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Today, we are here to consider H.R. 3309, the Innovation Act. The enactment of this bill is something I consider central to U.S. competitiveness, job creation, and our Nation's future economic security. The bill takes meaningful steps to address the abusive practices that have damaged our patent system and resulted in significant economic harm to our Nation.
During the last Congress, we passed the America Invents Act. Many view the AIA as the most comprehensive overhaul to our patent system since the 1836 Patent Act. However, the AIA was, in many respects, a prospective bill. The problems that the Innovation Act will solve are more immediate and go to the heart of current abusive patent litigation practices.
This bill builds on our efforts over the past decade. It can be said that this bill is the product of years of work. We have worked with Members of both parties in both the Senate and the House, with stakeholders from all areas of our economy, and with the administration and the courts.
To ensure an open, deliberative, and thoughtful process, we held several hearings and issued two public discussion drafts in May and September of this year, which led to the formal introduction of the Innovation Act in October. I strongly believe that the Innovation Act takes the necessary steps to address abusive patent litigation.
Abusive patent litigation is a drag on our economy. Everyone from independent inventors to start-ups to mid-and large-sized businesses face this constant threat. The tens of billions of dollars spent on settlements and litigation expenses associated with abusive patent suits represent truly wasted capital--wasted capital that could have been used to create new jobs, fund R&D, and create new innovations and technologies that "promote the progress of science and useful arts.''
And that is what innovation is really about, isn't it? If you are able to create something, invent something new and unique, then you should be allowed to sell your product, grow your business, hire more workers, and live the American Dream.
The Innovation Act puts forward reasonable policies that allow for more transparency and brings fundamental fairness to the patent system and the courts.
The Innovation Act is designed to deal with systemic issues surrounding abusive patent litigation as a whole, and includes a number of provisions designed to ameliorate this significant problem.
Within the past couple of years, we have seen an exponential increase in the use of weak or poorly granted patents against American businesses with the hopes of securing a quick payday. Many of these abusive practices are focused not just on larger companies but against small and medium-sized businesses as well. These suits target a settlement just under what it would cost for litigation, knowing that these businesses will want to avoid costly litigation and probably pay up. The patent system was never intended to be a playground for litigation extortion and frivolous claims.
The Innovation Act contains needed reforms to address the issues that businesses of all sizes and industries face from patent troll-type behavior, while keeping in mind several key principles, including targeting abusive behavior rather than specific entities, preserving valid patent enforcement tools, preserving patent rights, promoting invention by independents and small businesses, and strengthening the overall patent system.
Congress, the Federal courts, and the PTO must take the necessary steps to ensure that the patent system lives up to its constitutional underpinnings, and let me be clear about Congress' constitutional authority in this area. The Constitution grants Congress the power to create the Federal courts, and the Supreme Court has long recognized that the prescription of court procedure falls within the legislative function.
To that end, the Innovation Act includes heightened pleading standards and transparency provisions. Requiring parties to do a bit of due diligence up front before filing an infringement suit is just plain common sense. It not only reduces litigation expenses, but saves the courts' time and resources. Greater transparency and information make our patent system stronger.
The Innovation Act also provides for more clarity surrounding initial discovery, case management, fee shifting, joinder, the common law doctrine of customer stays, and protecting IP licenses in bankruptcy. Further, the bill's provisions are designed to work hand-in-hand with the procedures and practices of the Judicial Conference, including the Rules Enabling Act and the courts, providing them with clear policy guidance while ensuring we are not predetermining outcomes and that the final rules and the implementation in the courts will be both deliberative and effective.
Today, we are taking a pivotal step toward eliminating the abuses of our patent system, discouraging frivolous patent litigation, and keeping laws up to date. The Innovation Act will help fuel the engine of American innovation and creativity, help create new jobs, and grow our economy.
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Madam Chairman, I yield myself 30 seconds to affirm what we have said from the outset: this bill is designed for the little guy, both the innovator, the inventor, and the end-user small business that are getting subjected to these trolling attacks.
No innovator, no inventor, no one who brings a lawsuit to perfect their claim should fear this legislation unless their claim has no reasonable basis in law or fact. It is only then that they would be disadvantaged. In fact, most of the provisions in this bill are designed to lower the cost of litigation.
The big guys can pay all they need to for litigation. The little guys can't afford to. By lowering the cost of litigation, we are going to create greater opportunity, both for the innovators to pursue their good claims and for the little guys on the receiving end who get these outrageous demand letters on the other side who are having to pay outrageous costs or simply pay money.
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The very provision the gentleman from California references, section 145, is used by these very patent trolls to bypass the process. That is why, working in conjunction with the America Invents Act that has already been passed and this legislation, we will have an effective tool for those legitimate inventors, and we will stop the trolls from getting out from under the bridge.
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Madam Chairman, I yield myself the balance of my time.
In closing, Madam Chairman, I want to thank my fellow Judiciary colleagues and their staffs who have devoted much time, energy, and intellect to this project. We have worked together for the common goal of comprehensive patent litigation reform for the past decade.
While some of us still have differences over individual items, I want these Members to know that I appreciate their contributions to the project and I value their friendship.
I also want to particularly thank Representatives Howard Coble, Zoe Lofgren, and Peter DeFazio for serving as lead sponsors of this legislation and, most particularly, Congresswoman Lofgren, who worked so hard with us in the markup process in the Judiciary Committee.
In the Senate, we have worked closely with Senators Leahy, Grassley, Cornyn, Hatch, Lee, and others. I want to thank them and their staffs for their contributions to this effort.
Furthermore, I would like to thank the White House and the U.S. Patent and Trademark Office for working collaboratively with us and providing important technical assistance.
I also want to thank both my full committee and IP subcommittee staff for all of their hard work on this important legislation, and most particularly, Vishal Amin, counsel to the subcommittee.
This bill is something I consider central to U.S. competitiveness, job creation, and our Nation's future economic security. The Innovation Act is the product of much negotiation and compromise. This bill builds on our efforts over the past decade. It can be said that this bill is the product of years of work. We have worked with Members of both parties in both the Senate and the House, with stakeholders from all areas of our economy, and with the administration and the courts.
To ensure an open, deliberative, and thoughtful process, we held several hearings and issued two public discussion drafts in May and September of this year, which led to the formal introduction of the Innovation Act in October.
The Innovation Act takes meaningful steps to address the abusive practices that have damaged our patent system and resulted in significant economic harm to our Nation. This bill will help grow America's innovation economy.
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