[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]


 
                 IMPROVING FEDERAL COURT ADJUDICATION 
                            OF PATENT CASES

=======================================================================

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON COURTS, THE INTERNET,
                       AND INTELLECTUAL PROPERTY

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 6, 2005

                               __________

                           Serial No. 109-59

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov

                                 ______

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                       COMMITTEE ON THE JUDICIARY

            F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois              JOHN CONYERS, Jr., Michigan
HOWARD COBLE, North Carolina         HOWARD L. BERMAN, California
LAMAR SMITH, Texas                   RICK BOUCHER, Virginia
ELTON GALLEGLY, California           JERROLD NADLER, New York
BOB GOODLATTE, Virginia              ROBERT C. SCOTT, Virginia
STEVE CHABOT, Ohio                   MELVIN L. WATT, North Carolina
DANIEL E. LUNGREN, California        ZOE LOFGREN, California
WILLIAM L. JENKINS, Tennessee        SHEILA JACKSON LEE, Texas
CHRIS CANNON, Utah                   MAXINE WATERS, California
SPENCER BACHUS, Alabama              MARTIN T. MEEHAN, Massachusetts
BOB INGLIS, South Carolina           WILLIAM D. DELAHUNT, Massachusetts
JOHN N. HOSTETTLER, Indiana          ROBERT WEXLER, Florida
MARK GREEN, Wisconsin                ANTHONY D. WEINER, New York
RIC KELLER, Florida                  ADAM B. SCHIFF, California
DARRELL ISSA, California             LINDA T. SANCHEZ, California
JEFF FLAKE, Arizona                  CHRIS VAN HOLLEN, Maryland
MIKE PENCE, Indiana                  DEBBIE WASSERMAN SCHULTZ, Florida
J. RANDY FORBES, Virginia
STEVE KING, Iowa
TOM FEENEY, Florida
TRENT FRANKS, Arizona
LOUIE GOHMERT, Texas

             Philip G. Kiko, General Counsel-Chief of Staff
               Perry H. Apelbaum, Minority Chief Counsel
                                 ------                                

    Subcommittee on Courts, the Internet, and Intellectual Property

                      LAMAR SMITH, Texas, Chairman

HENRY J. HYDE, Illinois              HOWARD L. BERMAN, California
ELTON GALLEGLY, California           JOHN CONYERS, Jr., Michigan
BOB GOODLATTE, Virginia              RICK BOUCHER, Virginia
WILLIAM L. JENKINS, Tennessee        ZOE LOFGREN, California
SPENCER BACHUS, Alabama              MAXINE WATERS, California
BOB INGLIS, South Carolina           MARTIN T. MEEHAN, Massachusetts
RIC KELLER, Florida                  ROBERT WEXLER, Florida
DARRELL ISSA, California             ANTHONY D. WEINER, New York
CHRIS CANNON, Utah                   ADAM B. SCHIFF, California
MIKE PENCE, Indiana                  LINDA T. SANCHEZ, California
J. RANDY FORBES, Virginia

                     Blaine Merritt, Chief Counsel

                         David Whitney, Counsel

                          Joe Keeley, Counsel

                          Ryan Visco, Counsel

                    Shanna Winters, Minority Counsel


                            C O N T E N T S

                              ----------                              

                            OCTOBER 6, 2005

                           OPENING STATEMENT

                                                                   Page
The Honorable Lamar Smith, a Representative in Congress from the 
  State of Texas, and Chairman, Subcommittee on Courts, the 
  Internet, and Intellectual Property............................     1
The Honorable Howard L. Berman, a Representative in Congress from 
  the State of California, and Ranking Member, Subcommittee on 
  Courts, the Internet, and Intellectual Property................     2
The Honorable Darrell Issa, a Representative in Congress from the 
  State of California, and Member, Subcommittee on Courts, the 
  Internet, and Intellectual Property............................     3

                               WITNESSES

Ms. Kimberly A. Moore, Professor of Law, George Mason University 
  School of Law
  Oral Testimony.................................................     6
  Prepared Statement.............................................     8
Mr. John B. Pegram, Senior Counsel, New York Office, Fish & 
  Richardson, P.C.
  Oral Testimony.................................................    11
  Prepared Statement.............................................    13
Mr. Chris J. Katopis, Counsel, Drinker, Biddle & Reath, LLP
  Oral Testimony.................................................    26
  Prepared Statement.............................................    28
The Honorable T.S. Ellis, III, United States District Judge, 
  Eastern District of Virginia
  Oral Testimony.................................................    49
  Summary of the Prepared Statement..............................    52

                                APPENDIX
               Material Submitted for the Hearing Record

Prepared Statement of the Honorable Howard L. Berman, a 
  Representative in Congress from the State of California, and 
  Ranking Member, Subcommittee on Courts, the Internet, and 
  Intellectual Property..........................................    73
Prepared Statement of the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, and 
  Member, Subcommittee on Courts, the Internet, and Intellectual 
  Property.......................................................    74
Article submitted by Kimberly A. Moore, Professor of Law, George 
  Mason University School of Law, entitled ``MARKMAN EIGHT YEARS 
  LATER: IS CLAIM CONSTRUCTION MORE PREDICTABLE?''...............    75
Article submitted by Kimberly A. Moore, Professor of Law, George 
  Mason University School of Law, entitled ``FORUM SHOPPING IN 
  PATENT CASES: DOES GEOGRAPHIC CHOICE AFFECT INNOVATION?''......    92
Article submitted by Kimberly A. Moore, Professor of Law, George 
  Mason University School of Law, entitled ``Are District Court 
  Judges Equipped to Resolve Patent Cases?''.....................   139
Article submitted by John B. Pegram, Senior Counsel, New York 
  Office, Fish & Richardson, P.C., entitled ``Should There Be a 
  U.S. Trial Court With a Specialization in Patent Litigation?''.   176
Letter from the Honorable T.S. Ellis, III, United States District 
  Judge, Eastern District of Virginia to the Honorable Lamar 
  Smith, a Representative in Congress from the State of Texas, 
  and Chairman, Subcommittee on Courts, the Internet, and 
  Intellectual Property..........................................   208
Article submitted by the Honorable T.S. Ellis, III, United States 
  District Judge, Eastern District of Virginia entitled 
  ``Presentation: Distortion of Patent Economics by Litigation 
  Costs''........................................................   213
Article submitted by the Honorable T.S. Ellis, III, United States 
  District Judge, Eastern District of Virginia entitled 
  ``Presentation: Quicker and Less Expensive Enforcement of 
  Patents: United States Courts''................................   218
Charts prepared by the Intellectual Property Owners Association 
  (IPO) on IP Litigation Commenced in the U.S. District Courts, 
  1993-2004, and IP Suits Filed in U.S. District Courts, 1995-
  2005...........................................................   229


          IMPROVING FEDERAL COURT ADJUDICATION OF PATENT CASES

                              ----------                              


                       THURSDAY, OCTOBER 6, 2005

                  House of Representatives,
              Subcommittee on Courts, the Internet,
                         and Intellectual Property,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 4:34 p.m., in 
Room 2141, Rayburn House Office Building, the Honorable Lamar 
Smith (Chair of the Subcommittee) presiding.
    Mr. Smith. The Subcommittee on Courts, the Internet, and 
Intellectual Property will come to order.
    I'm going to have an opening statement. Then the Ranking 
Member will have an opening statement. And then Congressman 
Issa of California will have an opening statement, as well. Let 
me recognize myself for mine.
    Today, our Subcommittee will begin an examination of the 
state of patent adjudication in the Federal judiciary. In 1992, 
the Advisory Commission on Patent Law Reform stated, in a 
report to the Secretary of Commerce, ``One of the most 
significant problems facing the United States patent system is 
the spiraling cost and complexity associated with the 
enforcement of patent rights.''
    Since that report, there has been an explosion in the cost, 
volume of cases, and complexities associated with enforcing 
patent rights. Though the number of patent cases filed in U.S. 
district courts has almost doubled in the last decade, the 
reality is that patent cases make up a small fraction--
typically, less than 1 percent--of total cases filed in a given 
court.
    Nevertheless, this small percentage of cases accounts for 
nearly 1 in 10 complex cases, which require 20 or more days of 
trial and demand disproportionate resources from district 
courts and attention from trial judges.
    The basic statutory structure of the Federal judicial 
system, which is responsible for adjudicating patent cases has 
been largely untouched by Congress for more than 20 years. In 
the last significant structural change, Congress created the 
Court of Appeals for the Federal Circuit in 1982, as part of 
the Federal Courts Improvements Act.
    In establishing the Federal Circuit, Congress eliminated 
the traditional ability of regional courts of appeals to hear 
patent cases, in the interest of promoting greater stability in 
the patent law, increasing uniformity of decisions, and 
restricting forum shopping.
    Nevertheless, there is a growing awareness that the U.S. 
patent adjudication system remains beset with inefficiencies, 
inconsistencies, and opportunities for forum shopping.
    Two of our witnesses today will provide the Subcommittee 
with considerable anecdotal and statistical evidence that 
suggest the patent adjudication system is not functioning in an 
efficient, cost-effective, and predictable manner.
    While acknowledging deficiencies, our remaining witnesses 
will articulate the view that there is insubstantial evidence 
that the system is broken, and postulate that none of the 
proposed solutions are guaranteed to work.
    Still, there is a widespread and a well deserved perception 
that patent litigation is too expensive, too time consuming, 
and too unpredictable. In a knowledge-based economy that is 
intended to reward innovation, the cost and effects of 
unnecessary delays and uncertainty are not incidental or 
academic.
    A patent claim that is construed too broadly deprives 
potential competitors and consumers of new products. One 
construed too narrowly deprives patent holders of the full 
benefit of their innovation.
    As the Subcommittee with jurisdiction over both the 
administrative functions of the United States Patent and 
Trademark Office and the Federal judiciary, we should begin to 
address these issues.
    And I want to acknowledge here the role of Representative 
Issa, who suggested that we begin this inquiry. As one of the 
few Members of Congress who has actually held patents, he 
brings a practical perspective to our work on the Committee. 
And after I finish asking my questions today, I'm going to turn 
the gavel over to Representative Issa.
    That concludes my opening remarks. And the gentleman from 
California, the Ranking Member, Mr. Berman, is recognized for 
his.
    Mr. Berman. Well, thank you very much, Mr. Chairman, for 
scheduling this oversight hearing. This hearing about the 
courts that handle patent litigation is an interesting 
intersection of two separate issues within the Subcommittee's 
jurisdiction. Patents are the cornerstone of the economy. They 
provide incentive for innovation. Therefore, the effect 
litigation of patents has on the preservation of patent rights 
is all the more important to continually assess.
    The combination of the complex science and technology, the 
unique patent procedures and laws, the historical right to jury 
trials, the equitable division of labor and administration of 
the courts and their dockets, and the multiple methods 
available for dealing with the issues raised by patent 
litigation makes improvement of the patent adjudication system 
a uniquely complicated and difficult task.
    Many say the system works well. Yet at the same time, some 
say the high costs of litigating and the reversal rate at the 
district court level reveal otherwise. These complexities 
appear to have distorted patent markets and patent economics.
    The increasing costs of litigating patent infringement and 
validity issues now frequently gives weak, untested, and 
presumptively valid patents the same kind of protection that 
was previously only granted to or reserved for strong or 
judicially tested patents.
    Patent quality has been a long-time priority of mine and, 
with the introduction of the Patent Reform Bill, we are trying 
as a Subcommittee to ensure the quality of patents. Even so, 
despite the many efforts made so far, there are still many 
legal scholars, patent owners, and members of the judiciary and 
patent bar who believe changes to the patent litigation process 
in the courts are also necessary to improve the quality of 
patents.
    The creation of the Court of Appeals for the Federal 
Circuit alleviated the inconsistencies at the regional circuit 
court level. However, some continue to raise concerns about 
forum shopping at the trial court level.
    The Court of Appeals for the Federal Circuit has placed the 
job of construing patent claims in the hands of our Federal 
district judges, and kept other complex issues, such as non-
obviousness and equitable conduct and novelty, in the hands of 
the jury. Concerns have been expressed about whether a judge or 
jury can truly learn the intricacies of some of the science and 
technology placed before them during the length of a typical 
patent trial.
    Hopefully, if the post-grant opposition procedures in the 
Patent Reform Bill are enacted, this will address many of these 
complex issues before resort to district court litigation 
occurs.
    Recent accounts demonstrate that as time passes and the 
district court Federal judges are becoming more proficient at 
application of the claim construction rules spelled out by the 
Court of Appeals for the Federal Circuit in Markman, that that 
reversal rate is coming down. However, evidence suggests that 
our Federal district courts still spend a much greater ratio of 
time on patent cases than any other types of cases that come 
into their courts.
    There are many proposals for change in the patent 
adjudication system. Before implementing changes, we must first 
be able to fully understand the issues confronting the system, 
the many options that may be available to remedy issues in the 
patent litigation system that have been raised, and the effects 
of those proposed solutions.
    Thank you, Mr. Chairman.
    Mr. Smith. Thank you, Mr. Berman.
    The gentleman from California, Mr. Issa, is recognized for 
his opening statement.
    Mr. Issa. Thank you, Mr. Chairman. I greatly appreciate 
your holding this important hearing, a hearing that closely 
parallels the patent reform effort that you have spearheaded. I 
must say that I have never seen such interest generated about 
patents than you have generated in this last year.
    Your patent reform, to a great extent, is changing the 
product of the patent. This hearing today, hopefully, will 
begin the process of talking about the delivery system, or the 
evaluation system post-patent, beyond the Patent and Trademark 
Office.
    I believe that the axiom that ``justice delayed is justice 
denied,'' which is often used in the case of misdemeanors and 
felonies, is just as applicable in the business world, and 
certainly has proven to reduce the value of a patent until 
justice is finally delivered.
    As many of you know, I have a background in the electronics 
business. The company that I founded vigorously protected its 
staple of intellectual property, as did some of my competitors. 
This resulted in my involvement in numerous patent suits before 
the district courts, the ITC, and the fed circuit.
    When I was in business, I had to accept the cards that were 
dealt to me; but now I am in Congress, and have the unique and 
pleasurable opportunity to look into reforming this system so 
that others would not have to endure many of the examples that 
I found when in the private sector.
    I approach this effort with one key guiding principle: 
Business must have confidence in its intellectual property, 
confidence that derives from predictability of court decisions. 
This certainty allows a company to plan which products it will 
invest and develop, which it will market, and also fosters 
confidence from the investment community.
    District court patent holdings are currently reversed at 
least 35 percent of the time. And as my colleague from 
California said, although that is coming down, I believe it is 
coming down very slowly, and will not come down much further 
without affirmative action by this body.
    Judges have often commented that this makes them feel like 
their time and effort are considered by the fed circuit to be 
something of a rough draft. Such high reversal rates encourage 
entities to enter into more appeals, rather than less, on 
patent issues than would otherwise occur; dragging out 
litigation for years longer than is necessary. Obviously, this 
does not foster certainty.
    We need to find mechanisms for improving the track record 
of the district courts. I think there is no one that would 
disagree with that. And that is why we are here today.
    I have circulated one proposal, to conduct a pilot program 
within the district courts to encourage patent specialization 
among the district judges. Unlike many drafts you'll see, where 
the author believes that they have created the perfect 
document, this is a deliberately imperfect document.
    I'm looking forward to each of you responding as to the 
flaws you saw. Hopefully, many of those flaws will be common 
flaws. Certainly, the length of the study is open to debate, as 
are many of the other hurdles that we have to get past in this 
study; not the least of which is that everybody at the 
appellate level and at the district level is concerned that 
somehow any change will affect their lives adversely.
    I must add to this that we're also looking--or at least, 
that I'm hoping to encourage the Chairman and the Committee to 
look into several other possible reforms; including, as part of 
this pilot, the moving up, or the encouraging of moving up, of 
the Markman process to the earliest point, as far before a 
potential trial as possible; and also, formally opening up the 
interlocutory appeals process to the fed circuit on claims 
construction, since that is where the majority of the appeals 
are, and in any study our goal would be to accelerate the 
process of learning of whether we're doing better or worse by 
this specialization.
    I appreciate the witnesses joining us today. And I have had 
an opportunity to review your written testimony, but I look 
forward to a lively discussion afterwards. And I yield back, 
Mr. Chairman.
    Mr. Smith. Thank you, Mr. Issa. Before I introduce our 
witnesses, would you all please stand and be sworn in.
    [Witnesses sworn.]
    Mr. Smith. Thank you, and please be seated. Let me say, for 
the benefit of those in the audience today, that this is the 
first day Congress has been in session this week, and we don't 
have any votes until 6:30 tonight. Despite that, this is a very 
good turnout of Members, and I appreciate their being here, as 
well as the people in the audience being here to hear what the 
witnesses have to say.
    Our first witness is Kimberly A. Moore, who is a professor 
of intellectual property law at George Mason University School 
of Law. Professor Moore is a co-author of the textbook entitled 
``Patent Litigation and Strategy.'' She has conducted extensive 
empirical research on intellectual property topics, and has 
written numerous articles on patent case adjudication and 
patent litigation in general.
    Professor Moore earned her juris doctorate from the 
Georgetown University Law Center. She received a bachelor of 
science in electrical engineering and a master of science from 
MIT.
    Our second witness is John B. Pegram, who is senior counsel 
to the New York office of Fish and Richardson, where he 
specializes in patent litigation.
    Am I pronouncing that right, ``Pegram''?
    Mr. Pegram. You are, sir. Yes, you are.
    Mr. Smith. Thank you. Thank you. Mr. Pegram is a past 
president of the New York Intellectual Property Law 
Association, and a past director of the American Intellectual 
Property Law Association, where he twice served as chair of the 
patent litigation committee.
    Mr. Pegram received his law degree from New York 
University, and earned an undergraduate degree in physics from 
Columbia University.
    Our next witness is Chris Katopis, who is a counsel with 
the intellectual property practice group of Drinker, Biddle and 
Reath. Mr. Katopis previously served as director of 
congressional relations for the U.S. Patent and Trademark 
Office. In that capacity, he was responsible for legislative 
policy within the Office of Legislative and International 
Affairs, which included patents, trademarks, copyrights 
enforcement, and other domestic and international intellectual 
property matters.
    Mr. Katopis is also an adjunct professor at the Catholic 
University. He attended the University of Pennsylvania, where 
he was awarded a bachelor of science degree in biomedical 
engineering. He received his JD from Temple University.
    Our final witness is the Honorable T.S. Ellis, III, who 
serves as U.S. District Judge in the Eastern District of 
Virginia. Judge Ellis was nominated by President Ronald Reagan 
on July 1, 1987, and confirmed by the U.S. Senate on August 5, 
1987. Often referred to as the ``rocket docket'' by members of 
the legal profession, the Eastern District of Virginia has for 
years been among the top 25 districts in adjudicating patent 
cases.
    Judge Ellis received his JD from Harvard University, where 
he graduated magna cum laude. He earned his bachelor of science 
from Princeton.
    Now, welcome to you all. And we have your written 
statements which, without objection, will be made a part of the 
record. And please limit your testimony, as you already know, 
to 5 minutes.
    Judge Ellis, I'm tempted to look at the quick time it took 
you to be confirmed in 1987. I bet anybody now being considered 
would be jealous of those few days that it took back then.
    Our first witness and first person to testify today is 
Professor Moore, if you will begin.

TESTIMONY OF KIMBERLY A. MOORE, PROFESSOR OF LAW, GEORGE MASON 
                    UNIVERSITY SCHOOL OF LAW

    Ms. Moore. Chairman Smith, Ranking Member Berman, and 
Members of the Subcommittee, thank you for this opportunity to 
testify on this very important topic of Federal court 
adjudication of patent cases. I plan to focus my testimony 
today on two problems that I perceive confronting the patent 
litigation system.
    The first: Let me assure you, forum shopping is alive and 
well in patent cases in the district courts. If you look at my 
studies--one from the 5-year period, 2000-2004--you find that 
47 percent of all patent cases are consolidated in just the top 
ten districts. Well, that might suggest that: Why do we need 
anything specialized? We have great consolidation already. The 
problem is, when I compare that to my data from the five 
previous years, there were only 44 percent consolidated.
    I'm making a bit of a joke here. The real problem is, it's 
not the same ten districts. So you have consolidation among ten 
districts 5 years ago; you have the same amount of 
consolidation now, but it's not the same ten districts. 
Obviously, there's some overlap, but there also are some 
changes and some differences.
    I'm articulating these statistics in the study in more 
detail in a paper that I have forthcoming. I've titled it 
``Patent Lemmings,'' like the birds.
    Okay. So what I wanted to address in particular, in the way 
of a solution, would be the change to the patent venue statute. 
Lucky for me, Congress beat me to it. In H.R.2795, in the 
amendment in the way of a substitute, Congress has introduced a 
limitation to the venue statute, which I find very compelling 
and favor strongly.
    You would limit venue to the defendant's principal place of 
business, or where the defendant has committed acts of 
infringement and has a regular and established place of 
business. This is a very important limitation. Currently, 
patentees have the ability to sue in any of the 94 district 
courts--virtually unfettered ability.
    My only two very minor suggestions with regard to the 
pending legislation would be to expand the idea of corporate 
residence to include State of incorporation. I think that it 
would be fair that a corporation could be sued in the State in 
which it incorporated. I would also suggest that you create an 
exception to the venue rule that permits patentee plaintiffs to 
consolidate their actions pursuant to an MDL agreement--
pursuant to the MDL procedures, without a venue obstacle. So 
you would create an exception to the venue statute for MDL 
consolidated cases.
    The Coalition has made a recommendation to this Committee 
in the way of, instead of changing the venue statute, 
introducing a transfer of venue statute that is much more 
vibrant than the currently existing one. I prefer Congress' way 
of doing it.
    In short, the transfer of venue statute will not level the 
playing field, and it just adds another layer to what is 
already extensive, complex patent litigation. If you recognize 
there is a problem existing in forum shopping, the way to solve 
that problem is ex ante, with the venue statute, not ex post, 
with a motion to transfer. So I think that it's in everyone's 
best interest that Congress continue to pursue the venue 
statute in H.R. 2795 exactly the way it has been currently 
articulated.
    This brings me to my second proposal: the idea of 
designating specialized district court judges to hear patent 
cases. Patent cases are complex, difficult, time consuming, and 
expensive. Despite the nature of these cases, they are 
litigated before generalist judges and lay juries.
    The United States is unique in this respect. No other 
country allows lay juries to decide patent cases. In fact, many 
countries have created specialized patent trial courts.
    We have nearly a thousand district court judges capable of 
currently hearing patent cases; 680 active judges, and another 
290 senior judges. There are only about 3,000 patent cases a 
year filed, and only 3 percent go to trial.
    As you can see, the result is that district court judges 
simply do not get sufficient exposure to patent cases to 
develop the kind of expertise that would assist them in 
adjudicating these very complicated cases. Certainly, a few 
notable patent jurists have arisen from the mass of district 
court judges who hear patent cases, and they truly are 
exceptional patent jurists.
    This is why my proposal is not to create a specialized 
court. I actually don't think that's the way to go. And it 
would be problematic, in light of the fact that we already have 
a specialized appellate court. But instead, to designate 
individual judges--the number to be decided according to the 
docket--in each district, that would hear all of the patent 
cases in that district.
    Why do we need this? Well, we need it because of the forum 
shopping. But we also need it because of the high reversal rate 
that currently exists among the district court judges.
    It is not for lack of trying. Our district court judges are 
unbelievably dedicated and hard-working. They have ever-
increasing dockets that they continually face. Despite this, 
they try very hard to construe patent claims. Yet the reversal 
rate continues to be about 35 percent.
    One thing I want to point out to the Committee in 
particular: The reversal rate is actually rising; not going 
down. In my study, which I produced to the Committee as one of 
the published papers, the reversal rate has actually increased 
over the course of the last 10 years. The Federal Circuit has 
been reviewing the district courts' claim construction for 
about 10 years since Markman, and the reversal rate is in fact 
climbing.
    So my proposal with regard to specialized district court 
judges would include allowing those judges to continue to hear 
the regular cases that district court judges hear. They should 
have a general docket. They should remain generalist judges.
    In the short term, I am very favorably inclined toward 
Congressman Issa's proposal for the pilot program. I have just 
a few very modest, humble suggestions. The first is, 1 year is 
not enough time.
    Mr. Smith. Professor Moore, your time has expired.
    Ms. Moore. Oh, thank you, Chairman. I'm very sorry.
    Mr. Smith. And maybe we could get those minor suggestions 
in the question-and-answer period.
    Ms. Moore. Thank you, Chairman.
    [The prepared statement of Ms. Moore follows:]

                Prepared Statement of Kimberly A. Moore

    Chairman Smith, Ranking Member Berman and members of the 
Subcommittee, thank you for the opportunity to testify today on the 
topic of improving federal court adjudication of patent cases. Patent 
litigation is critically important to the functioning of our patent 
system. Without a credible, predictable means of enforcing patent 
rights, the rights themselves would cease to function effectively to 
spur innovation.
    I plan to speak today about two problems confronting the patent 
litigation system.
    Patent Venue Statute: The first is the virtually unfettered ability 
of patentee plaintiffs to file a patent suit in any of the 94 different 
district courts. The patent venue statute, 35 U.S.C. Sec. 1391, allows 
a corporation to be sued anywhere that personal jurisdiction exists 
which is any judicial district in any state where products are sold. 
This was not a problem when commerce was limited geographically, but in 
this day of national and, in fact, global commerce, this venue statute 
is no longer workable. The Amendment to H.R. 2795 addresses this 
problem by limiting venue to the judicial district where the defendant 
resides or the judicial district where the defendant has committed acts 
of infringement and has a regular and established place of business. 
The Amendment defines corporate residence as the district where the 
corporation has its principle place of business. I support this change 
to the venue statute.
    I have two minor suggestions to make. First, expand the definition 
of corporate residence to include state of incorporation. Venue is 
appropriate in either the judicial district where the principle place 
of business is located or the judicial districts in the corporation's 
state of incorporation. When a corporation selects a state in which to 
incorporate and thus avails themselves of the corporate laws of that 
state, it seems reasonable to permit them to be sued there.
    My second minor suggestion is to consider creating an exception to 
the venue rule that permits patentee plaintiffs to consolidate actions 
against defendants pursuant to the MDL procedures. If a patentee would 
like to simultaneously sue multiple defendants for the same or similar 
acts of infringement, it is more efficient to have these cases 
consolidated in a single forum and venue ought not to be an obstacle to 
that consolidation.
    I have also read the Coalition's recommendation for venue reform 
which instead suggests a more vibrant transfer of venue statute. I 
favor the Amendment to H.R. 2795. It is more effective and efficient to 
fix a problem ex ante than ex post. Transfer of venue motions will 
delay resolution and divert resources unnecessarily. Moreover, the 
Coalition draft language which allows the action to go forward anywhere 
there is ``substantial evidence or witnesses'' is sufficiently vague 
and likely to cause additional unnecessary litigation.
    The Coalition draft also suggests that venue ought to be 
appropriate in any judicial district where the patentee resides or 
maintains its principle place of business. The suggestion being that it 
should not be fair to make the patentee bear the expensive of 
litigating away from home. First, let me note that this merely shifts 
the burden of litigating away from home from the plaintiff to the 
defendant. Second, patent litigation now costs on average two to four 
million dollars per side, the marginal cost to the patentee of 
conducting the litigation in a district other than its home turf is not 
likely to inhibit anyone who can already afford this expense. Moreover, 
there are always contingent fee options and patent infringement 
insurance which aid patentees in enforcing their rights. Finally, the 
patentee who files suit gets to select the judicial district and the 
Amendment to H.R. 2795 gives her several districts from which to 
choose. Giving the patentee the option of choosing its own district 
would allow patent trolls to game the system more than they already do. 
They would simply locate themselves where they believe the laws and 
procedures to be most favorable and then litigate all their cases 
there.
    Amending the venue statute as proposed in H.R. 2795 with the modest 
changes suggested above will significantly reduce forum shopping by 
plaintiffs and some of the unpredictability which plagues the patent 
litigation system.
    Forum Shopping in Patent Cases: To the extent that there is any 
doubt about the existence and pervasiveness of forum shopping in patent 
cases, let me offer some empirical evidence. See Kimberly A. Moore, 
Forum Shopping in Patent Cases: Does Geographic Choice Affect 
Innovation, 79 N.C. L. Rev. 934 (2001). Patent cases are not evenly 
distributed among the 94 district courts. Comparing the data on patent 
litigations from the five year period 1995-1999 (9542 patent cases) and 
2000-2004 (12,768 patent cases) provides insight into the changing 
landscape of patent litigation. In the last five years, the top ten 
district courts have 47% of all patent cases. Comparing this to the 
data from 1995-1999, where the top ten jurisdictions had 44%, it seems 
at first blush like patent cases are even more heavily consolidated now 
in just a few key jurisdictions than they were five years ago. The 
problem is that it is not the same key jurisdictions. The data show, 
however, that plaintiffs in patent cases are moving en mass away from 
some judicial districts and towards others. I have titled the draft 
paper where I present these empirical results--Patent Lemmings.
    For example, the Eastern District of Virginia, affectionately know 
as the Rocket Docket, used to be a hub for patent cases. In 1997, 3.2% 
of all patent cases were resolved there. In 2004, the percentage 
dropped to 1.6% (a 50% decrease)--dropping in the rankings from seventh 
to twenty-third. The Eastern District of Texas, on the other hand had 
0.3% of all patent cases in 1997 and in 2004, it had 1.9% (a 633% 
increase)--going from tied for fifty-eighth to seventeenth. These 
changes are not due to a major relocation of large sectors of 
industry--they reflect forum shopping on the part of opportunistic 
plaintiffs who perceive a benefit to filing in the Eastern District of 
Texas and who have grown disenchanted with the Eastern District of 
Virginia. I am not suggesting that the cases that are filed in Texas 
belong more properly in Virginia, in fact, the Eastern District of 
Virginia was not the appropriate venue for many of the patent cases 
that had been filed there--a fact reflected in their 16% transfer rate 
in 1997.
    I have also found that the percentage of patent cases in a given 
district is not always linked to the percentage of civil cases filed 
there or the percentage of patents acquired by the residents of the 
district. For example, the District of Delaware, had 4.8% of all patent 
cases resolved in the last five years, but only 0.4% of all civil cases 
generally. Delaware's high percentage of patent cases is not correlated 
with patenting by local industry either--Delaware only has 0.41% of 
U.S. patents issued to U.S. inventors. Some practitioners claim that 
Delaware is selected by patentees because it is a pro-patentee forum. 
Empirical evidence demonstrates that Delaware judges do not grant 
summary judgment as frequently as judges in other courts and that 
summary judgment is more often a win for the infringer. The failure to 
grant summary judgment means that Delaware allows a much higher than 
average number of cases to go to trial--generally a trial by jury. 
Given the perception that juries are pro-patentee (which is supported 
by empirical evidence), patentees may prefer Delaware for this reason.
    My conclusion from this empirical analysis is that plaintiffs, who 
are patentees in 85% of the patent suits, forum shop and their 
preferences change over time which undermines any expertise judges in a 
given district do develop in patent cases. I have also found 
considerable variation in the manner of patent case adjudication by the 
different district courts and significant differences in win rate. In 
short, patentees are gaining an unfair advantage in litigation by forum 
shopping. The Amendment to H.R. 2795 would significantly curtail this 
gamesmanship and level the playing field.
    This brings me to my second, related proposal.
    Designating Specialized District Court Judges: Patent cases are 
complex, difficult, time consuming and expensive. Despite the nature of 
these cases, they are litigated before generalist judges and lay 
juries. The United States is unique in this respect. No other country 
allows lay juries to decide patent cases. In fact, many countries no 
longer have patent cases decided by generalist judges and have instead 
created specialized patent trial courts such as Germany, China, Japan, 
the United Kingdom, Australia, New Zealand, Singapore, Zimbabwe, 
Jamaica, Kenya, Thailand, Korea and Turkey.
    In the United States, there are 680 active district court judges in 
the 94 districts (and 290 additional senior judges). With 2800 patent 
cases per year and only 3% going to trial, district court judges have 
little exposure to patent cases. If patent cases were consistently 
being consolidated in the same jurisdictions, then the market would 
itself be creating specialization and there would be no real need for a 
specialized trial court. However, as the empirical evidence 
demonstrates, the distribution of patent cases among the judicial 
districts fluctuates with patentee preferences. Although a few notable 
patent jurists have arisen from the mass of district court judges who 
hear patent cases, forum shopping combined with the small number of 
cases has inhibited judges from developing expertise.
    If all patent cases in a given district were consolidated in one or 
more designated trial court judges, they would have a better chance to 
develop expertise in this area. The high claim construction reversal 
rate of district court judges supports the need for such 
specialization. Claim construction is the most important part of any 
patent dispute. The Supreme Court ruled that claim construction ought 
to be performed by district court judges rather than juries because 
they would be better at it. The Federal Circuit held that claim 
construction is a matter of law which results in de novo review of all 
district court claim construction decisions. In an empirical study of 
all claim construction decisions appealed to the Federal Circuit from 
1996 through 2003, I found that district court claim constructions were 
reversed 35% of the time. Worse yet, the reversal rate is still going 
up ten years after district court judges were charged with the task of 
construing patent claims indicating that district court judges are not 
getting better at construing patent claims. See Kimberly A. Moore, 
Markman Eight Years Later: Is Claim Construction More Predictable?, 9 
Lewis & Clark L. Rev. 231 (2005). See also Kimberly A. Moore, Are 
District Court Judges Equipped to Resolve Patent Cases?, 15 Harv. J. L. 
& Tech. 1 (2001). Given that claim construction is the starting point 
for any infringement or validity analysis, the high reversal rate of 
district court determinations results in considerable uncertainty until 
the Federal Circuit review process is over. Since the Federal Circuit 
has declined to review any claim construction decisions on 
interlocutory appeal, the parties and the district court are forced to 
adjudicate the entire patent case on what ends up being a faulty claim 
construction more than one third of the time. The inefficiencies and 
frustrations are obvious.
    The high reversal rate undermines confidence in district court 
decision-making and the integrity of our legal system. It also results 
in considerable frustration for the district court judges. This brings 
me to my proposed solution to these serious and pervasive problems--
designating a limited number of district court judges in each judicial 
district to adjudicate patent disputes. The number of designated judges 
would, of course, have to be correlated with the size of the court 
generally. Clearly one district court judge would not be able to handle 
all the patent cases brought in the Northern District of California for 
example.
    Although there would certainly be advantages to a single 
specialized patent trial court, in my opinion, designating trial court 
judges in each judicial district is a better approach. If a specialized 
trial court were created, it would have to be given exclusive 
jurisdiction rather than concurrent jurisdiction with the district 
courts. Concurrent jurisdiction would merely provide yet another forum 
shopping alternative.
    A specialized trial court would eliminate forum shopping, 
inconsistency and unpredictability which would decrease patent 
litigation overall. The judges on a specialized trial court would 
develop greater expertise in patent law due to increased exposure. 
Moreover, creation of a specialized patent trial court would help 
reduce the crowded dockets of the district courts.
    There are, however, drawbacks to a specialized patent trial court. 
First, specialized courts are potentially subject to capture by the 
bar--in this case the patent bar. Second, having only one trial court 
for all patent cases would eliminate the percolation that currently 
occurs among the various district courts. Having numerous courts 
simultaneously considering similar issues permits the law to evolve and 
often aids in flushing out the best legal rules. Unlike other 
countries, the United States already has a specialized appellate court 
which resolves all patent cases--the United States Court of Appeals for 
the Federal Circuit. Given the single appellate court for all patent 
cases, adding a single specialized patent trial court would in my 
opinion be too much specialization.
    Instead, I propose that a single judge or a small number of judges 
in each judicial district be designated to adjudicate all the patent 
cases filed there. To the extent possible, the docket of the designated 
judge should not be limited to patent cases. Ideally, the judge who is 
appointed to this role would be technically educated or trained and/or 
have a patent background. This proposal would considerably limit the 
number of potential judges who would preside over patent cases and 
increase predictability without loosing the percolation and considered 
development of the law. Through experience these judges would develop 
more expertise at resolving patent cases. It would, of course, be 
important, that the designated judge remain the designated judge. In 
short, this position should not be rotated among the judges or the 
benefits of experience and predictability would be entirely 
eviscerated. Limiting the number of judges who adjudicate patent cases 
will decrease forum shopping and with experience these judges will 
develop greater expertise.
    Let me caveat this proposal by saying that I am not meaning to 
criticize the existing district court judges. They are charged with a 
difficult job and an ever increasing workload. District court judges 
work hard to resolve patent cases. In fact, many excellent patent 
jurists have evolved from this group. Yet, even some of these judges 
have raised concerns about adjudicating patent cases and one has 
publicly advocated for a specialized trial court to adjudicate patent 
cases. See Judge James F. Holderman, Judicial Patent Specialization: A 
View From the Trial Bench, 2002 U. Ill. J.L. Tech. & Pol'y 425 (2002).
    Let me also explain that I am not proposing that the specialized 
trial court eliminate the role of the American jury in patent 
litigation. Under current interpretations of the Seventh Amendment, it 
seems unlikely that the jury could ever be entirely removed from patent 
litigation. To the extent though that there is concern about juror 
comprehension or bias, a specialist district court judge would be in a 
better position to preside over patent cases to ensure more informed, 
accurate decision-making by the jury. The specialist judge, by virtue 
of his knowledge and experience, would also be better able to resolve 
issues as appropriate on summary judgment, eliminating unnecessary jury 
trials.
    In conclusion, empirical evidence substantiates forum shopping by 
patentee plaintiffs which is inefficient and reflects inequity in our 
legal system. By amending the patent venue statute, the Amendment to 
H.R. 2795 will significantly level the playing field for plaintiffs and 
defendants in patent cases. While changing the venue statute might 
result in a greater dispersion of patent cases among the judicial 
districts, designating specialized judges in each judicial district 
would consolidated patent cases among a smaller number of judges. The 
experience and expertise gained through this consolidation will 
increase predictability, reduce litigation, improve patent case 
adjudication and enhance the integrity of the legal process.

    [Additional material submitted by Ms. Moore is located in 
the Appendix.]
    Mr. Smith. Thank you. Mr. Pegram.

         TESTIMONY OF JOHN B. PEGRAM, SENIOR COUNSEL, 
            NEW YORK OFFICE, FISH & RICHARDSON, P.C.

    Mr. Pegram. Mr. Chairman, Ranking Member Berman, and 
Committee Members, thank you for all of the attention you're 
giving to the improvement of the patent system. Thank you also 
for the opportunity to testify today.
    I'm testifying as an individual who has studied this 
subject of adjudication of patent cases for many years. I 
support the study of this subject by the Subcommittee. The 
problems are widely recognized. There have been many proposed 
solutions. There's been little detailed study, to date. In 
particular, today I will be suggesting the designation of the 
U.S. Court of International Trade as an alternative or parallel 
jurisdiction patent trial court.
    The serious problems in the patent trial court system today 
are revealed in several ways. First is correctness. A high 
percentage of appealed cases are reversed, so the courts are 
not getting it correct as frequently as they do in other areas 
of the law. Predictability is low, and so the result is more 
litigation and more extended litigation. Efficiency: Cases are 
often slow, and there is a huge cost.
    Some of the causes are the limited patent experience of 
most judges. I would be happy if the witness to my right, with 
his biomedical degree, could clone Judge Ellis, and we could 
have him many times over. And that would certainly be one cure, 
but one that perhaps is not available yet.
    The judges have limited time. I want to emphasize the lack 
of standardized procedures. The Federal Circuit now defers to 
the regional circuits on issues that they conclude are not 
specific to patent law; which means, therefore, that the 
damages are calculated in different ways, depending on which 
regional circuit is involved.
    In my view, there is an excessive diversity of courts and 
judges. There is a lot of gaming of the system, the forum 
shopping that Professor Moore referred to.
    Today there are over 600 regular, and almost 300 senior, 
district judges. These are generalists. They have, on average, 
too little exposure to patent litigation. The average judge 
gets four to five new patent cases a year. There are only a 
hundred patent trials per year--a fairly steady number for many 
years. So that means the average judge gets a patent trial 
every 7 years.
    Judicial management is a big issue. The judges have limited 
time, because of their large dockets, and also because of the 
priority that is given to criminal cases. Also, it is difficult 
for a judge with limited patent experience to effectively 
manage the litigation. The litigants' costs are higher, due to 
lack of standardized procedures.
    In the past, there's been an aversion in the United States 
to specialized courts. The Court of Appeals for the Federal 
Circuit was intentionally made not just a patent appeals court, 
for that reason. However, if we benchmark, we find that the 
foreign courts are going to patent specialization; that the 
U.S. courts very successfully in other areas, such as business 
and commercial courts, have been moving toward greater 
specialization.
    And I would suggest a medical analogy: When you have 
cancer, do you want to go to the City of Hope Hospital, or just 
let your general practitioner take care of it?
    The Court of Appeals for the Federal--excuse me. The Court 
of International Trade is a court within the Federal Circuit, 
already. That would permit development of procedural law and 
simplified procedures under the Federal Circuit's supervision.
    There would be substantially no cost to adopting my 
proposal. There are existing under-utilized judges; there's an 
existing courthouse and offices. These judges have no criminal 
dockets which would delay their proceedings. As I mentioned, 
they have available time; although I would say that they're not 
sitting on their hands. They're being effectively used by 
designation in district courts, where they have experience. 
They have existing jury trial competence; both when they sit in 
their own court in certain types of cases, and also when they 
sit by designation in the district courts. And they have 
uniquely an existing authority to conduct trials anywhere in 
the United States.
    There are many more details and legislative suggestions in 
my articles.
    So if this proposal helps, hurray. If not, nothing would be 
lost. I look forward to the other witnesses' testimony and the 
question period. Thank you very much.
    [The prepared statement of Mr. Pegram follows:]

                  Prepared Statement of John B. Pegram



    [Additional material submitted by Mr. Pegram is located in 
the Appendix.]
    Mr. Smith. Thank you, Mr. Pegram.
    Mr. Katopis.

            TESTIMONY OF CHRIS J. KATOPIS, COUNSEL, 
                  DRINKER, BIDDLE & REATH, LLP

    Mr. Katopis. Thank you very much, Chairman Smith, Ranking 
Member Berman, Members of the Subcommittee, for the privilege 
of testifying today. My name is Chris Katopis. I'm a patent 
attorney with the law firm of Drinker Biddle; although the 
views I'm espousing are my own, and should not be ascribed to 
any of our clients.
    I am testifying today not as a litigator, but as someone 
who has had a decade of experience in Government, with the 
House and the PTO, working on patent and judiciary issues.
    I'm sorry to tell Mr. Pegram that my Republican brethren 
generally frown on cloning, even in the case of esteemed 
judges. So I hope to focus your attention on some other 
alternatives that may prove useful.
    Certainly, this Subcommittee ``gets it,'' for continually, 
again and again, acknowledging the importance of the patent 
system for institutions like universities, investors, 
entrepreneurs, small business. You are to be commended for 
that. You are also to be commended for elevating patent issues 
to an unprecedented level, with a record number of hearings 
this year. I just wanted to acknowledge that.
    But patent litigation is notoriously known as ``bet the 
company litigation.'' The stakes are high; the verdicts are 
often huge, multi-million-dollar. And the fierce nature of our 
system, which is winner-take-all, I think, amplifies the sound 
of the crisis.
    But unfortunately, I don't think the frustration, the 
statistics, the anecdotes that we're hearing, justify 
suggesting that the system is flawed. And I also think it's 
premature to suggest structural alternatives to the Federal 
judiciary and expanding some of the processes that will be 
discussed today, like expanding interlocutory appeals.
    In focusing your attention on issues to look at, I think 
you must start with the USPTO. As the Subcommittee heard at 
last month's oversight hearing, the USPTO is engaged in a 
number of productivity initiatives. And if you have confidence 
in the PTO management, you will believe that they will be 
successful and this will lead to a dramatic increase in the 
number of patents issued over the next 5 years, as well as 
patents with increased complexity.
    And you can quibble. You know, we saw the graph last month, 
and there was some quibbling over how much the rate of increase 
would occur. But it is certain that the number of patents that 
will be entering the marketplace will increase, along with 
their complexity. And this will guarantee that the number of 
patents in litigation, as well as the percentage that goes to 
trial, will dramatically increase over the next 5 years.
    So this hearing is very timely for Congress to sort of 
assess and ask whether the system can adequately handle the 
enhanced caseload and the complexity of these cases. I call 
this the bulge in the snake moving.
    One of the issues which we're going to talk about today is 
the Federal Circuit and the high reversal rate regarding 
interlocutory appeals. Even though there's a big number 
attached to the statistic, for me, it doesn't have meaning 
without more unraveling of the layers of the onion.
    It could be one of three things. It could be that the 
Federal Circuit is not putting enough deference to the lower 
court--the ``run amok'' argument. The lower courts may be 
lacking some capabilities. Or it may be that these cases are 
the tough cases; they're too close to call and, in a winner-
take-all system, the appeals are necessary, you know, to 
justify your inventive rights.
    So I think there's some mix of issues at stake. And 
certainly, if you favor certainty, then it's worth looking at 
ways of giving increased deference to the district court. And I 
outline a suggestion in my testimony.
    Further, I think we can still enhance the--even though we 
increase the certainty, increase the accuracy of the district 
courts. In my written statement, I justify a number of ways of 
adding capabilities to the district courts, in terms of 
education, resources, tools, expanding the use of special 
masters.
    It struck me in the course of researching and preparing for 
this hearing that--I talked to a special master, where the 
judge found him by doing a Google search. There is not a good 
resource for judges to find neutral court-appointed experts. I 
think this is lacking.
    So I think Congress needs to take a deep breath, and assess 
where we are with the system, what's coming down the pike; do 
an in-depth study; conduct pilots; increase the capabilities of 
the district court; and open a dialogue between the courts and 
Congress.
    Today's hearing is a great start, and I think that the 
sooner the better. There are initiatives that you can begin 
before Congress adjourns, sine die, the sooner the better. 
America's entrepreneurs, inventors, and small businesses 
deserve nothing less.
    So thank you, and I'm happy to entertain any questions.
    [The prepared statement of Mr. Katopis follows:]

                 Prepared Statement of Chris J. Katopis




    Mr. Smith. Thank you, Mr. Katopis.
    Judge Ellis.

   TESTIMONY OF THE HONORABLE T.S. ELLIS, III, UNITED STATES 
          DISTRICT JUDGE, EASTERN DISTRICT OF VIRGINIA

    Judge Ellis. Thank you, Chairman Smith, Ranking Member 
Berman, and the other Members. I'm delighted to be here today, 
and I appreciate very much the opportunity to express my views 
on these various proposals.
    I'm here today, of course, speaking only for myself. But my 
views, of course, are informed by my life experiences, which I 
think are, in the circumstances, worth elaborating on very 
briefly. I've spent about 35 years, or 36 years, in the law. 
I've spent about 18 years as a partner in a large law firm, 
where I litigated the widest variety of cases: business cases 
of all kinds, everything from nuclear licensing to motorcycle 
accidents, medical malpractice. Almost anything you can think 
of, I've tried, and lost, and won a few.
    Then, as noted, I was appointed to the bench in 1987. And I 
might note, since the Chairman noted it, that I was appointed 
by Ronald Reagan, so I should point out that this is as close 
as any Federal judge should get to law-making.
    Now, having said that, I should also point out that I 
appreciate the kind words by Mr. Pegram, but I'm sure that 
there are many litigants who have appeared before me--and my 
wife--who would have strong, cautionary words to say about 
trying to clone me. [Laughter.]
    In any event, going on, over the time that I've served as a 
district judge, again, I've tried the widest variety of cases. 
The Eastern District of Virginia has a very rich docket; 
everything from espionage cases, which I'm involved in almost 
all the time, to patent infringement cases, to product 
liability cases, environmental toxic tort cases, nude bathing 
in the Potomac--I can't imagine being able to tell you how 
broad the range of litigation is.
    And I do suggest to you that the notion that patent 
infringement cases are the most complex or the most difficult 
or the most time-consuming is not true. Sure, they're time 
consuming, they're labor intensive. And sure, they are complex. 
And I'll get to the range of those cases that I've tried. But 
to conclude that they're the only complex cases is a mistake.
    And they're also not the only ``bet the company case.'' I 
can assure you of that, as well. Most cases these days--when I 
first began practicing law, a $30,000 case was a big case. Soon 
after that, everything became ``third world war,'' practically.
    In any event, based on that experience, it is my view that 
the current system is working. It is working to produce fair 
and generally correct results that are consistent with fairness 
and with the overall goals of the patent laws; which of course, 
as we know from the Constitution, is to promote the progress of 
the useful arts.
    But I agree with the Chairman that it is far too costly. I 
think the discovery process for all cases is a black hole into 
which we throw enormous resources and it gives off very little 
light in return.
    How do we deal with that? Judges need to deal with that. In 
the Eastern District of Virginia, we deal with it by having 
every case go to trial within about six or 8 months, regardless 
of nature or dimension; with only the rarest of exceptions. 
That includes patent cases. This is a fairly rigorous time 
schedule. It imposes severe discipline on judges and litigants. 
But it is appropriate. It does keep costs down.
    Now, there are other ways to keep costs down. We need to 
explore those. Although I have a strong caution about Congress 
getting into the job of micro-managing the adjudicatory 
process. I think that's a mistake. But I do think it is 
important for judges to be more conscious of the enormous costs 
of litigation. And the fact is, I think one of the articles I 
submitted is an article I wrote on how litigation costs distort 
patent economics. I believe that's available.
    But in any event, let me address what I think is the major 
impetus for the proposals. And that is the Markman decision and 
the reversal rate related to Markman. There's no question that 
Markman, of course, was a landmark, a watershed event in patent 
infringement litigation. I tried lots of cases before which 
were non-Markman, before Markman came along, and many since 
then; and I know the difference.
    And it is--it does make it more labor intensive. The 
principal result is that judges must engage the technology. 
They must engage it, and they must write opinions about their 
Markman decisions. And judges are now becoming aware of that.
    My view is that the first year there was about a 40-percent 
reversal rate, according to the figures I had from the Federal 
Circuit. And my view of that is that it took a while for 
district judges to get the message. And it's still a message 
that is being propagated by the Federal judicial center and 
many of us. That is, to engage the technology, write opinions, 
and demonstrate that you have thought about it carefully.
    Then the reversal rate went way down, into the 20's, by 
1998. Then it crept up again. And it is now, as Professor Moore 
pointed out, I think about 35 percent. But that figure is 
flawed. It's not flawed because of Professor Moore. She's an 
exceptional researcher and an exceptional academic, and I bow 
to her.
    But she is limited by the way in which the data exists. She 
can't, for example, tell you how many cases were not appealed, 
where the people were satisfied with the Markman determinations 
and accepted them. She cannot tell you how many cases where the 
Court of Appeals of the Federal Circuit reversed a Markman 
determination, but affirmed five or six others.
    I had a case in which I had 24 patents involved in 
electronics, transistor circuitry; patents in which I made 
dozens of Markman determinations. Now, that case never went to 
appeal. I think the parties might--they settled ultimately. I 
can tell an interesting story of how that went, because we used 
independent experts, which was not a good idea. And I can come 
back to that.
    But the fact of the matter is that there are many cases 
where numerous patent Markman determinations are made that are 
affirmed, in effect, by the Federal Circuit, and those aren't 
accounted for in the 35 percent.
    But the bottom line is this. The normal reversal rate for 
cases is roughly 20 percent. But that includes both clearly 
erroneous or factual determinations, and de novo 
determinations, matters of law, about which there is a higher 
percentage rate. No one knows what that figure is exactly, so 
far as I'm aware; but it's estimated to be about 24, 25, to 26 
percent.
    Markman is up at 34, at the last I heard. I believe that 
will decline. I think it is stable now. I do not believe it's 
rising. I believe it is stable and it will continue to decline.
    Why was there a blip going up? I think because the Federal 
Circuit was in the process of getting organized about its rules 
of construction. We all know about the dictionary disputes, and 
how that went back and forth for some period of time and caused 
some confusion. But that will stabilize, and that will come 
down.
    So I do not believe that there is any need for any 
specialty courts or specialty trial judges. And then, think of 
the problems that that would create.
    Mr. Smith. Judge Ellis, I hate to say that you're out of 
time; I hate to do that to any judge. But maybe there'll be 
some time during the question-and-answer period.
    Judge Ellis. This is your court, sir. [Laughter.]
    Mr. Smith. Okay.
    [The summary of the prepared statement of Judge Ellis 
follows:]
   Summary of the Prepared Statement of the Honorable T.S. Ellis, III



    [Additional material submitted by Judge Ellis is located in 
the Appendix.]
    Mr. Smith. Professor Moore, let me direct my first question 
to you. But at the outset, let me say that, at least from my 
perspective, it seems to me that we do have a legitimate 
problem, both in the increase in the number of patent cases, 
their complexity, and perhaps or at least in the amount of 
reversals that we see; all of which have been documented by 
you.
    Judge Ellis called you a respected professor and researcher 
whom he admires, but he said your data was flawed. And I wanted 
to know if you wanted to respond to that.
    Ms. Moore. Thank you, Chairman Smith. Well, the data is not 
flawed, and I'm happy to make it freely available to anyone who 
is interested in reviewing it. I do actually, contrary to Judge 
Ellis' suggestion--the data includes every single claim term 
that was appealed. So if he had a case where 24 were appealed, 
and 23 were affirmed, those are all counted as 23 separate 
affirmances in my data and one reversal.
    Despite that, there's a 35-percent reversal rate. The 35 
percent reversal rate is the cumulative rate over the 8 years 
of the study from Markman to last year. The 35-percent reversal 
rate is for all 8 years. If you do look at the graph, there is 
a continuing rise over the time period. So the most recent year 
is higher than 35 percent. It's the mean of all the years.
    Mr. Smith. Okay. Professor Moore, what do you think of Mr. 
Pegram's idea; that is, giving the Court of International Trade 
patent jurisdiction?
    Ms. Moore. Well, I am not--I don't support the idea. If we 
were to give them concurrent jurisdiction with the district 
courts, it just creates another avenue for forum shopping by 
plaintiffs.
    Beyond that, if we give them exclusive jurisdiction--I'll 
tell you, once I actually wrote an article advocating the 
consideration of a specialized trial court. I'd like to retract 
it here formally. You know, I'll chalk it up to youth.
    But in any event, the reason that I oppose the idea now is 
simply because, with the creation of the Federal Circuit, I 
believe we have enough of a specialized court situation, and we 
would lose all the percolation that comes from having many 
district courts be able to weigh in on the law and then have 
the Federal Circuit look at all of those different 
interpretations and come up with the right one.
    Mr. Smith. I understand. Mr. Pegram, in regard to your 
idea, you clearly, by saying that the Court of International 
Trade should have patent jurisdiction, are willing to designate 
a particular court and give that jurisdiction to a court other 
than the courts that now have it. So what's wrong with 
Professor Moore's idea about designating a judge within each 
district and having that judge become an expert in patent law?
    Mr. Pegram. Ninety patent courts is too many. And I think 
that there is a big difference between having a collegial court 
that are all under the same rules of procedure, which I think 
we should try as an experiment with the CIT, and having 90 
different judges that the only thing that is assured is that 
each one's in a different district and that they're under all 
the different regional courts of appeal.
    Mr. Smith. All right. Thank you. Mr. Katopis, I'm going to 
read from your testimony, page 10. You say that, ``all of the 
available evidence suggests that the number and complexity of 
patent disputes will climb dramatically in a few short years.'' 
And then you say further on that one of the underlying reasons 
that the Federal Circuit reversal rate is so high is that the 
district court lacks certain capabilities.
    Isn't this the whole point of what Professor Moore is 
saying? And yet, your response is to suggest another study and 
another commission. If the problem is as severe as you describe 
it--and I believe that it is--why not have a specialty judge, 
so to speak?
    Mr. Katopis. I think that there may be merits in that, 
specialty judges. However, I think Congress really needs to 
take a deep breath, and assess what's going on. I would be 
interested in knowing, in terms of the reversal rate, what's 
really going on? Are these all electrical engineering cases, 
for example? Is there some problem with the electrical 
engineering patents that are coming out of the PTO? Is that 
something that we need to look at?
    So I think it's important to--I would like to know, are 
special masters or magistrates being used in these cases? I'd 
like to understand why that number is so large, before Congress 
takes action, especially radical action.
    Mr. Smith. Do you have a quick response, Professor Moore, 
to that?
    Ms. Moore. Well, my quick response would be that, with 
regard to the 35 percent number, that 35 percent number has 
nothing to do with the PTO issuing good or bad patents, because 
it's claim construction. Whether it's a good or a bad patent, 
somebody's got to construe the claims. And that's, 
unfortunately, not getting done correctly 35 percent of the 
time.
    Mr. Smith. Okay. Mr. Katopis, you don't think that there 
might be at least just a little bit of institutional resistance 
here to a change in the status quo or the loss of jurisdiction 
on the part of some members of the judiciary? Which is totally 
understandable and totally natural. Members of Congress don't 
want to give up any jurisdiction. Those of us on the Judiciary 
Committee don't want to lose any of it to any other Committee, 
and so forth. But it strikes me that that might be a partial 
explanation for the resistance to something that might be 
needed in our society today.
    Mr. Katopis. Well, Mr. Chairman, maybe I'm just really 
conservative and leery of change. So perhaps that----
    Mr. Smith. Well, usually conservatives--at least, I don't 
think it's a Republican idea to suggest more studies and 
commissions, but maybe it is. I guess it depends on which side 
of the desk you're on.
    And Judge Ellis, you wanted to respond, real quickly. And 
my time is up after your response.
    Judge Ellis. Well, I agree that we don't know the precise 
reasons for the high reversal rate, but I think I have a clue. 
And if you'll give me some time, I'll tell you.
    Mr. Smith. Okay. Without objection, I'll yield myself 
another 2 minutes.
    Judge Ellis. All right.
    Mr. Smith. And please proceed.
    Judge Ellis. If I reflect on the kinds of Markman 
determinations that I've been required to make, we're talking 
about the vagaries of language. And it's no respecter of 
technical area. You will find dicey Markman determinations in 
swimming pool toys, as I had recently, or in transistor 
circuitry, or in air disc brakes, or indeed anywhere.
    Because it is the goal of every person seeking a patent to 
get the broadest possible patent they can. And how do you do 
that? You use broad, vague claim language. And once you have 
that broad claim language, you can argue in a patent 
infringement case that it covers something you maybe hadn't 
anticipated, but you can still argue it. And then, a district 
judge has to decide whether it's that broad or not. And then, 
the court of appeals has to decide.
    I suppose everyone here knows, of course, that the Court of 
Appeals for the Federal Circuit has 12 judges, only six of whom 
have technical backgrounds. And what do you do? Do you then 
have--there is a chemical PhD on the Federal Circuit, but there 
are no procedures in the Federal Circuit to ensure that Judge 
Newman hears all chemical patents. In fact, they have 
explicitly rejected such a procedure.
    Generalist people can do this, and can understand it. The 
ablest judges--or the ablest lawyers who have appeared before 
me in patent infringement cases have often had AB degrees in 
English.
    But the reason for the high reversal rate, I think, is the 
expansive, broad language, and the changing definitions, and 
district judges need to engage.
    Mr. Smith. And not a lack of expertise; or so you would 
argue.
    Judge Ellis. Not a lack of expertise.
    Mr. Smith. Okay.
    Judge Ellis. I think if you had an expert set of courts, 
you'd have disagreements again. And if you put appeals there, 
you'd have disagreements among experts up there.
    Mr. Smith. Professor Moore, any response?
    Ms. Moore. Well, the only response I would have to Judge 
Ellis' comment is that you have to consider the position he's 
coming from. He is, without question, one of the most esteemed 
of all the patent jurists in the country. He--I don't know, but 
probably--has a lower reversal rate than other judges. I could 
look at my study and figure that out.
    So maybe what is easier for some judges, given the 
experience he has with the high number of patent cases, may not 
be quite so easy for other judges who have very, very few 
patent cases.
    Mr. Smith. I thank you all for your responses.
    The gentleman from California, Mr. Berman, is recognized 
for his questions.
    Mr. Berman. Thank you very much, Mr. Chairman.
    If a group of schlubs like us can decide whether or not the 
patent law should be amended--I mean, I am a believer in a 
generalist being able to sort of learn enough--just enough to 
be dangerous. In other words, I mean, I wonder if you lose 
something by having somebody who is so tied up and so involved 
by background and training and everything else in patent law. 
Sometimes, the benefit of a fresh look at something is useful 
in these situations.
    The issue of reversal rates, there are people around who 
like to say, ``Oh, the Ninth Circuit is reversed more than any 
other circuit.'' And I say, ``Well, let's see, what does that 
measure? The number of times the court granted cert and then 
reversed the Ninth Circuit? Or was it the number of decisions 
the Ninth Circuit made? Or the number of decisions where 
someone sought cert and it was not granted? Is that factored 
into it?''
    I mean, you can create a lot of different conclusions based 
on where you decide to draw the line in determining the 
reversal rate.
    But I guess you indicate, Professor, you don't want a 
specialized patent court. You want what, judges, one or more 
judges, in each of the districts to handle all the patent cases 
in that district? Is that your suggestion?
    Ms. Moore. I think that would be a better proposal, yes, 
Mr. Berman.
    Mr. Berman. Done based on volunteering for it? Or the chief 
judge having the authority to say, ``You're the new guy here, 
you're stuck with this''?
    Voice. That's how they do it now.
    Mr. Berman. ``Here's your reward.'' No, that isn't how they 
do it now. Now they have a random method of selecting judges; 
notwithstanding the Judiciary Committee's investigation into 
how judges get cases. It's a random determination, by and 
large, isn't it, in almost every district?
    Judge Ellis. Well, it is in the Eastern District of 
Virginia, but it wasn't until relatively recently. But 
relatively recently, for reasons we all understand now, it has 
now become random everywhere.
    Mr. Berman. The chief judge used to decide who would get 
the case?
    Judge Ellis. Yes. But the chief judge didn't do it. It was 
often--I can remember times in the '80's when someone would 
come in and say, ``You know, I'm not really up to trying this 
case. I haven't been feeling well. Who here wants to try it?'' 
There were lots of different ways in which it happened, and 
that was wrong. They all ought to be randomly assigned, without 
regard.
    Now, I don't know how you would appoint somebody, or 
designate somebody. If you designated, for example, somebody 
with an electrical engineering background, and somebody came to 
that person with a life sciences case, what good is that 
electrical engineering background going to do?
    Mr. Berman. And are patent cases the only kind of really 
complicated cases?
    Judge Ellis. Absolutely not. I can attest that there are 
many other kinds of complicated cases that are--I'm not saying 
patent cases are not time consuming. They're very labor 
intensive for judges. I cannot tell you how many hours I poured 
over transistor circuitry diagrams, struggling to understand 
it.
    But I have also had espionage cases that have been terribly 
difficult and time consuming; securities fraud cases; toxic 
tort environmental cases that involve very complicated 
questions of statistical methodology.
    Mr. Berman. How did you get Federal jurisdiction over a 
nude bathing case?
    Judge Ellis. The Potomac.
    Mr. Berman. What, they bathe across State lines?
    Judge Ellis. State park--national park.
    Mr. Berman. I see. Okay. So it wasn't the original package 
doctrine.
    Judge Ellis. No.
    Mr. Berman. Okay. [Laughter.]
    Judge Ellis. It was really a very uninteresting case. 
[Laughter.]
    Mr. Berman. All right. The issue of claims construction, 
Professor, you divorced it from the issue of the quality of the 
patent. And I don't quite understand why it would be divorced. 
If the Patent Office is granting a patent to a broad and vague 
claim, isn't that, by definition, a critique of the quality of 
that patent?
    And how a claim is construed, if it's construed in one way, 
it very well could be a poor quality patent, because there was 
prior art that wasn't novel, or it was obvious. Construed that 
way, it was a poor-quality patent; construed another way, it 
might--Why aren't they totally interrelated, the issue of 
quality of patents and how claims are construed?
    Ms. Moore. I guess, Mr. Berman, I don't see that as 
contributing to the complexity, making it more difficult for 
the district court judge to accurately figure out which way it 
should be construed. If it's construed so broadly as it reads 
on the prior art, as you correctly pointed out, the patent is 
going to be invalid, and his job is actually quite easy. If 
it's construed narrowly, then maybe you won't have 
infringement.
    But I guess that I don't see the quality of the job the 
Patent Office does as really having any very big impact on the 
likelihood a district court's claim construction is going to be 
right or wrong, or get reversed or be affirmed.
    Mr. Issa. [Presiding.] One more minute, by unanimous 
consent.
    Mr. Berman. Okay. Thank you.
    Judge Ellis. May I respectfully dissent? I do think that 
the way in which the patent claim is written can affect the 
validity of it. And the vagueness of it can affect the validity 
of it. And it's often a battle in construing a claim to 
construe a claim to preserve its validity; is one of the 
cardinal rules. And as I said earlier----
    Mr. Berman. You mean like construing a statute to preserve 
its constitutionality?
    Judge Ellis. That's right. So while I agree in essence with 
Professor Moore that basically the validity of the patent isn't 
inextricably intertwined with it, it can be related to it. And 
if you take a looking, I think it would be worth studying a 
range of the kinds of Markman determinations.
    You know, if you get a patent that says in a method, 
``heated to 500 degrees approximately,'' or ``more or less,'' 
and then a district judge has to decide, well, is 490 degrees 
``more or less''; is 491 degrees ``more or less''? Experts are 
going to disagree about that. I had experts testifying in this 
transistor circuitry case, and even they couldn't agree on the 
definition of a term.
    Mr. Berman. Could I just--this is really going to be sort 
of a ``yes'' or ``no'' answer, if I could.
    Mr. Issa. Without objection, an additional half-minute.
    Mr. Berman. Assuming that claim construction is essential 
to properly determining both issues of infringement and 
validity, and many cases would be settled earlier with 
reasonable claim constructions, would you recommend, would any 
of you recommend, establishing a procedure that would make 
interlocutory review of claim construction to the Federal 
Circuit available to litigants? I guess, under the theory that 
if you send that judge decision up for appeal on an 
interlocutory basis, and that's resolved, you might in many 
cases get a settlement and do away with a lengthy jury trial 
and all of the other stuff that goes with it.
    Ms. Moore. Yes, I would favor that. But there are some 
concerns you need to be wary of; which is the volume of cases 
that would put in the laps of the Federal Circuit judges. And 
you know, while you would remove a lot of the inefficiency from 
the district court, you may over-burden the court with very 
complicated cases.
    Mr. Pegram. For that reason, I'm not ready to adopt that 
proposal. But I'm willing to see what comes up in further 
discussion of this subject.
    Mr. Katopis. Well, I'm not a litigator, so I'm going to 
embarrass myself, probably. But I'll say the earlier in the 
process you have----
    Mr. Berman. You worked here. You can't be more embarrassed 
than that.
    Mr. Katopis. Well, talk to Mr. Merrit. [Laughter.]
    The earlier in the process you have the appeal, the more 
half-baked the record is. So you probably won't have enough 
really to give a meaningful appeal. So I think there's a little 
bit of a ``Catch-22.'' But the judge can speak to that more 
fully.
    Judge Ellis. I have not thoroughly thought that out, but I 
would be preliminarily opposed to it; the reason being that the 
record wouldn't be sufficiently developed. But more than that, 
I have on many occasions--I always hold Markman hearings as 
early as possible--early as possible. It's one of the first 
things I do, to get a sense of that. And I make rulings as 
early as I can.
    Oftentimes, I'm not able to make rulings, because I'm not 
confident that I fully understand the case. So I tell the 
lawyers, ``Make alternative assumptions, and put those 
alternative assumptions to your infringement experts to see 
whether there is infringement.''
    I have even had occasion in the course of a trial to change 
my mind about a Markman determination and change my definition 
in front of the jury because a bright light went on in a dark 
recess of my mind that hadn't gone on when it should have much 
earlier. So I'm not sure interlocutory appeal is the fix that 
it might appear to be.
    Mr. Issa. Thank you. And the Chair recognizes the gentleman 
from Virginia, Mr. Goodlatte, for his round of questioning.
    Mr. Goodlatte. Well, thank you, Mr. Chairman. I appreciate 
your yielding me this time. I was very interested in the last 
question asked by the gentleman from California, Mr. Berman, 
and I'd like to follow up on it.
    It seems like the majority of you are skeptical about the 
idea of an interlocutory appeal. I'm still concerned about the 
estimate that you've given us, Professor Moore, that perhaps as 
many as a third of district court claim constructions are 
improper. Others have said that it could be as high as 47 
percent.
    And so I'll ask you. But since you were somewhat supportive 
of the idea of interlocutory appeal, I also want to hear the 
three dissenters' ideas of how we get away from that problem if 
we don't use the interlocutory appeal.
    Are there other things that we can do before it gets to the 
district court? Are there things we can do to improve the 
quality of the district court decisions? Or do you disagree 
that the quality is that low? Because being wrong a third of 
the time is awfully high for any district court. They wouldn't 
want to be reversed a third of the time on appeals in most 
other areas of the law. So we'll start with you, and work our 
way back.
    Ms. Moore. Thank you. Certainly, Congressman, I agree with 
you that the reversal rate is cause for concern. As far as 
interlocutory appeal goes, I am extremely receptive to the 
idea. I would very much like to see the Federal Circuit taking 
cases under interlocutory appeal. They've had many such 
appeals. They've rejected all of them; which is their matter of 
right. So maybe there would be a way that we could encourage 
them to take some. And that would probably be a very good 
thing.
    Mr. Goodlatte. We could do that. Let me ask you to respond 
to Mr. Katopis' observation that if you allow the appeal 
earlier in the process the record on which the appeal is based 
is skimpier.
    Ms. Moore. That's not a concern in claim construction, sir. 
In claim construction, you're supposed to construe the claims 
in light of the intrinsic record. It's like construing a 
statute in light of the legislative history. Once it's there, 
it's there.
    Really, district court judges are discouraged from looking 
outside of the patent documents itself to determine what the 
claim terms mean. So there really isn't the need to develop 
this extremely extensive record for part of claim construction.
    Mr. Goodlatte. Thank you. Mr. Pegram?
    Mr. Pegram. In the practical world, however, I agree with 
the views expressed by Judge Ellis, that sometimes the light 
does dawn later, either in the minds of counsel or in the minds 
[sic] of the judge. We are talking about something----
    Mr. Goodlatte. But obviously, if the rate of determination 
of improper constructions is between 33 percent and 47 percent, 
a lot of the time, the light never goes on. What do we do to 
get the light to go on?
    Mr. Pegram. Well, if you'll bear with me, sir, I agree with 
Judge Ellis that the problem isn't quite as bad as the 
statistics look, because there are so many cases in which the 
claim construction is never appealed: the parties have settled; 
there is an adjudication by summary judgment. Only 3.6 percent 
of the cases go to trial. So there are many, many cases in 
which the district court has reached a Markman decision of some 
sort, that may go unrecorded and unreported, that I think may 
not appear in the statistics.
    I, personally, don't feel that the driving reason for 
making an improvement in the adjudication system is this issue 
of reversals on the Markman hearing. And I would tend to agree 
that we should encourage, as Judge Ellis said, a preliminary 
determination.
    But this is a matter of law. And as a matter of law, it's 
subject right up to the end of the trial to be changed, and to 
be changed in the Federal Circuit. And that's just the way it 
is in our system, if it's going to be a matter of law.
    So there are going to be changes to occur. And I don't 
think that the numbers are so outrageous, when you look at it 
in the context of over 3,000 patent cases a year.
    Mr. Goodlatte. How many of those are appealed?
    Ms. Moore. Four hundred and fifty a year.
    Mr. Goodlatte. Out of 3,000 are appealed. And so we're 
seeing somewhere between 150 and over 200 of those 
constructions determined to be improper. Judge Ellis?
    Judge Ellis. Well, the reversals could be for other 
reasons, not having to do with Markman. So you can't attribute 
the full 30----
    Ms. Moore. No, the 35 percent are solely claim construction 
reversals.
    Judge Ellis. All right. Well, my view is that the 
interlocutory appeal is not a good idea, especially in our 
docket. Everything is over in 8 months.
    Mr. Goodlatte. Okay. I heard that. What I'd like to know, 
with due respect to all of you, what do you do instead to 
reduce that number?
    Mr. Katopis. Congressman, if I may, I still don't 
understand what underlies that number. Is it, as I suggested, 
the Federal Circuit running amok; a deficiency in the district 
courts; these are just tough cases, they imply issues of patent 
quality? I think there needs to be more information, and 
perhaps the Professor has that. And I have only been thinking 
about these issues for several months.
    The ``water cooler talk'' at the USPTO is pretty boring, 
actually. And this comes up----
    Mr. Goodlatte. I can imagine.
    Mr. Katopis. And one of the things that we discussed 
internally--and I probably shouldn't talk about this too much--
is that, where you have this problem, can you give greater 
deference to the district court by looking at what the legacy 
of Markman is?
    It was suggested that Markman took the issue away from the 
juries, gave it to the judges, but maybe didn't make it a pure 
question of law; and maybe there's a way Congress can revise 
the standard as de novo, based on a question of fact, or 
something to clamp down on the appellate review.
    This may limit an inventor's rights. This may not be a good 
thing. I guess the goal for Congress is to decide what is an 
adequate number. Is it 33 percent, 20 percent, 10 percent? You 
know, what is the goal? Or is it just because of this sound of 
the cries of frustration that you keep hearing?
    Mr. Goodlatte. Well, let's ask Judge Ellis. Is there 
something that should be done in the process, before it reaches 
the district court, that would make district court judges 
better able to handle this? Or do you just not agree that 
they're not handling it well to begin with?
    Judge Ellis. Well, I don't agree that they're, en masse, 
not handling them right. There are always going to be district 
judges who don't do their job as well as they should; just as 
there's a bell curve in every profession, including lawmakers.
    Mr. Goodlatte. Sure. Well, there's no question about that. 
[Laughter.]
    Judge Ellis. But in the main, I think we are a 
conscientious group, dedicated to doing the job in all cases. 
Now, what can be done in advance? Well, certainly there has 
been a process. We've only been at Markman for 10 years, and 
there has been a long, tedious process of getting correct, or 
getting straight, getting clear the rules of construction--from 
Vitronics through today--and that process is still going on, to 
some extent.
    In fact, I recall one case--and Professor Moore doesn't 
have to look for it--I was reversed on a Markman construction, 
where I wasn't reversed in other cases. But there was a 
dissent. So here is an expert court, two-to-one, and the person 
who dissented was the person with the technical background.
    What can be done? My view is that we can do better about 
requiring more specific language in patent claims, perhaps. You 
would be astonished, I think, and it would be instructive to 
look at the range of patent Markman decisions. What kind of 
language are judges being asked to determine? 
``Approximately,'' ``more or less,'' ``nearly,'' that kind of 
thing. Some are technical terms, to be sure; but those are the 
easy ones.
    Mr. Goodlatte. Mr. Chairman, I wonder if I might slide in 
one more question?
    Mr. Issa. Without objection, the gentleman is granted an 
additional minute.
    Mr. Goodlatte. I thank the Chairman. Mr. Pegram, since 
related State claims are often tried in Federal district court, 
what do you anticipate the effect on the parties would be if we 
permitted patent cases to be tried at the CIT, as you propose?
    Mr. Pegram. I don't see that there would be any particular 
difficulty with that. The district judges have to take up the 
law of the particular state today, and under those 
circumstances the CIT judges would have to consider the law of 
the State. But the fact of the matter is that that rarely 
occurs and is really significant in, I would guess, less than 5 
percent of the cases.
    Mr. Goodlatte. Would this have any relation to these 
determinations made in district court? Is this court in any way 
better able to make these determinations than some of the other 
courts involved?
    Mr. Pegram. As to State claims?
    Mr. Goodlatte. Yes.
    Mr. Pegram. Well, I don't think that--you know, I think 
that, certainly, a district court sitting in a State would have 
the most knowledge about the laws of that State, and it 
therefore would be--the CIT would be less of an expert court in 
the law of the State.
    Mr. Goodlatte. So it's not going to improve the results.
    Mr. Pegram. But in the 95 percent of the cases which were 
only patent issues, they'd be much more up to speed. And I 
would suggest, in answer to your prior question, that the way 
to have better dealing from the court's point of view with 
Markman situations is to use more experienced judges. I think 
Judge Holderman, in his paper that I've submitted along with my 
materials, also alludes to that.
    The other thing, I do agree with what Judge Ellis has said; 
and that is that some of these patents are very poorly written 
claims, the ones that filter up. But what I can't grasp is 
that, even if the U.S. Patent Office improved 90 percent of the 
patents issued, we would still be getting several thousand 
cases a year in which there were badly written claims that 
would be in the courts. And so I don't really think that we'd 
have the problem.
    Where the claims are clear, we frequently don't even have a 
dispute, we don't even have a litigation.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Mr. Issa. Well, thank you. And one nice thing about being 
the last to question, not only will I have, let's just say, a 
greater flexibility on my time, but so many good questions have 
already been answered.
    Picking up where the gentleman from Virginia left off, Mr. 
Pegram, I would be the first to say that I would like this 
Committee to deal with the ITC and ITC reform, and perhaps 
enhancement. I have the luxury of being somebody who won a case 
as a defendant at the ITC. That's the good news.
    The bad news is, I also understand that it denies the 
normal rights; not the least of which is, your accuser throws a 
Molotov cocktail and then runs away and lets a Federal judge 
and a Federal prosecutor double-team you.
    So having succeeded, I would say that, at this time, to 
include the ITC in anything that I'm going to suggest to the 
Chairman may not be yet appropriate. But I'll give you, 
certainly, a chance to respond. I'd feel inappropriate 
otherwise.
    Mr. Pegram. We have the wonderful situation in the United 
States of several confusing designations. I am referring not to 
the International Trade Commission, or ITC, which does have a 
peculiar, to say the best, procedure. I am referring to what 
used to be the Customs Court, the Court of International Trade.
    This is an article 3 court, and it has judges who are fully 
equivalent to Federal district judges. Although it has its own 
rules of practice and procedure, they are almost identical to 
the Federal rules of civil procedure. But it has the benefit 
that if we wanted to try some experimentation, those rules 
could be revised for patent cases.
    And so I think that if you look at the Court of 
International Trade, who I think is a highly regarded court, 
that you might not have the reservations that you would have 
about the International Trade Commission.
    Mr. Issa. Okay. But one of the proposals, I believe, that 
was out there was the ITC expanding beyond just injunctive 
relief, to have damages as something they could grant; which 
they presently can't. Am I misunderstanding that?
    Mr. Pegram. It's not my proposal.
    Mr. Issa. It's not your proposal.
    Mr. Pegram. I have heard people propose----
    Mr. Issa. Okay.
    Mr. Pegram. --expanding ITC. And there may have been some 
confusion with my proposal as a result of that.
    Mr. Issa. Good. I've got this.
    Mr. Pegram. But I do not support that.
    Mr. Issa. It's in there. Chris? Or Mr. Katopis?
    Mr. Katopis. Congressman, if I may share one observation? 
And I don't mean to be so sour about the CIT, but I think 
there's a lot of concern about reversal rates. I invite your 
attention to the AOC's website. The CIT has had traditionally 
about a 20 percent reversal rate by the Federal Circuit. For 
2005, it's 35 percent. So if you're thinking about adding 
jurisdiction to the CIT, I just hope that, you know, it 
satisfies the goals that you're trying to achieve.
    Mr. Issa. Okay. To the core of the proposal of 
specialization within the court, first, let me make a comment. 
What I think I heard all of you say is you don't want to take 
this and make it a separate, truly specialized court at this 
point, in spite of other countries' actions that do in fact in 
many cases have a specialized court, without juries, etcetera. 
Is that generally a nod, that you're all in various ways 
concerned about that?
    Okay. And the reason is, I'm concerned. The Federal judges 
I've talked to believe, as you do, Judge Ellis, that the 
generalist, given the right tools, can do better.
    To that extent, I'm going to ask a rhetorical question, as 
someone who's, obviously, never been a judge--except one time 
in a contest, and it did not involve any of that Potomac 
activity of yours. [Laughter.]
    But Your Honor, you have a chief judge in your district. 
That chief has scheduling and other rights, and probably checks 
to make sure that, you know, the electric bill is being paid--a 
series of administrative responsibilities.
    Judge Ellis. Yes.
    Mr. Issa. And it's usually done on a rotation basis?
    Judge Ellis. No.
    Mr. Issa. Okay. In San Diego, it's a rotation, the way it 
works.
    Judge Ellis. It is rotation in the sense that the most 
senior judge, provided he's under 62 or something like that----
    Mr. Issa. Until he gets senior status, has it.
    Judge Ellis. Well, he has it until he's 62. You cannot take 
senior status into your 90's. But you must be, I think it's 62, 
before you are the most senior to take it. And then you may 
only hold it for 7 years.
    Mr. Issa. So it's a limited period of time.
    Judge Ellis. Yes.
    Mr. Issa. Additional facilities and additional staff come 
with it?
    Judge Ellis. Yes, I think it's one secretary.
    Mr. Issa. Okay. And that's because it takes more people to 
do that job right.
    Judge Ellis. Yes, sir.
    Mr. Issa. Why would we not apply a similar concept to 
finding ways to deal with patent cases? And I know you're 
smiling because--I'm not trying to trap you.
    Judge Ellis. No, I think you're going right down where I 
want to go.
    Mr. Issa. Okay. [Laughter.]
    It's not a question of whether the judge is better or 
worse. It's not a question of whether they have a degree in 
chemical engineering. Because I really appreciate how you 
focused on it's not a matter of getting the right engineering 
degree for every patent case, and I think you're right on.
    However, frequency--not exclusivity, but frequency of 
dealing with patent cases; the appropriate staff to help in 
that process, whether those are permanent staff or they're 
staff loaned when you have a case, or in fact special 
assistants or masters, brought to you, instead of the plaintiff 
and defendant bringing you their experts and trying to spin 
your head around like ``The Exorcist''--is that what you're 
saying would make your body work better?
    I know the gentleman next to you talked in terms of 
resources as one of the solutions. Is that what you're trying 
to achieve to do your job better?
    Judge Ellis. I think that's a fascinating and interesting 
suggestion, and I think I like it. I haven't thought it 
through.
    Mr. Issa. I didn't want you to. I wanted to get right to 
it.
    Judge Ellis. If what you're suggesting is that judges who 
get patent cases, or a lot of them, should have an extra law 
clerk with expertise? Absolutely. I wouldn't disagree with that 
for a moment. That would be helpful. But I think it's very 
important for all district judges not to appoint experts or 
magistrates. You can't delegate what you've sworn to do. You're 
the decision-maker. You've got to engage the technology and do 
it.
    Now, I do agree that you ought to have help in doing it. 
And, sure, if I had another--I have a pretty full docket, but 
if I had another 20 or 30 patent cases, rest assured, I would 
be asking you, ``Please let me have one or two more law 
clerks.'' And I would certainly select them with some technical 
expertise; which might be in electrical engineering, but a 
person technically trained could think about life sciences, 
chemistry, and other things.
    Mr. Issa. Well, to that extent--and I'm going to ask you a 
follow-up, because it is unique for me to--I mean, actually, a 
lot of what we've come up with has come from meetings with 
other Federal judges. It's unique to have somebody in front of 
you, on the record, to help make the record.
    If in your court the rotation pattern, instead of being the 
next case, the next case, the next case, if it was, for the 
next year, every case that comes in that's a patent case goes 
to you; and you're supplemented with these people; but before 
people can figure out that they want to cheat the system and 
shop, you're into another one; and then maybe they're back to 
you, or maybe they're on to a third--would that still meet the 
requirement that you'd have other cases, you'd still be a 
generalist, but that we could help to not have what usually 
happens in San Diego historically?
    And I'm speaking for a moment from experience in San Diego. 
Every time a magistrate became a Federal judge or a district 
judge, or somebody from outside came in, and you had to 
redivide, guess what got redivided? Every patent case. In 
Michigan, the exact opposite. Judge Cohn reached out and took 
cases.
    Now, I have the good fortune that I had a case that I 
prevailed on in front of a magistrate elevated and then given 
my case by somebody who wanted to dump it quickly. And then, I 
also was in Michigan, where Judge Cohn reached out and grabbed 
a case and, oddly enough, a case that had been mismanaged and 
gone to the fed circuit and come back.
    I've seen the difference of time, expertise--exactly what 
you're talking about, as somebody who probably does have a 
lower reversal rating, who does move the ``rocket docket.''
    Is the goal reasonable, if we can keep from promoting burn-
out, keep from artificially creating venue shopping, and if 
these generalists can be better at what they do, while still 
having other cases? Are those elements that you would say would 
work, while still potentially not having every patent case 
equally divided into 14 judges?
    Judge Ellis. Yes.
    Mr. Issa. Excellent. Is there anyone that followed that, 
and agrees? [Laughter.]
    Ms. Moore. I agree.
    Mr. Pegram. I agree, in principle, in the courts that have 
a sufficient number of judges to do that. But I think that 
there are other issues, as addressed in my testimony earlier; 
such as the coordination of procedures across the country and 
issues such as--I still believe, for example, that 94 district 
courts, each with a specialist judge, is too many.
    Mr. Issa. Your Honor?
    Judge Ellis. We've talked a little bit. I think Professor 
Moore mentioned narrowing the venue choices. I don't have a 
view one way or the other, but that would certainly help in 
this regard.
    Right now, we allow people to select venues. And I 
believe--although Professor Moore can correct me--guess what? 
They go to the Northern District of California, they go to the 
Southern District of New York----
    Mr. Issa. Eastern District of Texas.
    Judge Ellis. Eastern--well, that's a new one. But you're 
right. And the District of Delaware. The reason they go to the 
District of Delaware is there's a marvelous hotel right across 
from the courthouse and good restaurants nearby.
    Mr. Issa. Finally, a valid reason.
    Judge Ellis. Yes. [Laughter.]
    But you're always going to have some forum shopping; which 
is perfectly appropriate, if the venue statute allows it. If 
you have a venue statute that says you can go to ``A,'' ``B,'' 
or ``C,'' then that's legitimate. And if you want to narrow it, 
go ahead and narrow it.
    But I understand what you're suggesting is: Look, let us 
have a system where a designated number of Federal judges in 
various districts get the patent cases for some period of time, 
and we give them some more resources to do it, and let them do 
all the other cases in addition.
    I think there would be some district judges who would 
oppose that, because they want to do them and they wouldn't be 
designated to do them. In other words, if you had a district of 
nine judges, as we do, there might only be two that would be 
designated. There might be another three or four who would want 
to do it.
    By the way, there are many kinds of cases. Those aren't the 
only. There are a lot of district judges who, once they take 
senior status, say, ``No more patent cases, no more capital 
cases, no more securities fraud cases, no more habeas cases.'' 
So there are lots of those.
    Mr. Issa. Or just the opposite.
    Judge Ellis. Or just the opposite.
    Mr. Issa. They choose to take----
    Judge Ellis. Exactly.
    Mr. Issa. --certain cases, because they're cerebrally 
beneficial.
    Judge Ellis. I agree. I agree. But my own concern is that I 
don't want district judges, and I don't want, to reach out and 
take a case, because that impairs your impartiality. I think 
there ought to be a system that does it randomly; you get what 
you get, and you do what you are given to do.
    Mr. Issa. Let me ask another question of the panel, because 
this is a suggestion that came up with a number of judges in 
the Southern District of California. For purposes of the pilot, 
the study, if we limited this to only double opt-in, meaning 
that although there would be a judge who was supplemented and 
relieved of sufficient other duties so that they would be able 
to rocket these cases, as appropriate--in other words, their 
criminal docket might be reduced--however, if there was this 
test, and there's a judge in the Southern District and there's 
a judge in your district or wherever, however, in order to get 
a case outside of the rotation, that both the plaintiff and 
defendant would have to agree, would that alleviate most of 
your concerns that somehow it was forum shopping? Or it would 
still be the same thing, except you'd have both sides agreeing 
to it? Yes, Professor Moore?
    Ms. Moore. I think that would be disastrous. Because you're 
never going to get agreement by them. And as a result, it's 
always going to go back into the random selection process. I 
mean, very seldom are you ever going to get them to agree. 
Everyone's going to have an idea of who's better for them and 
who's worse for them.
    Most of the time, the litigators are so smart, they can 
figure it out and get it right. So if it's better for me, it's 
worse for the other side, you know, and the other side is going 
to oppose the idea.
    Mr. Issa. You know, every once in a while--and I'm not 
opposing your statement. You certainly have more qualification. 
But the only way you get a judge--a bench trial is if both the 
plaintiff and defendant do not demand a jury; which means both 
sides want justice, rather than the luck of the draw. And yet--
well, I'm sorry--if you want justice, you get a judge; if you 
want your outcome, you hope for the jury.
    I wish I could disagree with that, but everyone who ever 
had a poor case but was hoping for the best, that I ever saw, 
asked for a jury. In patent cases. I'm being more narrow than 
general.
    That happens because both sides know that a bench trial is 
a lot faster. So to the extent that both sides agree to it 
because they're assured that things will go quicker, etcetera, 
and they have high confidence, to the extent that that happens, 
why wouldn't it happen that people would say, ``Look, we've got 
a high-level dispute, it's complicated, but we'd like a pro and 
we'd like it fast, and we're willing to take the chances that 
we're wrong''? You don't think that would ever happen?
    Ms. Moore. To the extent they're willing to do that, they 
already agree to binding arbitration and do it. Proctor and 
Gamble had a wonderful history of this. There are many 
companies that have engaged in binding arbitration. It avoids 
the litigation altogether. So to the extent that they want to 
sort of roll the dice, as you said----
    Mr. Issa. Roll the dice, but not roll the dice on the 
appeal. Your Honor?
    Judge Ellis. I think I agree with Professor Moore. I think 
it would be rare that it would happen. I've only had--without 
browbeating the lawyers, I've only had one instance that I can 
remember where they freely chose to have a bench trial.
    And the other interesting thing in this technical aspect, I 
can't tell you how many times I've had a technical case, and 
then had both lawyers strike every member of the jury with any 
technical expertise at all. We're all familiar with that 
phenomenon.
    Mr. Issa. I'm a witness to it. As a matter of fact, in my 
case, which was based on relay technology, one time, amazingly, 
the elevator repairman was specifically excluded, because, 
basically, that's what elevators are, is relay circuits and 
relay logic at some point.
    The term of a study--now, let's be presumptive, since I saw 
the right amount of nods that a pilot in a study seemed to be 
something everybody could agree would give us some potentially 
good information. Would 4 years be long enough? Would 5 years 
be too long? Can you give me your opinion of how long you think 
it would take to have this relatively small group that are 
proposed here? Let's just say two districts in which this 
occurs--two circuits, and within that only a district in each.
    How long would you think we'd need to go through the 
process, learning, the additional funding, for trial failure 
and modification? Judge Moore?
    Ms. Moore. No, not ``Judge Moore''----
    Mr. Issa. Oh, I'm sorry. Professor Moore. I'll get to the 
judge in a moment.
    Ms. Moore. If you have the power to do that, I'm all for 
it. No, I think that, at minimum----
    Mr. Issa. I'll take you over to the other side of the 
rotunda. [Laughter.]
    Ms. Moore. I think a minimum of 3 years, preferably five, 
would really be ideal; because just a couple of quick stats: 
Patent litigation takes on average 1.1 years, but that's for 
all cases, even the ones that settle. For a case to get to 
trial, there's an average over the last 20 years of 3.4 years. 
That's abominable. But 3.4 years. So if we want to see if 
judges can develop expertise, we've got to give them enough 
time to have enough cases, and also have those cases get up to 
appeal and back down.
    Mr. Issa. Excellent. Mr. Pegram?
    Mr. Pegram. I agree.
    Mr. Issa. Chris?
    Mr. Katopis. I agree. And I'd also add, it may be possible, 
with all due respect to the stats we've seen, to have maybe 
another study looking back at 10 years of the results, the 
legacy of Markman; and try to figure out this granular 
information that keeps me up at night, apparently, about 
whether it's electrical engineering cases, whether these cases 
relied on court-appointed experts in the adjudications. So, at 
least 3 years looking ahead, and then maybe you could also do 
something concurrently, looking back.
    Mr. Issa. Your Honor?
    Judge Ellis. Yes. Although my competency doesn't really 
extend to knowing how long it would take to study something, I 
would think three to five--three would be minimal.
    Mr. Issa. Okay. And I'm going to close in just a second. 
Because as much as I'd like to make the record very, very full, 
you certainly have all been generous with your time. But I do 
want to ask a question, because I think we have the right 
group.
    When we talked about claim construction, we talked about 
some of the challenges of reversal rates, I didn't hear anyone 
talk about the changing interpretation of doctrine of 
equivalence. You've all been in practice during this period of 
time. How do you think that the long-term results on that are 
going to be?
    Because, obviously, claim construction at one time included 
the ``what if,'' you know. And we certainly--it's not just the 
102 and 103 that you deal with now. But it was also, you know, 
``How could we interpret somebody's product to be somehow the 
equivalent of?'' which often kept a case going for longer. Do 
you see that as changing these statistics, even if we did 
nothing? Professor Moore?
    Ms. Moore. Thank you. The doctrine of equivalence is 
definitely being asserted in every, single patent litigation 
now. And it's a complicated, difficult assessment. Most of the 
time, it's left to the jury. However, the district court judge 
has the ability, through a number of avenues--like prosecution 
history estoppel and other mechanisms--to really impact the 
decision-making on whether or not it's going to even reach the 
jury on equivalence.
    This is where I think specialized judges would also be an 
enormous value. Specialized judges, in the way we've been 
discussing them--via frequency, having the expertise and doing 
this over and over again--would allow them to interpret the 
prosecution history more easily and, hopefully, more 
accurately. So I think it would be beneficial there, as well.
    Mr. Issa. Thank you. Mr. Pegram?
    Mr. Pegram. I agree completely. The cost of educating a 
judge who has not had the experience of a patent trial or the 
experience of a summary judgment motion in the area of the 
doctrine of equivalence, it's an immense cost to educate that 
judge for the first time.
    Mr. Katopis. Congressman, with all due respect, I'm going 
to pass, because I've only been in private practice for a short 
time. And as you reminded me before the hearing, I spent the 
better half of the last number of years raising patent fees, 
so----
    Mr. Issa. And trying to raise them even further.
    Mr. Katopis. So I will not contribute to this.
    Mr. Issa. Your Honor?
    Judge Ellis. I agree with Professor Moore's comments. I 
think I dissent from Mr. Pegram's. You're always going to 
educate the judge. And I don't know what's different about a 
patent case from any other case, in terms of educating them. 
There are judges who get maybe one espionage or national 
security case, one classified information case, every 5 years. 
They have to be educated in that.
    I really think we've got to focus back on why are we 
concerned. It's this reversal rate that has everyone concerned. 
And I'm happy to have a further study of that. I think it's 
important for us to remember that reversal rate for all issues 
of law is not much lower than 35 percent.
    Mr. Issa. Well, and I'm going to close with a very, very 
quick statement and a conclusion that's been written for me. 
[Laughter.]
    But this particular Member, I'm as concerned about the 
remaining 90 percent that don't get to appeal and are never 
reversed, or not reversed; that the concept of specialization 
was the belief that if you lowered from 800-plus--over 1,000, 
actually, including everyone on senior status--down to 90--
which Mr. Pegram objected to in some ways--that what we're 
doing is we're increasing from four a year, on the average, to 
maybe 40 a year that people would be dealing with.
    Even if it was only for a 2-year, 3-year period, 1-year 
period, the idea is that the intense focus--and Your Honor, you 
spoke about it, and I picked up on it. Judges need to focus 
more on this. The concept that we're hoping to find through the 
study is: How do we get focused?
    And perhaps, like a sabbatical, somebody concentrating in 
this area within their district for a couple of years; and 
then, ``Been there, done that, I'll give you advice, but Joe 
down the hall now has the majority of these cases,'' might 
allow for a ``have your cake and eat it too.''
    It is a concern of mine; not, though, about the ones that 
get reversed, alone; it's not just about that. It's about--Your 
Honor, you did a great job of telling us how the ``rocket 
docket'' works. The ``rocket docket'' isn't working everywhere.
    The hope is that all these cases would move better through 
some process. And if it's not this one, Your Honor, I look 
forward to learning as much as I can about other ways to 
provide good results quicker.
    Anyone have any closing, before I close?
    [No response.]
    Mr. Issa. With that, I'd like to thank the witnesses for 
their testimony. The Subcommittee is very appreciative of your 
contribution, and particularly the extended time you granted 
us.
    This concludes the oversight hearing on ``Improving Federal 
Court Adjudication of Patent Cases.'' The record will remain 
open for 1 week. I would like to ask, are all of you willing to 
take any additional questions that come from Members not able 
to be here?
    Then, we will also include that. Thank you for your 
cooperation. The Subcommittee stands adjourned.
    [Whereupon, at 6:05 p.m., the Subcommittee was adjourned.]

                            A P P E N D I X

                              ----------                              


               Material Submitted for the Hearing Record

Prepared Statement of the Honorable Howard L. Berman, a Representative 
     in Congress from the State of California, and Ranking Member, 
    Subcommittee on Courts, the Internet, and Intellectual Property

    Mr. Chairman, thank you for scheduling this oversight hearing on 
improving federal court adjudication of patent cases. This hearing 
about the courts that handle patent litigation will be an interesting 
intersection of two separate issues within the subcommittee's 
jurisdiction.
    Patents are the cornerstone of the economy, and provide incentive 
for innovation. Therefore, the effect litigation of patents has on the 
preservation of patent rights is all the more important to continually 
assess.
    The combination of the complex science and technology, the unique 
patent procedures and laws, the historical right to jury trials, the 
equitable division of labor and administration of the courts and their 
dockets, and the multiple methods available for dealing with the issues 
raised by patent litigation makes improvement of the patent 
adjudication system a uniquely complicated and difficult task. Many say 
the system works well, yet at the same time, some say the high costs of 
litigating and the reversal rate at the district court level reveal 
otherwise.
    These complexities appear to have distorted patent markets and 
patent economics. The increasing cost of litigating patent infringement 
and validity issues now frequently gives weak, untested and 
``presumptively valid'' patents the same kind of protection that was 
previously only granted to or reserved for strong or judicially tested 
patents.
    Patent quality has been a long-time priority of mine, and with the 
introduction of the Patent Reform Bill, we are trying to ensure the 
quality of patents. Even so, despite the many efforts made so far, 
there are still many legal scholars, patent owners, and members of the 
judiciary and patent bar who believe changes to the patent litigation 
process in the courts are also necessary to improve the quality of 
patents. The creation of the Court of Appeals for the Federal Circuit 
alleviated the inconsistencies at the regional circuit court level. 
However, some continue to raise concerns about forum shopping at the 
trial court level.
    The Court of Appeals for the Federal Circuit has placed the job of 
construing patent claims in the hands of our federal district court 
judges (Markman), and kept other complex issues, such as 
nonobviousness, inequitable conduct, and novelty in the hands of the 
jury. Concerns have been expressed about whether a judge or jury can 
truly learn the intricacies of some of the science and technology 
placed before them during the length of a typical patent trial. 
Hopefully, if the post-grant opposition procedures in the Patent Reform 
Bill are enacted, this will address many of these complex issues before 
resort to district court litigation occurs. In addition, recent 
accounts demonstrate that as time passes, and the District Court 
federal judges are becoming more proficient at application of the claim 
construction rules spelled out by the Court of Appeals for the Federal 
Circuit, that the reversal rate is coming down. However, evidence 
suggests that our federal district courts still spend a much greater 
ratio of time on patent cases than any other types of cases that come 
into their courts.
    There are many proposals for change in the patent adjudication 
system. However, before implementing changes, we must first be able to 
fully understand the issues confronting the system, the many options 
that may be available to remedy issues in the patent litigation system 
that have been raised, and the effects of these proposed solutions.
    Thank you Mr. Chairman. I yield back the balance of my time.

Prepared Statement of the Honorable John Conyers, Jr., a Representative 
  in Congress from the State of Michigan, and Member, Subcommittee on 
            Courts, the Internet, and Intellectual Property

    I have numerous concerns with the idea that Congress should 
establish a separate judicial system for patent cases. While I 
recognize that hyper-technical issues arise in patent lawsuits, every 
area of the law presents complex issues and circumstances. We should 
not go down the path of having isolated judiciaries or juries for every 
legal issue.
    During today's hearing of possible reforms to adjudication of 
patent cases, some seek to remedy what they view as an inefficient and 
expensive system. They argue that the inefficiency is due to the 
inexperience of the judges, litigants, and lay juries on patent law as 
well as the technologies behind the cases. Although the increased 
expertise provided in these reforms, such as having only technical 
experts as judges or jurors, are an attempt to improve the system, I 
believe they may be misguided.
    The idea of designating certain judges as ``experts'' to hear those 
cases is problematic. For instance, how would we determine who gets the 
classification of ``expert?'' Furthermore, who would assign ``special 
masters'' to apply their technical proficiency and construe patent 
claims? And how would we be certain that these special masters would 
not have financial or personal conflicts? The replacement of a lay jury 
with a ``blue-ribbon'' jury in these cases invokes similar questions of 
classifications.
    More generally, if the Committee seeks to make these changes for 
patent litigation, an argument can be made that we should apply the 
same arguments of inefficiency to all other types of cases and permit 
only experts to hear them as well. A civil rights lawsuit would have 
only civil rights lawyers as a judge and jurors. A personal injury 
lawsuit stemming from an escalator accident would have only escalator 
engineers as jurors.
    For these reasons, I cannot immediately support any of the proposed 
reforms to the adjudication process for patent litigation.
Article submitted by Kimberly A. Moore, Professor of Law, George Mason 
  University School of Law, entitled ``MARKMAN EIGHT YEARS LATER: IS 

                 CLAIM CONSTRUCTION MORE PREDICTABLE?''




Article submitted by Kimberly A. Moore, Professor of Law, George Mason 
 University School of Law, entitled ``FORUM SHOPPING IN PATENT CASES: 
              DOES GEOGRAPHIC CHOICE AFFECT INNOVATION?''




Article submitted by Kimberly A. Moore, Professor of Law, George Mason 
University School of Law, entitled ``Are District Court Judges Equipped 
                       to Resolve Patent Cases?''




 Article submitted by John B. Pegram, Senior Counsel, New York Office, 
Fish & Richardson, P.C., entitled ``Should There Be a U.S. Trial Court 
             With a Specialization in Patent Litigation?''




   Letter from the Honorable T.S. Ellis, III, United States District 
  Judge, Eastern District of Virginia to the Honorable Lamar Smith, a 
   Representative in Congress from the State of Texas, and Chairman, 
    Subcommittee on Courts, the Internet, and Intellectual Property




   Article submitted by the Honorable T.S. Ellis, III, United States 
 District Judge, Eastern District of Virginia entitled ``Presentation: 
          Distortion of Patent Economics by Litigation Costs''



   Article submitted by the Honorable T.S. Ellis, III, United States 
 District Judge, Eastern District of Virginia entitled ``Presentation: 
   Quicker and Less Expensive Enforcement of Patents: United States 
                                Courts''




 Charts prepared by the Intellectual Property Owners Association (IPO) 
on IP Litigation Commenced in the U.S. District Courts, 1993-2004, and 
           IP Suits Filed in U.S. District Courts, 1995-2005



                                 
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