[Congressional Record Volume 147, Number 47 (Tuesday, April 3, 2001)]
[Extensions of Remarks]
[Pages E518-E519]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 INTRODUCTION OF H.R. 1332: THE BUSINESS METHOD PATENT IMPROVEMENT ACT 
 OF 2001, H. R. 1333: THE PATENT IMPROVEMENT ACT OF 2001, AND H. RES. 
                    110: THE PTO FUNDING RESOLUTION

                                 ______
                                 

                         HON. HOWARD L. BERMAN

                             of california

                    in the house of representatives

                         Tuesday, April 3, 2001

  Mr. BERMAN. Mr. Speaker, I rise to discuss three pieces of 
legislation I have introduced today.
  Last fall, Representative Rick Boucher and I introduced H.R. 5364, 
the Business Method Patent Improvement Act of 2000. Upon introduction 
of that bill, I made it clear that my primary motivation was protection 
of intellectual property. I believe the protection of intellectual 
property is critical both to innovation and to the economy, and will be 
advanced by assuring the highest level of quality for U.S. patents.
  With these same goals in mind, today Representative Boucher and I 
introduce three new bills. The Business Method Patent Improvement Act 
of 2001 is very similar to last year's version, but includes several 
significant changes in response to legitimate criticisms of last year's 
bill. The Patent Improvement Act of 2001 responds to suggestions by 
many parties that certain provisions in last year's bill should apply 
broadly to all patentable inventions. Finally, the PTO funding 
Resolution ensures that all PTO fees will be used to fund the PTO and 
the vital services it provides.
  These bills represent a starting point, not an end point, for 
discussion of legislative solutions to patent quality concerns. The 
multitude of comments received on last year's bill demonstrate that 
these problems are difficult and, as yet, present no clear-cut answers. 
Indeed, reactions to last year's bill exhibited few consistent 
patterns, with members of the same industries often expressing 
diametrically opposed viewpoints. What was clear, however, was that 
introduction of specific legislation proved helpful at focusing the 
discussion. Thus, we introduce these bills to initiate that discussion 
anew in the 107th Congress.
  The Business Method Patent Improvement Act of 2001 requires the PTO 
to publish all business method patent applications after 18 months. In 
conjunction with the publication provision, it creates opportunities 
for the public to present prior art or public use information before a 
business method patent issues. It establishes an administrative 
``Opposition'' process where parties can challenge a granted business 
method patent in an expeditious, less costly alternative to litigation. 
The bill lowers the burden of proof for challenging business method 
patents, requires an applicant to disclose its prior art search, and 
finally, creates a rebuttable presumption that a business method 
invention constituting a non-novel computer implementation of a pre-
existing invention is obvious, and thus, not patentable.
  The Patent Improvement Act of 2001 would establish an administrative 
``Opposition'' process where parties can challenge any granted patent 
in an expeditious, less costly alternative to litigation. The bill 
creates a rebuttable presumption that any invention constituting a non-
novel
  The PTO funding Resolution creates a point of order regarding any 
legislation that does not allow the PTO to spend all fees collected in 
the year in which they are collected.
  Some may consider the coordinated introduction of these three bills 
an unusual approach. Indeed, it will be noted that the first two bills 
overlap--that is, they contain many of the same provisions applied to 
different, but overlapping types of patents. We have chosen this 
approach because we consider all the bills to be improvements over 
current law, but are not sure which bills will generate sufficient 
support to be enacted this Congress. Further, we consider the PTO 
funding Resolution to be a necessary element of any plan to improve 
patent quality, but recognize that such legislation will generate its 
own debate.
  I have decided to forge ahead through these thorny issues because my 
concerns about the quality and effects of business method patents have 
not dissipated or diminished during the past year. The pace of business 
method patenting has picked up dramatically. While in FY 1999, the PTO 
received approximately 2650 business method patent applications, in FY 
2000 it received 7800 such applications. The PTO reports that the first 
quarter of FY 2001 has seen business method applications running 18-20% 
higher than in Q1 of FY 2000. I commend the PTO for reducing the 
proportion of business method patents granted through its Business 
Method patent Initiative, but there is some concern that this 
Initiative will extend patent pendancies further.
  We will not know what business methods are claimed in these 
applications for at least eighteen months after filing, and in all 
probability for at least twenty-six months. Some consider this a 
problem in itself, as technology businesses attempting to move at 
Internet speed may invest enormous sums of ever-dwindling venture 
capital only to find important elements of their business plan covered 
by a patent. This is an unfortunate by-product of the patent system, 
but I do not believe we should address it by prohibiting patents on 
business methods or requiring publication upon filing.
  Of greater concern to me is assuring the highest quality of business 
method patents being issued. Unfortunately, those business methods 
patents of which we are aware do

[[Page E519]]

not give us much confidence about the quality of those yet to be 
published. Last year, I cited as examples of concern a patent granted 
for a method of allowing automobile purchasers to select options for 
cars ordered over the Internet, and a patent that purportedly covered 
the selling of music and movies in electronic form over the internet. 
This year I add to that list a patent for a method of operating a 
fantasy football league over the Internet, a patent covering incentive 
programs using the Internet, a patent covering the use of targeted 
banner advertising over the internet, and a patent covering a system 
for previewing music samples over the internet.
  I do not pretend to know whether any of these patents are valid or 
invalid. However, many respectable parties, including patent lawyers, 
patent-holding technology companies, and academics, have expressed 
serious concerns about the quality of such patents.
  I would like to see a patent system that subjects these patents to 
more rigorous review, and thus provide greater assurance that they are 
valid when issued. If there may be ways to improve the prior art 
available to patent examiners before they issue a patent, we should 
explore them. If there are ways to decrease the costs of challenging 
bad patents, we should enact them into law. And if retention of fees 
will result in better trained, more experienced examiners with access 
to better resources, we should let the PTO keep the fees.
  As I said last Congress: ``The bottom line in this: there should be 
no question that the U.S. patent system produces high quality patents. 
Since questions have been raised about whether this is the case, the 
responsibility of Congress is to take a close look at the functioning 
of the patent system in this very new, and rapidly growing area of 
patenting.''

                          ____________________