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Public Statements

America Invents Act

Floor Speech

By:
Date:
Location: Washington, DC

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Mr. GOODLATTE. Madam Chairman, I rise in strong opposition to this amendment.

Increasingly, individuals and companies are filing patents to protect tax strategies. When one individual or business is given the exclusive right to a particular method of complying with the Tax Code, it increases the costs and complexity for every other citizen or tax preparer to comply with the Tax Code. It is not difficult to foresee a situation where taxpayers are forced to choose between paying a royalty in order to reap the best tax treatment and complying with the Tax Code in another, less favorable way. Tax strategy patents add additional costs and complications to an already overly complex process, and this is not what Congress intended when it passed the Federal tax laws or the patent laws.

The problem of tax strategy patents has been a growing concern for over a decade. Over 140 tax strategy patents have already been issued, and more applications are pending. Tax strategy patents have the potential to affect tens of millions of everyday taxpayers, many who do not even realize these patents exist. The Tax Code is already complicated enough without also expecting taxpayers and their advisers to become ongoing experts in patent law.

That is why I advocated for inclusion in H.R. 1249 of a provision to ban tax strategy patents. H.R. 1249 contains such a provision which deems tax strategies insufficient to differentiate a claimed invention from the prior art. This will help ensure that no more tax strategy patents are granted by the PTO.

Importantly, the House worked hard to find a compromise that will ensure Americans have equal access to the best methods of complying with the Tax Code, while also preserving the ability of U.S. technology companies to develop innovative tax preparation and financial management solutions. I believe the language in H.R. 1249 does just that.

This amendment would allow any tax strategy patent that was filed as of the date of enactment of the bill to move toward issuance by the PTO. However, tax strategy patents are bad public policy whether they were filed the day before or the day after this bill happens to be enacted. The effective date in the underlying bill rightly applies to any patent applications pending on the date of enactment.

In order to reduce the cost of filing taxes for all Americans and to restore common sense to our patent system, I urge my colleagues to oppose this amendment.

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Mr. GOODLATTE. I thank the chairman for yielding.

Madam Chairman, I rise in opposition to this amendment.

The Senate-passed patent bill granted the PTO fee-setting authority into perpetuity. The Senate's goal was laudable. It wanted to allow the PTO to have control over the fees that it charges so that it would have more certainty about rolling out new programs and hiring new examiners to deal with pendency and quality issues. We have, as you know, a very long backlog--3 years, 1 million patents. However, I had strong concerns with granting this much authority to a government agency.

Currently, the PTO must come before Congress to request any fee increases. This forces the PTO to use its current resources in the most efficient manner and also strengthens Congress' hand when it comes to oversight over the agency. Thus, I worked to get a provision into the House bill that would sunset the PTO's fee-setting authority. The bill now terminates the fee-setting authority after 7 years unless Congress proactively acts to extend it. This will allow the PTO sufficient time to structure its fees but will ensure that Congress continues to have a strong influence over that process.

And I might add that the manager's amendment to the bill also strengthens Congress' hand and limits the objective of the PTO to arbitrarily raise its fees because the Congress still appropriates the funds and can only escrow funds--can't divert them to another purpose, but escrows them. PTO will have to come back to the Congress and justify additional funds it receives.

I believe the bill, as it is written right now, strikes the right balance. And I urge Members to oppose this amendment, which would altogether eliminate PTO fee-setting authority.

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Mr. GOODLATTE. Madam Chairman, I rise in strong opposition to this amendment, which is a bad idea. Post-grant review is one of the most important provisions in this bill. It allows third parties, for a limited window of 9 months after a patent is issued, to submit evidence that the patent should not have been granted in the first place.

This allows third parties, many of whom will be small businesses themselves who are familiar with the subject matter, to provide a check on patent examiners. If the evidence shows that the patent is indeed invalid, then the patent applicant should never have received the patent in the first place. If the evidence shows that the patent is valid, then the patent is made stronger and more certain by surviving a post-grant review.

The amendment would exempt small businesses from the post-grant opposition proceeding. However, the quality of a patent examination does not hinge on the size of the applicant, whether it was a small business, an independent inventor, or a large corporation. It hinges on the PTO job of scrutinizing that patent. A bogus patent held by an independent inventor is no less deserving of a second look than a bogus patent held by a Fortune 500 company.

For these reasons, I urge opposition to this very bad amendment.

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Mr. GOODLATTE. Mr. Chairman, I rise in opposition to this amendment. There is no doubt that the PTO has issued business method patents of questionable merit over the years. Many of these patents are still on the books. Unfortunately, many of these patents are being used by aggressive trial lawyers to extort money from deep pockets. Section 18 of the bill simply creates a process that allows experts at the PTO to reexamine the types of business method patents that the PTO believes to be of the poorest quality. This section was drafted in close coordination with the USPTO and is a pilot program that simply allows them to review certain business methods patents against the best prior art in a reexamination process.

Why would anyone oppose a process that allows low-quality patents, as identified by the USPTO, to be reviewed by the experts?

Business method patents on financial activities are the type of patents that are the subject of lawsuits and abuse most often. They are litigated at a rate 39 times greater than any other patents. Section 18 is designed to correct a fundamental flaw in the system that is costing consumers millions each year. The provision is supported by a broad bipartisan coalition that includes the U.S. Chamber of Commerce.

I urge Members to reject this amendment, which strikes an important litigation reform provision in the underlying bill.

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