[Congressional Record Volume 151, Number 75 (Wednesday, June 8, 2005)]
[Extensions of Remarks]
[Pages E1160-E1161]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         THE PATENT ACT OF 2005

                                 ______
                                 

                         HON. HOWARD L. BERMAN

                             of california

                    in the house of representatives

                        Wednesday, June 8, 2005

  Mr. BERMAN. Mr. Speaker, today I join Representative Smith (TX), 
Boucher, Goodlatte, Lofgren and Schiff in introducing the Patent Act of 
2005 (PA Act). Introduction of this legislation follows the 
acknowledgment by multiple sources that the current patent system is 
flawed. The release of the Patent and Trademark Office's Twenty-First 
Century Strategic Plan, the Federal Trade Commission's report entitled 
``To Promote Innovation: the Proper Balance of Competition and Patent 
Law and Policy,'' the National Research Council's compilation of 
articles ``A Patent System for the 21st Century'' and an economic 
analysis of patent law in a book titled Innovation and Its Discontents 
all speak to the challenges facing the patent system today. These 
accounts make a number of recommendations for increasing patent quality 
and ensuring that patent protection promotes, rather than inhibits, 
economic growth and scientific progress. Consistent with the goals and 
recommendations of those reports, the PA Act contains a number of 
provisions designed to improve patent quality, deter abusive practices 
by unscrupulous patent holders, and provide meaningful, low-cost 
alternatives to litigation for challenging the patent validity. 
Additionally, the PA Act begins to harmonize U.S. patent law with those 
of foreign countries.
  I firmly believe that robust patent protection promotes innovation. 
However, I also believe that the patent system is strongest, and that 
incentives for innovation are greatest, when patents protect only those 
patents that are truly inventive. When functioning properly, the patent 
system should encourage and enable inventors to push the boundaries of 
knowledge and possibility. If the patent system allows questionable 
patents to issue and does not provide adequate safeguards against 
patent abuses, the system may stifle innovation and interfere with 
competitive market forces.

  This bill represents our latest perspectives in an ongoing discussion 
about legislative solutions to patent quality concerns, patent 
litigation abuses and patent harmonization. We have considered the 
multitude of comments received on prior patent bills as well as the 
more recent subcommittee print. We acknowledge that the problems are 
difficult and, as yet, without agreed-upon solutions. It is clear, 
however, that introduction of this legislation will focus and advance 
the discussion. It is also clear that the problems with the patent 
system have been exacerbated by a decrease in patent quality and an 
increase in litigation abuses. With or without consensus, Congress must 
act soon to address these problems.
  Thus, we introduce this bill in the beginning of this Congress with 
the intent of framing the debate and with every intention of passing 
legislation in the 109th Congress.
  The bill contains a number of initiatives designed to improve patent 
quality, limit litigation abuses, and harmonize U.S. patent law with 
those of foreign countries, thereby ensuring that patents are positive 
forces in the marketplace. I will highlight a number of them below.
  Section 3 alters the conditions for patentability. Currently, the 
U.S. grants patents to whomever is ``first to invent.'' The bill amends 
this standard so that the ``first inventor to file'' is entitled to the 
ownership of a patent. This distinction encourages inventors to file 
immediately, enabling the invention to enter the public realm more 
quickly. Additionally, this modification will bring U.S. patent laws 
into harmony with the patent law in many foreign countries.

  Section 6 addresses the unfair incentives currently existing for 
patent holders who indiscriminately issue licensing letters. Patent 
holders frequently assert that another party is using a patented 
invention and for a fee, offer to grant a license for such use. Current 
law does little to dissuade patent holders from mailing such licensing 
letters. Frequently these letters are vague and fail to identify the 
patent being infringed and the manner of infringement. In fact, the law 
tacitly promotes this strategy since a recipient, upon notice of the 
letter, may be liable for treble damages as a willful infringer. 
Section 6 addresses this situation by ensuring that recipients of 
licensing letters will not be exposed to liability for willful 
infringement unless the letter specifically states the acts of 
infringement and identifies each particular claim and each product that 
the patent owners believes have been infringed.
  Section 7 is designed to address the negative effect on innovation 
created by patent ``trolls.'' We have learned of countless situations 
in which patent holders, making no effort to commercialize their 
inventions, lurk in the shadows until another party has invested 
substantial resources in a business or product that may infringe on the 
unutilized invention. The patent troll then steps out of the shadows 
and demands that the alleged infringer pay a significant licensing fee 
to avoid an infringement suit. The alleged infringer often feels 
compelled to pay almost any price named by the patent troll because, 
under current law, a permanent injunction issues automatically upon a 
finding of infringement. Issuance of a permanent injunction would, in 
turn, cause the alleged infringer to lose the substantial investment 
made in the allegedly infringing business or product.

  While we may question their motives, we do not question the right of 
patent trolls to sue for patent infringement, obtain damages, and seek 
a permanent injunction. However, the issuance of a permanent injunction 
should not be granted automatically upon a finding of infringement. 
Rather, when deciding whether to issue a permanent injunction, courts 
should weigh all the equities, including for example, the ``unclean 
hands'' of the patent trolls, the failure to commercialize the patented 
invention, the social utility of the infringing activity, and the loss 
of invested resources by the infringer. After weighing the equities, 
the court may still decide to issue a permanent injunction, but at 
least the court will have ensured that the injunction serves the public 
interest. Section 7 accomplishes this goal.
  Section 8 allows the Director of the USPTO to establish regulations 
limiting the circumstances under which a patent applicant may file a 
continuation application. Unfortunately, current practice guiding 
continuation applications is prone to abuse. There are limited 
restrictions specifying the circumstances under which an applicant can 
broaden the claims described in the patent application and still retain 
the original filing date. This practice may enable the applicant to 
claim the priority rights to another's invention by appropriating that 
new invention as an expansion of the claims in the original 
application. By authorizing the Director to change current policy on 
continuation applications, the bill tasks the PTO with tackling current 
abuses in the application process.
  Section 9 creates a post-grant opposition procedure. In certain 
limited circumstances, opposition allows parties to challenge a granted 
patent through an expeditious and less costly alternative to 
litigation. In addition, Section 9 provides a severely needed fix for 
the inter partes re-examination procedure, which provides third parties 
a limited opportunity to request that the PTO Director re-examine an 
issued patent. The current limitations on the inter partes re-
examination process restricts its utility so drastically that it has 
been employed only a handful of times. Section 9 increases the utility 
of this re-examination process by relaxing its estoppel provisions. 
Further, it expands the scope of the re-examination procedure to 
include redress for all patent applications regardless of when filed.

  Section 10 permits patent examiners, to consider certain materials 
within a limited time frame submitted by third parties regarding a 
pending patent application. Allowing such third party submissions will 
increase the likelihood that examiners are cognizant of the most 
relevant ``prior art,'' thereby constituting a front-end solution for 
strengthening patent quality.
  Other provisions include an expansion of prior user rights, 
publication of all application at 18 months, limitation on the 
calculation of damages to the value of the invention, and changes to 
the duty of candor defense and elimination of the best mode 
requirement.
  When considering these provisions together, we believe that this bill 
provides the comprehensive reform necessary for the patent system to 
achieve its primary goal of promoting innovation.
  The Chairman of the Subcommittee on Courts, the Internet and 
Intellectual Property,

[[Page E1161]]

Mr. Smith, deserves credit for bringing these issues to the forefront 
through numerous hearings on patent quality. In addition, I would 
especially like to thank Congressman Boucher with whom I have been 
working on patent reform for the past few years. Also deserving of 
thanks are the many constitutional scholars, policy advocates, private 
parties, and government agencies that continue to contribute their 
time, thoughts, and drafting talents to this effort. I am pleased that, 
finally, at least a consensus has emerged among the various 
collaborators in support of the basic ``post grant opposition'' 
approach embodied in the legislation. This bill is the latest iteration 
of a process we started over four years ago.
  Though we developed this bill in a highly collaborative and 
deliberative manner, I do not want to suggest that it is a ``perfect'' 
solution. Thus, I remain open to suggestions for amending the language 
to improve its efficacy or rectify any unintended consequences.
  As I have said previously, ``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.'' High patent quality is essential to continued 
innovation. Litigation abuses, especially those which thrive on low 
quality patents, impede the promotion of the progress of science and 
the useful arts. Thus, we must act during the 109th Congress to 
maintain the integrity of the patent system.

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