Markups

Opening Statements

       There are few economic issues our committee or this Congress will face that are more important than our patent law system. Intellectual property is responsible for nearly half of our nation's gross domestic product and one third of all jobs in the U.S. economy.  Our patent system, while not perfect, is the envy of the world.

       As I have stated before,  I believe the issues of non-practicing entities or so-called patent "trolls," present some unique problems that are worthy of congressional attention.  There is a disconnect when shell corporations — with little or no assets — can systematically abuse the patent system. If we don't know who these shell companies are, and – if they are able to unfairly threaten hundreds, if not thousands, of unsuspecting retailers –  we have a problem that requires a legislative solution.

       Unfortunately, the legislation before us overreacts to these issues and it would severely undermine the role of our federal judiciary in general and innovation in particular. I have been working my entire career to help foster an independent judiciary that can resolve disputes between parties on a fair and dispassionate basis based on an evenhanded set of rules. As a matter of fact, that is exactly what is happening now. The federal circuit and the Supreme Court are in the midst of altering the rules for patent fee shifting, discovery, and pleadings, among other things. There is little doubt that the federal judiciary – as evidenced by its exceedingly deliberative rulemaking process – is in a far better position than 535 members of Congress to set the proper rules for their own court rooms on these matters.

       Furthermore, by unbalancing the patent system we send a signal to inventors –  the very people doing the research and developing the cures that we benefit from every day – that their inventions are not worthy of full legal protection. This means that the next cure for cancer or technological break though may be stymied and never come, or may be developed abroad rather than in the U.S. And, by limiting the Committee to a single legislative hearing, by skipping subcommittee and moving to markup prematurely, we make it all the more difficult for members and stakeholders to provide meaningful input into the process.

       There is a broad range of patent experts and stakeholders who agree with me, and have expressed significant concern if not outright opposition to the bill before us, including the:

• Federal Judicial Conference;
• the American Bar Association;
• the American Intellectual Property Law Association;
• the Patent Officers Professional Association;
• the American Association of Universities;
• the Biotechnology Industry Association;
• the Twenty-First Century Patent Coalition;
• the Innovation Alliance;
• the American Association for Justice;
• the Pharmaceutical Research and Manufacturers Association;
• the Institute of Electrical and Electronics Engineers;
• the National Association of Patent Practitioners; and
• the National Bankruptcy Conference.

      Because I feel so strongly that Congress must get this issue right, Ranking Subcommittee Member Watt and I will offer a substitute that responds to the real and identifiable problems of patent abuse without upsetting the entire patent law system. Our substitute will also take the single most viable step we can take towards improving patent quality – ending fee diversion so that poor quality patents are not issued to begin with.

       I am willing to roll up my sleeves and work with all of the members of this Committee in developing a fair, reasonable and measured approach to patent reform. This Committee has a long history of cooperation between the chair and ranking member on intellectual property matters.  And while in my judgment that cooperation has been lacking thus far, I am hopeful we can work together to improve the legislation so that it can pass the House and Senate and be signed into law.

       Thank you, Mr. Chairman.

       Mr. Chairman, a little more than two years ago, as Ranking Member of the IP Subcommittee, I stood shoulder to shoulder with you, as Chairman of the IP Subcommittee, and Mr. Smith, then-Chairman of the full Committee, to work tirelessly to get patent reform legislation out of Committee, to the Floor and onto the President's desk. It was an historic moment. Patent reform efforts had lingered over the course of three terms of Congress. But finally, forward-looking legislation designed to shore up the USPTO and reestablish our patent system as the best in the world was enacted.

       Now as former PTO director, David Kappos, testified before this Committee late last month, the "ink is barely dry" on the American Invents Act, and another sweeping piece of legislation has been introduced. There is no doubt that the deceptive and abusive practices of the "non-practicing entities" or NPEs are deplorable and that congressional action to address these practices is appropriate. But, to quote former Director Kappos again,

"If there were ever a case where caution is called for, this is it. Caution in turn calls for a deliberative process that takes the time to reach out and listen to all stakeholders, including those who will not be the fastest ones off the mark. Many small innovators – today's Edisons – have not had time to make their views heard."

       One of those voices is that of Louis Foreman, CEO of Edison Nation, a small inventor who was instrumental in the passage of the American Invents Act, and stood with us as the President signed that bill into law. Louis is also my constituent, and proves the point made by Director Kappos.

       In a letter to the Committee yesterday, Louis along with other small inventors wrote:

[T]he process now underway is strikingly different in terms of the unprecedented haste with which it is being pursued and the lack of breadth and depth of key stakeholder feedback to evaluate the scope of the harm that will be caused by some of the proposed legislative provisions.

       As I have stated before, I share Louis' concerns. Where is the fire here? Why are we pursuing arbitrary deadlines to pass this bill which I believe has as many, if not more, critics than supporters. The critics and those expressing concern are not simply naysayers, but thoughtful and constructive stakeholders whose views have been casually cast aside.

       They include Chief Judge Rader of the Federal Circuit. Judge Rader has volunteered his time and expertise and alerted us to some of the intrusions on judicial independence in the bill that could lead to negative consequences. As a footnote, I must say that we have repeatedly heard of Congress's authority to enact laws that impact the judiciary and its processes. I don't believe anyone has ever questioned our authority to enact such laws, and neither is Judge Rader doing so. Rather, they are questioning the wisdom of doing so, particularly when scant attention has been given to the web of interactions between rules of judicial procedure and the laws we seek to engraft over that complex, well-thought out scheme.

       The litigation reforms in this bill will not only apply to the abusive litigants, but all litigants. Unfortunately, the problem we have now is not with NPEs but NPLs, non-practicing lawmakers, who have crafted legislation without consideration of how the courtroom actually operates.

       Mr. Chairman, there is a pathway to "yes", but the process thus far has taken us off-course. I will, therefore, offer a number of amendments today and a substitute along with the Ranking Member, all of which I hope will highlight some of the legitimate concerns that remain.

       Mr. Chairman, I yield back.

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