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Press Conference with Senator Patrick Leahy (D-VT), Chairman, and Senator Orrin Hatch (R-UT), Ranking Member, Senate Judiciary Committee; and Rep. John Conyers (D-MI), Chairman, and Rep. Lamar Smith (R-TX), Ranking Member, House Judiciary Committee

Press Conference

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Location: Washington, DC

PRESS CONFERENCE WITH SENATOR PATRICK LEAHY (D-VT), CHAIRMAN, AND SENATOR ORRIN HATCH (R-UT), RANKING MEMBER, SENATE JUDICIARY COMMITTEE; AND REP. JOHN CONYERS (D-MI), CHAIRMAN, AND REP. LAMAR SMITH (R-TX), RANKING MEMBER, HOUSE JUDICIARY COMMITTEE

SUBJECT: PATENT REFORM

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SEN. LEAHY: Good afternoon. I must have been -- I am -- this is the first time I've been in the Senate gallery since it's been fixed up. It's --

SEN. HATCH: It's nice.

SEN. LEAHY: It is. Right.

SEN. HATCH: And it's just wonderful the way we treat you. (Laughter.) (Inaudible) -- guys.

Q (Off mike) -- the House gallery.

SEN. LEAHY: Huh?

Q And the way we treat you --

Q Appropriation money for the House gallery.

SEN. HATCH: (Chuckling.) Yeah, that's --

SEN. LEAHY: There we go.

SEN. HATCH: That's John's job.

SEN. LEAHY: This is the Congress and it's also the year in which bipartisan patent reform should be enacted. When you talk about innovation and economic development, you're not talking about a Democratic or Republican objective; it is something that affects everybody in this country. So once again we're introducing this legislation, not only on a bipartisan but on a bicameral basis.

Patent reform is about economic development. It's about jobs. It's about innovation. It's also about consumers. All benefit under an efficient patent system.

When Thomas Jefferson issued the first -- very first patent -- to a Vermonter, by the way -- no one could have predicted how the American economy was going to develop and what changes would be needed for the law to keep pace.

Now it's been more than five and a half decades since the last time Congress significantly updated the patent laws. Fifty-five years ago it was a far different country and far different innovation, and if we're going to allow our innovators to flourish in the Information Age, we need new patent laws.

Last Congress, the Senate Judiciary Committee held three hearings on patent issues. We spent four weeks in mark-up sessions on the Patent Bill, during which the legislation was improved. We amended it to address numerous concerns. And the legislation we're introducing today picks up where our discussion last year left off.

We've made several changes. We've removed the 18-month publication, the applicant quality submission requirements. Those stirred significant concerns. We took them out. We've also adopted the House-passed approach of reexamination at the PTO.

One provision that we have not changed on introduction is the calculation of damages. It's perhaps the most controversial provision that remains in the bill. We kept the language the same, not because we assume it's going to be the final language in the bill, but we want to start off where we left off and give us something to work on.

Now, I'm also going to work with Senator Hatch on inequitable conduct reform. It was not addressed in the bill this year, but I know it's very important to him. And Senator Hatch -- I might say parenthetically, he and I have worked together for years on some of the most significant patent and trademark legislation the Senate has passed.

And the courts have been active on patent issues since we started our reform. I don't know if it's coincidence that they started getting active when we did, but the decisions have been moving along in a positive direction toward improving patent quality and reducing unnecessary litigation.

We're going to have a hearing in the Judiciary Committee next week on patent reform. We'll talk about the impact of those decisions. Some may very well be helpful.

Lastly, let me emphasize this is bicameral, it is bipartisan. We have some of the most senior members of the House and Senate endorsing the legislation, but we also have some of the newest members. And we've done this intentionally.

With that, I'll put my whole statement in the record. But let me yield to Senator Hatch, with whom I've worked on this for years.

SEN. HATCH: Well, thank you, Mr. Chairman. I want to begin by thanking Chairman Patrick Leahy for his leadership on this very important legislation, as well as our two distinguished House members who are with us here today, Chairman Conyers and, of course, Lamar Smith.

These folks have worked long and hard. It's a great undertaking to have a piece of legislation that's both bipartisan and bicameral, as Senator Leahy has said. And I always have said that patent legislation should be a multi-Congress endeavor.

Today's introduction signals the third and what I hope will be the final round. It hasn't been easy. At times, the process has been long. It's been tedious. But we all know that streamlining our nation's patent system would not be an easy task.

Protecting our country's global leadership in science and technology is of the utmost importance. Reform is long overdue. And it's integral to maintaining America's competitive edge and keeping our economy growing, especially during these difficult economic times.

Our country's ingenuity continues to fund our economy. And we must protect new ideas and investments in innovation and creativity. Patents encourage technological advancement by providing incentives to invent, invest in and disclose new technology.

Just about everything we use, on a daily basis, represents innovation that is protected by our patent system. Our ever- increasing technology-and-knowledge-based economy creates good, high- paying jobs in almost every state in our union.

Patent reform affects everyone and should not fall prey to partisan tactics from either side. We all have a stake in our nation's ability to grow and compete on a worldwide basis.

So I'm pleased with the manner in which the sponsors of this bill have worked together. We have listened to many of the concerns raised, by stakeholders, and have changed the legislative text accordingly.

We all agree that more work needs to be done, on the damages and inequitable conduct provisions. And I am hopeful that we will be successful, in making these and other changes, prior to floor consideration. And as the chairman has said, we've agreed to get this done.

If we are to continue to lead the globe in innovation and production, then we must have an efficient and streamlined patent system, one that fosters high-quality patents and limits counterproductive litigation.

Now is the time for patent reform. And these four folks up here, I think, are people who can help bring that to pass.

And it has to be brought to pass in order to keep our technological edge going the way we want to have it going.

So Chairman Conyers?

SEN. LEAHY: Thank you, Orrin.

John, it's all yours.

REP. CONYERS: Thank you.

REP. SMITH (?): (Knock it out of the thing on this one ?).

REP. CONYERS: Yup.

Thank you very much, Senator Orrin Hatch, Chairman Leahy and my good friend Lamar Smith, the ranking member of the House Judiciary Committee.

We all have come together; today we're introducing the same piece of legislation in both bodies. And the only person not here is Howard Berman, who for many years was doing the work that I'm doing now. He's chairman of the Foreign Affairs Committee. But he's with us; he's a cosponsor of the bill.

And of course, we've all learned a lot from our last endeavor. We were more successful in the House than the Senate was. So that's why we're over here today, to help get them organized -- (laughter) -- and to understand how this legislative process works.

SEN./REP. : (Off mike.) (Laughter.)

SEN. HATCH (?): Usually helping us.

REP. CONYERS: (Laughs.) But it's a pleasure to be working with all the men and women that are connected with us. Its importance cannot be underscored, particularly in the time and crisis that we are.

The two biggest stumbling blocks are pretty clear: damages and inequitable conduct. And there's a lot of effort going into that. Now, at the same time, there's a decision that will be coming out of a circuit federal appeals court that's going to weigh in on the legislation. And we're hoping that our hearings and our public discussions will be given the usual courteous attention that the court gives the work that we do.

So I'm happy to join all of you here, and I'd like to yield now to Lamar Smith, the senior Republican member of the House Judiciary Committee.

REP. SMITH: Thank you, John, very, very much.

REP. CONYERS: You're welcome, sir.

REP. SMITH: It's nice to be in such good company here today, with Senators Leahy, Senator Hatch, and my chairman, John Conyers.

This patent reform legislation has been four years in the making. Two Congresses ago we introduced the first patent reform bill. It didn't go very far.

In the last Congress we passed it in the House, and in this Congress, if you see the trajectory here, it seems to me that it only makes sense that we get it passed both in the Senate and the House and enact it this year.

Those four years have shown us a lot, and of course, as you've seen by the comments that have been made today already, we are going to work to try to nudge this bill along. If we have to make some tweaks to get the support, we're going to do that. It is important to pass this particular bill.

Intellectual property has grown in significance beyond almost anybody's imagination. I don't know whether this says more about me and how long I've been in Congress or about IP, but when I first came to Congress, there were no such thing as cell phones or BlackBerrys or laptops. So in just those few years -- I won't tell you how many -- we've seen how important intellectual property has become.

We also know the significance of intellectual property just on the basis of facts and figures. And even though intellectual property companies are -- I think it's 3 or 4 percent of all the total companies in America -- intellectual property companies now account for 17 percent -- 17 percent -- of our gross domestic product. In other words, 17 percent of our economic growth is due to IP industries.

And believe me, if there's any time to try to encourage IP industries and industries that do generate jobs to prosper, now is the time to do that.

The United States has one-third of all the patents that have been registered in the world. And IP exports in the United States contribute a whole lot to our trade balance, and clearly there's a surplus because we export far more in the way of intellectual property than we import. So all that shows you a little bit about the importance of the intellectual property.

As far as this bill goes, I think our aims here are really to strengthen the patent system, try to -- more than anything else, try to encourage and protect creativity and inventions. That's what underlies these bills.

And of course we also want to try to discourage frivolous lawsuits, the patent trolls, the individuals that would try to take advantage of the system that we have today.

This is going to be the most significant change in patent law that we've seen in almost 50 years. We're way overdue to addressing the intellectual property process and the patent process as well.

So I think we're off to a great start.

And my prediction to you-all is that this will be the most significant bill that you see introduced this year that enjoys both bipartisan and bicameral support, and that is a testimony to the individuals who are behind me. But it is that significant. If there's any bill that's going to pass, it's going to be a bill with this kind of bipartisan, bicameral support. And it is much needed by one of the few industries in America that is a growth industry, that is continuing to generate good and good-paying jobs.

So that's what we're about. Like I say, I think because of the trajectory we see in the past, because of the work that's been done over the last four years, I do predict we'll be successful this year.

SEN. LEAHY: Any questions from anybody? Yes.

Q Senator, Andrew Noyes from Congress Daily. On the damages and the inequitable conduct issue, or damages specifically, at the end of last session we had really these two camps who were at loggerheads over damages -- (off mike). And I believe that -- (off mike) -- between you and Mr. Specter. So what has changed with respect to damages?

SEN. LEAHY: I think a question of urgency of getting something passed. We know that we cannot continue the way we've been. We will get it passed. We will work out the differences. I've been in for 36 years. I know that when you have something that is extremely important to get done, it does get done.

Q On the inequitable conduct issue --

SEN. LEAHY: Senator Hatch and I will work this out.

Q -- could you speak to kind of what -- what are your thinking along this line?

SEN. HATCH: We've all agreed to work that out. And we're going to have to work it out. It's and important aspect. It isn't that it's so awfully important to me; it's important in order to not have people who would destroy the bill. But it's important to me too.

SEN. LEAHY: I might add that I wouldn't go through all the time that's going to be necessary to bring this up if I didn't think it could be done.

SEN. HATCH: That's right.

SEN. LEAHY: I really wouldn't. And I wouldn't ask my two friends from the other body to go out and do all the work they have to get it passed if I didn't think it could be done. I don't spend -- we have a lot of things going. We have all the nominations of a new administration. We have all the judicial nominations. These take up a great deal of time in the Judiciary Committee. I would not spend time on this simply for the sake of spending it. I am convinced it can be done. I'm convinced Republicans and Democrats will come together. And I'm convinced, because of the need, it will be done.

REP. CONYERS: The only thing is, we can't do it at the press conference this afternoon. But --

SEN. LEAHY: Believe it or not, there will be the -- (off mike). (Laughter.)

SEN. HATCH: Well, we could, but we're not going to. (Laughter.)

REP. CONYERS: I think the spirit is pretty clear here that there is a consensus about the importance of the legislation. And that makes me feel really good. The Judiciary Committees in both bodies traditionally have worked very closely together. And on this, it's quite rare that we both introduce the same bill to start our discussions off in each body of the Congress.

Q What did you guys decide to do about post-grant review? I know the pharmaceuticals previously were saying that they were open to some post-grant review if it was limited. The tech companies wanted a longer period. What did you decide to do in the bill?

(Cross talk.)

SEN. LEAHY: I don't think we want to negotiate that one here at the --

Q But is that in the bill as you're introducing it today? Do you have language --

SEN. LEAHY: We went from where we left off last year.

Q From where it was.

SEN. LEAHY: Yeah.

REP. CONYERS: Yeah, right.

SEN. LEAHY: But we fully expect there will be further changes on that.

REP. CONYERS: Yes, sir.

SEN. LEAHY: We'll take one more.

Q (Off mike.)

The problem for device makers with apportionment is that the life cycle of some of the more expensive devices that come to market, through the PMA and the patent process, have a relatively short iteration cycle, i.e., every two or three years, they're somewhat tweaked.

So apportionment doesn't really constitute that big a disincentive for would-be patent infringers. Is there a way to pass a bill that addresses both those concerns and those who support apportionment? Or is it an all-or-nothing proposition?

REP. CONYERS: No, it isn't. There are several ways that the damages problem is going to be taken care of. But that's what the hearings are about. We want to come to a consensus. And we start where we left off. But we're open. The whole bill is open for careful reconsideration.

(Cross talk.)

REP. SMITH: The chairman just reminded me of one thing to mention that you brought up, when you mentioned pharmaceuticals. When you talk about the subject that we're talking about, you have widely diverse business models.

You have high-tech companies who are patenting inventions that may have a shelf life of one or two years or maybe a half life of six months.

You have pharmaceutical companies that take, on the average, 18 years to develop a drug. So they have different business models and different interests.

But the common interest here -- and that's what the four of us are emphasizing -- the common interest is all these stakeholders, all these diverse types of businesses have an interest in protecting intellectual property. They have an interest in encouraging creativity. They have an interest in encouraging and protecting inventions. And that is what is going to pull us together.

We can't go on in this modern age operating on patent law that has been around for 50 years -- and as I mentioned a while ago, just in a fraction of that time, we've had the cell phones and laptops and Blackberries. So we -- everybody I think agrees on the need for patent reform. And because of those common denominators, that what's -- that is what gives us hope that we're going to be able to pull everybody together and move forward together.

There may be a situation where we have to work hard to come up with common denominators, and maybe those common denominators are a little bit lower than some of us might -- would have -- might have liked. But nevertheless, there are common dimensions here. There are common interests. And as I say, everybody wants to reform the system, protect patents, try to reduce the number of frivolous patents.

We want to encourage creativity and productivity and inventions, particularly in an industry, the IT industry, that contributes so much to our economy. And that's why we're going to be successful.

SEN. LEAHY: And we're not going to write legislation -- just one industry, and exclude the others. We're going to write legislation, first and foremost, that's good for the United States of America and good for our people, and to have, as the congressman just said, the innovation we need.

We understand there's different kinds of industry. All the stakeholders have been invited to the various meetings we've had, negotiations. Boy, and I've sat in on a lot of those that the -- anyone would like to think. And our staffs have, too, in the Senate. The door is open to everybody. It's not a closed-door thing. We're going to invite everybody in.

And with that, I think I'm going -- I've got to go back to work.

Q Last question, Mr. Conyers, and maybe Mr. Smith, on an unrelated issue. To the degree you can tell us, what is going on with the D.C. gun issue, with regard to the voting issue -- (off mike)?

(Cross talk.)

REP. SMITH: You handle it, John.

REP. CONYERS: Yeah, thanks a lot. (Laughter.)

(Cross talk.)

SEN. LEAHY: They can always do what we've done in Vermont. We have -- Vermont's the only state in the union with no gun laws -- except during deer season.

REP. CONYERS: (Laughs.) He's just kidding. Don't pay him any attention.


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