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Public Statements

America Invents Act

Floor Speech

Location: Washington, DC

Mr. SCHUMER. Mr. President, In September of 2011 this body debated and passed landmark patent legislation which was subsequently signed by the President and is now law.

The America Invents Act--AIA--updated, for the first time in many years, the way patents are issued and prosecuted, and in some instances the means by which businesses defend themselves against lawsuits filed by the ever-growing cottage industry of patent assertion entities.

The AIA made many important improvements to our patent law. But more needs to be done. Even in just the short time since the bill passed, the problem of so-called ``patent trolls'' has continued to grow exponentially. In fact, patent trolls cost operating companies $29 billion in 2011 alone. Many of these suits are the result of poor-quality patents being asserted by highly litigious parties against ordinary businesses, large and small, who are left with only unacceptable options: pay a costly licensing fee, settle a court case to avoid litigation costs, or expend millions in litigation fees in hope of prevailing at the end of the day in court.

This has been especially problematic in the universe of technology startups--a booming industry in New York in particular. These small businesses have everything going for them--good ideas, smart employees, and loyal customers. But they risk being entirely undercut by a clever patent troll who takes advantage of them in court. In fact, I have heard from businesses that actually had to fold as a result of a single poor-quality patent lawsuit. This is anathema not only to a pro-growth business culture, but also to the very principles of the intellectual property system.

I believe we can address this problem, and I believe there is a clear and simple way to do so; in fact, we have a model in Section 18 of the AIA. Section 18, the Schumer-Kyl provision, established a post grant review by the experts at the PTO of covered business method patents--the very patents which have been wreaking havoc in the courts and in boardrooms across the country. Section 18 allows a petitioner to request that the PTO review a covered patent and if they find it more likely than not to be invalid, to take a second look at it and return a decision promptly.

During debate of Section 18, I took the opportunity to make clear that District Courts should stay proceedings in patent cases if the PTO is reviewing the same patents because the PTO decision regarding the patent's standing would prove dispositive in court and obviate the need for further court proceedings.

I am pleased to note that district judges have been giving deference to the legislative history and that in at least 2 cases, have stayed their proceedings pending a PTO decision. Section 18 is not only providing patent holders and accused infringers with an alternative to court, but judges are able to better manage their dockets through the use of this new post-grant proceeding.

In the approximately 6 months since the process authorized by Section 18 began, around 20 patents have been challenged through it at the PTO. And those cases are being considered at the PTO in a more cost-effective way than litigation.

It is apparent that Section 18 is working the way we intended; the only problem with it is that it is too limited in two respects: first, it was only authorized as a temporary program and second the types of patents that are allowed to be considered under it are limited. For this reason, I will be introducing a bill when we return from recess to improve Section 18 by removing its temporary status and making more ``likely invalid'' business-method patents eligible for review. I look forward to working with Chairman Leahy and my colleagues on the Judiciary Committee on legislation to improve further the patent granting and patent prosecution system. A great place to start is to make sure the experts at the PTO get a chance to review low-quality patents against relevant prior art so that they cannot be used as a weapon against legitimate business.

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