[Congressional Record Volume 145, Number 148 (Wednesday, October 27, 1999)]
[Senate]
[Pages S13258-S13259]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HATCH (for himself and Mr. Leahy):
  S. 1798. A bill to amend title 35, United States Code, to provide 
enhanced protection for investors and innovators, protect patent terms, 
reduce patent litigation, and for other purposes; to the Committee on 
the Judiciary.


             the american inventors protection act of 1999

  Mr. HATCH. Mr. President, I am pleased to rise today, along with the 
Ranking Member on the Judiciary Committee, Senator Leahy, to introduce 
the American Inventors Protection Act of 1999. Simply put, this 
legislation reflects several years of discussions and consensus-
building efforts in the Senate and the House, and represents the most 
important and most comprehensive reforms to our nation's patent system 
in nearly half a century. As we prepare to enter a new millennium built 
on high-tech growth, the Internet, and electronic commerce, in which 
American competitiveness will depend on the strength of the patent 
system and the protections it affords, this legislation could not be 
more timely.
  The last time the Patent Act underwent a significant update was in 
1952. Since then, our Nation has experienced an unprecedented explosion 
of technology growth and a tremendous expansion of the global market 
for the fruits of American ingenuity. Yet our patent laws have remained 
largely unchanged in the face of the new demands engendered by these 
developments. This legislation--which many of my colleagues will 
recognize as a compromise version of the Omnibus Patent Act passed by 
the Judiciary Committee with near unanimity more than 2 years ago--will 
effect targeted changes to the patent code to equip the patent system 
to meet the challenges of new technology and new markets as we approach 
the new millennium, while at the same time promoting American 
competitiveness and ensuring adequate protection for American 
innovators, both at home and abroad.
  As many of my colleagues know, this legislation is the product of 
several years of discussion and extensive efforts to reach agreement on 
a responsible package of patent reforms. The Senate made significant 
progress toward consensus during the last Congress when several key 
compromises were reached in the Judiciary Committee to strengthen the 
bill's protections for small businesses and independent inventors and 
to preserve America's competitive edge in the face of increasing global 
competition. I was pleased this year to see those efforts continued in 
the House, where the supporters and former opponents of the bill agreed 
to sit down and work through their differences to produce a 
constructive patent reform bill. The result is H.r. 1907, which has 59 
cosponsors in the House--including the most ardent opponents of prior 
reform measures--and was passed in the House by a 376-43 vote.
  In many ways, the House-passed ``American Inventors Protection Act'' 
builds upon the compromises reached in the Senate during the last 
Congress. For example, the widespread agreement on 18-month publication 
of patent applicants is centered around the Senate compromise that 
allowed inventors to avoid disclosure of their applications by not 
filing their application abroad, where 18-month publication is now the 
rule. Similarly, estoppel provisions similar to those agreed to in the 
Senate form a key component on the broad-based agreement on patent 
reexamination reform. I  am pleased to see these compromises preserved 
and to see that the House has built upon them to reach the sort of 
broad consensus on patent reform that I have long advocated.

  The bill Senator Leahy and I are introducing today in the Senate 
preserves these important compromises and adds to them a number of 
important provisions. For example, our bill includes a title not in the 
House bill to reduce patent fees for only the second time in history 
(the first time fees were reduced was last year in a bill Senator Leahy 
and I ushered through the Senate), to ensure that trademark fees are 
spent only for trademark-related operations, and to require a study of 
alternative fee structures to encourage maximum participation by the 
American inventor community. Our bill also adds important provisions to 
enhance protections for our national security by preventing disclosure 
of sensitive and strategic patent-related information and by helping to 
identify national security positions at the Patent and Trademark Office 
(PTO) and obtain appropriate security clearances for PTO employees. The 
bill also prohibits the Commissioner of Patents and Trademarks from 
entering into an agreement to exchange U.S. patent data with certain 
foreign countries without explicit authorization from the Secretary of 
Commerce. Also in our bill is a requirement that GAO conduct a study on 
patents issued for methods of doing or conducting business, which have 
been the subject of a 75 percent increase in applications at the PTO/
  Like the House bill, our legislation will achieve a number of 
important substantive patent reforms, consistent with the principles of 
protecting American inventors, our national competitiveness, and the 
integrity of our patent system.
  First, the bill provides inventors with enhanced protections against 
invention promotion scams by creating a private right of action for 
inventors harmed by deceptive and fraudulent practices and by requiring 
invention promoters to disclose certain information in writing prior to 
entering into a contract for invention promotion services. An inventor 
who is harmed by any

[[Page S13259]]

material false or fraudulent statement or representation, or any 
omission of material fact, by an invention promoter, or by the 
invention promoter's failure to make the required disclosures, may 
recover actual damages or, at the plaintiff's election, statutory 
damages in an amount up to $5,000, as the court considers just, plus 
reasonable costs and attorneys' fees. A court may award increased 
damages, up to treble damages, where it finds such conduct to have been 
intentional and done with the intent to deceive the inventor. And, in 
an effort to provide better access to information for inventors, the 
Patent and Trademark Office is required to make publicly available all 
complaints received involving invention promoters, along with any 
response of the invention promoter.
  Second, as noted above, the bill will reduce patent fees, protect 
trademark fees from being diverted to non-trademark uses, and require 
the PTO to study alternative fee structures to encourage maximum 
participation by American inventors.
  Third, the bill provides a ``first inventor defense'' to an action 
for patent infringement for someone who has reduced an invention to 
practice at least one year before the effective filing date of the 
patent and commercially used the subject matter before the effective 
filing date of such patent. The bill responds to recent changes in PTO 
practice and the Federal Circuit's 1998 decision in State Street Bank & 
Trust Co. v. Signature Financial Group, 149 F.3d 1360 (Fed Cir. 1998), 
in which it formally did away with the so-called ``business methods'' 
exception to statutory patentable subject matter. As a result, patent 
filings for business methods are up by 75 percent this year, and many 
who have been using business methods for many years pursuant to trade 
secret protection--believing such methods were not patentable--are now 
faced with potential patent infringement suits from others who, while 
they may have come later to the game, were first to reach the patent 
office after the bar to patentability for business methods was lifted.

  Fourth, the bill will guarantee a minimum 17-year patent term for 
diligent applicants, addressing concerns that have been expressed since 
the United States went to a 20-year from filing term of protection with 
the adoption of the Uruguay Round Agreements Act in 1994.
  Fifth, the bill will place American inventors on a level playing 
field with their foreign competitors by providing for domestic 
publication in English of those patent applications that are now 
subject to foreign publication by foreign patent offices, while still 
retaining the option inventors now enjoy of preserving the secrecy of 
their application by not filing abroad. It also protects American 
inventors from broader disclosure of their invention through domestic 
publication than occurs in foreign publications by allowing the patent 
applicant to submit a redacted copy of their application for 
publication. This provision will effectively facilitate access to 
information that will enable inventors to target their resources more 
effectively while also providing, for the first time, effective interim 
protection for inventors during patent pendency.
  Sixth, the bill is designed to reduce litigation in district courts 
and make reexamination a viable, less-costly alternative to patent 
litigation by giving third-party requesters the option of inter-partes 
reexamination procedures (in addition to the current ex parte 
reexamination procedures). Under this optional procedure, the third 
party is afforded an expanded, although still limited, role in the 
reexamination process through an opportunity to respond, in writing, to 
an action by a patent examiner when, but only when, the patent owner 
does so. These expanded rights for third parties are carefully balanced 
with incentives to prevent abusive reexamination requests, including 
broad estoppel provisions and severe restrictions on appeals.
  Finally, the bill will make a number of miscellaneous, yet important 
patent reforms.
  In short, the provisions of this bill now enjoy widespread bipartisan 
and bicameral support. The total package of changes that have been made 
to this legislation over the past several years are both responsive and 
comprehensive. The time to act on this package of reforms is now. 
Intellectual property, and patents in particular, are among our 
nation's greatest assets in this technology-dominated age. Our patent 
system must be equipped to handle the challenges of the new millennium 
and to protect our nation's creators into the next century. The 
strength of our economy depends upon it. If we do not, we will lose our 
edge in the ongoing race for technological and economic leadership in 
the world economy.
  In the most simple of terms, we must have a patent system that is 
state of the art. The bill Senator Leahy and I are introducing today 
will help to provide just that. I hope that my colleagues will join 
with me in giving their overwhelming support for this measure.
  Mr. LEAHY. Mr. President, I am very pleased to join with Senator 
Hatch in introducing the ``American Inventors Protection Act of 1999,'' 
which I hope can be enacted into law this year.
  This patent bill is important to America's future. I have heard from 
inventors, from businesses large and small, from hi-tech to low-tech 
firms that this bill will give American inventors and businesses an 
improved competitive edge now enjoyed by many European countries.
  We should be on a level playing field with them.
  This bill reduces patent fees for only the second time in history. 
The first time that was done was also in a Hatch-Leahy bill passed by 
the Senate in the 105th Congress.
  All the concepts in this bill--such as patent term guarantees, 
domestic publication of patent applications filed abroad, first 
inventor defense--have been thoroughly examined. Indeed, they have been 
included in several bills that the Congress has carefully studied.
  Chairman Hatch and I have worked closely on this bill. I believe that 
we can get a good patent bill to the President before we go out of 
session this year. I look forward to working with the House on these 
issues and appreciate the hard work and careful crafting that went into 
their bill--H.R. 1907.
  I wish to point out that the Senate Judiciary Committee last year 
also developed a strong bill--S. 507--which contained many of the same 
concepts and approaches found in H.R. 1907 and S. 1798.
  It is long past time for the Senate to consider and pass this patent 
reform legislation. Our patent bill will be good for Vermont, good for 
Utah and every state in the Nation, good for American innovators of all 
sizes, and good for America.
  We will be working with the Administration, the full Senate and with 
the House to move this bill along quickly. I hope we can keep this 
bipartisan coalition together because otherwise this bill will die, as 
past efforts have.
  The patent bill will reform the U.S. patent system in important ways.
  It will reduce legal fees that are paid by inventors and companies; 
eliminate duplication of research efforts and accelerate research into 
new areas; increase the value of patents to inventors and companies; 
and facilitate U.S. inventors and companies' research, development, and 
commercialization of inventions.
  In Vermont, we have a number of independent inventors and small 
companies. It is, therefore, especially important to me that this bill 
will be one that helps them as well as the larger companies in Vermont 
like IBM.
  Over the past several years, Congress has held eight Congressional 
hearings with more than 80 witnesses testifying about the various 
proposals incorporated in the bill. Republican and Democratic 
Administrations alike, reaching back to the Johnson Administration, 
have supported these similar reforms.
  I also thank Secretary Daley and the administration for their 
unflagging support of effective patent reform. I also know that they 
worked closely with the House on H.R. 1907. I will submit a more 
detailed statement on S. 1798 before we proceed to Senate 
consideration.
                                 ______