 3 million patent applications filed has proved an earlier date of invention than the inventor who filed first. Madam Chair, let me repeat that: in the last 7 years, only one independent inventor out of 3 million patent applications filed has proved an earlier date of invention than the inventor who filed first. Independent inventors lose to other applicants with deeper pockets that are better equipped to exploit the current complex legal environment. So the first-inventor-to-file change makes it easier and less complicated for U.S. inventors to secure their patent rights, and it protects their patents overseas. And it eliminates the legal bills that come with interference proceedings under the current system. It is a key provision of this bill. Madam Chair, the amendment should not be approved, and I urge my colleagues to vote against it. I yield back the balance of my time.

Mr. SMITH of Texas. Mr. Chair, I want to clarify that Section 18 is designed to address the problem of low-quality business method patents that are commonly associated with the Federal Circuit's 1998 State Street decision. Not all business method patents are eligible for review by the patent office under Section 18. Towards that end, Section 18 of the bill specifically exempts ``patents for technological inventions'' from review. Patents for technological inventions are those patents whose novelty turns on a technological innovation over the prior art and are concerned with a technical problem which is solved with a technical solution. The technological innovation exception does not exclude a patent simply because it recites technology. Inventions related to manufacturing and machines that do not simply use known technology to accomplish a novel business process would be excluded from review under Section 18. Section 18 would not cover patents related to the manufacture and distribution of machinery to count, sort, and authenticate currency. It is the intention of Section 18 to not review mechanical inventions related to the manufacture and distribution of machinery to count, sort and authenticate currency like change sorters and machines that scan currency whose novelty turns on a technological innovation over the prior art. These types of patents would not be eligible for review under this program.

Mr. SMITH of Texas. I yield the gentleman an additional 15 seconds.

Mr. SMITH of Texas. I thank the gentleman for offering the amendment, and I urge my colleagues to support it. I yield back the balance of my time.

Mr. SMITH of Texas. Madam Chair, I rise to claim the time in opposition, although I support the amendment.

Mr. SMITH of Texas

Mr. SMITH of Texas. Madam Chair, I submit: (1) Manager's Statement on Supplemental Examination; (2) Manager's Statement on Genetic Test Study proposed in the Managers; (3) Statement on the codification of the Weldon amendment; (4) Statement on the business method patent transitional program; (5) Statement on the PTO fee compromise provision in the Manager's amendment; (6) November 2003 letter on the Weldon amendment from PTO Director James Rogan; (7) Information on the Weldon amendment from the Family Research Council. Chairman's Floor Remarks/Manager's Statement: Supplemental Examination in H.R. 1249 Mr. Speaker, this bill also contains a very important new administrative proceeding available to patent owners, to help improve the quality of issued patents. This new ``Supplemental Examination'' procedure encourages the voluntary and proactive disclosure of information that may be relevant to patent prosecution for the Office to consider, reconsider, or correct. The voluntary disclosure by patentees serves to strengthen valid patents, while narrowing or eliminating patents or claims that should not have been issued. Both of these outcomes promote investment in innovation by removing uncertainty about the scope, validity or enforceability of patents, and thus the use of this new proceeding by patent owners is to be encouraged. Subparagraph (C) relating to Supplemental Examination is intended to address the circumstance where, during the course of a supplemental examination or reexamination proceeding ordered under this section, a court or administrative agency advises the PTO that it has made a determination that a fraud on the Office may have been committed in connection with the patent that is the subject of the supplemental examination. In such a circumstance, subparagraph (C) provides that, in addition to any other actions the Director is authorized to take, including the cancellation of any claims found to be invalid under section 307 as a result of the reexamination ordered under this section, the Director shall also refer the matter to the Attorney General. As such, this provision is not intended to impose any obligation on the PTO beyond those it already undertakes, or require it to investigate or prosecute any such potential fraud. Subparagraph (C) is neither an investigative nor an adjudicative provision, and, as such, is not intended to expand the authority or obligation of the PTO to investigate or adjudicate allegations of fraud lodged by private parties. Further, any referral under this subjection is not meant to relieve the Director from his obligation to conclude the supplemental examination or reexamination proceeding ordered under this section. It is important for the process to proceed through conclusion of reexamination, so that any claims that are invalid can be properly cancelled. The decision to make referrals under subsection (c) is not meant to be delegated to examiners or other agents of the PTO, but rather is a determination that should only be made by the Director himself or herself. Supplemental Examination has the potential to play a powerful role in improving patent quality and boosting investment in innovation, economic growth, and job creation. The Director should implement this new authority in a way that maximizes this potential.

Mr. SMITH of Texas

Mr. SMITH of Texas. I want to respond to the gentleman from New Hampshire and say that one key issue for clarification is the interplay between actions under section 102(a) and actions under section 102(b). We intend for there to be an identity between 102(a) and 102(b). If an inventor's action is such that it triggers one of the bars under 102(a), then it inherently triggers the grace period subsection 102(b).

Mr. SMITH of Texas. I yield myself such time as I may consume. Mr. Chairman, individuals who raise questions about the constitutionality of this legislation perhaps should review the Constitution itself. The Constitution expressly grants Congress the authority to ``promote the progress of science and useful arts.'' That is precisely what this bill does. H.R. 1249 improves the patent system, ensuring the protection and promotion of intellectual property that spurs economic growth and generates jobs. The bill's inclusion of a move to a first-inventor-to-file system is absolutely consistent with the Constitution's requirement that patents be awarded to the ``inventor.'' A recent letter by professors of law from across the country--from universities including Emory, Indiana, Washington University in St. Louis, Missouri, NYU, New Hampshire, Wisconsin, Albany, Stanford, Chicago, Georgia, Richmond, Vanderbilt, and Washington--states that claims of unconstitutionality ``cannot be squared with well-accepted and longstanding rules of current patent law.'' And former Attorney General Michael B. Mukasey has said that the provision is both ``constitutional and wise.'' In a letter to PTO Director David Kappos, General Mukasey stated that the bill's constitutionality is assured because it ``leaves unchanged the existing requirement that a patent issue only to one who `invents or discovers.' '' Also, this provision actually returns us to a system that our Founders created and used themselves. Early American patent law, that of our Founders' generation, did not concern itself with who was the first-to-invent. The U.S. operated under a first-inventor-to-register, which is a system very similar to the first-inventor-to-file. It wasn't until the 1870s, when the courts created interference proceedings, that our patent system began to consider who was the first-to-invent an invention. These interference proceedings disadvantaged independent inventors and small businesses. Over time, interference proceedings have become a costly litigation tactic that has forced some manufacturers to take the path of least resistance and move operations and jobs overseas rather than risk millions or billions of dollars in capital investment. The America Invents Act does away with interference proceedings and includes a provision to address prior user rights without jeopardizing American businesses and jobs. Opponents of the first-inventor-to-file system claim that it may disadvantage independent inventors who cannot file quickly enough. But the current system lulls inventors into a false sense of security based on the belief that they can readily and easily rely on being the first- to-invent. Inventors forget that, to have any hope of winning an interference proceeding, they must comply with complex legal procedures and then spend over $500,000 to try to prove that they were the first- to-invent. In the last 7 years, under the current system of interference proceedings, only one independent inventor out of 3 million patent applications has proved an earlier date of invention over the inventor who filed first, one out of 3 million. In fact, the current patent system's costly and complex legal environment is what truly disadvantages independent inventors, who often lose their patent rights because they can't afford the legal battle over ownership. The America Invents Act reduces frivolous litigation over weak or overbroad patents by establishing a pilot program to review a limited group of business method patents that never should have been awarded in the first place. Section 18 deals with mistakes that occurred following an activist judicial decision that created a new class of patents called business method patents in the late 1990s. The PTO was ill equipped to handle the flood of business method patent applications. Few examiners had the necessary background and education to understand the inventions, and the PTO lacked information regarding prior art. As a result, the PTO issued some weak patents that have lead to frivolous lawsuits. The pilot program allows the PTO to reexamine a limited group of questionable business method patents, and it is supported by the PTO. Former 10th Circuit Federal Appeals Court Judge Michael McConnell sent me a constitutional analysis of the bill's reexamination proceedings. He stated that ``there is nothing novel or unprecedented, much less unconstitutional, about the procedures proposed in sections 6 and 18. The application of these new reexamination procedures to existing patents is not a taking or otherwise a violation of the Constitution.'' Supporters of this bill understand that if America's inventors are forced to waste time with frivolous litigation, they won't have time for innovation. That's why the U.S. Chamber of Commerce, National Association of Manufacturers, PhRMA, BIO, the Information Technology Industry Council, American Bar Association, Small Business & Entrepreneurship Council, Independent Community Bankers of America, Credit Union National Association, Financial Services Roundtable, American Insurance Association, Property Casualty Insurers Association of America, the Securities Industry and Financial Markets Association, the American Institute of CPAs, industry leaders, the Coalition for 21st Century Patent Reform, the Coalition for Patent Fairness, independent inventors, and all six major university associations all support H.R. 1249. To quote the Chamber of Commerce: ``This legislation is crucial for American economic growth, jobs, and the future of U.S. competitiveness.'' We can no longer allow our economy and job creators to be held hostage to legal maneuvers and the judicial lottery. American inventors have led the world for centuries in new innovations, from Benjamin Franklin and Thomas Edison to the Wright Brothers and Henry Ford. But if we want to continue as leaders in the global economy, we must encourage the innovators of today to develop the technologies of tomorrow. This bill holds true to the Constitution, our Founders and our promise to future generations that America will continue to lead the world as a fountain for discovery, innovation and economic growth. Mr. Chairman, I reserve the balance of my time.

Mr. SMITH of Texas. I yield myself the balance of my time. Madam Chair, let me address some of the criticisms that have been made about the manager's amendment. There are some who want to make more changes to the business method patent provision in the bill. This topic is the primary reason the Judiciary Committee launched patent reform back in 2005. In response to a number of poor-quality, business-method patents issued over the past decade, the bill creates a transitional program within PTO to evaluate these patents using the best prior art available. Bad patents will be weeded out, but good ones will become gold-plated based on their enhanced legal integrity. There are others who have sought changes to the prior art provisions in the First-Inventor-to-File section. The language in our bill which replicates that in the Senate version has drawn support from a large cross-range of industries and investors. Some colleagues have complained during this debate about the treatment of PTO funding in the manager's amendment. The bill that the House Judiciary Committee reported would allow the PTO to keep all the revenue it raises without having to request funding through the normal appropriations process. This is treated as mandatory spending and scored savings in excess of $700 million. Because of concerns raised by the Appropriations Committee members, we worked with them to develop a compromise that eliminates fee diversion while permitting the appropriators to retain oversight through the traditional appropriations process. The manager's amendment accomplishes this goal, but it means that the mandatory spending provisions of the revolving fund become discretionary spending under the reserved fund. Because this change is contrary to CutGo requirements, we need a waiver for consideration of H.R. 1249. I want to emphasize that the bill includes user fees paid by inventors and trademark filers to the PTO in return for services. This isn't the same thing as using tax revenue from the general treasury to fund the agency, so I am not sure that the CutGo rules even apply. Very importantly, there is no impact on the deficit. The manager's amendment is constitutionally sound, improves the base text of the bill, and incorporates a funding agreement approved by the leadership to get this bill to the floor. It's important to pass it and then move on to the other amendments. I urge my colleagues to vote ``aye'' on the amendment.

Mr. SMITH of Texas. Madam Chair, I yield back the balance of my time.

Mr. SMITH of Texas. I yield myself such time as I may consume. Madam Chair, the manager's amendment consists of numerous technical edits and other improvements to the bill. Some of the highlights include the following provisions: Expansion and clarification of prior-user rights under section 273 of the Patent Act. Institutions of higher education qualify for ``micro-entity'' status when paying fees. In other words, an inventor who works for a university or who assigns or conveys an invention to a university qualifies for lower micro-entity fee status. Consolidation of numerous PTO reporting requirements. Inclusion of ``Weldon amendment'' language that forbids the patenting of inventions ``directed to or encompassing a human organism.'' This language has been part of the CJS appropriations legislation for years. It's directed as preventing the PTO from approving inventions related to human cloning. And deletion of a provision that provides special treatment to one company that wants to get additional patent term protection from the PTO. These and other changes in the manager's amendment smooth out a few rough edges and improve the overall bill. I reserve the balance of my time.