[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                 THE PATENT TRIAL AND APPEAL BOARD AFTER
                     10 YEARS, PART II: IMPLICATIONS OF 
                     ADJUDICATING IN AN AGENCY SETTING

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

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON COURTS, INTELLECTUAL 
                        PROPERTY, AND THE INTERNET

                                 OF THE

                       COMMITTEE ON THE JUDICIARY

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

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                        THURSDAY, JULY 21, 2022

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                           Serial No. 117-75

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         Printed for the use of the Committee on the Judiciary
         
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]         


               Available via: http://judiciary.house.gov
               
                                __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
49-782                    WASHINGTON : 2022                     
          
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                       COMMITTEE ON THE JUDICIARY

                    JERROLD NADLER, New York, Chair
                MADELEINE DEAN, Pennsylvania, Vice-Chair

ZOE LOFGREN, California              JIM JORDAN, Ohio, Ranking Member
SHEILA JACKSON LEE, Texas            STEVE CHABOT, Ohio
STEVE COHEN, Tennessee               LOUIE GOHMERT, Texas
HENRY C. ``HANK'' JOHNSON, Jr.,      DARRELL ISSA, California
    Georgia                          KEN BUCK, Colorado
THEODORE E. DEUTCH, Florida          MATT GAETZ, Florida
KAREN BASS, California               MIKE JOHNSON, Louisiana
HAKEEM S. JEFFRIES, New York         ANDY BIGGS, Arizona
DAVID N. CICILLINE, Rhode Island     TOM McCLINTOCK, California
ERIC SWALWELL, California            W. GREG STEUBE, Florida
TED LIEU, California                 TOM TIFFANY, Wisconsin
JAMIE RASKIN, Maryland               THOMAS MASSIE, Kentucky
PRAMILA JAYAPAL, Washington          CHIP ROY, Texas
VAL BUTLER DEMINGS, Florida          DAN BISHOP, North Carolina
J. LUIS CORREA, California           MICHELLE FISCHBACH, Minnesota
MARY GAY SCANLON, Pennsylvania       VICTORIA SPARTZ, Indiana
SYLVIA R. GARCIA, Texas              SCOTT FITZGERALD, Wisconsin
JOE NEGUSE, Colorado                 CLIFF BENTZ, Oregon
LUCY McBATH, Georgia                 BURGESS OWENS, Utah
GREG STANTON, Arizona
VERONICA ESCOBAR, Texas
MONDAIRE JONES, New York
DEBORAH ROSS, North Carolina
CORI BUSH, Missouri

         AMY RUTKIN, Majority Staff Director and Chief of Staff
               CHRISTOPHER HIXON, Minority Staff Director
                                 ------                                

           SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND
                              THE INTERNET

             HENRY C. ``HANK'' JOHNSON, Jr., Georgia, Chair
                  MONDAIRE JONES, New York, Vice-Chair

THEODORE E. DEUTCH, Florida          DARRELL ISSA, California, Ranking 
HAKEEM JEFFRIES, New York                Member
TED LIEU, California                 STEVE CHABOT, Ohio
GREG STANTON, Arizona                LOUIS GOHMERT, Texas
ZOE LOFGREN, California              MATT GAETZ, Florida
STEVE COHEN, Tennessee               MIKE JOHNSON, Louisiana
KAREN BASS, California               TOM TIFFANY, Wisconsin
ERIC SWALWELL, California            THOMAS MASSIE, Kentucky
MONDAIRE JONES, New York             DAN BISHOP, North Carolina
DEBORAH ROSS, North Carolina         MICHELLE FISCHBACH, Michigan
JOE NEGUSE, Colorado                 SCOTT FITZGERALD, Wisconsin
                                     CLIFF BENTZ, Oregon

                      JAMIE SIMPSON, Chief Counsel
                     BETSY FERGUSON, Senior Counsel
                            
                            
                            C O N T E N T S

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                        Thursday, July 21, 2022

                                                                   Page

                           OPENING STATEMENTS

The Honorable Henry C. ``Hank'' Johnson, Jr., Chair of the 
  Subcommittee on Courts, Intellectual Property, and the Internet 
  from the State of Georgia......................................     2
The Honorable Darrell Issa, Ranking Member of the Subcommittee on 
  Courts, Intellectual Property, and the Internet from the State 
  of California..................................................     3

                               WITNESSES

Candice Wright, Director, Science, Technology Assessment, and 
  Analytics Team, U.S. Government Accountability Office
  Oral Testimony.................................................   116
  Prepared Testimony.............................................   118
James Donald Smith, Chief Intellectual Property Counsel, Ecolab
  Oral Testimony.................................................   143
  Prepared Testimony.............................................   145
Michael Asimow, Dean's Executive Professor of Law, Santa Clara 
  University School of Law
  Oral Testimony.................................................   148
  Prepared Testimony.............................................   150
Richard Torczon, Senior Counsel, Wilson Sonsini Goodrich & Rosati
  Oral Testimony.................................................   157
  Prepared Testimony.............................................   159

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Materials submitted by the Honorable Darrell Issa, Ranking Member 
  of the Subcommittee on Courts, Intellectual Property, and the 
  Internet from the State of California, for the record
  A list of decisions made under Andrei Iancu, Former Director, 
    U.S. Patent and Trademark Office.............................     8
  An article entitled, ``The Origins of Judicial Deference to 
    Executive Interpretation,'' The Yale Law Journal.............    12
Materials submitted by the Honorable Hank Johnson, Chair of the 
  Subcommittee on Courts, Intellectual Property, and the Internet 
  from the State of Georgia, for the record
  A letter from Andrew Fois, Chairman, Administrative Conference 
    of the United States.........................................   110
  A letter from Katherine K. Vidal, Under Secretary of Commerce 
    for Intellectual Property; Director, United States Patent and 
    Trademark Office.............................................   114
Materials submitted by the Honorable Thomas Massie, a Member of 
  the Subcommittee on Courts, Intellectual Property, and the 
  Internet from the State of Kentucky, for the record
  An article entitled, ``The Pecuniary Interests of PTAB Judges--
    Empirical Analysis Relating Bonus Awards to Decisions in AIA 
    Trials,'' SSRN...............................................   182
  An article entitled, ``How Google and Big Tech Killed the U.S. 
    Patent System,'' IPWatchdog..................................   296
  An article entitled, ``USPTO response to FOIA confirms there 
    are no Rules of Judicial Conduct for PTAB Judges,'' 
    IPWatchdog...................................................   305
  Text of the Seventh Amendment to the Constitution..............   310

                                APPENDIX

A letter from Morgan W. Reed, President, ACT | The App 
  Association, submitted by the Honorable Darrell Issa, Ranking 
  Member of the Subcommittee on Courts, Intellectual Property, 
  and the Internet from the State of California, for the record..   314

                 QUESTIONS AND RESPONSES FOR THE RECORD

Questions for the witnesses submitted by the Honorable Zoe 
  Lofgren, a Member of the Subcommittee on Courts, Intellectual 
  Property, and the Internet from the State of California, for 
  the record.....................................................   318
Response from Candice Wright, Director, Science, Technology 
  Assessment, and Analytics Team, U.S. Government Accountability 
  Office, submitted by the Honorable Zoe Lofgren, a Member of the 
  Subcommittee on Courts, Intellectual Property, and the Internet 
  from the State of California, for the record...................   319
Response from Michael Asimow, Dean's Executive Professor of Law, 
  Santa Clara University School of Law, submitted by the 
  Honorable Zoe Lofgren, a Member of the Subcommittee on Courts, 
  Intellectual Property, and the Internet from the State of 
  California, for the record.....................................   321

 
                   THE PATENT TRIAL AND APPEAL BOARD
                 AFTER 10 YEARS, PART II: IMPLICATIONS
                  OF ADJUDICATING IN AN AGENCY SETTING

                              ----------                              


                        Thursday, July 21, 2022

                        House of Representatives

             Subcommittee on Courts, Intellectual Property,

                            and the Internet

                       Committee on the Judiciary

                             Washington, DC

    The Subcommittee met, pursuant to call, at 10:03 a.m., in 
Room 2141, Rayburn House Office Building, Hon. Hank Johnson 
[Chair of the Subcommittee] presiding.
    Members present: Representatives Johnson of Georgia, 
Stanton, Ross, Issa, Jordan, Gohmert, Gaetz, Tiffany, Massie, 
Bishop, Fischbach, and Bentz.
    Staff present: John Doty, Senior Advisor and Deputy Staff 
Director; David Greengrass, Senior Counsel; Moh Sharma, 
Director of Member Services and Outreach & Policy Advisor; 
Cierra Fontenot, Chief Clerk; Gabriel Barnett, Professional 
Staff Member; Casey Lee, Staff Assistant; Jamie Simpson, Chief 
Counsel for Courts & IP; Atarah McCoy, Professional Staff 
Member/Legislative Aide for Courts & IP; David Brewer, Minority 
Deputy Staff Director; Ella Yates, Minority Member Services 
Director; Andrea Woodard, Minority Professional Staff Member; 
and John Lee, Minority USSS Detailee.
    Mr. Johnson of Georgia. [Presiding.] The Subcommittee will 
come to order.
    Without objection, the Chair is authorized to declare 
recesses of the Subcommittee at any time.
    Welcome to this morning's hearing on ``The Patent Trial and 
Appeal Board After 10 Years, Part II: Implications of 
Adjudicating in an Agency Setting.''
    Before we begin, I would like to remind the Members that we 
have established an email chain and distribution list dedicated 
to circulating exhibits, motions, or other written materials 
that the Members might want to offer as part of our hearing 
today. If you would like to submit materials, please send them 
to the email address that has been previously distributed to 
your offices, and we will circulate the materials to Members 
and staff as quickly as we can.
    I would like to ask all Members to please mute your 
microphones when you are not speaking. This will help prevent 
feedback and other technical issues, and you may unmute 
yourself anytime you seek recognition.
    I will now recognize myself for an opening statement.
    Welcome again to this morning's hearing on the PTAB. This 
hearing is called Part II because it is the second in a series 
of hearings this Committee is conducting on the PTAB. In our 
first hearing we held last month, we explored the impact of the 
PTAB on innovation and small businesses.
    Today, we will hear testimony about the decision-making 
processes of the PTAB and whether the PTAB's placement within a 
larger organizational structure of the United States Patent and 
Trademark Office affects its decision-making processes. In 
particular, we will explore whether parties that appear before 
the PTAB are provided with a forum that has the due process 
protections normally associated with adjudicatory decision-
making.
    As we heard at our previous hearing, the PTAB is one of the 
busiest forums in the United States for litigating the validity 
of a patent. The PTAB conducts trial-like proceedings pursuant 
to the 2011 Leahy-Smith America Invents Act, or the AIA. The 
most popular proceeding is called an inter partes review. 
Congress intended for inter partes review to be faster and more 
efficient than district court litigation to address the 
technical question of whether a patent claims a new and non-
obvious advance over the prior art.
    AIA proceedings before the PTAB could involve patents that 
are worth sometimes billions of dollars. For this reason, it is 
imperative that the parties who go before the PTAB are ensured 
due process and transparent treatment. Parties can get a fair 
hearing only if the judges presiding over that hearing are 
themselves free from bias and undue influence.
    The judges who preside over AIA proceedings before the PTAB 
are called Administrative Patent Judges, or APJs. APJs have 
expertise not only in patent law, but also in various 
technologies. This makes APJs well-situated to handle the 
technical aspects of patent validity.
    We have heard, however, troubling reports that APJs are not 
always free to make decisions in an independent manner, based 
on the evidentiary record and relevant legal authority. 
Instead, as I anticipate today's hearing will show, APJs are 
often subject to influence in their decision-making from 
higher-ups at the USPTO.
    In my view, such influence is in tension with Congress' 
intent in creating the PTAB, where the decision-making was 
explicitly assigned to a three-judge panel meant to be 
insulated from outside influence. This type of influence would 
also violate several norms usually assumed to apply in an 
adjudicatory context, such as a prohibition on ex parte 
communication and a party's right to know the decisionmaker's 
identity.
    About a year ago, Ranking Member Issa and I asked the 
Government Accountability Office to investigate allegations of 
interference in PTAB decision-making. Today, we will hear the 
GAO's preliminary findings for the first time. I anticipate 
that the GAO's testimony will confirm that some of our concerns 
about due process and transparency before the PTAB are 
warranted.
    In United States v. Arthrex, the Supreme Court held that 
the structure of the PTAB violated the Constitution's 
Appointments Clause. The Court concluded that the 
constitutional violation could be remedied by giving the 
Director the authority to change the outcome of any proceeding 
by striking the portion of the Patent Act granting exclusive 
ability to grant rehearings to the PTAB. The Court did so 
because it concluded that the Appointments Clause requires a 
transparent decision for which a politically accountable 
officer must take responsibility.
    I recognize that, in the 10 years since the AIA has been 
enacted, the PTAB had to grow quickly to handle the onslaught 
of cases that were being filed. I understand that it is 
difficult from a managerial perspective to obtain consistency 
among so many judges on important questions relating to the new 
AIA laws. Nevertheless, as the Supreme Court observed in 
Arthrex, a director's unfettered political control over the 
pre-issuance decisions of APJs is problematic, and although the 
Court appeared to fix the Appointments Clause problem, it left 
open the question of whether director control violates the 
Constitution's requirements for due process.
    Thus, I believe it is Congress' responsibility to consider 
whether a legislative fix to the PTAB's structure, one that 
preserves both due process and transparency for the parties and 
freedom from influence for APJs, is needed. This hearing will 
provide us with facts, so that we can Act to provide a sensible 
solution.
    I am pleased that we have a panel of government experts, 
legal scholars, and distinguished practitioners. Thank you all 
for being here today, and I look forward to your testimony.
    It is now my pleasure to recognize the Ranking Member of 
the Subcommittee, the gentleman from California, Mr. Issa, for 
his opening statement.
    Mr. Issa. Thank you, Mr. Chair. Thank you for holding this 
important hearing today.
    Members of the Subcommittee and participants do understand 
that no matter where you are on other portions of current 
patent law, it is undeniable and agreed by all us that PTAB has 
a major role, not only in what a patent means when it comes 
before the court, but the very existence of that court has 
changed the prosecution process. When someone is looking at 
asking for claims, they think about their claim construction 
relative to what would happen if they asserted it and went 
before the PTAB.
    All of this is affecting the quality in a positive way of 
patents being issued as we speak, but it continues to be very 
concerning that this was intended to be an open and transparent 
process. Its predecessor, which still exists, the ex parte 
reexam, was never open and transparent. An opponent would 
submit to the Patent Office what they believed was information 
that could and should strike portions of the patent or all of 
it, based on allegations often made by the patent owner. Then, 
behind closed doors, in literally an unrecorded meeting in some 
cases, the patent holder would come in and say, ``No, that 
isn't the case,'' and that would be the end of it.
    As a result, ex parte reexaminations often were not used 
because an adverse outcome, even one that was incorrect, was 
neither appealable nor could you get into an Article III case 
and not be stuck with the fact that there was a presumption 
that the Patent Office, basically, got it right.
    So, in an ex parte reexamination, at its best, it must be 
open and transparent. The arguments must be heard by both 
sides, and the decision must, in fact, be based on the facts 
presented. Unfortunately, it has now come to our attention 
that, during the entire last administration, and perhaps even 
before, there was a behind-closed-doors process, one in which 
preliminary decisions would be brought to the administrator and 
decisions would be reversed without ever having a public 
hearing--without the light of day.
    This process has created a host of questions, and the Chair 
alluded to them. We want due process. We want transparency. To 
get both, we are going to have to make changes in the current 
system. There are a lot of possibilities, not the least of 
which is to prohibit the reviewing officer from working in an 
ex parte fashion and make all their correspondence in real time 
available. That may be unwieldy, but certainly we have to 
consider it.
    I think, additionally, when I joined with the Chair last 
year in asking for the GAO to conduct an investigation, we did 
so because we had had allegations, but not substantiation. In 
looking at the preliminary report, I find the GAO's 
investigation to be disturbing. They indicate that bureaucrats 
in the agency leadership, led by the Director himself, have 
improperly influenced or altered decisions by PTAB Judges in 
secret--without transparency and, in my opinion, without due 
process.
    In those cases, the parties involved had no idea that the 
Director or others were meddling in their case. There was no 
process to know that it went through a director review. The 
parties were given no explanation and had no opportunity to 
address the Director or anyone else in the decision process. 
The parties could not even point out and go to court to appeal 
the Director's decision, even if it was wrong and done in 
secret. In fact, one of the challenges with administrative 
review of this sort is that it does not have the ordinary 
appeal process.
    I have before me--and I apologize, it is a partial stack; 
we ran out of paper in the printer--I have before me just some 
of the Director's decisions that were made that we now have as 
what I would call improper rulemaking. I want to talk about 
that just briefly.
    We have a process for making rules. Those rules are subject 
to review by Congress. The fact is we make the laws; they make 
the rules. We review the rules to make sure they are consistent 
with the law. None of this and more is subject to that because 
it evaded the rulemaking process.
    As we go through the GAO study, it is likely that we will 
speak to the new Director specifically on reversing some of 
these or setting them aside, simply because they violated the 
current law on rulemaking. That is unfortunate. You should not 
have decisions made one way under one administration and 
reversed on the other. You should not rely on rules that have 
been made, and then, see them set aside. Unless the process is 
open and transparent, you will have that.
    I want to personally thank more than 200 Administrative Law 
Judges at PTAB for the hard work they do. They are qualified 
and their decisions have stood the test of review at the 
Federal Circuit, and even at the Supreme Court, far more than 
even Article III Judges.
    So, today, I know we will hear people that are for and 
against the existence of PTAB, but I think what we have to 
concentrate on is those people who are doing their job need to 
either be supported by the process or, if opposed, it has to be 
in an open and transparent way.
    So, Mr. Chair, I would ask unanimous consent that these 
documents be placed in the record. Additionally, would ask 
unanimous consent that an article, ``The Origins of Judicial 
Deference to Executive Interpretation'' in The Yale Law Journal 
also be placed in, as a document that I believe will help us in 
understanding why this deference needs to be properly 
administered or, in the alternative, that we set them aside.
    Mr. Johnson of Georgia. Without objection.
    [The information follows:]

                        MR. ISSA FOR THE RECORD

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    Mr. Issa. Thank you. I would yield back.
    Mr. Johnson of Georgia. I thank the gentleman.
    Without objection, all other opening statements will be 
included in the record.
    I will now introduce the panel of Witnesses.
    Candice Wright is the Director of the U.S. Government 
Accountability Office's Science, Technology Assessment, and 
Analytics team. She oversees the GAO's work on federally funded 
research, intellectual property protection and management, and 
Federal efforts to help commercialize innovative technologies 
and enhance U.S. economic competitiveness.
    Before joining the GAO, Ms. Wright worked in the private 
sector in a variety of human capital consulting roles and has 
led engagements examining Federal contracting, risk to the 
defense supplier base, foreign military sales, and homeland 
security. She holds a Master's of Public Policy from Carnegie 
Melon University and a BA in management from Bentley College.
    Welcome.
    James Donald Smith is Chief Intellectual Property Counsel 
for Ecolab; which is it? Ecolab, where he oversees the 
company's global operations for protection of Ecolab 
innovation.
    Before joining Ecolab, Mr. Smith served as the Chief 
Administrative Patent Judge at the United States Patent and 
Trademark Office, where he led the Patent Board and oversaw its 
transition from the Board of Patent Appeals and Interferences 
to the Patent Trial and Appeals Board, or PTAB.
    Mr. Smith has experience both as a patent litigator and 
patent prosecutor, and has directed in-house IP teams for 
several multinational corporations, including Lexmark, Nokia, 
and Baxter International. He was also formerly Assistant Dean 
of Emory University's School of Law, and Mr. Smith holds a JD 
from Duke University School of Law and a BA in electrical 
engineering from the University of Maryland College Park.
    Welcome, sir.
    Michael Asimow is the Dean's Executive Professor of Law at 
Santa Clara University School of Law and a Professor of Law 
Emeritus at UCLA Law School, where he has received both the 
University's Distinguished Teaching Award and the School of 
Law's Rutter Award for Excellence in Teaching.
    Mr. Asimow is a former Chair of the American Bar 
Association's section on administrative law and Regulatory 
Practice and has written numerous articles on State and Federal 
administrative law, as well as comparative administrative law. 
Mr. Asimow holds a JD from UC Berkeley and a BS from UCLA.
    Welcome, Mr. Asimow. You are on the screen.
    Last, but not least, Mr. Richard Torczon is a Senior 
Counsel and a member of the patent litigation practice in the 
Washington, DC, office of Wilson Sonsini Goodrich & Rosati.
    Before joining the firm, Mr. Torczon was an Administrative 
Patent Judge at the PTAB, where he wrote more than a thousand 
opinions and orders on patent appeals, petitions, motions, and 
briefs. Before serving as an APJ, Mr. Torczon was an Associate 
Solicitor in the U.S. Patent and Trademark Office's Office of 
the Solicitor.
    Mr. Torczon holds a JD from the University of Texas Law 
School, an MS in biotechnology from Johns Hopkins University, 
and a BA in computer science from Rice University.
    Welcome, sir.
    Before proceeding with testimony, I would like to remind 
all our Witnesses that you have a legal obligation to provide 
truthful testimony and answers to this Subcommittee, and that 
any false statement you make today may subject you to 18 U.S.C. 
1001.
    Before turning to our panel of Witnesses, without 
objection, I will enter a statement from Andrew Fois, Chair of 
the Administrative Conference of the United States, an 
independent agency in the Executive Branch charged by statute 
with making recommendations to the President, Federal agencies, 
Congress, and the Judicial Conference, to improve agency 
adjudication, rulemaking, and other administrative processes.
    Mr. Johnson of Georgia. I would also like to note that we 
have a statement from the U.S. Patent and Trademark Office 
responding to the GAO's initial findings, along with 
information about some new interim processes they have put in 
place.
    [The information follows:]

                MR. JOHNSON OF GEORGIA FOR THE RECORD

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    Mr. Johnson of Georgia. Now, turning back to our Witnesses 
with us today, please note that each of your written statements 
will be entered into the record in their entirety. Accordingly, 
I ask that you summarize your testimony in five minutes.
    To help you stay within that timeframe, there is a timing 
light on your table. When the light switches from green to 
yellow, you have one minute to conclude your testimony. When 
the light turns red, it means that your five minutes have 
expired.
    We will have five-minute rounds of questions after the 
Witnesses' testimonies.
    Ms. Wright, you may begin.

                  STATEMENT OF CANDICE WRIGHT

    Ms. Wright. Chair Johnson, Ranking Member Issa, and Members 
of the Subcommittee, thank you for the opportunity to discuss 
GAO's ongoing work about management oversight practices at the 
Patent Trial and Appeal Board.
    Mr. Issa. The microphones tend to need you to be pretty 
close to work. If you pull it a little closer--
    Ms. Wright. Yes. How about now? Okay.
    Thank you for the opportunity to discuss GAO's ongoing work 
about the management oversight practices at the Patent Trial 
and Appeal Board. Today, I will share with you the preliminary 
insights from our survey of over 200 PTAB Judges, as well as 
perspectives from external stakeholders on PTAB oversight 
practices.
    Over the years, various USPTO Directors, with input from 
PTAB management, have introduced oversight practices to achieve 
consistency in quality decisions, given the increasing number 
of judges. Oversight practices have included review of the 
judge's work before and after decisions are issued. While 
judges generally acknowledge the need for some oversight to 
promote consistency across decisions, our preliminary work 
identified concerns among PTAB Judges about the increasing 
levels of management oversight.
    Many of the central oversight practices have been 
formalized into policy over the last five years. These include 
a peer review Committee of nonmanagement judges who reviewed 
AIA institution in final written decisions before issuance.
    In addition, PTAB established a process in which management 
conducted pre-issuance reviews and provided comments on 
decisions that involved issues of interest, such as new legal 
or policy areas, or areas of inconsistency with other PTAB 
decisions or USPTO guidance.
    PTAB management officials told us the comments provided as 
part of management and peer review processes were generally 
optional for judges to adopt. In our work, we found that two-
thirds of judges who worked on AIA trials and one-third of 
judges who worked on ex parte appeals reported feeling pressure 
to change an aspect of their decision due to management review 
comments.
    Based on survey and interviews, some judges reported the 
increasing amount of oversight and guidance contributed to a 
sense of pressure that goes beyond cases in which USPTO 
Directors or PTAB management were involved. While judges may 
have reported feeling pressure, they noted oversight, 
typically, did not influence the merits of the case. However, 
there can be pressure on discretionary areas driven by agency 
policy or guidance.
    The concerns raised by PTAB Judges signal potential 
cultural issues. Some judges noted that, even though they 
personally have not been on a case in which management, or a 
director had directly intervened, they heard about situations 
involving other judges, which then made them feel pressure as 
to how to render their own decision, irrespective of 
management's involvement.
    One judge stated that the very existence of the management 
review process creates a preemptive chilling effect. Some 
judges noted having minimal insight about certain management 
practices, including who in management is reviewing and 
commenting on decisions.
    We spoke to various stakeholders who generally valued 
PTAB's ability to resolve patent disputes with specialized 
Patent Judges. Stakeholders were generally unaware of the 
management and peer reviews, except for some who had heard of 
them anecdotally or because they were former PTAB Judges or 
officials.
    Most stakeholders were concerned about the lack of external 
transparency on how decisions are made within PTAB and the 
extent to which certain decisions were solely those of the 
three-judge panel, or whether others had influenced the 
decision.
    Some sitting judges also echoed this concern over external 
transparency, noting that when management influenced a 
decision, there would be no record in the issued opinion. One 
judge noted that such insights could help parties to a case 
decide whether to appeal or to request director review.
    In closing, I note that, during the course of our review, 
PTAB recently announced a new interim process for decision 
circulation which replaces the previous peer review committee. 
The new interim process would make use of a circulation judge 
pool of nonmanagement judges. However, this judge pool will not 
consult with management about a decision prior to issuance.
    Under the new process, management review will be voluntary, 
and it will be optional to implement comments. Also, the 
Director will not be involved in directing or influencing 
decisions prior to issuance.
    Officials noted the new process was put in place as a means 
to promote transparency about decisionmaking in PTAB. This 
could be a good step forward to address concerns of judges and 
stakeholders. We will examine the implications of the new 
interim process as we complete our ongoing work.
    Chair Johnson, Ranking Member Issa, and Members of the 
Subcommittee, this concludes my remarks. I would be happy to 
answer questions you may have.
    [The statement of Ms. Wright follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Johnson of Georgia. Thank you, Ms. Wright.
    Mr. Smith, you may begin.

                STATEMENT OF JAMES DONALD SMITH

    Mr. Smith. Chair Johnson, Ranking Member Issa, esteemed 
Members of the Committee, in 2011, at the recommendation of 
then-Under Secretary and Director David Kappos, I was appointed 
by then-Secretary of Commerce Gary Locke of the Commerce 
Department to serve as the Chief Administrative Patent Judge of 
the Patent Trial and Appeal Board--or sorry--the Board of 
Patent Appeals and Interferences of the United States Patent 
and Trademark Office, or BPAI. I was the last person to serve 
in that role. As you all well know, the BPAI was transformed by 
the enactment of the AIA to become the PTAB. With that change, 
I was asked to serve as the first inaugural Chief Judge of the 
PTAB.
    At the time of the AIA's enactment, the BPAI had an ex 
parte case backlog that eventually rose in 2013 to 27,000 
appeals arising from within the PTO. With the task of reducing 
that backlog also came the task of equipping the PTAB to handle 
the new AIA jurisdiction. We expected to be added to our 
workload about 400 new trials every year. The predicted rate of 
400 new trials per year turned out, as you know, to be in 
excess of 1,500 new trials, or at least that many trial 
petitions every year for the next several years.
    At the time of this transition situation, the new PTAB 
comprised about 90 APJs, and because of strict preclusions on 
hiring in the Federal government at the time, only those 90 
judges were supposed to reduce the 27,000 case ex parte 
backlog, even as 7,000 new ex parte appeals were being filed 
every year, and then, also, adjudicate 400 new trial 
proceedings annually, which, as stated, actually turned out to 
be 1,500 new trial matters per year.
    David Kappos positioned for and petitioned for, and quite 
fortunately, received permission from this Congress and the 
White House Budget Office for us to be allowed to expand the 
board. We needed at least 150 additional first-rate patent 
judges, and we needed them to be nominated, selected, and 
appointed quickly.
    Accordingly, the Chief APJ, to whom oversight of such 
selection and nomination duties fall, needed to oversee and 
drive the necessary process while also ensuring that the 
regular judicial duties of the tribunal proceeded smoothly. In 
consultation with Director Kappos, we constructed a process 
that endeavored to select for nomination to the Secretary of 
Commerce the people thought best by us to discharge the duties.
    As mandated by the statute, we sought to add to the fine 
judges already on the board 150 individuals who were of 
unquestionable technical and legal qualification. We looked for 
the best PTO employees qualified to serve, and we heavily 
recruited from outside the PTO, including by looking to the 
ranks of former judicial clerks who had served earlier in their 
careers under Article III Judges at the Federal District Courts 
and the Courts of Appeals.
    We don't have time this morning to go into all what the 
proceedings for the selection included--writing samples, 
interviews of recommending individuals, interviews of the 
candidates themselves, and also, numerous hearings, many 
appointment hearings for the judges.
    One thing to focus on perhaps for this morning is the one 
question we asked all the candidates, and it went something 
like this: It is early evening one day in the workweek, and the 
Under Secretary or one of his representatives has slipped into 
your office to discuss an opinion you are drafting for a case 
which was heard, or is being heard, by the panel. This person 
says to you that, because of political considerations, facts 
known only to the Director, some impact on the marketplace, 
that the Director wishes the case to be decided in a way other 
than how the panel is prepared to decide the case. What will 
you do?
    Every one of the judges who we advanced for nomination 
answered that question only one way: We will ask whoever is 
asking us to change our decision to leave because we believe in 
judicial independence and due process, and the Director has 
other means, including through rehearing, for the case to be 
reviewed. All the candidates who said they would do whatever 
the Director told them to do were not advanced in the process.
    I speak to this largely to say this one thing: From at 
least that time through now, my belief is that all the judges 
in their hearts and souls have a commitment to judicial 
independence. Whatever may be incident to the process now, I 
think none of that will have changed what they seek to do in 
the carrying out of their jobs.
    If the hearing allows later, the one other thing I would 
want to touch on is the mention by the GAO report of the ARC, 
the first of the review mechanisms that is mentioned in the 
report and about which I think I also can offer some historical 
perspective.
    [The statement of Mr. Smith follows:]
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    Mr. Johnson of Georgia. Thank you.
    Mr. Asimow, you may now begin.

                  STATEMENT OF MICHAEL ASIMOW

    Mr. Asimow. Good morning, and thanks so much for inviting 
me here today.So, the reason I got invited was because of an 
ACUS study that I did about five years ago about adjudication 
outside the Administrative Procedure Act, of which there is a 
great deal in the Federal government, and the PTAB was one of 
my prize exhibits. Now, in fact, there is a question about 
whether PTAB is covered by the Administrative Procedure Act, 
which I don't have time to discuss, but I'd be happy to turn to 
it in the question period.
    The problems that we are all talking about today all arise 
from the defective structure of the PTAB when it was first 
created. Because, unlike any other system of adjudication in 
the Federal government, there is no appellate process within 
the agency. That is very unusual, and it created a crisis 
because there was no way for the Director to manage the 
decisions of hundreds of Patent Judges. So, very suboptimal 
solutions were adopted to try to achieve coherence, 
consistency, and to carry out the policies of the Director of 
the USPTO.
    So, I am not going to have time today to talk about whether 
we should restructure the PTAB, although, again, I would be 
happy to answer questions about it. I want to defend some of 
the measures that the PTAB took on a managerial level.
    First, I am in favor of the use of precedent decisions. 
These are used across the Federal government and a very useful 
method of achieving consistency in adjudication. So, I think 
those are just fine.
    The adoption of guidance documents, which are regulations 
that can be adopted without going through notice and comment, 
to settle policy questions is extremely useful, and probably 
should be more utilized by PTAB than it is already.
    I am in favor of peer review systems, including the new 
innovations in that. It is perfectly okay, in my point of view, 
to have some judges critique the work of other judges, even 
before the decision becomes final.
    The issue here before us today is management review, in 
which the GAO report makes it clear that management frequently 
intervened in pending cases. As a practical matter, the judges 
were intimidated and chilled and mostly followed the 
suggestions of management, which were really commands.
    So, I think this violates a number of basic administrative 
law norms.
    First, the lack of transparency. It just isn't fair; the 
Director's interference favors one of the parties to an inter 
partes proceeding against the other. Yet, the person on the 
losing side doesn't know what that input was and has no 
opportunity to rebut it, nor do you really know enough to 
decide whether to appeal the structure.
    In addition to that, I believe the management interference 
violates the rule against ex parte communications. In 
particular, I call attention to a regulation adopted by PTAB 
which says ex parte communications regarding a specific 
proceeding with a board member is not permitted, unless both 
parties have an opportunity to be involved in the 
communication.
    I think that regulation has been flouted by the management 
interference practices. It violates the exclusive record 
principle, which says that a judge can only consider what is in 
the hearing record in making the decision. In general, it 
violates the principle that Administrative Judges in our system 
should be independent in law and fact and appearance. 
Management interference prevents that from happening.
    Now, I know all this arises from the lack of a proper 
appellate mechanism, which was a very serious defect in the 
AIA, and has been remedied to a degree by the Supreme Court's 
decision in Arthrex, which says there has to be an appellate 
mechanism. So far, none has been created. Simply giving the 
Director power of interim review over all the hundreds and 
hundreds of cases flowing through the agency is not adequate. 
There needs to be a structure of APJs who are handling and 
creating an appellate tier within this agency, with then 
perhaps discretionary review by the Director. Still, as better 
appellate review is instituted within this agency, I hope that 
the need for management interference will be greatly lessened.
    So, I would be happy in the question period to discuss 
possible changes, restructuring of the PTAB, as well as its 
interrelationship with the Administrative Procedure Act.
    So, thanks very much for the opportunity to comment on the 
PTAB.
    [The statement of Mr. Asimow follows:]
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    Mr. Johnson of Georgia. Thank you, Mr. Asimow.
    Mr. Torczon, you may now begin.

                  STATEMENT OF RICHARD TORCZON

    Mr. Torczon. Good morning, Chair Johnson, Ranking Member 
Issa, and Members of the Subcommittee.
    Thank you for inviting me to provide my views on the Patent 
Trial and Appeal Board. My involvement with the board spans 
over three decades, including nearly two decades as an 
Administrative Patent Judge deciding appeals, managing trials, 
and drafting board rules. I now practice mainly before the 
board representing patent owners, petitioners, and appellants.
    Please note that I speak only for myself, not for my law 
firm, not for my clients, and not for any other organization.
    My written statement is of record and provides content and 
support for the points I will summarize today.
    First, tension inherently exists between political 
accountability and adjudicative independence. In Arthrex and 
other recent Supreme Court decisions, the court has favored 
political accountability for various textual and structural 
reasons. For purposes of this hearing, I assume Arthrex is 
correct and controlling.
    Second, political interference is not new. What has 
changed, however, is the frequency and scope of that inference. 
Previously, political and management interference were rare and 
always recognized, at least some level, as improper. Now, it is 
routine, so routine it has become institutionalized.
    The AIA accelerated the erosion of an ethos that is 
embodied in the Administrative Procedure Act which sets the 
norm for agencies. For example, the current layers of 
predecisional review are a new concept with predictable 
chilling effects. In fairness, most such interference does not 
directly affect the merits. However, critically, even minor 
interference creates a ratchet effect, such that, once some 
interference becomes the norm, more follows.
    From the outside perspective, there are at least two 
problems with this.
    First, parties, courts, Congress, and the public never know 
whether, or how much, interference has occurred in a given 
decision. Nothing is preserved in the case's record, and no 
internal communications are preserved for archives.
    Second, flouting one administrative norm leads to flouting 
others. For example, Congress defines a rule as an agency 
statement of general or particular application and future 
effects. Board precedential decisions clearly meet this 
definition. Yet, they do not comply with any of the statutory 
rulemaking requirements. This rule by fiat is particularly 
harmful at the institution stage, where lack of judicial review 
enables unchecked departures from administrative norms that 
stakeholders cannot challenge.
    Several possible solutions exist. The simplest is simply to 
codify transparency. Congress could require that all ex parte 
communications initiated from outside the panel must be made of 
record.
    Alternatively, many have suggested creation of an 
independent review level. We should acknowledge the cost of 
diluting the Director's important policy role by creating yet 
another source of patent authority. Unfortunately, however, it 
might be needed to ensure the board adjudications will occur on 
the merits and on the record.
    Review authorities should be distributed over enough 
reviewers to be practical. Vesting all review responsibility in 
a single reviewer is facially impractical and would evoke the 
same skepticism that the Supreme Court's Arthrex decision has 
prompted.
    The review authority should stay in its lane and not 
compete with the Director's policymaking. Review authority, 
especially if located inside the USPTO, must have budget 
protections and other comparable assurances of its actual 
independence.
    Finally, if APJ work is subject to additional internal 
review, the rationale for three-APJ panels dissipates. Congress 
should consider whether single APJ trials would facilitate 
other process reforms, such as faster trials and live 
testimony.
    In conclusion, thank you again for inviting me here today. 
I look forward to your questions.
    [The statement of Mr. Torczon follows:]
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    Mr. Johnson of Georgia. Thank you, and I thank all the 
Witnesses for their testimony today.
    We will now proceed under the five-minute rule with 
questions, and I will begin by recognizing myself for five 
minutes.
    Ms. Wright, the GAO's testimony suggests that many 
Administrative Patent Judges felt pressure to change their 
decisions in response to direction from management. Based on 
your team's research, was this direction from management always 
made in writing? If not, can you also tell us what other forms 
this direction took?
    Ms. Wright. Certainly. I would say, with respect to the 
comments that were received during the management review, it 
really was a mixed approach. It did seem, however, that most of 
the comments were actually not in writing, and we discovered 
that through our discussions with the judges as well as with 
PTAB management. Sometimes it might have been a phone call, 
somebody walking into someone's office to have a discussion, 
but, certainly, there were not a lot of documented comments 
that were provided, from what we learned.
    Mr. Johnson of Georgia. Thank you.
    Mr. Torczon, from the GAO's testimony, it seems that the 
Administrative Patent Judges on a three-judge panel are often 
contacted by others at the agency about the case, about that 
case. Yet, there is an existing regulation that prohibits ex 
parte contacts with APJs. Are you aware of this apparent 
tension while you were an APJ?
    Mr. Torczon. Thank you.
    As the person who drafted the rule in question, I can 
assure you that it has never been viewed as having internal 
application. Having said that, I would like to clarify. I mean, 
a typical Appeals Judge is deciding--by ``deciding,'' I mean 
writing about 100 cases a year and participating on another 200 
as a panel member. The number of cases in which there is actual 
interference is pretty small. So, I don't want it to seem like 
this is happening in every case.
    The problem, of course, is that it is happening at all. It 
has two effects. One is it is a real problem in the case where 
it does happen, and it is also it does have a chilling effect. 
Because, particularly on certain hot-button issues like 101 
patent eligibility, there is an excellent chance that, if you 
are not saying things exactly the way they are supposed to be 
said or you come out with a result that you think is right on 
the merits, but maybe doesn't fit in the right pigeonhole, you 
may get a visit; you may even be asked to change your opinion.
    Mr. Johnson of Georgia. In light of the rule against ex 
parte communications being in place at this time, do you think 
legislatively mandating no ex parte contacts with APJs would go 
far enough to ensure judicial independence?
    Mr. Torczon. I absolutely think legislation would make a 
difference. Among other things, it would give clear empowerment 
and a clear sense of policy direction to the agency of what is 
supposed to occur. It would also, as a practical matter, give 
the APJs employment recourse if they are criticized at that 
point.
    I think, largely, this comes down to a matter of culture. 
In a perfect world, we wouldn't need this because in a perfect 
world people would understand that the existing administrative 
norms already require what we are discussing. I think the 
problem is, culturally, we are well past that point.
    Mr. Johnson of Georgia. Thank you.
    Professor Asimow, one of the issues highlighted by the GAO 
is that Administrative Patent Judges sometimes face lower 
performance reviews or reassignment if they do not accept 
management-directed changes. How do other agencies handle this 
sort of dynamic in an adjudicatory setting?
    Mr. Asimow. Well, if you are covered by the Administrative 
Procedure Act, there are various elaborate protections for 
Administrative Law Judges, and who, if they are subject to any 
kind of unfavorable employment action, can take that to the 
Merit Systems Protection Board. Now, this doesn't exist when 
you are outside the APA, and therefore, it is more difficult to 
achieve judicial independence in the situation that you 
describe. There isn't any clear-cut remedy for the APJ to 
pursue if they suffer some sort of negative employment result. 
It is a big problem, and obviously, undercuts the goal that 
Administrative Judges must be independent.
    Mr. Johnson of Georgia. Thank you.
    My five minutes have expired. We will now turn to the 
gentleman from Kentucky, Mr. Massie, for five minutes.
    Mr. Massie. I thank the Chair.
    I wasn't here for the AIA. So, just kind of looking back in 
history, but was part of the reason that it was established was 
that the stakeholders wanted more certainty in the outcomes, 
that maybe the juries weren't capable of adjudicating patent 
fluidity? Was that part of the motivation, that a layperson 
selected to be on a jury might not come up with the right 
answer? I will ask you, Mr. Smith.
    Mr. Smith. Can you hear me? Yes.
    I am not sure that there was--well, let me answer the 
question this way without speaking to juries specifically. 
Because, of course, in going to the AIA, one not only avoids a 
jury, but a bench trial from a Federal District Court.
    Mr. Massie. If you could speak about juries, I would 
appreciate it because that is my next question.
    Mr. Smith. Well, it is subsumed within the answer. 
Generally, well, the statute requires the judges of the PTAB to 
be both technically and legally qualified, and only they 
participate without any jury in the decision of the case. So, 
one necessarily gets, with a PTAB proceeding, the elimination 
of any uncertainties one might think a jury to introduce to the 
proceeding.
    Mr. Massie. Would you like to comment on it, Mr. Torczon?
    Mr. Torczon. Yes. I think that there was an understanding 
that issues outside the technical or legal merits could 
influence the decision of any decisionmaker, and that one of 
the advantages of having an expert body is that they would be 
familiar with the technology. By statute, APJs are required to 
be, and usually within--or usually are deciding cases that are 
aligned to their area of technical expertise.
    Plus, APJs decide far more patent cases than anybody else, 
even the Federal Circuit Judges, and so, as a consequence, are 
always very acutely aware of what the State of the case law is. 
So, I think the expectation is you would get advantages and 
efficiencies by having people who are directly familiar with 
both the technology and the law which may be lost on others.
    Mr. Massie. Thank you.
    So, just looking back--I wasn't here for the creation--but 
I find it odd that we created this panel that would invalidate 
patents because the juries weren't capable of understanding 
this, but infringement is still decided by juries, right? Isn't 
this true, that PTAB doesn't deal with infringement?
    Mr. Torczon. That is quite true, and, in fact, even 
invalidity is still typically, or often handled still in court.
    Mr. Massie. So, I think it is kind of odd. I don't 
understand why this is a one-way system where, if you are an 
inventor, the only thing that comes out of PTAB, the only 
possible outcome that is an active outcome is your patent is 
dead. If you are an inventor and somebody is infringing on you, 
the PTAB doesn't--there is no offer of help there, and we are 
trusting--we say we can trust juries with the decision of 
infringement, but not with the decision of patent validity. In 
fact, they involve exactly, not precisely, but very largely, 
the same issue.
    Do you believe that patent holders should at least, even 
after PTAB, always have the right to a jury trial?
    Mr. Torczon. I would have to unpack that question a little 
bit. I mean, certainly, if you are in District Court--
    Mr. Massie. Should they be able to appeal it and get a jury 
trial?
    Mr. Torczon. So, you are proposing appeal of an 
administrative decision to a District Court with a jury trial. 
I would say that this goes to a more fundamental issue because 
that would be unique in review of an administrative decision--
    Mr. Massie. Well, here is the problem that I have: There 
used to be a provision in our parliamentary rules on the floor 
of the House where you could rename a bill. I once offered an 
amendment to rename the bill to suspend the debt limit two 
years ``A Bill to Kick the Can Down the Road and For Other 
Purposes.'' We got 40 votes on that amendment.
    [Laughter.]
    If I had been here for the AIA, I might have offered an 
amendment to rename it ``The Seventh amendment Repeal Act,'' 
because this thing that is in our Constitution, which is the 
right to a jury trial, if the thing in question is more than 
$20, it has been suspended by AIA.
    I know my time has expired, and I don't want to start us 
off on a bad foot. So, I would yield back to the Chair.
    Mr. Issa. It was a wonderful foot. I felt it.
    Mr. Johnson of Georgia. Thank you.
    We will now turn to the gentlelady from North Carolina, Ms. 
Ross, for five minutes.
    Ms. Ross. Thank you, Mr. Chair. Thank you to the Ranking 
Member and all the Witnesses for being here today to discuss 
this very important issue.
    I represent a district in North Carolina that takes pride 
in its culture of innovation. My district is home to world-
class research institutions, individual inventors, small 
startups, large technology companies, and everything in 
between.
    Innovators deserve to have their rights enforced in a 
transparent manner consistent with the principles of due 
process. What is why the GAO's preliminary findings are so 
troubling. Seventy-five percent of the surveyed judges 
responded that the oversight practiced by the politically-
appointed directors or other PTO management had affected their 
independence. This is unacceptable and contrary to the 
fundamental values that undergird our democracy. The integrity 
of the U.S. patent system must be maintained to ensure 
continued American innovation.
    My first question is for Mr. Smith. As the inaugural Chief 
Judge who oversaw the agency's transition from the Board of 
Patent Appeals and Interferences to PTAB, your written 
testimony states that you sought to ``enshrine due process and 
lack of interference.''
    Can you talk about your vision of how the board was meant 
to function and how that compares to what we have heard from 
the GAO today? Please also highlight what you believe are the 
root causes for those differences.
    Mr. Smith. To the first part of your question, I will offer 
these two things:
    First, somewhat in distinction to what Judge Torczon has 
said, I think at least at the time I was at the board, the idea 
that there should be no ex parte communication operated not 
only with respect to ex parte communication coming from outside 
the agency, but also from within the agency; that the three 
judges empaneled to hear a case were to be hearing it by 
themselves without interference or discussion or contribution 
by any others inside or outside the office.
    Secondly, I would say this, and this touches on the portion 
of my testimony that I had hoped to provide a little more 
insight around; namely, the operation of the ARC. The ARC was 
intended not to be an ex parte communication or other 
interference by other judges, including management judges, with 
respect to the merits of the decision, but merely one to drive 
uniformity in the written output of the board.
    In fact, it was the case that members of the ARC sometimes 
provided to judges recommendations about how strongly they 
might State their opinions, even when those opinions were the 
opposite of what an ARC member might himself or herself have 
decide.
    So, that is at least some of how, historically, we tried to 
drive independence, transparency, and the absence of 
interference in communication about cases.
    Ms. Ross. Thank you very much.
    Mr. Torczon, as a former judge who now represents litigants 
appearing before PTAB, how did the GAO findings comport with 
your personal experiences? Do you find any of those findings 
particularly surprising?
    Mr. Torczon. The first answer is they are very consistent, 
not only with my experience, but also with what I hear from 
currently serving judges. No, none of them were surprising. 
Again, I think the report shows that there is a problem; it is 
not in every case, but the lack of transparency makes it a 
problem because you never know when it is an issue.
    Ms. Ross. Okay. Then, where do you think--why don't we go 
to this next one for Ms. Wright very quickly?
    Thank you for your work to shed light on this critical 
issue. I understand the final report will have recommendations. 
Are those recommendations limited to the recommendations for 
the PTO? Or will you have some legislative ideas that go with 
that?
    Ms. Wright. At this time, based on the findings that we are 
reviewing, it will likely be recommendations to PTAB or to 
USPTO. We think that there are certainly some issues to look at 
with respect to transparency, communications. So, those will be 
some of the things that we will continue to develop as we 
complete our work.
    Ms. Ross. Thank you, Mr. Chair. My time has expired, and I 
yield back.
    Mr. Johnson of Georgia. Thank you.
    Next will be the gentleman from Ohio, the Ranking Member of 
the Full Committee, Mr. Jordan, for five minutes.
    Mr. Jordan. Thank you, Mr. Chair. I would yield to the 
gentleman from California, Mr. Issa.
    Mr. Issa. I thank the gentleman.
    Ms. Wright, you said that you thought this would be 
primarily the PTO. If you make recommendations and they make 
changes without legislation, would there be any reason they 
couldn't simply change back later?
    Ms. Wright. That is certainly a likelihood. Based on what 
we heard from the judges and others who we spoke with different 
directors take a different approach. There are some of them 
that are more heavy-handed, some that are a little bit more 
hands-off. So, there is probably a need to think about ways in 
which to ensure that there can be consistency, regardless of 
who the director is.
    Mr. Issa. Following up on that, Mr. Smith said that, in the 
interview process, candidates who failed to say, ``Get out of 
my office'' were not selected. In your interview process, did 
you find people who, in fact, admitted that they made changes 
based on these ex parte, effectively, orders to make changes?
    Ms. Wright. So, while we did hear from people that there 
were directions or comments provided that could alter or modify 
their decisions, none of the judges who responded to the survey 
or those we interviewed admitted, or stated, I should say, 
whether or not they subsequently adopted those changes. They 
certainly noted that they felt pressure to do so; they felt an 
obligation, particularly if it had potential repercussions on 
their performance reviews, but we did not hear specifically 
whether or not those changes were actually adopted.
    Mr. Issa. I don't think I would admit it, either. Following 
up on what Mr. Smith said, they did not throw the man out of 
the room; they did not ask him to leave, and they felt 
pressured. So, at a minimum, it could have had an effect on 
their decision process, without a doubt?
    Ms. Wright. It is possible, but hard to say, since we don't 
have the evidence, testimonial or otherwise, to show--
    Mr. Issa. In at least one case, did the Director actually 
make reversals in an ex parte and undisclosed fashion?
    Ms. Wright. I am sorry, can you repeat--
    Mr. Issa. Did you find cases that were reversed in any case 
by the Director, period? In other words, they made a 
preliminary, it was reversed, and the indication was on orders 
of the Director?
    Ms. Wright. Nothing in our work.
    Mr. Issa. You saw cases that got reversed after a 
preliminary; you just couldn't prove who did it?
    Ms. Wright. We did not note--we couldn't say definitively 
what changes were adopted and whether that resulted in an 
actual reversal. Judges noted that they got comments; they felt 
pressure; they felt obligated, but we did not have the 
information to definitively confirm.
    Mr. Issa. Mr. Torczon, I knew you would be chomping at the 
bit. Let me just ask one preliminary question, which is, if you 
were an Article III Judge, and someone walked in the room and 
had an ex parte discussion about how you should decide it, is 
there any question about what would happen if you walked in to 
see an Article III Judge with such a--even if you were Federal 
Circuit Judge, what would happen?
    Mr. Torczon. I think the result would be very different. In 
fact, this gets to a point that there actually is an internal 
review process at the Federal Circuit, but there is a huge 
difference between a staffer offering a suggestion to someone 
with life tenure and a supervisory or even supervisor-supported 
colleague giving you advice on how to write a decision when you 
are not life-tenured.
    Mr. Issa. Especially when your career could be affected by 
that same person.
    Mr. Torczon. Right, and sometimes the effects can be really 
subtle, too. If there are two dispositive issues in a case, one 
of them is a hot-button issue like section 101 and the other 
one isn't, I may choose to decide the case on the issue that is 
not dispositive and try to avoid the 101 issue entirely.
    Plus, I can give you at least one example from my 
experience where I was on a panel. One of the judges was a 
management official. I indicated I would dissent, and the next 
thing I knew, the case had been assigned to a different panel. 
So, sometimes it can be fairly heavy-handed.
    Mr. Issa. There won't be time for you to answer this one, 
but when we get another round I want to make sure that both you 
and Mr. Asimow are prepared to talk about your divergent 
decisions. Because he felt that circumventing APA was okay and 
necessary, and you seem to feel that, without rulemaking, the 
process effectively was not what Congress had intended in the 
law.
    You can just say yes because--
    Mr. Torczon. Yes. Yes, I would look forward to that.
    Mr. Issa. Thank you.
    I yield back. I thank the gentleman.
    Mr. Johnson of Georgia. Thank you.
    We will now turn to the gentleman, Mr. Stanton, from 
Arizona for five minutes.
    Mr. Stanton. Thank you very much, Chair Johnson. Thank you 
for holding this important hearing and substantive hearing.
    I know you have additional questions you have for the 
Witnesses. So, I yield my time back to you, Mr. Chair.
    Mr. Johnson of Georgia. I thank the gentleman. Ms. Wright, 
the GAO study required you to work closely with the USPTO and 
the PTAB management. Can you explain how your interactions with 
them went and did you have any concerns that you were not 
getting the information that you needed?
    Ms. Wright. Well, indeed we did have several meetings and 
conference calls with them, and I would say in the beginning it 
took a little bit of attention and effort to grease the skids, 
if you will. Over time, as the work continued, we were able to 
get information. Sometimes there were multiple discussions 
about the various document requests, but overall, I would say 
in the end, they were responsive to our requests for 
information.
    Mr. Johnson of Georgia. Did you have any concerns that you 
were not getting the information that you needed?
    Ms. Wright. There was nothing obvious that would suggest 
that anything was being withheld from us. Sometimes it did take 
a little while to get the information that we were requesting, 
but in the end, to the extent that it was available, we did get 
the information.
    One of the things we did ask about was whether or not there 
were written comments that were provided, an example that could 
be shared. That was something that we consistently heard that 
there weren't really many written comments to be able to 
provide to us.
    Mr. Johnson of Georgia. Is there any information that you 
believe that you should have gotten, but you haven't yet to 
receive?
    Ms. Wright. Nothing outstanding comes to mind at this time.
    Mr. Johnson of Georgia. Thank you. Mr. Torczon, your 
testimony suggests that there was a culture of judicial 
independence when the PTAB was the Board of Patent Appeals and 
Interferences. Where do you think that came from? Do recent 
developments suggest that this was more of a norm than a legal 
or regulatory requirement?
    Mr. Torczon. I think there were several factors that went 
into play. First, when I joined the board in the mid-'90s, 
patent law was just starting to become a highly visible topic. 
So, I think we have seen an increasing politicization of the 
agency since then.
    I also think that one way that the AIA directly contributed 
to this is a very quick tripling of the size of the board. I 
think Chief Judge Smith deserves enormous credit for managing 
that process. That is a crazy growth curve.
    I think one of the things is when I started at the board, 
overwhelmingly, people were coming from within the government, 
either the PTO or other agencies. So, the understanding of the 
basic norms of agency practice existed. While bringing a lot of 
people from outside of the government had undoubted benefits, 
one of the consequences was a weakening of that norm, plus at 
that time, they converted the position to have a two-year 
probationary period which meant your first two years at the 
board you also have less job security, whereas if you were 
coming in from another part of the PTO, you pretty much had job 
security right away.
    So, I think there were a lot of factors that set into this, 
but there was no watershed thing and it is not like the AIA 
flipped the switch or anything. I just think the culture 
drifted over the years.
    Mr. Johnson of Georgia. Thank you. Mr. Smith, I wish we had 
time to hear about how you were able to clear out that backlog, 
if you were able to, and incorporate the new volume that was 
coming in. That is a story for a book, I suppose. From my 
vantage point, part of the problem seems to be that APJs are 
legal and technical experts, capable of reading and digesting 
binding precedent from the Federal Circuit and the Supreme 
Court. Therefore, if the Director issues legal guidance on a 
contentious issue of substantive patent law, APJs may 
legitimately think that guidance departs from binding judicial 
case law. As we know, the USPTO has no substantive rulemaking 
authority.
    In your view, how should this situation be handled?
    Mr. Smith. A panel judge never wants to have by following 
agency guidance not follow Federal Circuit or Supreme Court 
law. So, this was the subject of often discussion, we always 
undertook to take note of any guidance from the Director's 
Office and certainly to allow it to guide us. Always with the 
thought that any written decision goes to the Federal Circuit 
and the Federal Circuit never would say while you didn't follow 
our precedent, we affirm because you followed the guidance of 
the Director. So, always the mandate was that the North Star is 
Federal Circuit and Supreme Court jurisprudence.
    Mr. Johnson of Georgia. Thank you. Okay, we will next hear 
from the gentleman from North Carolina, Mr. Bishop, for five 
minutes.
    Mr. Bishop. Thank you, Mr. Chair. I yield my time to Mr. 
Massie.
    Mr. Massie. I thank the gentleman from North Carolina. Mr. 
Torczon, I realize the answer to the question I am about to ask 
could take all day or all five minutes, but I wanted to give 
you a chance to give me a brief answer.
    In the beginning, in your testimony, you said for the 
purpose of the hearing. We will assume that Arthrex, we will go 
along with Arthrex. Does that imply that you have some 
disagreement that maybe you think the Supreme Court didn't get 
it right?
    Mr. Torczon. I think that the place they came out saying 
that a political head of an Executive Branch agency should have 
a significant role in outcomes is a very reasonable one and I 
am sure their reasonable minds can and do differ, but I am not 
a Supreme Court Justice. I am satisfied with that result. Their 
solution isn't a particularly good solution.
    Mr. Massie. Their solution is not a good solution. Okay.
    Mr. Smith, how about you?
    Mr. Smith. I think the Supreme Court, and for that matter, 
the Federal Circuit, put forward two clear alternatives, both 
of which are constitutionally and legislatively acceptable. 
Presidential appointment without significant review by the 
Director or for inferior officers, no Presidential appointment, 
but review by the Director which then triggers the next 
important and critical question, what kind of review? Is it a 
review of a kind that limits, eliminates ex parte communication 
and allows transparency? So, it is a fine solution, if properly 
executed.
    Mr. Massie. So, all these problems that we are grappling 
with and all the things that Ms. Wright has showed us here, how 
do we avoid this for the first 250 years of our country, the 
problems of where the judges at PTAB don't feel like they have 
independence? How do we avoid that for the first 250 years of 
the country with adjudicating patents?
    Mr. Smith. Well, of course, the development of the 
administrative and agency estate within the government is a 
long one and in the late 20th and early 21st century we have 
problems of that kind that we never had in the first 200 years 
because government wasn't that size. The primary protection was 
of the kind we have in Article III Courts, appointment by the 
President with the advice and consent of the Senate and then no 
change of salary of firing for how you decide a case. Inasmuch 
as those protections existed also in the Executive Branch, we 
also had insulation from the kinds of problems dealt with by 
the Supreme Court in the Arthrex decision.
    Mr. Massie. Do PTAB Judges get bonuses? Do their salaries 
change based on their managers' appraisal of their performance?
    Mr. Smith. At least for a time and I don't know if it is 
true now, bonuses were paid to PTAB Judges, but not at all 
based on how they decided cases, but how much decisional 
workload they were willing to undertake, and this is part of 
the story with regard to reducing the 27,000 case backlog. 
Essentially, we asked the judges to work extra hours in order 
to help reduce that backlog.
    Mr. Massie. I am going to ask unanimous consent to submit 
to the record a paper. It is called Pecuniary Interests of PTAB 
Judges-Empirical Analysis Related to Bonus Awards to Decisions 
which seems to find empirically that the ones who struck down 
more patents got paid more. I think that is a problem.
    [The information follow:]

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    Mr. Massie. You said that the Supreme Court offered two 
solutions. There is actually a very good third solution which 
is the solution we had for the first 250 years, before AIA. It 
seems like we are struggling with this problem because we took 
something that belongs in the Judicial Branch and worked in the 
Judicial Branch for 250 years and stuck it in the most 
political branch there is. There is no bipartisanship in the 
Executive Branch even.
    Congress is very political, but at least there is some 
Republicans and some Democrats at all times. In the Executive 
Branch, it is political, and the Judicial Branch is--I am just 
sitting here thinking all these problems get solved if you do 
one thing. Put it back the way it was. Put it back the way it 
was. Otherwise, we will be here. We can patch this PTAB up, but 
we are going to be here four more years wondering about how the 
system got corrupted, how the independence was lost, why 
inventors are getting messed over and they have no way to 
appeal it. We will just be back here again if we try to patch 
this thing up and I yield back my time. I yield back.
    Mr. Johnson of Georgia. Thank you. At this time, we will 
recess for about 15-20 minutes for votes that have been called. 
We should be back in about 20 minutes.
    [Recess.]
    Mr. Johnson of Georgia. Okay, the Committee has gone back 
into session. With that, we will now hear for five minutes, Mr. 
Gaetz.
    Mr. Gaetz. Thank you, Mr. Chair. Thank you for calling this 
hearing. I yield to Mr. Massie.
    Mr. Massie. Thank you, Mr. Gaetz. Ms. Wright, I am glad you 
did this study and I wish it were complete. I am not sure why 
we called you here without a complete study, but since it is 
not complete, I am not blaming you for that. I want to ask you 
a question about the stakeholders who were interviewed to make 
sure you got the full picture.
    Did any of the patent holders that were stakeholders, were 
you able to interview any patent holders who had their patents 
invalidated at PTAB and then couldn't get judicial review after 
that?
    Ms. Wright. I am not aware of any such instances from the 
folks that we spoke with. It was a really small group of 
people, 23 stakeholders total, and I think just a handle of 
patent owners.
    Mr. Massie. It may be too late, but if it is not, I think 
it would be helpful to talk to patent holders who feel 
aggrieved by the PTAB and weren't able--specifically the ones 
who weren't able to get any kind of review at a Court of 
Appeals beyond that. I just think it is un-American that we 
have a system like that where somebody they have worked all 
their life, they worked really hard on something, they invested 
their time, their money, and in some cases mortgaging their 
businesses and homes, and then they get--and what we found out 
today, they get in a very nontransparent way, they get told we 
are just going to take that all away from you. What happens is 
they appeal it to the court, and then the court has this thing 
where they say, well, we are going to agree with PTAB, and we 
are not going to re-litigate. We are not going to go back and 
look at what they did. Every time an inventor comes in and says 
that to me, I am like how can this be in this country?
    Mr. Smith, do you think that inventors deserve at least 
another review of their case in the Article III Courts, if 
their patent is invalidated by PTAB?
    Mr. Smith. Yes.
    Mr. Massie. Are you aware of any cases where the higher 
court just refuses to actually look at the facts in the case?
    Mr. Smith. I think the structure of the AIA made it so that 
if no trial is instituted that decision is not reviewable. If a 
trial came to be instituted and the claims were declared to be 
unpatentable, I believe that the AIA most definitely creates a 
review structure within the Article III Court, first to the 
Federal Circuit and then to the U.S. Supreme Court.
    Mr. Massie. What I am hearing from inventors is that the 
higher courts just refuse to review the facts.
    Mr. Smith. That is not my understanding.
    Mr. Massie. Okay.
    Mr. Smith. My understanding is that the Article III Courts 
who review decisions of the PTAB have the same review of facts 
that they have in other cases under a higher standard, of 
course, than they review the law where that is reviewed de 
novo, but they certainly have available to them the opportunity 
to declare the work of the PTAB to have been in error with 
regard to any fact finding.
    Mr. Massie. There is a patent holder or used to hold a 
patent sitting behind you. Had her patent stripped by PTAB and 
hasn't had that what seems to be a right of any American 
extended to her to have an actual review of the facts of the 
matter in the case. I think that is problematic.
    Mr. Torczon, is it possible to patent a perpetual motion 
machine?
    Mr. Torczon. Unfortunately, yes. In fact, I had a friend 
who once took a tour of the European Patent Office where they 
proudly showed him their collection of U.S. patents to 
perpetual motion machines which was the entirety of their art 
on that subject.
    Mr. Massie. Well, I think what Congress did when they 
passed AIA and created PTAB was they created something akin to 
a perpetual motion machine. When you get down in it, it does--
it can't really exist. You can't really have judicial 
independence, especially now, in the context of Arthrex where 
they said it has to be, there has to be somebody who is 
politically appointed who has got at least some control over 
what is going on. The problem with that is even if it is not 
immediate and direct control over every patent review, it leans 
one way or the other and that happens every four years and 
patents last 20 years and it shouldn't be this whether you 
believe in stronger patents or weaker patents. I yield back the 
balance of my time.
    Mr. Johnson of Georgia. We will now hear from the gentleman 
from Oregon, Mr. Bentz, for five minutes.
    Mr. Bentz. Thank you, Mr. Chair. I yield my time to the 
Congressman from California, Mr. Issa.
    Mr. Issa. I thank the gentleman for his kindness in his 
yielding.
    Mr. Smith, earlier, quite a while earlier, there was a 
discussion about should you, having had a decision by PTAB, 
should you be entitled to a jury trial. There was also a 
question by the gentleman from Kentucky about this whole idea 
of being able to get back to what I understood was the District 
Court if you didn't like what the PTAB did.
    Let's go through a couple of historic items because the 
gentleman talked about restoring it as it was before the 
Invents Act. Do you get to have an Article III Judge and a jury 
review if there is an ex parte reexamination and your patent is 
invalidated?
    Mr. Smith. No, sir.
    Mr. Issa. So, that existed before 2011. Still exists, 
right?
    Mr. Smith. Yes, sir.
    Mr. Issa. Okay, so administrative processes don't--are 
decisions because that is the entity, the PTO grants the 
patent. They also are the ones that can say we erred and new 
information changes our decision.
    Mr. Smith. That is the current structure, yes, sir.
    Mr. Issa. Okay. The only difference between an ex parte and 
the inter partes is that the inter partes is open and 
transparent and if not interfered with does have a high-level 
judge looking at it and making decisions based on evidence that 
is potentially rebutted if inaccurate?
    Mr. Smith. Yes, sir.
    Mr. Issa. Okay. Now, let's talk though about this jury 
question because I think that is extremely important. Mr. 
Massie and I both have one thing in common which is we have a 
lot of patents and some patent experience, having been the 
litigants, if you will.
    Does a judge give the jury the Markman decision in an 
Article III Court?
    Mr. Smith. Maybe yes, maybe no. There is a certain amount 
of complexity to it.
    Mr. Issa. Under Markman is the Article III Judge required 
to issue a Markman decision.
    Mr. Smith. The judge is required to issue a Markman 
decision. There comes to be the question of how much is there 
in the way of underlying facts which drive the question of a 
law that is determined at a Markman stage in a case. It could 
be that there are no facts in dispute in which case the jury 
had no role in the Markman determination by the judge.
    Mr. Issa. As a practical matter, Mr. Torczon, as a 
practical matter, Markman decisions by the judge which decide 
what the patent really means, not what the patent holder says 
it means when coming forward, but what it actually means, 
effectively can strip away claims as the plaintiff has alleged 
them, and can often define the outcome of the case. Is that a 
fair statement that Markmans often end cases or effectively end 
cases?
    Mr. Torczon. I think with the qualification of often, yes. 
In fact, the best proof of that is often at which you see 
settlements or indeed interlocutory appeals because it is 
dispositive.
    Mr. Issa. So, when we are looking at this tool created by 
Congress that has over 250, virtually 250 judges today working 
on, it is a tool--and correct me if I am wrong, that is fairly 
similar to other tools, but it has a couple of advantages. It 
is open and transparent if properly conducted. It has experts 
who specialize in it, which Article III Judges have a hard time 
being because they have other cases. The reality is it is less 
expensive, quicker, and has a narrow scope of what it is to 
decide.
    Mr. Torczon. Yes, I think that is true. In fact, I would 
point out that a lot of the concerns that are being addressed 
at this point were brought up in Oil States. The Supreme Court 
explained how the particular nature of this process that is 
basically a review of an expert agency's product that is simply 
get re-reviewed makes perfect sense and doesn't implicate the 
kinds of Seventh amendment concerns.
    Mr. Issa. Lastly, for the person behind you whose patent 
has been invalidated and my sympathies because that really 
hurts any time you lose a claim that you believe should be 
meritorious. If that happened effectively at a Markman or in an 
ex parte reexamination, the outcome would be the same. There 
would be no Federal Circuit appeal, correct?
    Mr. Torczon. I think there would be. Both reexams and 
District Court cases provide routes to Federal Circuit review. 
As Judge Smith pointed out, if a case isn't instituted, the 
patent owner has already won. If it is instituted, whoever wins 
or loses has a route to the same Federal Circuit review.
    Mr. Issa. So, she is not being denied that capability. She 
simply has to avail herself of it?
    Mr. Torczon. No, as somebody who has represented many 
patent owners at the Federal Circuit, I know that they review 
the cases in great detail. In fact, if anything, a criticism of 
the Federal Circuit is it re-weighs facts perhaps more than an 
Appellate Court should, so the idea that the Federal Circuit 
did not look at the facts is totally inconsistent with my 30 
years of experience with the court.
    Mr. Issa. Thank you. I yield back.
    Mr. Johnson of Georgia. We will now turn to the gentlelady 
from Minnesota, Ms. Fischbach, for five minutes.
    Mrs. Fischbach. Well, thank you very much, Mr. Chair. I 
guess, I know this is going to be a difficult question or maybe 
not difficult, but maybe more expansive than four and a half 
minutes that I have got, but you know, one of--and this is to 
all the Witnesses. What do you think Congress can do to correct 
the issues raised in the GAO investigation? Both in the short 
term and in the long term and that is open to anybody, so if 
someone would like to jump in or any of these Witnesses.
    Ms. Wright. So, I would say from GAO's perspective, 
certainly we think that bringing more attention to the need for 
transparency and decisions is really important, including being 
able to identify whether the opinions that are issued are that 
of the three-judge panel or perhaps other parties.
    Mrs. Fischbach. Legislatively, you think we could 
accomplish that?
    Ms. Wright. There are probably legislative avenues to do 
so.
    Mrs. Fischbach. Okay. Thank you. Do any of the other 
Witnesses want to get into that and maybe--
    Mr. Asimow. Yes, I would. One option that should be 
considered by Congress is the creation of a tribunal instead of 
the existing structure of the PTAB, that is, that it is no 
longer a part of USPTO, but is an independent adjudicating 
entity in which the director of the PTO would become a party 
and could appear on the side of either litigant, but that 
otherwise, the process isn't controlled by the USPTO at all.
    So, as an example of that, there are numerous examples. You 
might think about the Tax Court. So, if you have a tax dispute 
with the government, you are not litigating before the IRS, you 
are litigating before an independent adjudicating body called 
the Tax Court and the IRS is your opponent.
    So, in general, and really around the world, this idea of 
the independent tribunal is an appealing model.
    Mrs. Fischbach. Thank you very much. Mr. Torczon and 
forgive me for mispronouncing your name if I did. Do you have 
anything to add to that? I know that you touched on a few 
things earlier, sort of kind of talked about a few things and I 
am just wondering from your perspective are the things that 
Congress could do in short term and long time.
    Mr. Torczon. So, I am kind of an agnostic on this. I think 
the one real thing that needs to be done is a culture reset as 
the minimum. We have talked about how sort of a surgical 
requirement for transparency is probably necessary. Beyond that 
there are so many possibilities. Congress solved this problem 
in 1927 and inadvertently messed it up with the Civil Service 
Reform in the '70s. So, you could go back and make everybody a 
PAS which was the old way that it used to work.
    There are all sorts of possibilities. I even give examples 
of moving the Article 1 Judges into the Judiciary. There are 
lots of possible choices, pluses and minuses to all of them, 
but transparency really is a necessary factor of any solution.
    Mr. Smith. If I may offer--
    Mrs. Fischbach. Absolutely.
    Mr. Smith. First, my views on all the things I have spoken 
to today are my own and not that of Ecolab or anybody else. I 
should--that is entered into the record, but I think I should 
State that as well here.
    I think this is a rare instance in which the solutions for 
Congress to follow have been spelled out somewhat more 
explicitly by the Supreme Court than in other instances. 
Presidential appointment of the judges is one route. That is 
solution number one. That maybe thought not the right solution 
for a variety of reasons.
    Another is to have review, but make sure that is with 
inferior officers not appointed by the President, review of 
their decisions, that is entirely consistent with all the 
things we are concerned about, due process, transparency, and 
the like.
    Maybe the mechanism already is part of what the system has 
in it. The Director decides in a case where the decision, the 
prudence of it, there is some misgivings about that to have the 
case reheard on rehearing by another purely independent panel 
which the Director again--where the Director again would not 
interfere with the independent determination. That maybe it is 
easier if the tribunal operates outside the agency or maybe 
mechanisms like that without the Director, possibly outside the 
agency, but that is the other path. Review, but with a review 
that is transparent and involves no interference.
    As Judge Torczon was saying earlier, no ex parte 
communication ought to mean no ex parte communication and 
transparency. Every communication being on the record should 
mean every communication being on the record.
    Mrs. Fischbach. Thank you, and thank you to all the 
Witnesses for being here today. I appreciate that and I know 
you had to wait while we ran for votes, but thank you very 
much.
    With that, Mr. Chair, I yield back.
    Mr. Johnson of Georgia. I thank the gentlelady. Next, we 
will hear from the distinguished gentleman from California, Mr. 
Issa, for five minutes.
    Mr. Issa. I think the gentleman from Kentucky has a UC 
request if we could.
    Mr. Massie. Mr. Chair, I ask unanimous consent to submit 
four documents to the record. The first is one I referenced 
earlier in case we didn't get that in there, titled How 
Pecuniary Interests of PTAB Judges-Empirical Analysis Related 
to Bonus Awards to Decisions. The second one is How Google and 
Big Tech Killed the U.S. Patent System. The third one, USPTO 
Response to FOIA Confirms There Are No Rules of Judicial 
Conduct for PTAB Judges. The fourth one I would like to submit, 
the Seventh amendment to the Constitution for the record 
because I believe the PTAB is an egregious violation of it. 
Thank you.
    Mr. Johnson of Georgia. Without objection, so ordered.
    [The information follows:]

                       MR. MASSIE FOR THE RECORD

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    Mr. Johnson of Georgia. The gentleman is recognized.
    Mr. Issa. Thank you, if we could start again. Thank you. I 
think I am the closing Act here and so I want to bring back 
some questions that I think particularly my two judges, former 
judges are equipped to answer.
    First, when we look at PTAB today, is it in fact an 
organization that has a lower reversal rate than Article III, 
at least as to the items that they have before them?
    Mr. Smith. I think the answer to that is yes.
    Mr. Issa. Is it quicker notwithstanding that you might be 
in two places, but the process is fairly quick?
    Mr. Smith. There is no question that is true. If a Congress 
did the PTAB the favor or the non-favor of requiring written 
decisions in no more than 365 days, I think at least during the 
period I was the Chief Judge, we did not take 366 days in even 
one case.
    Mr. Issa. So, we have a response that is quicker and more 
accurate, but perhaps lacks transparency. Because it is quicker 
and more accurate, it is fair to say at least on those decision 
it is less expensive for both sides, right?
    Mr. Torczon. I would say that is generally true just 
because the issues are so much narrower.
    Mr. Issa. So, knowing what is good about it, we have some 
challenges. I am going to ask one question to both of you, the 
Chair and I have talked about a lot of potential fixes 
including the tribunal and other options. Is it fair to say 
that in a previous court decision when bankruptcy judges, 
Article 1 Judges, were moved to fall under the Federal Circuit 
system, it both solved the problem and elevated the respect for 
the decision process?
    Mr. Torczon. Yes, I think that is true. I would say that my 
experience confirms GAO's which is that generally people 
believe that they are getting very high-quality decisions from 
the board. That is certainly my belief.
    Mr. Smith. The Bankruptcy Court solution, Article 1 Judges 
in the Article III world certainly have proven over time to 
work and the question is does it work for this circumstance? 
That is the matter before your esteemed selves.
    Mr. Issa. Well, in somewhat of a closing statement, the 
challenge we have is with the GAO's preliminary findings and 
what we hope to be some additional with whistleblowers that 
have come forward that we hope to bring public at the right 
time, we do believe that there needs to be Congressional 
action. Now, we want to do it measured. We want to do it 
carefully. In light of the Supreme Court, we want to do it 
constitutionally. So, that gives us several avenues.
    Obviously, additional confirmed individuals who perhaps 
would be term and would not be as politically affected 
certainly is one possibility and the Chair and I have discussed 
it. The idea of moving to Article III oversight is another one. 
Because of the size of this court, it would bode well for it. 
Unfortunately, because of the size and complexity of it, the 
question is would we remove them from their technical 
environment, from an environment that is synergistic to what 
they do. All of those will have to be considered.
    The one thing that I will ask is a closing question to each 
to the extent that you can answer it. If we were to scrap 250 
judges and growing, what would be the impact if all that work 
was moved back to the Article III Courts?
    Mr. Torczon. If I can start, I would point out that this is 
not really been the solution that has existed since the 1830s. 
The PTAB, the office since the 1830s, has reviewed and had 
trials between competing interests and has even taken out 
patents and patent interferences.
    Mr. Issa. Oh, my goodness. So, you are telling us that it 
is not new and what Mr. Massie is saying that we should just go 
back to the way it was, wouldn't actually take it all to the 
Article III, the way he implied? Tell me more, please.
    Mr. Torczon. As something actually like patent 
interferences which may be an extreme minority, yes, patent 
interferences covered all patentability issues and even covered 
inequitable conduct and invalidated patents as part of that 
process. The AIA has expanded the scope, but one of the reasons 
why the AIA was adopted is because it was very clear that the 
interference process was being abused to get a post-grant 
review process that otherwise wasn't available.
    Mr. Issa. Mr. Chair, that is probably the best place to 
close, the recognition that this is an evolution, that we have 
been here every 4, 10, or 20 years for more than a century, and 
that yes, we might be here again in four years, but that this 
is a process that has evolved because of past problems, not 
because somehow there was a new invention of a different 
remedy. I think our Witnesses have been very helpful in us 
making the record complete and I thank the Chair for his 
calling this hearing today and yield back.
    Mr. Johnson of Georgia. I thank the Ranking Member and this 
concludes today's hearing. I want to thank all the Witnesses 
for your testimony today.
    Without objection, all Members will have five legislative 
days to submit additional written questions for the Witnesses 
or additional materials for the record. Without objection, the 
hearing is adjourned.
    [Whereupon, at 12:08 p.m., the Subcommittee was adjourned.]

                                APPENDIX

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                        QUESTIONS AND RESPONSES

                             FOR THE RECORD

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