    [Senate Hearing 118-705]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 118-705

                         THE RESTORE PATENT RIGHTS ACT:
                              RESTORING AMERICA'S
                         STATUS AS THE GLOBAL IP LEADER

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

                                    HEARING

                                   BEFORE THE

                     SUBCOMMITTEE ON INTELLECTUAL PROPERTY

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                              UNITED STATES SENATE

                        ONE HUNDRED EIGHTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                               DECEMBER 18, 2024

                                   __________

                               Serial No. J-118-90

                                   __________

             Printed for the use of the Committee on the Judiciary

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                            www.judiciary.senate.gov
                                www.govinfo.gov

                                    __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    61-414 PDF                  WASHINGTON : 2025

    -----------------------------------------------------------------------------------

                           COMMITTEE ON THE JUDICIARY

                       RICHARD J. DURBIN, Illinois, Chair
    SHELDON WHITEHOUSE, Rhode Island     LINDSEY O. GRAHAM, South Carolina,
    AMY KLOBUCHAR, Minnesota                 Ranking Member
    CHRISTOPHER A. COONS, Delaware       CHARLES E. GRASSLEY, Iowa
    RICHARD BLUMENTHAL, Connecticut      JOHN CORNYN, Texas
    MAZIE K. HIRONO, Hawaii              MICHAEL S. LEE, Utah
    CORY A. BOOKER, New Jersey           TED CRUZ, Texas
    ALEX PADILLA, California             JOSH HAWLEY, Missouri
    JON OSSOFF, Georgia                  TOM COTTON, Arkansas
    PETER WELCH, Vermont                 JOHN KENNEDY, Louisiana
    LAPHONZA BUTLER, California          THOM TILLIS, North Carolina
                                         MARSHA BLACKBURN, Tennessee
           Joseph Zogby, Democratic Chief Counsel and Staff Director
          Katherine Nikas, Republican Chief Counsel and Staff Director

                     Subcommittee on Intellectual Property

                     CHRISTOPHER A. COONS, Delaware, Chair
    MAZIE K. HIRONO, Hawaii              THOM TILLIS, North Carolina,
    ALEX PADILLA, California                 Ranking Member
    JON OSSOFF, Georgia                  JOHN CORNYN, Texas
    PETER WELCH, Vermont                 TOM COTTON, Arkansas
                                         MARSHA BLACKBURN, Tennessee
                 Rajiv Venkataramanan, Democratic Chief Counsel
                      Brad Watts, Republican Chief Counsel

                                C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page

    Coons, Hon. Christopher A........................................     1
        Prepared statement...........................................    25
    Tillis, Hon. Thom................................................     3

                                   WITNESSES

    Babcock, Jacob...................................................     4
        Prepared statement...........................................    27

    Contreras, Jorge L...............................................     9
        Prepared statement...........................................    33

    Landau, Joshua...................................................     6
        Prepared statement...........................................    43

    Osenga, Kristen Jakobsen.........................................     7
        Prepared statement...........................................    65

                         THE RESTORE PATENT RIGHTS ACT:
                           RESTORING AMERICA'S STATUS
                            AS THE GLOBAL IP LEADER

                                  ----------

                          WEDNESDAY, DECEMBER 18, 2024

                          United States Senate,
                 Subcommittee on Intellectual Property,
                                    Committee on the Judiciary,
                                                        Washington, DC.
        The Subcommittee met, pursuant to notice at 2:18 p.m., in
    the Dirksen Senate Office Building Room 226, Hon. Christopher
    A. Coons, Chair of the Subcommittee presiding.
        Present: Senator Coons [presiding], Hirono, Tillis, and
    Blackburn.

            OPENING STATEMENT OF HON. CHRISTOPHER A. COONS,
               A U.S. SENATOR FROM THE STATE OF DELAWARE

        Chair Coons. This hearing of the Intellectual Property
    Subcommittee of the Senate Judiciary Committee will come to
    order. I'd like to thank all four of our witnesses for
    participating today, and I'd like to especially thank my
    colleague, Ranking Member Thom Tillis, and his staff for
    putting this hearing together, again on a consensus basis.
        This is our 10th Intellectual Property Subcommittee hearing
    of this Congress, the most of any of the Subcommittees of the
    full Committee. We have conducted oversight on the PTO and the
    Copyright Office, analyzed and worked through five different
    bipartisan bills, had a hearing on the intersection of AI and
    IP, and probed foreign threats to American IP.
        We've actually been doing the work our constituents sent us
    to Washington to do, legislating, and at every step, Senator
    Tillis, you and your team have been fantastic partners. Thank
    you, and I look forward, God willing, to continuing our work
    together in the next Congress.
        I expect other Members of this Subcommittee will be joining
    us today. Today's hearing examines the RESTORE Patent Rights
    Act, a bill I currently co-sponsor with Senator Cotton of
    Arkansas. This one-sentence bill would restore the presumption
    that a patent owner should receive an injunction when she
    demonstrates that a defendant has infringed her valid patent.
    This is in no way a new or novel idea. Our Founding Fathers
    made it clear that inventors should have exclusive rights to
    their inventions. In other words, the constitution in its
    script, guarantees to inventors the ability to prevent others
    from using or selling their inventions without their
    permission.
        For more than 200 years, our Federal courts recognized this
    exclusive right, and in nearly 100 percent of cases, courts
    issued permanent injunctions against patent infringers when
    patent owners sought them. This system was predictable and
    orderly. Parties who wanted to use patented technology
    negotiated with patent owners to pay for licenses rather than
    infringing upfront, and then risking a costly injunction
    shutting down manufacturing and distribution operations.
        That changed in 2006 with the Supreme Court's decision in
    eBay v. MercExchange. In that case, the Supreme Court held
    injunctions were not the per se remedy for patent infringement.
    Instead, courts were to apply the traditional four factor
    equitable test before deciding whether to award either money
    damages or injunctive relief. As you can guess, after eBay,
    courts have much more frequently concluded money damages rather
    than injunctions are sufficient to compensate a patent owner
    for infringement.
        Studies conducted since eBay have shown the number of
    injunctions sought, and the number of injunctions granted have
    decreased substantially. Now, the relative decrease in requests
    for permanent injunctions was 65 percent for operating
    companies and 90 percent for non-practicing entities. And even
    when parties did seek injunctive relief, they were awarded it
    less frequently.
        So, grants of injunctions to patent holders who had proven
    validity and infringement dropped from a 100 percent to about
    70 percent. Putting these trends together means courts are
    simply issuing far fewer permanent injunctions against
    infringers than they were before this decision.
        These numbers don't capture the full impact of the eBay
    decision. Predatory infringement and ``infringe now, pay
    later'' model is broadly on the rise. It stands to reason why
    should a potential licensee negotiate with a patent owner of
    good faith when they can infringe now for free and maybe at
    some point later pay a court determined licensing fee. Or
    better yet, maybe the infringer can wear the patent owner down
    with years of repeated litigation and with injunctive relief
    uncertain, extract licensing concessions. Individual inventors,
    universities and startups are especially vulnerable because
    they often lack the significant financial resources to sustain
    prolonged litigation.
        As a result, in my view, the value of a patent has
    diminished. If a patent owner can't be confident that they can
    exclude infringers from practicing the invention, how can they
    sell a high value license? They can't. And the post eBay data
    show a huge increase in lower value non-exclusive licenses,
    meaning patent owners have a tougher time recovering their
    investment, which leads to abandoning innovative ideas or
    reducing R&D investment in the kind of ideas that can propel
    our economy.
        It's for these reasons I introduced the RESTORE Patent
    Rights Act, and as I've said before in a single sentence this
    would restore the rebuttable presumption and undo the harmful
    effects of eBay. In all four of our previous hearings,
    examining specific bipartisan bills, we have witnesses who both
    support and oppose the legislation. We try to hear all sides on
    this, this hearing's no different.
        With Senator Tillis's cooperation, we have a panel with
    diverse views and perspectives, both on the challenge and the
    operational impact of eBay, and this bill, and its potential
    consequence. We want to hear from you about whether you think
    this bill is needed, whether it's crafted the right way,
    although at one sentence there's not a lot of details to work
    through and tell us what you like and what you don't and how to
    make it better.
        Before I introduce the panel of witnesses, I'd like to turn
    it to my friend and colleague, Senator Tillis, for any opening
    remarks.

                OPENING STATEMENT OF HON. THOM TILLIS,
            A U.S. SENATOR FROM THE STATE OF NORTH CAROLINA

        Senator Tillis. Thank you, Chair Coons, and thank you for
    holding the hearing on the RESTORE Patent Rights Act. Before I
    get to make a few comments and we hear from the witnesses, I
    just want to thank you for another great Congress session
    working together, 10 hearings.
        But what you may not know is how much work goes into those
    hearings for which I think we both are very grateful to the
    staff who do the lion's share of the work. But I also think
    it's important to mention on the broader subject of
    intellectual property, how many meetings, work groups the work
    of this Committee, I would put up against any Subcommittee in
    the U.S. Senate for the past couple of Congresses.
        And a lot of that has been through the cooperation, the
    active involvement of many Members, but absolutely through our
    consensus-based leadership of the Committee and through the
    hard work of the staff. So, I thank you-all for the work that
    you've done.
        We're going to hear from witnesses on both sides of the
    issue today. Whether or not you support or have concerns with
    the bill or oppose what we're trying to accomplish, you all
    know what the bill does, so I'm not going to tell experts what
    it does.
        I'm here as a business person trying to solve problems, and
    I view this as another problem that is a threat to innovation.
    It's particularly a threat to the innovation ecosystem when
    we're talking about some of the smallest, less resourced
    inventors and innovators, there's got to be a way to get it
    right.
        Now, what I do like or what I will tell the witnesses,
    thank you for coming, whether you're on the pro or the con side
    of the bill, either as written or any iteration of it, I thank
    you for coming here. I will tell you that when we have limited
    attendance and we have time, I do sometimes convert my
    questions into sort of an ad hoc debate club. So, if any of you
    happen to hear something and I seem to think that you want to
    respond, I will most likely do that.
        But this is the first time I've actually given people
    notice. That I want a good fulsome discussion. I don't want to
    hear any less from somebody who's opposed to the bill than
    someone who's supports it, mainly because we want to get to a
    good, fair, balanced outcome. But I am convinced that Senator
    Cotton and Senator Coons are onto something here, and I look
    forward to the testimony, and look forward to the engagement
    afterwards.
        Thank you-all. Thank you, Mr. Chair. And also, we apologize
    for starting 15 minutes late. We had a vote that we had to take
    care of. Thank you.
        Chair Coons. Thank you, Senator Tillis. Thank you, Senator
    Hirono, for joining us again. I'd now like to introduce our
    witness panel. First, we have Jacob Babcock, CEO of NuCurrent,
    a 40-person company based in Chicago that works on wireless
    power solutions and has a portfolio of more than 300 granted
    and pending patents.
        Next, we have Joshua Landau, senior counsel for innovation
    policy at CCIA, the Computer and Communication Industry
    Association, where he advises the Association on patent issues.
    Then, Professor Kristen Osenga, professor of law at the
    Richmond School of Law, where she focuses on patent litigation
    and patent law reform. And last, Professor Jorge L. Contreras,
    professor at the University of Utah College of Law, where he
    works on IP issues and directs the law schools program on IP
    and technology law.
        Grateful to have you all here. After I swear in the
    witnesses, you'll each have roughly 5 minutes to provide an
    opening statement. We'll then proceed likely with two rounds of
    questioning depending on attendance and time. So, could you all
    please stand and be sworn? Please raise your right hand and
    repeat after me.
        [Witnesses are sworn in.]
        Chair Coons. Mr. Babcock, you may proceed with your opening
    statement.

                   STATEMENT OF JACOB BABCOCK, CEO,
                      NUCURRENT, CHICAGO, ILLINOIS

        Mr. Babcock. Chairman Coons, Ranking Member Tillis, and
    Members of the Subcommittee, thank you for the opportunity to
    testify today. When I graduated from Indiana University in
    2004, I joined Teach for America to help close the education
    gap. After finishing in 2006, I embarked on a career in tech
    and entrepreneurship. And in the nearly 20 years since, I've
    watched a new type of gap emerge, an innovation and IP gap,
    created by a systematic gutting of our once great patent
    system. This didn't happen by accident.
        Mega tech special interests have driven judicial,
    legislative, and administrative changes that heavily tilt the
    system in their favor. For example, the 2006 eBay decision
    eliminated injunctive relief, leaving inventors with inadequate
    compensation while infringers profit. Other harmful cases have
    included the 2014 Alice decision and the 2018 Oil States
    decisions, which have combined to substantially weaken patent
    rights.
        On the legislator front, the 2011 America Invent Act
    created the PTAB, which invalidates patents at an alarming rate
    and drains inventors resources. Finally, on the administrative
    front, the U.S. PTO has turned patents into paper shields by
    lowering the standard of review, shifting the burden of
    evidence to patent holders, and allowing defendants multiple
    bites at the apple.
        The result is a system that no longer protects innovators
    or provides clarity to investors. Instead, it rewards those who
    exploit our ideas, shifting and stifling competition and
    creativity. Let me share what this looks like to me in a
    practical sense and in my business and as an investor.
        At NuCurrent, the company I founded in 2009, we specialize
    in wireless power and data transfer. We filed over 400 patents,
    and partnered with leaders like HP and Honeywell to bring
    breakthrough products to the market. But despite our success,
    we've experienced firsthand how the system fails to protect
    innovators. A major Korean OEM stole our patented technology,
    and they enabled their suppliers in China and Taiwan to profit
    from our work. Without injunctive relief, we couldn't block
    them.
        By the time financial remedies arrived years later, the
    damage was already done. Billions of dollars in value flowed
    overseas, and that's value that we would've invested in
    American jobs and innovation. This wasn't just theft; it was a
    systematic failure of the U.S. patent system. And here's the
    bigger problem, the lack of injunctive relief distorts fair
    business dealings.
        Mega corporations know that there's no urgency for them to
    act. Without the threat of an injunction, they can choose to
    ``infringe now and pay later'', as you mentioned, if they pay
    at all. A former Apple executive even called this strategy a
    fiduciary obligation because for mega tech litigation is just a
    small tax on doing business. But for companies like mine, it's
    devastating.
        Instead of inventing, building, and creating jobs, we're
    forced to fight endless legal battles. This broken system also
    discourages the next generation of innovators.
        As a founding investor in the 81 Collective Venture Fund, I
    see this every day. Eighty-one percent of U.S. GDP comes from
    industries like manufacturing, healthcare, and energy.
    Industries that are reliant on hard tech. Yet these sectors
    receive less than half of venture capital investment. Why is
    that? It's because investors see the risks of a broken patent
    system outweighing the rewards of making the investment.
        At mHub, a hard tech accelerator where I serve on the
    board, entrepreneurs often ask me, is filing a patent worth it?
    Is it worth the investment? Today, I often have to say no, and
    this may be the biggest tragedy of all. Every time I give that
    answer, I worry we're letting the next Big American innovation
    slip away, only to be exploited by foreign competitors or
    entrenched players. The good news is, we can fix this. The
    RESTORE Act offers a common-sense solution by restoring
    injunctive relief, it gives inventors the ability to stop
    proven infringers. This really isn't complicated in my eyes. If
    you're found guilty of breaking the law, you shouldn't get to
    keep profiting.
        No other area of law works this way except for patents. The
    RESTORE Act will empower inventors to protect their work,
    rebuild trust in the patent system, drive investment in
    critical sectors like manufacturing, energy, and healthcare.
    And this is really about fairness. It's about ensuring that
    when inventors take risks, work hard, and bring groundbreaking
    technologies to life, their rights are respected.
        So, to close, I'll say this; this is our moment. The
    RESTORE Act sends a clear signal, that America values its
    innovators, protects its creators, and will not tolerate IP
    theft, whether from foreign competitors or domestic giants.
    Thank you.
        [The prepared statement of Mr. Babcock appears as a
    submission for the record.]
        Chair Coons. Thank you, Mr. Babcock. Mr. Landau.

    STATEMENT OF JOSHUA LANDAU, SENIOR COUNSEL, INNOVATION POLICY,
     COMPUTER AND COMMUNICATIONS INDUSTRY ASSOCIATION, WASHINGTON,
                                   DC

        Mr. Landau. Chairman Coons, Ranking Member Tillis, Members
    of the Subcommittee, thank you for inviting me to testify on
    behalf of the Computer and Communications Industry Association.
    CCIA has advocated for competition and innovation in the
    technology and communications industries since 1972. Our
    members are leaders in many areas of technology, including
    semiconductors, artificial intelligence, cloud computing, and
    e-commerce.
        CCIA members are also active participants in the patent
    system, often appearing in the top five annual recipients of
    U.S. patents, as well as litigating in district courts and at
    the PTAB. CCIA supports a balanced patent system that promotes
    rather than hinders innovation.
        The eBay decision has helped to ensure that the U.S. patent
    system fairly rewards patentees, without creating excessive
    burdens on innovators or rewarding patentees windfalls. It also
    encouraged innovation and commercialization. After eBay was
    decided in 2006, research and development spending accelerated
    its rate of increase, patent filings likewise accelerated, and
    not just any patent, but patents that were more likely to be
    cited by others and thus more likely to contribute to new
    innovation in the future.
        Some studies have even found an overall increase in social
    welfare due to the eBay decision. eBay did have an impact on
    innovation. It accelerated it. The RESTORE Act would reverse
    these benefits and it would incentivize manufacturing outside
    of the United States, at a time when bolstering domestic
    manufacturing is a national priority.
        It's also simply unnecessary. Prior to eBay operating
    companies, companies that make products, could obtain
    injunctions in almost all cases. And after eBay, those
    companies can obtain injunctions in almost all cases. For
    operating companies, eBay represented almost no change in their
    ability to obtain an injunction. And for inventors that don't
    make anything themselves, but work with exclusive licensees,
    situations like a small inventor partnering with a manufacturer
    or a university working with a startup, injunctions do remain
    available.
        Now, there was a drop in injunctions after eBay, but the
    companies that have a harder time obtaining injunctions are
    companies that create lawsuits instead of products. We have a
    term for those, patent assertion entities, sometimes referred
    to as patent trolls. And contrary to some claims, those patent
    trolls are still out there. In fact, they now represent the
    plurality of all patent lawsuits.
        These are the companies that would significantly benefit
    from RESTORE. Beyond its positive impacts on innovation eBay
    also brought the patent system in line with the rest of
    American law. Injunctions are an equitable remedy, and
    equitable remedies are governed by equitable principles.
        Of those principles, one of the most important is that
    equitable relief is only available when legal remedies are
    inadequate to make a plaintiff whole, when there's some kind of
    harm that money can't fix. This principle is so important that
    Congress wrote it into the first Judiciary Act, so basic that
    the Supreme Court summarized injunctive relief by saying. in
    brief, the basis for injunctive relief are irreparable injury
    and inadequacy of legal remedies. If there's no irreparable
    injury, there's no basis for an injunction.
        This longstanding principle explains both the eBay decision
    and the outcomes in court cases after eBay. Competitor
    litigation seeks to prevent irreparable harms, loss of market
    share, loss of consumer goodwill, loss of your competitive
    advantage, but a patent assertion entity, a company that exists
    only to obtain money through its patents, doesn't suffer those
    harms.
        They can have a complete remedy through 35 U.S.C. 283,
    which instructs the factfinder to award damages adequate to
    compensate for the infringement. Because a patent assertion
    entity's only loss is monetary, there's no irreparable harm.
    There's no reason to grant an injunction. There's also good
    economic reason not to grant injunctions in that circumstance.
    Economic theory finds that the threat of an injunction distorts
    negotiations because injunctions take the entire product off of
    the market.
        That makes sense when a patent covers the entire product.
    But modern high-tech products are complex multi-component
    devices that might involve tens or even hundreds of thousands
    of patents, each covering a tiny aspect of the product. When a
    defendant is faced with the inability to make or sell its
    product, it can't negotiate for the fair value of the patented
    technology, the risk of having your product taken off the
    market entirely is just too high. A patent owner is entitled to
    be made whole for the infringements of their patent, but when
    their injury can be remedied solely by money damages, the
    impacts of the eBay decision, the entire history of the United
    States legal system and economic theory all tell us that an
    injunction is unneeded and inappropriate.
        eBay accelerated innovation. We should not reverse that.
    Thank you for the opportunity to testify today, and I look
    forward to your questions.
        [The prepared statement of Mr. Landau appears as a
    submission for the record.]
        Chair Coons. Thank you, Mr. Landau. Professor Osenga.

        STATEMENT OF KRISTEN JAKOBSEN OSENGA, PROFESSOR OF LAW,
        UNIVERSITY OF RICHMOND SCHOOL OF LAW, RICHMOND, VIRGINIA

        Professor Osenga. Chairman Coons, Ranking Member Tillis,
    and Members of the Subcommittee, thank you for this opportunity
    to speak with you today about why Congress should enact the
    RESTORE Patent Rights Act. This bill, by establishing a
    rebuttable presumption in favor of injunctive relief for patent
    infringement, would bring back a patent system based on
    reliable and effective patent rights that serves as a
    foundation for this country's innovation ecosystem.
        For over 2 centuries, if a valid patent was found to be
    infringed, the patent owner could generally rely on the court
    granting a permanent injunction to prevent further
    infringement. And this stems from the Constitution's grant of
    power to Congress to secure exclusive rights to incentivize
    authors and inventors. A patent grants only exclusive rights,
    no positive rights, just the right to exclude others from using
    the patented technology. If a patent owner cannot stop an
    infringer from using their patented technology, the patent
    loses its value.
        Because of this, prior to 2006, courts would presumptively
    grant a permanent injunction in nearly all cases where patent
    infringement was found. This high grant rate was not just
    aligned with patents grant of an exclusive right, but also
    provided a level of certainty, important to both patent owners
    and infringers.
        In 2006, the Supreme Court issued eBay v. MercExchange and
    dramatically altered the patent landscape. Under the test
    imposed by eBay, injunctive relief is no longer certain.
    Instead, some patent owners can be more certain they will not
    be granted an injunction, and will have to settle for an
    ongoing royalty set by a court while the infringer is permitted
    to continue using the patent owners innovative technology.
        Studies after eBay show that permanent injunctions were
    granted much less frequently than before eBay, especially for
    patent licensing firms. There's some new research that shows
    that patent owners, regardless of business type, are not even
    asking for injunctive relief at the same rate as they did
    before eBay.
        If you take into account these patent owners who don't even
    seek injunctive relief, the decrease in granted injunctions
    where infringement is found, is down 66 percent for operating
    companies and 91 percent for licensing firms. The shift from a
    presumption of injunctive relief to a patent system where
    injunctive relief is uncertain, has serious negative effects on
    the patent system.
        First, the lack of injunctive relief has led to predatory
    infringement, where infringers who know they're unlikely to be
    enjoined, make a calculated decision to ``infringe now and pay
    later''. This forces the patent owner to litigate rather than
    negotiate, to obtain payment for use of their patented
    technology. A predatory infringer is basically a squatter
    living in a room of your house without your permission. This
    rewards the infringer in a number of ways.
        First, they may never face litigation and they can use
    someone else's patented technology for free. Second, even if
    they face litigation and lose, they will have been using this
    technology for free for a number of years, basically getting an
    interest free loan during their period of infringement and
    infringement cases are expensive and take many, many years to
    conclude.
        And third, there is empirical evidence, the court
    determined royalty rates are often lower than negotiated fees.
    So, after years of using the technology for free, infringers
    end up having to pay less than they would've if they had agreed
    to license the patent upfront. What is a win-win situation for
    the infringer, who is a bad actor, is a lose-lose situation for
    the patent owner, decreasing the value of their patents and
    depriving them of revenue that could be used to further
    innovate, or even expand their business.
        Second, where injunctive relief is uncertain, licensing
    negotiations are distorted and push patent values lower. When
    an injunction is available, a patent owner can say, no, I will
    not license this to you at that price. To use the technology,
    the other party will need to pay the asking price or will need
    to design around or use a different technology. But when an
    injunction is unlikely to be granted, the other party has no
    need to negotiate in good faith or even at all. Some may choose
    to engage in predatory infringement, but even those who choose
    not to infringe end up negotiating in a market in which patents
    are devalued as an asset class.
        One recent study showed exclusive licenses, which are
    typically high value, have decreased post eBay, while non-
    exclusive licenses, which are typically lower valued have
    increased. The problems created by eBay can be fixed by
    enacting RESTORE, which in fact restores the patent system to
    the state it was prior to eBay. Injunctions would be generally
    granted, unless there were a compelling reason not to do so.
        Certainty and injunction serve as a deterrent to predatory
    infringement and facilitates fair negotiations. With these
    qualities the patent system provides effective and reliable
    patent rights, which in turn drive the United States innovation
    ecosystem.
        Thank you and I look forward to your questions.
        [The prepared statement of Professor Osenga appears as a
    submission for the record.]
        Chair Coons. Thank you, Professor. Professor Contreras.

       STATEMENT OF JORGE L. CONTRERAS, JAMES T. JENSEN ENDOWED
         PROFESSOR FOR TRANSACTIONAL LAW; DIRECTOR, PROGRAM ON
     INTELLECTUAL PROPERTY AND TECHNOLOGY LAW, UNIVERSITY OF UTAH,
           S.J. QUINNEY COLLEGE OF LAW, SALT LAKE CITY, UTAH

        Professor Contreras [inaudible]. Chairman Coons, Ranking
    Member Tillis, and distinguished Members of the Committee, I'm
    a professor of law and have 33 years of experience practicing,
    teaching, and studying intellectual property law, including
    remedies in patents. In these opening remarks, I'd like to
    offer some perspectives on sometimes heated debate concerning
    injunctive relief in U.S. patent cases, particularly the
    Supreme Court's 2006 decision in eBay v. MercExchange.
        First, every empirical study----
        Chair Coons. Professor, is your microphone on?
        Professor Contreras. Oh, sorry. Oh, now it says ``Talk.''
    Sorry about that. I'll just continue, that was intro.
        Every empirical study to date shows that even after the
    eBay decision, permanent injunctions are still issued and
    roughly 75 percent of patent infringement cases, thus
    legislative measures responding to complaints that patent
    injunctions are lost or off the table are hardly necessary.
        Second, concerns that courts are allowing hordes of patent
    infringers to continue to violate patents with impunity are
    grossly exaggerated. My own work shows that during the 15-year
    period from 2006 to 2021, courts have authorized continued
    infringement in exchange for an ongoing royalty after denying a
    permanent injunction only 32 times, that's just twice per year
    across thousands of patent infringement lawsuits in this
    country, hardly an avalanche of infringement that will derail
    the innovation economy.
        Third, there are already strong legal mechanisms in place
    to deter what has been called holdout and predatory
    infringement. These include recovery of litigation costs and
    enhanced damages under the Patent Act in which a judge can
    penalize an infringer up to three times the awarded damages for
    willful infringement.
        Following the Supreme Court's 2016 decision in Halo v.
    Pulse, it has become even easier to get enhanced damages. And a
    recent study shows between 2016 and 2020, willfulness was found
    in approximately 65 percent of patent infringement cases. The
    very real likelihood of such damages multipliers is a
    significant deterrent to patent infringement even without the
    threat of an injunction that does not meet the eBay standards.
        By the same token, there is no evidence that eBay has
    depressed patent damages awards. If you exclude default
    judgments, median patent damage awards significantly increased
    in the years after eBay. So, let me turn briefly to the
    proposed RESTORE Patent Rights Act. The Act claims that it is
    intended to help undercapitalized entities, individuals, and
    institutions of higher education, which are entirely worthy
    goals, but these entities are not likely to be the principal
    beneficiaries of the Act.
        The entities that will most benefit are for-profit patent
    assertion entities, or PAEs, whose main source of revenue is
    suing larger companies for patent infringement and many of
    which are based offshore. As reported by Bloomberg in 2022, all
    10 of the top 10 filers of patent litigation in the United
    States were PAEs. The top filer was single-handedly responsible
    for suing 179 separate defendants.
        In contrast to targets of PAE litigation are typically
    large domestic companies that employ millions of American
    workers, and create the product and services that fuel the
    American economy. For example, in 2022, the top defendants in
    patent infringement suits included Walmart, AT&T, Amazon,
    Apple, Microsoft, Google, Cisco, and Verizon.
        The Act's creation of a presumption of irreparable harm
    would make it significantly easier for PAEs to obtain
    injunctive relief and use that leverage to extract higher
    payments from American companies at the cost of consumers.
        It has also been argued that firms that don't readily enter
    into patent licensing agreements with PAEs are acting in a
    predatory or unethical manner. Some have gone so far as to
    decry this refusal as contrary to the rule of law. Yet far from
    being unethical, it's entirely reasonable for a firm to resist
    a PAE licensing demand that involves patents of questionable
    validity, where as is often the case, patents are not even
    mapped to the allegedly infringing products.
        Finally, critics claim that the eBay framework has made the
    U.S. an outlier in terms of international patent enforcement,
    especially compared to jurisdictions like Germany that have a
    reputation for issuing injunctions automatically when a patent
    is infringed.
        But if this were ever the case, things have changed. In
    recent years, other countries, including Germany, have
    implemented their own rules regarding the need for
    proportionality when considering patent injunctions. As a
    result, the eBay framework has placed America in a position of
    global leadership in the reform of patent remedies.
        So, in conclusion, I believe that courts should be
    permitted to continue to judiciously apply the eBay four-factor
    analysis when continuing the issuance or considering the
    issuance of permanent injunctive relief in patent cases. This
    analytical framework has served American businesses and the
    economy well over nearly 2 decades and has done so in an
    effective, clear, and exemplary manner. Seeding these benefits
    to patent searchers, many of which are foreign corporations and
    PAEs, would cause more harm than good to the American economy.
        Thank you.
        [The prepared statement of Professor Contreras appears as a
    submission for the record.]
        Chair Coons. And thank you-all. I look forward to our
    questions and your answers. I'm going to start by just
    exploring the use and efficiency of injunctions, so I better
    understand your testimony, in a second round of questions I'll
    get to the legislation itself and its likely impact.
        Mr. Babcock, we just heard two witnesses really
    predominantly focus on patent assertion by entities outside the
    United States, predominantly extractive, not contributing
    anything to American innovation and manufacturing and they are
    the principal target of the concerns expressed by two of the
    witnesses. Do you make anything?
        Mr. Babcock. Yes, we design, we invest a lot in R&D. And we
    design wireless power, and data circuits, and components that
    are then built into products for our customers. So, one thing
    that's unique about us is that we work in an arm's-length
    relationship with the engineering organizations, with our
    customers, which is usually distinct from what they're calling
    PAEs, which are just patent holders that usually are buying the
    patents from companies that have been put out of business
    because they couldn't get arm's length deals done.
        Chair Coons. So, could you tell us a little bit more about
    how you discover your IP was stolen and what were the legal
    remedies available to you? Because as you described it, a
    Korean entity stole a critical piece of IP and was literally
    able to generate, I think you said, billions in value, before
    you were able to find any meaningful relief.
        Mr. Babcock. Yes. thanks for asking too, because the
    timeline is one of the most egregious elements here. So, we
    didn't really even discover the infringement until a few years
    after it started where the technology was put into phones. So,
    it'd already been put into a couple hundred million phones at
    that point.
        Then by the time we filed a lawsuit, worked through some of
    those issues and ultimately decided to settle with them, it was
    about 7 years after the initial infringement. By that time,
    their suppliers were enabled with the technology, and they had
    proliferated it not only to the company that we sued, but also
    to others in the cell phone industry. The cat was out of the
    bag and we couldn't put it back in.
        Chair Coons. What difference would it have made if you'd
    had a presumption of injunctive relief in your toolkit as you
    proceeded?
        Mr. Babcock. I believe that it would've made the companies
    more seriously consider who the suppliers of technology were
    and whether they had a license or the legal ability to provide
    that technology. It was basically a free for all on the
    technology, and those companies got to benefit, but it didn't
    return the benefit to us, the inventors.
        Chair Coons. And you talked a little bit about as did
    Professor Osenga, efficient infringement, what's the order of
    magnitude difference between your company and the Korean
    company you're describing that ultimately then took advantage
    of your technology?
        Mr. Babcock. Multiple orders. These companies have
    trillion-dollar market caps right now. And despite the increase
    in investments in venture capital over the past 10 years, I
    think if you look at increases in valuations of hard tech
    companies, you're not going to see a significant uptick in
    investment or in valuation. So, we're talking, you know, three,
    four, five orders of magnitude differences.
        Chair Coons. Professor Osenga, you used the term predatory
    infringement. Why I think an Apple executive was cited is
    talking about efficient infringement or the obligation to
    shareholders to engage in infringement. What do you mean by
    predatory infringement? What do you mean by that term?
        Professor Osenga. Thank you for the question and I think
    it's important because efficient infringement makes it sound
    like it's good. We like efficiency, efficiency is a positive
    thing. I think by continuing to name intentional purposeful
    theft of other person's intellectual property as efficient,
    we're sort of blessing it.
        So, I'd like to change the narrative to predatory
    infringement, because what we often see is a larger company
    that is better resourced, able to use the intellectual property
    of a smaller company who has less resources, may not be able to
    find the infringement, may not be able to sustain litigation to
    stop the infringement. That seems rather more predatory than
    efficient.
        Chair Coons. You use the example of someone being a
    squatter in your home. I think that's accessible to people, the
    idea that your home is your property and someone manages to get
    into a room of your house and just live there until you're able
    to physically evict them, which would be the equivalent of
    injunctive relief, rather than paying you the rent that they
    decide they'd like to years later which would be a predatory
    infringement.
        Why do you think that intellectual property rights aren't
    treated or viewed the same as physical property rights?
        Professor Osenga. Thank you. Yes, so I think, I believe,
    particularly with homes, if there's a level of personhood, and
    so we're much more attached to our homes. Maybe you'd be less
    concerned if they lived, I don't know, in the corner of your
    yard. But for some inventors, especially small inventors, small
    companies, oftentimes those also represent personhood as well
    as livelihood. So, I do think it's a lot more like homes. I
    think we should think about it as squatters within homes. I
    think it's a mistake to not think about intellectual property
    in the same way that we think about real property.
        Chair Coons. Let me just across the four of you. Does
    everyone agree that injunctive relief is being sought and
    granted substantially less frequently post eBay? Mr. Landau
    asserted that that really only primarily applies to PAEs.
        Mr. Landau. That primarily applies to PAEs. I believe the
    study you're referring to when you said a 66 percent decrease
    in effective rate is by Kristina Acri. I read that study; I
    noted several problems with it. For one, in 2016, she reports
    requests for permanent injunctions in 12 cases, grants in 11
    cases. I independently reviewed 2016 just at random, and
    located 22 cases filed that resulted in not just a request, but
    a grant of that injunction. So, I don't know how trustworthy
    those numbers are.
        The other problem with it is that her denominator is total
    patent cases when she looks at request rate, and changes under
    the AIA in the joinder rules made it so that NPEs filed
    significantly more lawsuits than they used to. Not that they
    were targeting more defendants necessarily, but because they
    couldn't target 10 defendants in one lawsuit. There's a larger
    number of cases overall.
        Operating companies didn't experience that same shift, as a
    result using the operating company request rate, but putting
    the total number of cases at the bottom distorts what the
    actual result is. If you rerun it, there is a reduction, but it
    is much less significant than that reported.
        Chair Coons. Mr. Babcock, you were making an expression.
        Mr. Babcock. Yes, my experience is different. I'm not an
    academic or a lobbyist, I just run businesses and invest in
    them. And my experience working with lawyers in this case is
    they say we're not even going to request injunctive relief in
    cases anymore because we can't get it. It's just not given
    after the eBay decision. And they just want to focus on what
    they think can be achieved, which is financial remedies.
        Chair Coons. Professor Osenga then Professor Contreras
    about whether or not injunctive relief is still sought and
    available to actual manufacturing companies.
        Professor Osenga. I disagree with Mr. Landau's assertion
    that Professor Acri's work is suspect. I think she found a very
    clever way to look at the change in the system after eBay. A
    lot of what the numbers are often based on is how many of the
    requested injunctions are granted, and it really doesn't take
    into account how many cases in which the requests aren't even
    made as Mr. Babcock said. So, I think Professor Acri's study is
    fair and I do believe that the number has gone down
    substantially, both for operating and for licensing firms.
        Chair Coons. Professor Contreras, you get the last question
    of this round.
        Professor Contreras. Yes, thanks very much. I mean, I also
    have some concerns about the study that was cited for many of
    the same reasons as Mr. Landau and a couple of others. But
    rather than go into that I mean, I would say two things and
    first, if the number of requests for injunctions has gone down,
    and I would be willing to concede that it probably has, that is
    probably a good thing, because it probably weeds out meritless
    cases for injunctive relief. And I think that that saves
    judicial resources and makes litigation less expensive for
    everyone.
        So, if we can weed out meritless cases in that way, I think
    that is a positive. That being said, I would disagree with Mr.
    Babcock's characterization of what practicing lawyers are doing
    and saying out in the field. I work with lots of lawyers and am
    involved in many cases involving operating companies and PAEs
    and patents, and I have yet to see lawyers in major cases who
    give up any possible motion that they can file any remedy that
    they can seek. And generally, injunctions are very much on the
    table, very much a threat even under eBay and still shape the
    settlement negotiations in these cases.
        Chair Coons. Thank you for your testimony, Senator Tillis.
        Senator Tillis. Thanks again everyone being here. Mr.
    Landau, I think you mentioned in your opening testimony that a
    plurality of the cases out there now are from patent assertion
    entities or patent trolls.
        Mr. Landau. That's correct. And in some months, it's the
    majority.
        Senator Tillis. Where are the rest?
        Mr. Landau. The rest are primarily operating companies. And
    then to a much lower extent, you have university cases, some
    inventor started company cases, others that are sometimes
    called NPEs, but are not part of that sort of PAE situation.
        Senator Tillis. What do you say to Mr.--Well, first off, I
    actually believe that there are patent assertion entities and
    there are patent trolls. And one of the things we need to do is
    figure out how to distinguish between the two so that we can
    try and downward trend. I don't think any of you would say,
    look, an inventor who has a legitimate case should be able to
    get compensated properly, and at the same time, we shouldn't
    disrupt that innovation being enjoyed and brought to market.
        It's a very difficult thing and I've heard arguments from
    either side, but I think that it's also important to mention
    that we're not all patent assertion entities are bad people
    sometimes, to Mr. Babcock's point, they simply there are
    entities out there that didn't invent, but they own the patent,
    they just simply are an entity that may have the scale to win
    if they pursue a patent infringement. I think we need to be
    realistic about that.
        So, my team will spend a little bit more time really
    getting down into the details so that I better understand the
    good actors, the bad actors, and some of the actors that are in
    the middle. Mr. Babcock, you were the only one who took a few
    notes when Mr. Landau was doing an opening statement. Are there
    any things that you want to get off your chest before I go to
    the academic end of the dais?
        Mr. Babcock. Yes, one thing that really stood out to me,
    again, just from practice as a business person, I'm hearing a
    lot of concern about the PAEs, but I think a lot of the burden
    shifting that's happened over the past decade or so, where the
    time, money and power is now on the side of the infringers, and
    it takes a lot of money and time for these patent holders to
    assert.
        What that's led to is a lot of challenges for those
    companies that might put them out of business or put them in
    jeopardy of getting more funding. And so these PAEs are almost
    a creation of Big Tech by putting companies out of business and
    the patents then end up getting aggregated into more financial
    entities that assert them professionally at the scale you're
    talking about. So, I don't think that gets brought up a lot in
    the discourse.
        It's like there's some belief that there's some like
    natural order that there's some PAE, some NPE, some operating
    companies, some professors that invent. I think these are
    related, and I actually think that some of the evils in the
    system are created by the burden shifting that has happened.
        Senator Tillis. Okay. And now for the professorial side of
    the dais here. I'm kind of curious, tell me about if RESTORE
    Patent Rights Act were to pass, what elements of the eBay
    decision would still, if any, be applicable?
        Professor Contreras. I know the way I understand the act
    and, I do congratulate you on writing a one-sentence statute
    that's very good. I mean, so this would presumably affect only
    factors one and two of the eBay test, right? Whether there's
    irreparable harm can be shown and whether monetary damages
    would be sufficient to compensate the infringer. The third and
    fourth elements of the eBay test, which are balancing of the
    equities between the parties and the public interest, my
    understanding is that those aren't affected by the act. They're
    certainly not mentioned in the act and so I assume that those
    would continue in effect.
        Professor Osenga. Thank you. I believe the way I understand
    it, it's the rebuttable presumption of injunctive relief would
    bring us back to pre-eBay times that wasn't the Wild West.
    During pre-eBay times, what was happening was actually
    injunctions were granted on the basis of equity.
        And so, if there was a reason, perhaps in the public
    interest or otherwise, for an injunction not to issue, it
    wouldn't. And that's that rebuttable part of the presumption of
    injunction. So, I think it doesn't mess with the eBay factors
    at all. It just returns us to a time prior to eBay when
    injunctions were generally granted.
        Senator Tillis. And Mr. Landau, I had a question for you on
    that. I think pre-eBay decision injunction rates were pretty
    high. What are they today?
        Mr. Landau. So, pre-eBay, the injunction rate, it varies
    depending on exactly which study you look at, but the overall
    injunction rate was about 95 percent for operating companies.
    Now, after eBay, it's about, again, looking at different
    numbers, you get slightly different numbers, but about 2
    percent lower for NPEs, for patent assertion entities, it is
    significantly lower than that. Typically, I've seen numbers in
    the twenties.
        Senator Tillis. I see Mr. Babcock agreeing with that.
        Mr. Babcock. I would say disagreeing, I'm just surprised at
    the only 2 percent difference, but.
        Senator Tillis. Seems odd we'll dig into it. Okay. Make
    sure we're looking at the same numbers. It seemed odd to me,
    but I'm not an attorney, so I do ask questions. I don't know
    the answer, to my staff may, but I was just more curious.
        Look to the point. I just I wanted to touch on a point
    because I think it was something said by an Apple executive
    about, they're performing their fiduciary responsibility. I
    don't disagree with that, to be honest with you. They need to
    press the system to the maximum extent possible.
        So, I say that to say, that I'm not demonizing one end of
    the spectrum that I generally enjoy a good relationship with
    because I'm a product of it. I came from Big Tech. But I still
    think we have a problem to solve here. And I know that with a
    one-sentence bill, it's kind of hard to come up with an
    alternative. But I do believe that I would like for cooler
    heads to prevail and try to figure out a way that we're getting
    to the root cause. And this is fundamental fairness for
    inventors here who want to build things, where it seems to me
    the status quo puts some of them at a disadvantage and more
    importantly, the invention that we never get to enjoy.
        I don't know what impact that is, but that's what happens
    when innovation gets stifled and people think that they just
    can't, as a small inventor breakthrough. So, let's figure out
    how we continue the dialog and get to a fair and just outcome.
    Thank you.
        Chair Coons. Thank you, Senator Tillis, Senator Hirono.
        Senator Hirono. Thank you, Mr. Chairman. I thank both of
    you for having this hearing and for the panel. I do want to
    start by saying that this Subcommittee does work that tends to
    be bipartisan, so that's more than refreshing. It enables us to
    get things done.
        And on the topic of injunctions, I am a strong supporter of
    patent rights, especially the patent rights of small inventors,
    because I'm also told that a lot of our competitiveness comes
    from the work of small inventors, and I am all for, and
    enabling them, to effectively protect their inventions.
        I co-sponsored the Stronger Patents Act in previous years,
    and am inclined to support this legislation as well. And I
    think back to these many years ago, and I took property law and
    my professor described property law as being a bundle of
    rights. And the most important of these rights is the right to
    exclude, and we won't even get into the rule of perpetuity and
    all that.
        So, property, the right to exclude and that is what we're
    talking about with, I would say, injunctive relief. So, it
    seems to me that I don't see how a decision like eBay could not
    have some sort of an impact on business dealings, because often
    the remedies that are available really turn on who bears the
    burden of going forward.
        So, under eBay, the burden lies with the inventor who's
    already been deemed that his or her invention has been
    infringed upon. And now the inventor bears a burden of showing
    that an injunctive relief should ensue. So, that is a pretty
    tough burden to bear. So, I don't understand how it is that the
    eBay decision could not have the effect of making it a lot
    harder for inventors to protect their patents, if it's much
    harder to get injective relief.
        And I do recognize that Professor Cont, I'm sorry, um is
    it, [points at witness] yes, Contreras. So you cited too, I
    think you cited too, that we don't really have a problem here,
    but I can't see how we don't, so I think I'd like to ask Mr.
    Babcock, the non-lawyer in the group. Right, Okay.
        So, over the past decades, as far as I'm concerned, we've
    seen a number of efforts to weaken patent rights. I, I think
    that's been the impact of some of these laws that we've
    enacted. And I would cite the Supreme Court's eBay decision
    among those, America Invents Act and one of the few people that
    voted against that Act, because I thought it had a negative
    effect, especially on small inventors to the growing number of
    things that are not patent eligible.
        So, for Mr. Babcock, what has the weakening of patent
    rights meant to innovative companies like yours and the
    startups that you support?
        Mr. Babcock. Yes, thank you for the question. And I want to
    go back to something Mr. Tillis said and add to it. The
    inventions that we don't see are the most important ones that
    we're missing, and it's really hard to quantify those. But
    where I think you see it showing up is in the lack of venture
    capital that goes into those businesses, because venture
    capitalists and angel investors cannot rely on patents as
    strong property.
        If venture capitalists were able to rely on intellectual
    property, they would be able to invest in the most promising
    people and the most promising technologies, because they could
    do the scientific diligence to understand if this is
    meaningful.
        But the problem is today, you can invest in great,
    meaningful, exciting technology, but you don't know as a
    business person if you'll ever have the ability to monetize it.
    So, I think it's not showing up as big of a problem as it
    actually is because It's really hard to measure what's missing.
        Senator Hirono. I tend to agree with you. So, what would
    passing this measure mean, both financially and symbolically?
    If you want to think of it that way to innovators.
        Mr. Babcock. Yes, I think it's one step in the right
    direction. I think the pendulum has swung dramatically over the
    past 20 years. You mentioned the legislation, you've mentioned
    some court cases, and there's also administrative changes that
    have happened.
        This would be a step back in the right to direction, get
    the pendulum swinging back toward a more moderate middle
    system, and there's more that needs to be taken care of. I
    think the PTAB is particularly problematic, but this would be a
    very good starting point because it shifts the burden back to
    the defendants. They can still avoid injunctive outcome. But
    they have to be the ones that prove it. And I think that's a
    fair way to put it.
        Senator Hirono. I agree with you because I don't see why
    the infringer should not have the burden of going forward
    regarding whether an injunction should ensue. Thank you, Mr.
    Chairman.
        Chair Coons. Thank you, Senator Hirono. Mr. Babcock said
    that time, money, and power have shifted to, and I may
    mischaracterize, ``Big Tech Infringers.'' Mr. Landau most of
    the largest technology companies, household names Apple, Meta
    are members of your association. I'd be interested in your
    perspective on the impact of the RESTORE Patent Rights Act on
    members of your organization. And are there any revisions to
    this bill that, in your view, could make it better?
        Mr. Landau. Yes, so I think I'll start at the end of your
    question with the revisions point. At the end of my testimony,
    I actually do propose a revision that I think would really
    address a lot of the concerns you're hearing from myself, from
    Professor Contreras, while also strengthening that providing a
    presumption of injunctive relief, and that would be to attach
    it to some form of working requirement.
        To say, you get the presumption if you are making a
    product, or if you're working with an exclusive licensee to
    make a product. If you're working with a startup to make a
    product. If you're doing something with your patents, you get
    the presumption, otherwise you have the eBay test as we have it
    today. You can still receive an injunction. It might just be a
    little harder to receive.
        Chair Coons. Thank you. Mr. Babcock, you talked both about
    your company and also about mHub, an incubator that supports a
    lot of small startups. And part of your assertion, let me make
    sure I understand it correctly, is that the cost and the
    uncertainty and the length of litigation, were key barriers to
    pursuing injunctive relief. How important is making sure that
    this system is balanced and that injunctive relief is available
    to small startups of the type that mHub supports?
        Mr. Babcock. It's critical because it gives some balance to
    those smaller companies that are, let's just face it, when
    you're a small company, it's unlikely you're going to be
    successful. And so stacking more chips against those companies
    makes it less likely that they will raise the money they need
    to bring their innovations to market. So, giving them a small
    arrow in the quiver of competitiveness would be essential.
        Chair Coons. Well, you could give them a bigger arrow in
    the quiver.
        Mr. Babcock. Yes, please.
        Chair Coons. Professor Osenga, some have argued that the
    RESTORE Patent Rights Act doesn't go far enough because it
    establishes only a rebuttable presumption rather than finding a
    mandate that upon a finding of infringement, there must be
    injunctive relief. What do you think of the balance that the
    current statute or the proposed bill, what do you think of the
    balance that it strikes? Does it go too far? Does it go far
    enough? And would you suggest any additional changes?
        Professor Osenga. Thank you. I believe that the one-
    sentence bill is perfect.
        [Laughter.]
        Chair Coons. I should record this moment. Yes. Something
    that I have is perfect.
        Professor Osenga. So, for these reasons. First of all, the
    rebuttable presumption brings us back to the 200 years of
    history with the injunction of relief being an equitable
    remedy. There are certain times when it doesn't and shouldn't
    apply, so a mandatory injunction would be not in line with
    equity, not in line with historical practices.
        Going forward with the eBay tests as it is, as Mr. Babcock
    says, puts a lot of burden on the patentee to show that they
    deserve injunctive relief, which is an extra layer that
    shouldn't have to be once they've already been able to prove
    that their patent has been infringed upon.
        Mr. Landau's proposal, also adds a lot of burden to the
    patentee. They're going to have to show that they're the good
    guy, that they're doing the right things. And so that doesn't
    alleviate some of the concerns that Mr. Babcock raises.
        But also, I want to point out that even in the eBay
    decision, in the majority opinion, they cite to the paper bag
    case to say, basically starting in 1908, right? That injunctive
    relief doesn't require a working or operating company in order
    to receive it. And so, for all of those reasons, I think that
    the bill as proposed hits exactly all the right notes.
        Chair Coons. Professor Contreras and Professor Osenga, I'll
    let you kick this around. Some commentators have argued that
    the result was actually not mandated by the eBay decision, that
    it was an outgrowth of Justice Kennedy's concurrence, that his
    concurrence which is not the holding of the case, which really
    focused on business method patents and on patent trolls, drove
    this outcome, the application of eBay. Do you think that's
    correct or incorrect? Professor Contreras?
        Professor Contreras. I would say that's not correct.
    Courts, when they are reviewing a request for injunctive
    relief, they look at the majority opinion, they cite the
    majority opinion, and that that is the law. I think district
    courts understand very well what a concurring opinion is from
    the Supreme Court, and they understand that that is not
    Presidential and not binding.
        My research assistants and I reviewed every single case in
    which an injunction was not granted and an ongoing infringement
    was allowed, and they were not citing a concurring opinion
    except you know, possibly just by way of greater explanation.
    Certainly, the holding of the majority is what was being cited.
        Chair Coons. Professor Osenga, would you disagree or agree
    with that characterization of the impact of Kennedy's
    concurrence literally no impact?
        Professor Osenga. I disagree with Professor Contreras.
    Whether the courts are citing it or not, if you look to who
    isn't receiving injunctive relief, it falls into the categories
    that the Kennedy concurrence lays out. It's the operating, the
    licensing firms, its business methods, and then it also
    sometimes gets into the multiple patents covered in a single
    component. That's essentially when we get into standard
    essential patents. And so, those are the times when we don't
    see injunctions granted. So, whether they're citing it or not,
    I think it may as a big impact.
        Senator Coons. Thank you all for your testimony. Senator
    Tillis.
        Senator Tillis. Mr. Landau's suggestion to a non-attorney
    who doesn't necessarily take a position that the one-sentence
    bill is perfect. I've just tried to figure out, Ms. Osenga, you
    said something to the effect it adds an extra burden to
    identify the good guys, but that was my point about patent
    assertion versus patent trolling.
        Why isn't there some way to, and Mr. Babcock, if you want
    to opine, I'm just assuming the attorneys are going to gimme an
    answer that my attorneys will have to explain. But why isn't
    there something there to that concept at the end of the day,
    that's really what we're trying to do is just make the good
    guys not have a burden that could cause an invention never to
    occur.
        So, what am I missing in terms of trying to find a way that
    does that, that doesn't increase the burden? It kind of gets to
    the point that Mr. Landau made. And Mr. Landau, or Mr.
    Contreras, or Mr. Babcock, or professor Osenga, any of you can
    answer, but why aren't we trying to get to that? I mean, this
    isn't just so cut and dried, Mr. Chair, that we have to pick a
    winner and loser here. Or is there any thought process to
    bridge in the middle ground?
        Mr. Landau. Well, since no one else seems to want to jump
    in. I will say that it would create a different burden, but I
    don't think it creates an additional burden to show a working
    report.
        Senator Tillis. Well, the reason I was asking is, Mr.
    Babcock talked about if we created more of a sense that people
    were going to be able to assert their intellectual property
    rights, then we would have more people investing earlier. And
    would that create an environment where the people who are
    incented to invest earlier would then be able to invest in
    defending the intellectual property if it got that point in the
    life cycle? Does that make any sense to y'all? Because I'm kind
    of a project guy, I'm trying to understand what I'm talking?
        I thought what I heard you say, Mr. Babcock, is that one of
    the reasons why angel investors and private equity are hesitant
    now is because they don't necessarily--they're not willing to
    invest in the science and technology to see if it's a deal
    worth investing in, because they're not really sure if the
    intellectual property rights would be preserved if they did.
    But isn't it fair to say that those folks would also, if they
    saw a promising invention or a promising idea, that they would
    likely have the resources to prove that they're good actors or
    working with a good actor? I'm just trying to figure out what
    I'm missing here.
        Mr. Babcock. I think a lot of it comes back to that burden
    at every step of the way. So, if you think about the process
    here, so you go through the invention, so you invent something
    meaningful, then maybe you had a little seed funding for that,
    or maybe you did that out of your own pocket, or from friends
    and family, then you want to file patents, and then you pay
    tens of thousands of dollars to law firms and you go through
    USPTO Office to prosecute those patents, to earn the patent.
        Usually, I think historically, once you earn patents, then
    you can fundraise significantly more money on top of those
    because it meant something. Today, I don't think it means that
    much. I think that once you have those patents or that first
    patent, or that second or third, it's a little bit of
    credibility building, but it doesn't really change the
    financial picture much, to get that next stage of real funding
    to now bring it to market and to do something with it. So, as
    an inventor or as an entrepreneur, you're required to find
    other ways of competing.
        Senator Tillis. Okay. So, Professor Osenga does that, mean
    that--like again, I thank you all in advance for coming here
    with your opinions, but does that mean that that Mr. Landau's
    decision is sort of a poisoned pill? It doesn't really do
    anything, or his suggestion? I'm just trying to understand it.
    And I'll give you a chance too, Mr. Landau, take notes.
        [Laughter.]
        Professor Osenga. Thank you. I do think that Mr. Landau's
    proposal leaves us in the same eBay space. It's just changing
    the words of the test.
        Senator Tillis. Same result, different approach, result.
        Professor Osenga. Correct.
        Senator Tillis. Mr. Contreras, and then I'll let Mr. Landau
    finish up my time.
        Professor Contreras. Yes. Thank you, Senator. I mean, I
    have to say in my view that the eBay framework itself, is this
    the middle ground? It is, it offers the balance that we need.
        Senator Tillis. So, you're in the ``ain't broke category''.
        Professor Contreras. Excuse me.
        Senator Tillis. So, you're in the ``ain't broke not broke
    category''.
        Professor Contreras. In this case, I believe I am, yes
    because and its industry dependent. One thing we haven't really
    talked about is this is industry dependent. In some industries,
    pharmaceuticals, for example, you get injunctions all the time,
    almost every time.
        It's in industries where patent claims are harder to parse,
    they're more vague, and where they can be asserted against very
    broad swaths like Cedar Lane and its campaigns against hundreds
    of companies in the tech space, just because they do something
    involving a computer that they're going to get one of these
    claims. That's where the failure to be able to show irreparable
    harm, inability to get compensated by money damages, where
    those factors really make a difference, and I think they work.
        Senator Tillis. And Mr. Landau?
        Mr. Landau. So, I hear a lot about the sort of excessive
    burden, but before I was doing this, I was a litigator. I was a
    patent litigator. And a big portion of any case is proving your
    damages. And I don't think there are any inventors out there
    who would just abandon their damages case. You're always going
    to want damages for past infringement, even if you do want an
    injunction for future infringement. So, you are always going to
    have this component of your case where you prove what harm you
    suffered, and that's normal. We don't award remedies that have
    no evidence behind them, nor should we.
        So, I don't think it is an excessive burden. I think it
    changes the burden a little bit. And I deeply respect Professor
    Contreras, but I think I disagree with him that this doesn't
    change anything from eBay. Presumptions matter, I can say
    innocent until proven guilty. I can say guilty until proven
    innocent. Those are very different things. So, putting a
    presumption of irreparable harm is meaningful, it means that
    you have that presumption. The other party has to push back and
    prove that you didn't experience an irreparable harm. So, I
    think it is a meaningful difference.
        Senator Tillis. Thank you all. Thank you all for being
    here. We'll continue the dialog. Mr. Chair, you don't intend to
    get a markup and get this bill passed before the end of your
    tenure, right?
        Chair Coons. Yes. Tomorrow.
        Senator Tillis. Okay. So, you know, outside of the Hail
    Mary here, this is a dialog to be continued and hopefully we
    can continue it early next year. Thank you.
        Chair Coons. Senator Hirono.
        Senator Hirono. Thank you. I'd like to make sure that I
    have clarification on this. So, this is for Professor Osenga.
    Didn't eBay shift the burden of going forward to the patent
    holder in terms of getting an injunction?
        Professor Osenga. Yes. Thank you.
        Senator Hirono. So, one of the things that Mr. Babcock
    mentioned, and this is in line with Senator Tillis's line of
    questioning. It has to do with the importance of the
    availability of venture capital for startups, and of course,
    that would include small inventors in particular.
        Mr. Babcock, you mentioned, you said that venture
    capitalists are not going to be inclined to invest in
    inventions that cannot be protected as a property right. So,
    are there VC people that you talk with who can tell us that
    this is in fact a limiting factor for their wanting to provide
    venture capital money?
        Mr. Babcock. Yes. And in my experience, probably 9 out of
    10 venture capitalists you reach out to for fundraising
    purposes, once they understand that it's a hard tech, patent-
    based business, they just say, that's not in our expertise. We
    don't invest in those businesses.
        Senator Hirono. And do you think that if this bill were to
    pass to create more protection for certainty that they may have
    a different view of investing in these kinds of startups,
    including small inventors?
        Mr. Babcock. I think it's a starting point. I don't think
    it does enough, but I think it starts swinging the pendulum
    back toward fairness in the middle ground.
        Senator Hirono. I think the availability of VC capital,
    it's very, very important. So, that's an added factor that
    where I do think that we need to support a bill like this.
    Thank you.
        Chair Coons. Given that a close friend of mine is about to
    give his farewell speech on the floor of the Senate, I'm going
    to defer to Senator Tillis to close this hearing out. And I
    look forward to hearing about Senator Blackburn's questioning.
    Thank you.
        Senator Blackburn. Thank you, Mr. Chairman. And I want to
    thank you-all for being here and doing this hearing. One of the
    things that has concerned me and intellectual property and its
    protections or something we hear a lot about in Tennessee,
    whether it is our auto engineers or it's our singers, our
    songwriters, our authors, our publishers, they're concerned
    about AI. They're concerned about losing IP protections. So, I
    appreciate this.
        And many times, China comes up and one of the things we've
    paid attention to, if you go back and you look at 2021, China
    really moved ahead when it came to patent filings. And in 2021,
    they did 1.59 million patent filings, and that was more than
    double what we had in the U.S. And that acceleration rate is
    something that was of tremendous concern to me, because we know
    China is repeatedly trying to take our R&D and take our IP.
        And Mr. Babcock, you talked about this in your testimony,
    and I'll quote you. You said ``to donate our R&D and American
    IP to aggressive foreign competitors'' was a statement you
    made. Why don't you elaborate on that one for me?
        Mr. Babcock. Yes. we were trying to work in good faith with
    a Korean OEM, for putting wireless power into their cell
    phones. Once they realized the ingenuity of the invention, they
    worked with their suppliers in China and Taiwan to figure out a
    way to reverse engineer it and build it. And it ended up
    proliferating into over a billion cell phones since then. And
    as I mentioned earlier, it just let the cat out of the bag, and
    you can't put it back in. We have gotten financial damages.
        Senator Blackburn. So, then talk about how the RESTORE Act
    would help with that type of situation.
        Mr. Babcock. Yes. So, the RESTORE Act can actually stop it
    from proliferating because it will actually enjoin those
    companies from being able to ship products if it has the
    infringing technology in it versus the paradigm we're in today.
    They might just have to pay some amount of money at a future
    date, and they might not have to if we don't come up with the
    money to go around and sue the entire cell phone industry,
    which is a very expensive proposition, risky, and distracting
    when we want to spend our time inventing new technologies, not
    litigating the past.
        Senator Blackburn. Yes, I can appreciate that. Well, we
    have watched very closely as how China has significantly
    increased their R&D efforts, and they lead the world in 57
    critical and emerging technologies.
        Now, in the early 2000's, we were the leader in those
    critical and emergency technologies. And right now, we lead in
    just seven of those. And this is of tremendous concern to me,
    it's why Senator Welch and I did the leadership in Critical and
    Emerging Technologies Act, which would require the PTO to put
    in place a pilot program that would expedite the examination of
    10,000 patents and microelectronics, artificial intelligence,
    quantum information. And Mr. Landau, let me ask you, why would,
    in your opinion, why would the patent system be a great place
    to do this, to do this expediting and pushing this innovation?
        Mr. Landau. So, I think that the patent system is of
    course, the appropriate place to place that sort of process.
    The patent system exists to promote the progress of science and
    the useful arts. That's why we have a patent system. It's
    actually one of the unique things about the U.S. patent system.
    Ours is the only, or one of the only that puts that progress as
    the reason rather than some other rationale.
        So, I think it makes sense that if we think these are
    important technologies, and they are, my members are heavily
    involved in many of them, we do want to have that sort of
    accelerated process through the patent office. We do want to
    have an accelerated examination process. I think that makes
    perfect sense.
        Senator Blackburn. Well, we think that this will help push
    us back into that leadership position on this so that it is
    something that is encouraging our innovators. We don't want
    them leaving the country. We want to keep this innovation here.
    We don't want to have that IP stolen from them. We don't want
    predatory infringement. And Professor, I know you talked about
    that a little bit earlier, and protecting these innovators and
    their constitutional right to benefit from their innovations is
    something that should be a priority of this Committee. Thank
    you, Mr. Chairman, I yield back.
        Senator Tillis. Well, thank you-all for being here. Senator
    Blackburn, before you leave, I'd like to seek unanimous consent
    to have Chairman Coons' closing remarks submitted to the
    record.
        Senator Blackburn. Without Objection.
        [The information appears as a submission for the record.]
        Senator Tillis. I do on behalf of Senator Coons want to
    thank you-all for being here. I do agree with him. I think
    injunctive relief is no longer near the certainty it used to
    be. I'm just in a category of trying to figure out how we can
    produce certainty and not have unintended consequences, which I
    think is part of the concern with the opposition.
        About the only thing I will read in his speech is he wants
    to especially thank me and my staff for being great partners at
    the hearing. I don't want to miss that one. But no, thank you
    all for being here. The thing I like about this Committee, and
    frankly, one of the only reasons why I continue to be on
    Judiciary is we try to present ourselves in a professional,
    respectful manner. Really just trying to get to a fair outcome.
        I don't think either one of you want to prevent fewer Mr.
    Babcock's, and all of you want innovation. It's about trying to
    figure out how we can tune the dial to get the best of both.
    And if we engage in a constructive way, we'll come out with an
    outcome that maybe not everyone likes, but if I'm convinced
    it's going to move the ball down the field, then I'm going to
    support it. And I appreciate Senator Cotton and Senator Coons
    for pressing on this issue. So, thank you-all for your
    testimony.
        And I should say that the record will be held open, any
    kind of questions will be due a week from today. But given the
    holidays, we're going to extend the deadline to 5 p.m. Friday,
    January 3, so that if anyone has questions, wants to submit
    other information to the record, you can by January 3. Thank
    you-all. Have a great holiday. Meeting adjourned.
        [Whereupon, at 3:32 p.m., the hearing was adjourned.]
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