[Congressional Record Volume 153, Number 130 (Wednesday, September 5, 2007)]
[House]
[Pages H10146-H10154]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          AMERICAN PATENT LAW

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 18, 2007, the gentleman from California (Mr. Rohrabacher) is 
recognized for 60 minutes.
  Mr. ROHRABACHER. Mr. Speaker, let me just note for my colleague who 
just finished his very, very appropriate remarks concerning the passing 
of Jennifer Dunn, I have three children at home, little Tristen and 
Anika and Christian; and as a parent, I am very grateful to Jennifer 
Dunn for the leadership that she provided in helping make our country 
safer for our children, the children that we all love so much.
  And when we talk about the future and I think about my children, we 
have to think that whatever we do here, we are creating a better world, 
and it is a better world for our children because they are going to be 
around a lot longer than we are.
  Well, Mr. Speaker, on Friday the House will consider legislation that 
will have a huge impact on the well-being of the American people and, 
yes, the well-being of America's children as they get older. Yet this 
bill will have a great deal to do with whether or not our children have 
good jobs and live in a secure country.
  This bill is receiving very little attention. Very powerful interest 
groups are trying to sneak this one by us, and if they succeed, they 
will be enriched and the American people will be worse off.
  So what's new? Well, what's new is that this special interest foray 
is not aimed at just adding an earmark or changing a clause in the tax 
law to help a specific company. It is a maneuver to dramatically 
diminish a constitutionally protected right that has served our Nation 
well. It is a fundamental change in a system that has been in place 
since our country's founding. That is a lot different than the special 
interest forays in the past just aimed at changing little elements of 
the law for their own benefit.
  We are talking about fundamentally altering America's patent system. 
Now, if H.R. 1908, the bill in question, passes, there will be 
tremendous negative long-term consequences not just for America's 
inventors but for the country.
  Now, patent law is thought to be so complicated and so esoteric that 
most people tune out once they realize that that is the subject of a 
discussion. We have probably lost people right now who are reading the 
Congressional Record or watching C-SPAN or our colleagues who are 
watching this from their offices. But the technology that we are 
talking about is vitally important to the well-being of our country. 
Patent law is not so complicated and esoteric because it is that vital 
to the well-being of our country. Our technological genius and the laws 
protecting and promoting that genius have been at the heart of 
America's success as a Nation.
  America's technological edge has made American workers competitive 
with low-priced laborers overseas. It has provided the American people 
with the highest standard of living in the world, and it enabled our 
country to sail safely through the troubled waters of world wars and 
international threats. It is American technology that has made all the 
difference for our country's security and our people's quality of life.
  Protecting individual rights, even for the little guy, has been the 
hallmark of our Nation. Patent rights, the right to one's own creation, 
which is what we are talking about when we talk about patent rights, 
have been considered a fundamental part of our system since our 
country's founding. In fact, Benjamin Franklin, Thomas Jefferson, 
George Washington, and others of our Founding Fathers were not the only 
people who believed in freedom and democracy. They believed in 
technology and progress.
  Visit Monticello and see what Thomas Jefferson did with his time 
after he penned the words to the Declaration of Independence and after 
he served as President of the United States. He went back to Monticello 
and spent his time inventing gadgets and pieces of equipment that would 
lift the burden from the shoulders of labor. And, by the way, Jefferson 
was America's first Patent Commissioner.
  And then there is Ben Franklin, the inventor of the bifocal and the 
potbellied stove. Before Benjamin Franklin people could only heat 
themselves at a fireplace and project heat in a room only from a 
fireplace. And Benjamin Franklin invented the potbellied stove, which 
started the whole concept of modern heating. This grand old man, who 
was present at the Declaration of Independence and the writing of our 
Constitution, once lamented his own death not by talking about the fear 
of the unknown and dying but by lamenting that he would not be able to 
see the great human progress that was bound to happen, the 
technological advances that would be the byproduct of a free people in 
the United States of America.
  Our Founding Fathers believed that with freedom and with technology, 
we could increase the standard of living of all our people, not just 
the elite. Our founders were visionaries, not just about political 
structures but about a way of life for ordinary people and the future 
of humankind. Those patriots who laid the foundation of our country 
wrote into the Constitution a provision they firmly believed was a 
prerequisite to progress and freedom.

  Now, last night after I gave a similar speech on the floor, a 
teacher, a so-called teacher of history, called my office to complain, 
``There is nothing about copyrights or patents in our Constitution.'' I 
don't know how long he has been a teacher. He said he has been teaching 
20 years. But my staff member took out a copy of the Constitution and 
read to him article I, section 8 of the Constitution, which states in 
part: ``Congress shall have the power to promote the progress of 
science and useful arts, by securing for limited times to authors and 
inventors the exclusive right to their respective writings and 
discoveries.'' They held the right of owning one's ideas and creations 
and inventions as equal to the rights of speech, religion, and 
assembly. In fact, in the body of the Constitution before the Bill of 
Rights, the word ``right'' is only used in reference to patents and 
copyrights. So that shows you the priority that our Founding Fathers 
placed on the technological development that would create the dream of 
America that they felt that they were establishing here on this 
continent.
  In short, we have had the strongest patent protection in the world, 
and that is why in the history of mankind there has never been a more 
innovative and creative people. And it has been no accident that 
Americans are the world's great inventors, scientists, and 
technologists. No, it is not just the diversity of our people, but 
diversity certainly plays a role and we can be proud of that and it has 
contributed to our capabilities. It wasn't just our natural resources, 
although we were blessed with vast territory and natural resources. Our 
innovation and progress can be traced to our law from the very 
beginning. It was the intent of those who wrote these protections into 
our fundamental law, into the Constitution in those earliest days of 
our Republic, and it was their vision of optimism that motivated them 
to write this into the law. Our history is filled with stories of 
technological achievement that flowed from the fact that we had 
established a country that thought that the rights of ownership of what 
you create is just as important as your right to speak or the right to 
worship God as you so choose.
  We found people who emerged among us, Eli Whitney, for example, who 
not only invented the cotton gin but who invented the interchangeable 
parts for manufacturing. This revolutionized industrial production and 
dramatically uplifted the well-being of millions of people and, yes, 
people who were yet to be born.
  Cyrus McCormick invented the reaper. Before that the food supply for 
our

[[Page H10147]]

people was limited. People went to bed hungry, large numbers. Cyrus 
McCormick invented a reaper that made sure that every person would have 
bread enough to eat, that children would be fed.
  Samuel Morse invented the telegraph, which eventually led, of course, 
to the telephone and revolutionized a whole idea of communications 
throughout the world. Thomas Edison, the light bulb and so many other 
inventions.
  Interestingly, black Americans were prolific inventors even at times 
when they were terribly discriminated against because patent law was 
one law that was justly applied to them for the most part, although 
there were issues of discrimination even in that area. But compared to 
the other areas where they were totally discriminated against, there 
was some leeway in our society. And black inventors emerged, as is 
predictable, because that was their avenue to rise up. Men like Jan 
Matzeliger, who invented a machine that was used in shoe manufacturing 
that dramatically changed the shoe industry to the point that the 
average person after Matzeliger's invention could afford to have more 
than one pair of shoes in his life.

                              {time}  1930

  Before that they were so expensive, people had one pair of shoes that 
they repaired for the rest of their lives.
  George Washington Carver, another great black inventor, a great 
scholar, a world-respected scientist, and so many more like him. We are 
proud that our history advanced technologies because we know, as 
Americans, as we have always known, that through our country's history, 
that the inventions that we're talking about produced more wealth with 
less labor, thus increased the standard of living of all people and the 
opportunity for all people who are part of our country's brotherhood 
and sisterhood to share in the benefits, in the fruits of this free 
society.
  And yes, we have had problems in the past and there was 
discrimination against black Americans, obviously. Slavery was a blight 
on our system, a sin. But as we have tried to produce more wealth, and 
the more wealth that has been produced and the more opportunity that's 
been available, the easier it's been for our society to try to correct 
those terrible crimes and sins of the past. And black Americans have 
done their share, more than their share, in producing these inventions 
that have helped our country.
  By and large, the inventors were not part of large corporate 
structures. They were, by and large, little guys, people who didn't 
have vast companies behind them, which leads us, of course, to the 
Wright brothers.
  We remember the Wright brothers, men with little education that 
worked in a bicycle shop. They owned a bicycle shop and ended up 
inventing something a little more than 100 years ago that they were 
told was impossible to invent, impossible to build by the experts. They 
had no huge corporate structures behind them, so thus they didn't have 
a board of directors that prohibited them from their research or 
directed them in a way that would have prevented them from being 
successful. They went forward, they invested their time, and they 
invested their limited resources. And they changed the future of 
humankind forever as they took mankind's feet off the ground and put us 
on the road to the heavens. The patent issued to the Wright brothers is 
perhaps one of the most significant documents in the history of all 
mankind.
  Let us understand that it was not raw muscle nor was it just hard 
work that built our country. People work hard all over the world and 
live in abject poverty. It is not our vast territory or natural 
resources. It was, instead, our ingenuity, our intelligence, and yes, 
the legal system that was established to protect that ingenuity and the 
intelligence and the creativity of our people.
  We treated intellectual property, the creation of new technologies, 
as we treated property and personal rights and political rights. They 
were held in the same esteem in the United States of America. And that 
is what America is all about, that every person's rights were to be 
respected and protected. As I say, we didn't always live up to that 
dream, but it was our standard. We held those high standards and it 
served us well. Now we have people trying to undermine those standards 
for personal gain.
  Today we face a great historic challenge, and this challenge comes 
exactly at a time when our country faces economic threats from abroad 
as never before. We must prevail over our economic competitors. They 
are at war with the well-being of the American people. We must win, or 
our country and our people will lose. My children, Anika, Tristen and 
Christian, they will lose. Your children, all of our children will have 
worse lives in the future if we lose this battle, this economic battle 
that we are fighting today. Yes, our people will suffer.
  Future generations could well see their standard of living decline, 
the opportunity of their young people vanish, as well as the safety and 
strength of our country, which all leads us to the legislation that 
will be considered on Friday. Very powerful corporate interests, mainly 
billionaires in the electronics industry and the financial industry, 
are on the verge of fundamentally changing the U.S. patent system, and 
it will have dire consequences for the American people. So our 
colleagues need to pay attention.
  Let us be clear and specific; the legislation in question, H.R. 1908, 
will dramatically weaken the patent rights of ordinary Americans and 
make us even more vulnerable to the outright theft of American-made 
technology and innovative ideas.
  The purpose of the legislation is to weaken the patent system. Those 
people in the electronics industry and the financial industry do not 
want to pay royalties; they do not want to be hampered by watching out 
for and respecting the ownership rights of our inventors anymore.
  This legislation is a slow-motion destruction of the patent system. 
No one will be candid enough to admit it, but the real reason for this 
and past forays against the patent system is aimed at the destruction 
of the system; it is not to make it better. No one is going to admit 
it. They're going to say they're here trying to reform the system. It 
is not aimed at that; it is aimed at destroying the system. The word 
``reform'' is being used as a cover just as it was a cover in the 
immigration battle. We all remember that. People talked about 
comprehensive immigration because the real purpose, as we all know, was 
amnesty in that bill that was making its way through Congress. 
Everybody knows that. And amnesty would have brought tens of millions 
more here, at least that was debatable. Well, we should have talked 
about it and debated that issue. Instead, we heard about comprehensive 
reform as if it was going to solve a problem and make the immigration 
influx into our country, bring it under control. No. The purpose of 
that bill was amnesty.
  When they talk about reform of our patent system, what they're really 
talking about is destroying the patent system and weakening its 
protection. They couldn't pass it otherwise.
  There are some real problems that need to be solved with our patent 
system. Unfortunately, the legislation making its way through the 
system does not correct the problems, just as the comprehensive amnesty 
bill or comprehensive immigration bill didn't solve the problems. The 
problems are being used as an excuse to act. But the proposed changes 
are aimed at a totally different and indefensible goal. It is a power 
grab, a classic power grab where we are not having an honest debate, an 
honest exchange of ideas with the American people.
  So we readily admit, those of us who are in opposition to the bill 
that will come to the floor Friday, H.R. 1908, we admit that we need 
patent legislation, legislation that speeds the examination and 
issuance of patents, helps the process, the examination process and the 
issuance process, provides training and compensation for patent 
examiners. We need legislation that does just that. We need legislation 
that will protect our inventors against theft, especially against 
foreign theft, where our own creative genius of our people is being 
taken and stolen by foreigners and then put into their manufacturing to 
outdo the United States, to put us out of business; our own creative 
genius used against us. Yes, we need to fix these problems with the 
patent.
  The bill has this goal, and supposedly they talk about it. And if 
that was the

[[Page H10148]]

goal, it would be welcomed. Well, it also has been a straw man to 
justify this revolutionary altering of our patent system, of course. 
What we need, of course, is to correct the problems in the current 
system, not to destroy the system.
  This comprehensive bill that we face, interestingly enough, is 
similar to a bill that came up 10 years ago that we managed, with 
public outcry, just like the outcry that stopped the immigration bill 
in the Senate. We stopped a bill like this 10 years ago. I called it 
the ``Steal American Technologies Act.'' Well, the same group of 
people, the same interest group that tried to push that is back. And so 
if you take a look at this bill, we might call it the ``Steal American 
Technologies Act Part 2.''
  So just what does H.R. 1908 do? First and foremost, it is designed, 
as I say, to weaken the patent protection of American inventors. So we 
support real reforms, but the proposed changes in H.R. 1908 will cause 
the collapse of the patent system that has sustained America for the 
past 200 years.
  The negative impact of the totality of this bill is reflected in the 
wide spectrum of opposition who are now mobilizing against it.
  For the Record, I would submit this list of those who are opposing 
H.R. 1908, and I would ask this to be included in the Record at this 
point.

  Organizations and Companies Which Have Raised Objections to Patent 
                        Legislation (H.R. 1908)

       Organizations and Companies Raising Objections to H.R. 
     1908, the Patent Reform Act of 2007: 3M, Abbott, Accelerated 
     Technologies, Inc., Acorn Cardiovascular Inc., Adams Capital 
     Management, Adroit Medical Systems, Inc., AdvaMed, Advanced 
     Diamond Technologies, Inc., Advanced Medical Optics, Inc., 
     Advanced Neuromodulation Systems, Inc., Aero-Marine Company, 
     AFL-CIO, African American Republican Leadership Council, 
     AIPLA--American Intellectual Property Law Association.
       Air Liquide, Air Products, ALD NanoSolutions, Inc., ALIO 
     Industries, Allergan, Inc., Almyra, Inc., AmberWave Systems 
     Corporation, American Conservative Union, American 
     Intellectual property Law, Association (AIPLA), American Seed 
     Trade, Americans for Sovereignty.
       Americans for the Preservation of Liberty, Amylin 
     Pharmaceuticals, AngioDynamics, Inc., Applied Medical, 
     Applied Nanotech, Inc., Argentis Pharmaceuticals, LLC, 
     Arizona BioIndustry Association, ARYx Therapeutics, Ascenta 
     Therapeutics, Inc., Association of University Technology 
     Managers (AUTM).
       Asthmatx, Inc., AstraZeneca, Aware, Inc., Baxa Corporation, 
     Baxter Healthcare Corporation, BayBio, Beckman Coulter, BIO--
     Biotechnology Industry Organization, BioCardia, Inc., BIOCOM, 
     Biogen Idec, Biomedical Association, BioOhio, Bioscience 
     Institute, Biotechnology Council of New Jersey.
       Blacks for Economic Security Trust Fund, BlazeTech 
     Corporation, Boston Scientific, Bridgestone Americas Holding, 
     Inc., Bristol-Myers Squibb, BuzzLogic, California Healthcare 
     Institute, California Healthcare Institute (The), Canopy 
     Ventures, Carbide Derivative Technologies, Cardiac Concepts, 
     Inc., CardioDynamics, Cargill, Inc., Cassie-Shipherd Group 
     (The), Caterpillar, Celgene Corporation, Cell Genesys, Inc., 
     Center 7, Inc., Center for Small Business and the 
     Environment, Centre for Security Policy, Cephalon, CheckFree, 
     Christian Coalition of America.
       Cincinnati Sub-Zero Products, Coalition for 21st Century 
     Patent Reform, Coalitions for America, CogniTek Management 
     Systems, Inc., Colorado Bioscience Association, Conceptus, 
     Inc., CONNECT, Connecticut United for Research Excellence, 
     Cornell University, Corning, Coronis Medical Ventures, 
     Council for America, CropLife America, Cryptography Research, 
     Cummins-Allison Corporation.
       Cummins Inc., CVRx Inc., Dais Analytic Corporation, 
     Dartmouth Regional Technology Center, Inc., Declaration 
     Alliance, Deltanoid Pharmaceuticals, Digimarc Corporation, 
     DirectPointe, Dow Chemical Company, Dupont, Dura-Line 
     Corporation, Dynatronics Co., Eagle Forum, Eastman Chemical 
     Company, Economic Development Center, Edwards Lifesciences, 
     Elan Pharmaceuticals, Inc., Electronics for Imaging, Eli 
     Lilly and Company, Ellman Innovations LLC, Enterprise 
     Partners Venture Capital, Evalve, Inc.
       Exxon Mobile Corporation, Fallbrook Technologies Inc., 
     FarSounder, Inc. Footnote.com.
       Gambro BCT, General Electric, Genomic Health, Inc., Gen-
     Probe Incorporated, Genzyme, Georgia Biomedical Partnership, 
     Glacier Cross, Inc., GlaxoSmithKline, Glenview State Bank, 
     Hawaii Science & Technology Council, HealthCare Institute of 
     New Jersey, HeartWare, Inc., Helius, Inc., Henkel 
     Corporation, Hoffman-LaRoche, Inc.
       iBIO, Imago Scientific Instruments, Impulse Dynamics (USA), 
     Inc., Indiana Health Industry Forum, Indiana University, 
     Innovation Alliance, Institute of Electrical and Electronics 
     Engineers (IEEE)-USA, InterDigital Communications 
     Corporation, Intermolecular, Inc., International Association 
     of Professional and Technical Engineers (IFPTE), Invitrogen 
     Corporation, Iowa Biotechnology Association, ISTA 
     Pharmaceuticals, Jazz Pharmaceuticals, Inc., Johnson & 
     Johnson, KansasBio, Leadership Institute, Let Freedom Ring, 
     Life Science Alley, LITMUS, LLC.
       LSI Corporation, Lux Capital Management, Luxul Corporation, 
     Maryland Taxpayers' Association.
       Masimo Corporation, Massachusetts Biotechnology Council, 
     Massachusetts Medical Device Industry Council, MassMEDIC, 
     Maxygen Inc., MDMA--Medical Device Manufacturer's 
     Association, Medical College of Wisconsin, MedImmune, Inc., 
     Medtronic, Merck, Metabasis Therapeutics, Inc., Metabolex, 
     Inc., Metacure (USA), Inc., MGI Pharma Inc., MichBio, 
     Michigan Small Tech Association, Michigan State University, 
     Millennium Pharmaceuticals, Inc., Milliken & Company, Mohr, 
     Davidow Ventures, Monsanto Company, Motorola.
       NAM--National Association of Manufacturers, 
     NanoBioMagnetics, Inc. (NBMI), NanoBusiness Alliance, 
     NanoInk, Inc., NanoIntegris, Inc., Nanomix, Inc., Nanophase 
     Technologies, NanoProducts Corporation, Nanosys, Inc., 
     Nantero, Inc., National Center for Public Policy Research, 
     Nektar Therapeutics, Neoconix, Inc., Neuro Resource Group 
     (NRG), Neuronetics, Inc., NeuroPace, New England Innovation 
     Alliance, New Hampshire Biotechnology Council, New Hampshire 
     Department of Economic Development, New Mexico Biotechnical 
     and Biomedical Association, New York Biotechnology 
     Association.
       Norseman Group, North Carolina Biosciences Organization, 
     North Carolina State University, North Dakota State 
     University, Northrop Grumman Corporation, Northwestern 
     University, Novartis, Novartis Corporation, Novasys Medical 
     Inc., NovoNordisk, NUCRYST Pharmaceuticals, Inc. NuVasive, 
     Inc., Nuvelo, Inc., Ohio State University, OpenCEL, LLC.
       Palmetto Biotechnology Alliance, Patent Cafe.com, Inc., 
     Patent Office Professional Association, Pennsylvania Bio, 
     Pennsylvania State University, PepsiCo, Inc., Pfizer, PhRMA--
     Pharmaceutical Research and Manufacturers of America, 
     Physical Sciences Inc., PointeCast Corporation, Power 
     Innovations International, PowerMetal Technologies, Inc., 
     Preformed Line Products, Procter & Gamble, Professional 
     Inventors' Alliance, ProRhythm, Inc., Purdue University, Pure 
     Plushy Inc., QUALCOMM Inc.
       QuantumSphere, Inc., QuesTek Innovations LLC, Radiant 
     Medical, Inc., Rensselaer Polytechnic Institute, Research 
     Triangle Park, NC, Retractable Technologies, Inc., 
     RightMarch.com, S & C Electric Company, Salix 
     Pharmaceuticals, Inc., SanDisk Corporation, Sangamo 
     Biosciences, Inc., Semprius, Inc., Small Business Association 
     of Michigan--Economic Development Center, Small Business 
     Exporters Association of the United States.
       Small Business Technology Council, Smart Bomb Interactive, 
     Smile Reminder, SmoothShapes, Inc., Solera Networks, South 
     Dakota Biotech Association, Southern California Biomedical 
     Council, Spiration, Inc., St. Louis University, Standup Bed 
     Company (The), State of New Hampshire Department of Resources 
     and Economic Development, Stella Group, Ltd., StemCells, 
     SurgiQuest, Inc.
       Symyx Technologies, Inc., Tech Council of Maryland/MdBio, 
     Technology Patents & Licensing, Tennessee Biotechnology 
     Association, Tessera, Inc., Texas A&M, Texas Healthcare, 
     Texas Instruments, Three Arch Partners.
       United Technologies, University of California System, 
     University of Illinois, University of Iowa, University of 
     Maryland, University of Michigan, University of Minnesota, 
     University of New Hampshire, University of North Carolina 
     System, University of Rochester, University of Utah, 
     University of Wisconsin-Madison, US Business and Industry 
     Council, US Council for International Business.
       USGI Medical, USW--United Steelworkers, Vanderbilt 
     University and Medical Center, Virent Energy Systems, Inc., 
     Virginia Biotechnology Association, Visidyne, Inc., 
     VisionCare Opthamalogic Technologies, Inc., Washington 
     Biotechnology & Biomedical Association, Washington 
     University, WaveRx, Inc.
       Wayne State University, Wescor, Inc., Weyerhaeuser, Wilson 
     Sonsini Goodrich & Rosati, Wisconsin Alumni Research 
     Foundation (WARF), Wisconsin Biotechnology and Medical Device 
     Association, Wyeth.

  This list includes biotech industries, the pharmaceutical industry, 
small businesses, labor unions, universities, patent examiners, and of 
course inventors. And that's just a very small part of the list, as you 
will see with those people reading the Congressional Record.
  And why are so many of these people, why are such a large number of 
people opposed to it? Perhaps the easiest to understand of why people 
are against this bill is the issue of disclosure. In this bill, 
disclosure is called ``publication.'' From the time of the founding of 
our country until recent years it was mandated by our law that every 
patent

[[Page H10149]]

application would be held confidential until the patent was issued. In 
fact, if a patent examiner left out some information about a patent 
application, they could end up in jail. It was a felony. Well, this 
bill is going to change all of that.
  We have had a system that's been dramatically different from the rest 
of the world in this confidentiality, and it was this element that has 
been a major success for us. Yet in the legislation, H.R. 1908, as well 
as the legislation we beat 10 years ago, that's one of the first things 
they're trying to do is end the confidentiality. In fact, this bill, 
H.R. 1908, at this point eliminates the right of confidentiality for 
American inventors. H.R. 1908 would mandate the publication of all 
patent applications 18 months after the patent is applied for, whether 
or not the patent has been granted. Is everybody getting that? This 
bill will mandate that the people of India and China and Korea and 
elsewhere will have all of the details of our patent applications, our 
most cutting-edge secrets, before the patent is issued. It will be on 
the Internet.
  Now, let's look at the numbers. 89,000 American patents were issued 
by the Patent Office last year; 32 percent of them went to small 
business or those companies who employ less than 500 employees. Twenty 
percent of U.S. origin patents, 20 percent of the patents chose to opt 
for the current provision of law that will prevent their application 
from being published before the patent is issued. So right now they 
have a right to opt for that because if people that apply for 
international patents, their patent is published after 18 months. But 
we have 20 percent of the U.S. origin patents opted not to permit their 
patent application to be published after 18 months. Last year, that 
means 20,000 inventors, about two-thirds of all small business 
inventors, chose to keep their patent secret and keep it away from the 
prying eyes of China, Japan, Korea, India and others who would steal 
their new innovations.
  And you don't have to take my word that these countries want the bill 
passed for sinister purposes. Just look at this quote from the Economic 
Times of India dated July 23, 2007. Listen to this, and I quote, ``A 
crucial bill making its way through the U.S. Congress is set to give 
new inexpensive options for the Indian drug makers to attack the 
patents that give monopoly rights to the top-selling multinational 
corporation brands in the largest pharmaceutical market.'' Did you get 
that? That means they're waiting so that our pharmaceutical companies 
can invest hundreds of millions of dollars to try to develop a new 
drug, and they know they're going to get it. The Indians already are 
saying it's an inexpensive option for the Indian drug makers because 
they're going to be able to take that information and get more drugs on 
the market there before our own people are able to get those drugs, and 
the hundreds of millions of dollars of research of our companies will 
be just stolen.
  That's why the pharmaceutical industry is against this bill. It is 
estimated that already at this time the U.S. economy loses $250 billion 
a year from global intellectual property theft. This bill would double 
or triple that loss, and in the long run, equip our economic 
adversaries with what they need to compete with us and to drive 
Americans out of business. Got that? Our own technology being used to 
destroy American jobs.
  It's our technology and our technological advancement that has let 
American workers compete with low-price workers overseas. Now they're 
going to change our laws because certain elements in our high-tech 
industries, meaning the electronics industry and the financial 
industry, do not want to pay royalties to our inventors; that we're 
going to provide this information to the rest of the world so they can 
steal it and use it against us. Doesn't sound like anybody's watching 
out for the interests of the American people.
  Well, it should be easy for everyone to understand that part of the 
bill. And, in fact, the authors of the bill, even though they stuck to 
this, they put it in the bill originally. And 10 years ago they tried 
to push this same thing. They now say they're going to try to amend the 
bill so that provision isn't as tough.

                              {time}  1945

  Well, what about the other provisions of the bill? Even if this 
provision comes out, because they know it is just too easy to 
understand how horrible that would be for America, the other provisions 
are just as bad. It is just that they are harder to understand.
  So if the publication requirement comes out, people should understand 
that that, too, is part of a strategy to get the rest of the bill in 
which would undermine America's inventors. Those pushing H.R. 1908 want 
China, Japan, Korea and India and others to know every detail of 
developing technologies and our creative ideas, even before the patents 
have been issued. So we understand, this will facilitate that. That is 
pretty easy to see when you are talking about giving them all the 
information.
  Just as bad, however, this bill opens up new avenues of attack for 
those foreign and domestic business predators who would purposely 
infringe on the inventor's patent rights. So, what we are doing, the 
rest of these provisions, that is easy to understand, this publication, 
you know, anyone can see, that is asking everybody around the world to 
steal our ideas and use them against us. Well, these other ideas are 
just as damaging. They basically would help foreign and domestic 
predators against our inventors.
  H.R. 1908 would open up new doors of attack both before a patent is 
issued and after it is issued. Before, in expanded, what they call 
inter partes examination which, in effect, gives the infringers of a 
patent another opportunity to challenge every patent that they are 
infringing upon.
  Once at the Patent and Trademark Office, and if unsuccessfully, if 
they fail the first time, they can try again in a court after the 
patent has been issued. So even if they had challenged the issuance of 
a patent beforehand in the current process, this bill allows them then 
to again challenge it after the patent has been issued in court, which 
dramatically increases the cost for the inventor, freezing out the 
little guys. It allows powerful corporate third parties to sit in and 
state their case while someone is trying to get their patent.
  Yet again, this is an avenue given to the large corporate interests. 
And what does it do? It punishes the little guy. Then afterwards, we 
have a whole new postgrant review. Now that is in the beginning. They 
have a right to sit in on the process and to basically try to disrupt 
the patent process in the very beginning stages so the little guy has a 
tough time getting it granted. But then afterwards, there is a whole 
new postgrant review. This means that after the patent has been issued, 
we make it easier for the big guys to keep coming back and attacking 
the right of the person who developed this new technology. The new 
postgrant review lowers the bar of proving that a patent is invalid. 
Thus, we have actually changed the standard that has protected our 
inventors against aggressive and unjustified attacks by people 
challenging them.
  Currently, the patent challenger must prove a patent's invalidity, 
prove that a patent is invalid by clear and convincing evidence. That 
is a quote, ``by clear and convincing evidence.'' They are going to 
change that to the ``preponderance of evidence.'' How will that affect 
the patent system? What we have here is an attempt to change that 
wording and change the standard in a way that weakens the foundation 
that a patent holder relies upon in terms of all of the legal defenses 
that he has to make. We end up with a situation where investors are 
going to hesitate to get involved with any small inventors because we 
now have changed the basic rules that have protected the small 
inventors against unjustified attacks.
  In fact, Mr. Speaker, as with the immigration bill, this is not a 
fix. None of this is a fix. It will just make it worse. The corporate 
elite tells us that this will reduce lawsuits. Well, Mr. Speaker, I am 
confused, because the system that is now being used in Europe which is 
the system that they are proposing that we now put into our system, the 
same postgrant review system, they are trying to change our rules to 
make the same rules as they do in Europe. Well, Europe has three times 
the number of lawsuits that are filed in attempts to steal the patent 
rights of the inventor through lawsuits than we have in the United 
States.

[[Page H10150]]

  So what is this going to do? It is going to flood our system with 
lawsuits. Of course, lawsuits are expensive. The little guy loses. In 
fact, Japan dropped this element from their system because it produced 
too many lawsuits. They dropped it in 2004. So while we are 
strengthening the chance of the big guy to attack the little guy even 
after the patent has been granted, they found it to be a disaster in 
Japan. They discarded it. In Europe, it causes three times the number 
of lawsuits.
  Mr. Speaker, this is not the right path to take. It is not reform. It 
will make things worse.
  I am going to yield to my good friend, Marcy Kaptur, in one moment. 
But let me just note one other element here before we do. We hear about 
the widespread problem with patent lawsuits. This is something we hear 
about all the time. This is why we have to pass this legislation. Well, 
there are horror stories concerning some companies that have been tied 
up, very few, but some have been tied up and eventually having to 
relent to trial lawyers because of delays in the patent system. We also 
know about the examiners who are overworked. We know that our patent 
examiners are underpaid. They aren't getting the training they need and 
the proper education they need. Yes, we need to fix that.
  In reality, patent lawsuits, of course, do not stem from these 
problems. Lawsuits are not a major problem. In fact, between 1993 and 
2005, the number of patent lawsuits versus the number of patents 
granted has held steady. So although we have problems in the system, 
that is not what is resulting in a higher number of lawsuits. In fact, 
in 2006, there were only 102 cases that actually went to trial.
  Mr. Speaker, this number is far below the average number of cases 
that that one District Court judge sees annually. And it is far fewer 
than what they have over in Europe. Of course, there is room for 
improvement, and I readily admit that. But this is not a crisis that 
demands us to dramatically change the fundamental nature of the system.

  Mr. Speaker, as we get into more of a discussion of this, my friend, 
Marcy Kaptur, who has stood beside me in this fight for the last 10 
years trying to protect the little guy, realizing that unless we 
protect the American inventor and American technology, that American 
workers and the standard of living of our people are going to decline, 
and that countries like Japan, India and others will steal our 
technology and use it to put our people out of work, this is a champion 
of the working people of our country. And we have a Republican-Democrat 
coalition here, as we will see on Friday.
  I would now yield whatever time she may consume to the gentlewoman 
from Ohio (Ms. Kaptur).
  Ms. KAPTUR. Mr. Speaker, I would thank the fine gentleman from 
California (Mr. Rohrabacher) for securing the special order time this 
evening and join him in his special order concerning the patent bill 
that will be coming up later in the week.
  I share his concern that this bill is not reform, and with what is 
happening across our country with the outsourcing of jobs, now is not 
the time to weaken U.S. patent protection, which is a constitutional 
protection going back to the founding of our Republic.
  Congressman Rohrabacher has gone through a lot of the technicalities 
of what is involved in this bill that is coming before us. Let me just 
say that there was a magazine article published back in June by 
Manufacturing and Technology News in their June 29, 2007 issue. Viewers 
can go to www.manufacturingnews.com and pick it up. It was written by 
Dr. Pat Choate. What I find particularly compelling about this article 
is it gets into who actually is driving this bill and why is this bill 
coming at us, a bill that will weaken protections for U.S. inventors, 
or those that file in our country, at a time when we were hemorrhaging 
jobs, certainly in the manufacturing sector, but not just that sector, 
and at a time when our trade deficit is now close to $1 trillion a 
year, a time when our budget deficit and our trade deficit is so high 
that the Federal Reserve a week ago had to resort to creating money, 
printing money and shoving it into our financial system to try to prop 
it up.
  What is happening? Why would this bill be coming up now? We know that 
the forces that are driving this bill are very large corporations, 
transnational corporations, the very ones that are moving our jobs 
offshore. And what they are about is that sometimes those very big 
companies get sued because they infringe on other people's patents. 
They then go to court and lose, and they are forced to pay fines. In 
response, because they don't like that, they are financing an expensive 
lobbying propaganda and legal campaign to weaken our patent laws.
  They are using the wrong measure. What they should do is stop 
infringing on other people's patents and not try to change the whole 
patent system as a solution to their predicament. Let me just place a 
number on the record that is quoted in this article. And I don't know 
that the gentleman has done this yet this evening, but between 1993 and 
2005, four of these big companies paid out more than $3.5 billion in 
patent settlements. But in the same period, their earnings were more 
than $1.4 trillion, making their patent settlements only about one-
quarter of 1 percent of their revenues. Now they wish to reduce even 
those costs, not by changing their obviously unfair and often illegal 
business practices, but by persuading Congress and also the Supreme 
Court to weaken U.S. patent protections which have been guaranteed 
since the founding of the Republic. They have tried to convince 
Congress that there is some type of litigation crisis. As the gentleman 
has just properly outlined, there is no litigation crisis in the courts 
relating to patents.
  Mr. ROHRABACHER. There are 102 cases over a year, which is basically 
what one judge sees. There is no litigation crisis. But again, as you 
are aware, what we have here is they are trying to use that as cover to 
try to do something else, because the bill is not aimed at correcting 
that. The bill is aimed at permitting these large companies to take, at 
will, from America's inventors.
  Ms. KAPTUR. We know how much they have been taking in other ways, 
taking health benefits away from our people, taking good wages away 
from our people, literally taking jobs and transporting them someplace 
else. And our patent system has been at the basis of the creativity of 
this country. It is a great, great system
  By the way, I will say for the record, there is a website one can go 
to, www.uscourts.gov/caseload2006. contents.html. And on that site, you 
can look at these various cases to see that the courts aren't 
overloaded. The courts aren't saying they are overloaded in terms of 
suits relating to patents. But one of the parts of the bill that truly, 
truly concerns me, and why I shall vote against it, is that these very 
large transnational corporations want to change the longstanding 
practice of the U.S. Patent and Trademark Office of granting a patent 
to the person who actually invented it. We call it ``first to invent.'' 
They want to change it to ``first to file.'' In other words, if they 
get the system they want, which means that an inventor takes their 
brilliant idea to the Patent and Trademark Office, even before it is 
approved, it has to be posted on a Web site, and somebody in China or 
somebody in Tokyo can take that, file it in their country, and they 
say, ``grant the patent to the first to file.'' Not the first to 
invent.
  We protect individuals in this country. We protect that intellectual 
capital. To even suggest that we should go to a system that the 
gentleman has said that exists in Europe, for example, that is not the 
American system. Before the American system of economics got captured 
by these globalists who are controlling Wall Street and some of these 
big decisions that are hollowing out communities across this country, 
we had a country that respected the Constitution and the right of the 
inventor. You. The person who actually created the idea, whether you 
are a musician, whether you are an electronics expert, whether you are 
an automotive expert, whether you make a decent paper towel hanger for 
your kitchen, if you have a better idea, our legal system protects you 
against the large companies and the small.

                              {time}  2000

  Ms. KAPTUR. You have a right to your idea.
  Mr. ROHRABACHER. The fundamental rules that were laid down 200

[[Page H10151]]

years ago on the very subject, for example, not just the 
confidentiality, which they are trying to destroy, but the subject that 
you brought up is first to file, versus the concept that we had in our 
system for over 200 years, which is that we respect the person who is 
the first to invent.
  Inventors have told me over and over again that if we change our 
system, and, by the way, in Europe and Japan that is the way their 
systems are, and, of course, they don't protect the little guy. Their 
systems were designed at a time when they weren't talking about 
individual rights, but were trying to protect corporate interest in 
their country.
  But first to file would flood our system with patent applications day 
after day after day. The large corporations who can afford to make a 
new filing every time there is a little step forward, you would end up 
flooding the system, as compared to what it is today. Talk about delays 
in the patent system. It would have a horrible impact.
  In fact, some of the other things that they are suggesting also in 
terms of these, on June 7th, 2007, a letter to Congress from Chief 
Judge Paul Michael of the U.S. Court of Appeals for the U.S. Federal 
Circuit Court warned Congress that the learning curve for all of these 
changes that they are talking about, especially the first to file and 
the various changes in the standards, will result in additional court 
delays that would be severe and would add additional attorneys fees and 
costs.
  So that is what we have. In the name of trying to prevent a glut, 
which they say now is flooding our courts, when there are only 102 
cases, they are going to create changes that will flood our courts and 
add dramatically to the cost for an individual inventor.
  Ms. KAPTUR. If the gentleman would be kind enough to yield to me 
again, it would force our inventors to defend themselves in a way that 
they don't have to today to go through all these additional 
bureaucratic hurdles, because under the current system we protect your 
idea, we protect your right as an inventor, no matter how small you 
are.
  In fact, if you look at the patents filed every day, which I look at 
as the seed capital of the future of this economy, a third of those 
patent applications are from very small inventors. They are from 
universities. We see every day major counterfeiters around the world 
taking our ideas and doing knockoffs. They actually come to your 
district, Congressman Rohrabacher, before they come to mine, because 
you have got that port down there in Southern California.
  But we know how counterfeiting occurs and what the potential is in 
other places to cheat, and we have protections for our people against 
that.
  Mr. ROHRABACHER. If I might add, the protections we have had, there 
are penalties that companies will pay, and you mentioned that those 
large corporations paid $2 billion, or I forget the exact figure you 
used, in terms of damages. Well, this bill would reduce the amount of 
damages that can be collected from a patent owner, an inventor who has 
been violated by an infringer.
  If a company steals someone's nice idea and does not pay them for it 
and starts using it, especially foreign companies, this bill actually 
reduces the amount of money that can be expected by changing the 
criteria of how you can assess damages. What you will end up with is it 
won't be worthwhile for the inventor to have to pay the lawyers and go 
after these infringers, and our inventors will be high and dry, the 
technology that they do invent will go overseas, so they will cease to 
invent.
  Who is going to be worse off? Everybody is going to be worse off.
  Ms. KAPTUR. It would seem to me that at this point in our country we 
would be wanting to encourage innovation here in the United States. We 
want to be rewarding those people who are creating the future, whether 
it is in agriculture, whether it is in transportation, whether it is in 
medical care.
  We have all seen the companies in our district where jobs are 
growing, and they begin with invention, they begin with creativity 
guaranteed by our Constitution. Why would we make it more difficult for 
them in the courts? Why would we make it easier for those who want to 
take their idea or get a sneak preview of their idea before their 
patent is granted? Why would we want to give them greater advantage in 
this struggle for jobs in America? It is beyond me. But I understand 
power and I understand the power of these companies.
  Mr. ROHRABACHER. It is easy to understand why it is going on, because 
the bill that is coming forward on Friday, H.R. 1908, that bill is 
designed not to help American competitiveness. That bill is not 
designed to protect the property rights of inventors. That bill is 
totally designed for the purpose of weakening the system for the 
American inventor and protecting the ability of the big guys, the guys 
who are shipping the jobs to China already, that is how much they care 
about us, to protect their ability to use technology and to steal it 
without having to pay for it. That is the purpose. It weakens it. The 
whole bill is designed to weaken the patent system.
  As I have used the example of the immigration bill before, where 
people didn't want to talk about amnesty, everybody knows that was the 
real purpose. They used the word ``comprehensive'' to cover up that and 
not to debate amnesty.
  This bill, the ``comprehensive reform bill,'' is designed to weaken 
the system, but they are using ``reform'' as a word to make it sound 
like they are trying to improve things.
  Let us note the reason. If you ask these big companies and the people 
proposing this why we have to do it, they are not going to tell you we 
are doing it for the big guys. We are doing it because the financial 
industry and the electronics industry, they don't want to pay 
royalties, and they do their manufacturing overseas, so they don't care 
about the American worker anyway. They are not going to say that. What 
they are going to say is we need to harmonize all of our laws dealing 
with economics. We need to get up with the rest of the world. It is 
called harmonization. We heard that 10 years ago. We have to harmonize 
our law with the rest of the world.
  We have had the strongest protection for patent rights of any country 
in the world since our country's founding, and it has served us well. 
Now they want to harmonize it with the rest of the world by lowering 
our standards, by lowering our protection.
  If we did that with other freedoms, the freedom of religion, the 
freedom of speech, there would be a revolution in our country, because 
if we want to push for all countries to have one standard, well, they 
should be increasing their standards to meet our level of protection of 
rights, not having us lower the protection that we have for our 
individual citizens.
  Ms. KAPTUR. Yes. And you know at this time in this country, where it 
is hard to find a good paying job, it is really very hard, some of 
these companies that are trying to weaken our patent system actually 
pay their staffs less than companies that are in communities like I 
represent, where people earn a living wage.
  These companies also outsource a lot of jobs related to component 
manufacture and so forth. I find it interesting that they have so much 
power and they have so much influence that now they are trying to, in a 
way, take away the potential for districts like mine to reinvent 
themselves by protecting those who are creating new ideas. In fact, 
they want to get rid of this opt-out provision, where if you are a 
small inventor and you file as first-to-invent at the Patent Office, 
you have a choice whether you want foreign entities to be able to see 
that invention now. They have this opt-out provision, where you protect 
yourself before you are able to get the approval and try to get the 
money to manufacture or provide the service that you want to provide.
  This will make it very difficult. About half of the inventions that 
we have come from small businesses, universities and independent 
inventors who select that opt-out provision.
  Mr. ROHRABACHER. Right, because they don't want the foreign interests 
to have all that information even before they get issued the patent.
  Ms. KAPTUR. Absolutely. I don't think the average American 
understands how hard it is to get the money to start up your company. 
Once you have filed and gotten the patent itself, it is not easy if you 
are a small inventor. Why would you want to reveal that abroad?

[[Page H10152]]

  Mr. ROHRABACHER. Clearly, when we are talking about harmonizing our 
laws with the rest of the world, this is not an excuse to dramatically 
bring down the rights that have been enjoyed, the protections our 
people have enjoyed, and which have assured America's prosperity and 
the security of our people.
  In fact, let's take a look at these huge electronics corporations and 
huge financial interests that are pushing H.R. 1908. These are the same 
companies that build their manufacturing units in China and have built 
up the economy of China so they can outcompete Americans. These are the 
same companies that have actually worked with a despotic gangster 
regime in Beijing so that their computers can be used to help track 
down political dissidents.
  They tell us, well, we have to improve the economy of China in order 
to have them evolve into a more peaceful and more Democratic country. 
That is baloney. What they are doing over there is getting a quick 
profit. They are sitting over there getting their blood money at a 25 
percent profit a year, when if they would have the same projects and 
have the same manufacturing in the United States, perhaps they would 
only make a 5 or 10 percent profit.
  What it is, they have no loyalty to American ideals and they don't 
have a loyalty to the American worker. Without American working people 
standing up for these principles, these big companies would have 
nothing. We would live in a world that would be awash with tyrants, if 
it wasn't for the American people who defend liberty and justice 
throughout the world.
  But yet these corporations take all of them for granted, just like 
they take for granted these small inventors. They look at them as 
nerds. These big executives, who will live in gated communities and go 
to the country clubs, they look at these inventors as nerds. The 
creative types are just the creative types. We have seen it over and 
over again.
  That is the way they treat the American people as well, with 
arrogance and with a total lack of consideration. They go over and they 
invest in China, when they should be giving jobs, decent paying jobs, 
to the American people. But their profit margin would be a little less.
  By the way, that profit margin that we are talking about, this isn't 
a profit margin that goes just to their stockholders. We are talking 
about big corporate billionaires who give themselves huge corporate 
salaries. And what are they doing? They are putting American workers 
out of work and sending it over to China.
  This bill is their bill. H.R. 1908 will permit them to not only take 
the jobs to China, but to take the technology that is invented in our 
country to China to outcompete the workers here that are left.
  Ms. KAPTUR. As a member of the Defense Subcommittee, the gentleman 
might be surprised to learn that today I spent part of my day learning 
that the U.S. Department of Defense main contract for procurement of 
tires for our vehicles, defense vehicles, is from a foreign company. 
And we have very few tire manufacturers left in the United States of 
America.
  I couldn't believe it. The company that is favored, Michelin, is 
building a facility in China to manufacture tires. I thought, wait a 
minute. What about Akron, Ohio? What about North Carolina? What about 
Kansas? What about other places where we make tires in this country? 
How is it possible that the Department of Defense signs a contract for 
tires with a foreign company? I have got nothing against Michelin, but 
what about American jobs and technology?
  Mr. ROHRABACHER. The gentlewoman is right on target. What you have to 
do to understand how evil that is is realize that the Chinese couldn't 
have built that tire company because they did not have the equipment to 
do it. We have a major corporation from the United States sending our 
technology and our equipment over there, where American workers in the 
past would be able to outproduce low-paid Chinese workers because we 
had the technology. Our corporate leaders now have sent jobs over there 
by giving them the technology they need to outcompete American workers.
  I will have to say we have a little disagreement on trade in terms of 
democratic countries, because I don't see anything wrong with trading 
with democratic countries. What we are referring to right now is 
something we both totally agree on, how can we have free trade with 
despotic regimes like China and other dictatorships around the world, 
where they keep their own people in abject poverty, and we are going to 
let our corporations take our technology over there, take even our 
investment there? A lot of times it is done with government-guaranteed 
loans from our government.
  So this is all part of an overall problem, not a problem, but a 
threat to the American people, and this is a new wrinkle. In H.R. 1908, 
this is just the part where they are going to take the technology that 
is invented here immediately over and let their companies overseas 
steal it and use if, and then say to the inventors, go ahead and sue 
us. Try to get it.

                              {time}  2015

  Ms. KAPTUR. I share the gentleman's value of free trade among free 
people, and I also believe it should be a two-way street. So when the 
United States has a trade imbalance with any country of over $10 
billion each of three consecutive years, I think we should go back and 
see what is wrong with that agreement. I think it ought to be assessed 
by the administration. I think we should find out what is going wrong.
  We are not doing that anywhere on the globe. Whether it is China or 
whether it is Mexico, we are falling into deeper and deeper debt.
  I think the measure is a real measure, not just political, but also 
the bottom line. Are we winning or losing in that trade relationship? 
If we are losing in that trade relationship, we ought to fix it.
  Mr. ROHRABACHER. One thing we know is that today's corporations are 
far different than in the past. We have corporations that are basically 
multinational corporations. Yeah, American citizens may lead up these 
corporations, but they consider themselves to be the head of a huge 
multinational organization, and their loyalty isn't to the people of 
the United States, it is to, supposedly, the corporate structure which, 
of course, could mean that they put thousands of Americans out of work 
and not give it even a second thought.
  We cannot rely on these corporate elites to make the policy that will 
determine the future of our country. And that is what is happening 
here. The corporate elite, basically the high-tech billionaires, have 
come around and written H.R. 1908, and it will be a disaster for the 
American people if we let this go by because in the long term it will 
eliminate our technological edge over our competitors.
  Ms. KAPTUR. The gentleman was talking about the cheating that is done 
by many companies globally, and one of the reasons I don't care for the 
bill that is going to be brought before us is right now there are at 
least 15 different factors that a court can weigh in assessing fines on 
companies that cheat, that infringe on someone else's patent. What 
happens under this bill is these 15 factors that the courts like 
because it helps them make a judgment in whatever the particulars of 
the case might be, are reduced to one and the other 14 factors don't 
really have to be weighed. So there is a significant change in this 
legislation that would heavily impact on what the courts can do and how 
they look at a given case.
  I will submit this article for the Record that talks about Bose's 
port tube technology being infringed on by JBL as an example of what is 
happening.

         [From Manufacturing & Technology News, June 29, 2007]

    Covering Innovation, Globalization and Industrial Competitiveness


                   Patent ``Reform'' Is Anything But

                            (By Pat Choate)

       Ironically, Congress is now threatening China with harsh 
     remedies if it does not quickly stiffen its patent 
     protections, even as Congress marks up legislation that will 
     dramatically weaken U.S. patent protections. This bill is the 
     Patent Reform Act of 2007.
       This schizophrenic policy is being driven by a group of 
     ``Big Tech'' transnational corporations that repeatedly 
     infringe the patents of others, get sued, lose in court and 
     are then forced to pay billions of dollars in penalties. Now, 
     in response, they are financing an expensive lobbying, 
     propaganda and legal

[[Page H10153]]

     campaign to weaken U.S. patent laws by passing this Patent 
     ``Reform'' Act. They cleverly call themselves The Coalition 
     for Patent Fairness (CPF); included are large transnational 
     corporations such as Adobe, Microsoft, Cisco, Intel, eBay, 
     Lenovo, Dell and Oracle.
       During the period 1993-2005, four of the CPF companies paid 
     out more than $3.5 billion in patent settlements. In the same 
     period, their combined revenues were $1.4 trillion, making 
     their patent settlements only about one-quarter of one 
     percent of their revenues. Now, they wish to reduce even 
     those costs, not by changing their obviously unfair, and 
     often illegal, business practices, but by persuading 
     Congress, and also the Supreme Court, to weaken U.S. patent 
     protections.
       These corporations have convinced many members of Congress 
     and many editorial writers that the U.S. patent system is 
     badly broken and that it requires a major legislative 
     overhaul. Supposedly, they say, the U.S. is in the midst of a 
     ``litigation crisis'' where responsible corporations (CPF 
     members) are being penalized by unworthy lawsuits. And, also 
     supposedly, the United States Patent and Trademark Office 
     (USPTO) is issuing massive numbers of unworthy patents that 
     are being used in lawsuits against innovative companies 
     (again, CPF members).
       The ``litigation crisis'' and ``unworthy patents'' 
     allegations simply do not hold up under examination.
       The real facts of the so-called litigation crisis are that 
     for the past two decades the number of patent lawsuits 
     commenced annually has been about 1.5 percent of all patents 
     granted. In 2006, it was 1.47 percent. This is business as 
     usual. Most patent lawsuits, moreover, settle before trial. 
     In 1979, some 79 percent of patent cases settled before 
     trial, while in 2004 almost 86 percent did. Matters are 
     actually improving.
       Also, the U.S. has few patent trials: For instance, in 2001 
     only 76 patent lawsuits were tried and only 102 went to trial 
     in 2006. By no measure can 102 patent trials be considered a 
     national litigation crisis. The annual report of Federal 
     Judicial Caseload Statistics, which is on the Internet, 
     provides the factual antidote to false claims of a litigation 
     crisis (www.uscourts.gov/caseload2006/contents
.html).
       As to the massive numbers of ``unworthy patents'' argument, 
     the real-world test is how many patents are challenged and 
     the outcome of those challenges. Between 1981 and 2006 the 
     USPTO issued more than 3.1 million patents. In that period, 
     8,600 were challenged at the Patent Office through inter 
     partes and ex parte reexaminations. The number challenged 
     amounts to less than three-tenths of one percent. Of those 
     challenged, about 74 percent resulted in claims narrowed or 
     cancelled. In addition, almost 60 percent of the relatively 
     few patents challenged in a court trial are sustained.
       My point is that the USPTO's work is certainly not perfect, 
     but the Patent Office is also not pouring out a stream of bad 
     patents.
       If there are no patent ``litigation crisis'' and no patent 
     ``quality crisis,'' what is the real purpose of the Patent 
     Reform Act of 2007 legislation before Congress?
       A main goal is to legislate changes that will reduce 
     penalties paid by infringers. Under existing law, a patent 
     holder who is infringed upon is entitled to damages adequate 
     to compensate for infringement, but in no event less than a 
     reasonable royalty. The courts now consider a list of 15 
     factors in that calculation, including apportioning the part 
     of the realizable profit created by the infringed invention 
     versus other factors such as the manufacturing process, 
     promotion, sales or other patents owned by the infringer.
       Under this bill, however, Congress mandates that the court 
     ``ensure that a reasonable royalty is applied only to the 
     economic value properly attributable to the patent's special 
     contribution over the prior art'' while only allowing the 
     consideration of the other 14 factors. The bill goes on to 
     require that the court subtract from the analysis ``the 
     economic value properly attributable to the prior art, and 
     other features or improvements, whether or not patented that 
     contribute economic value to the infringing product or 
     service.'' Think of this as a big finger on the scales of 
     justice that favors the infringer.
       Often, the infringed component is only one of dozens of 
     parts and contributions that make up the product, but that 
     component may be the very thing that makes the product sell.
       JBL infringed Bose's patented port tube technology, for 
     instance, which gives Bose speakers their distinctive 
     clarity. Bose's technology vastly improved the sound of the 
     JBL speakers and drove JBL's sales. Bose sued and won. JBL 
     wanted the royalty determination based on the small value of 
     a cheaply made, plastic port tube. The federal court, 
     however, determined that Bose's technology is what drove 
     JBL's sales and set the damages on the value of the entire 
     speaker system. If the damages were apportioned only to the 
     cost of making the port tube, Bose would have received a tiny 
     fraction of what its invention was worth. If JBL were allowed 
     to subtract the value of all prior art in the damage 
     calculation, which this legislation would allow, Bose would 
     likely have gotten almost zero.
       Cutting the damages paid by infringers is the goal of the 
     many serial infringers supporting this provision.
       Chief Judge Paul R. Michel of the U.S. Court of Appeals for 
     the Federal Circuit advised Congress in a letter dated June 
     7, 2007, that the current law on apportionment is stable, 
     works well and is understood by litigators and judges, and 
     that the new proposal would be a radical change that would 
     cause great chaos in the legal system. He noted that this 
     change would require a massive damage trial in every case and 
     a new kind of costly macroeconomic analysis. ``Resulting 
     additional court delays would be severe,'' he wrote, ``as 
     would additional attorneys' fees and costs.'' I think that we 
     can mark him down as opposed.
       One other pernicious result is this ``primary factor'' 
     apportionment provision would actually encourage more 
     infringement. Rather than negotiate with a patent owner and 
     pay for use of an innovation, many infringers would simply go 
     ahead and use it, pay nothing and, if caught and proceeded 
     against, then pay a small royalty payment eventually set by a 
     federal judge.
       If Congress enacts this provision, it is sanctioning the 
     ``taking'' of a patent owner's property and drastically 
     reducing the price, if anything, an infringer must pay. Think 
     of it as ``self-licensing'' someone else's patent. During the 
     life of a patent, copyright or trademark, there is no 
     difference between real property and intellectual property. A 
     patent belongs to someone. Often it has great value. The 
     owners should decide how it is used and the terms of that 
     use, not the infringers.
       A second goal of the proposed legislation is to force the 
     USPTO to publish on the Internet all patent applications 18 
     months after the date they are filed. Since most patent 
     applications now take an average 31 months to process, the 
     Big Tech corporations that are sponsoring this legislation 
     would get an advanced peek at an applicant's secrets more 
     than a year before the inventor has patent protection, that 
     is, if the patent is even granted, which for half of all 
     applications, it is not. If an infringer took those secrets 
     to China or India or anywhere where patent protection is lax, 
     as many would, the inventor's only recourse would be to go 
     to those countries and file a lawsuit. Few small 
     companies, universities and inventors can afford this.
       Foreign pirates find this mandatory publication provision 
     particularly useful. For China, South Korea and many other 
     nations, the USPTO's computer in Arlington, Va., is their 
     primary source of R&D. Many foreign corporations and 
     governments fill a room with computers, engineers and fast 
     Internet connections and then task them with finding new 
     technologies in unprotected U.S. patent applications. The 
     U.S. isn't the only country with this problem; the Japanese 
     Patent Office reports their computers get 17,000 hits per day 
     from China and 55,000 hits per day from South Korea.
       When Congress first enacted this 18-month publication 
     requirement in 1999 it also created a loophole. Inventors can 
     opt-out of having their applications published if they agree 
     not to file for any foreign patents. About half of all 
     applications from small businesses, universities and 
     independent inventors select to opt-out. The proposed bill 
     would eliminate this opt-out choice.
       The Big Tech corporations also want Congress to change the 
     long-standing practice of the U.S. Patent Office of granting 
     a patent to the first-person-to-invent to the practice used 
     in Europe, Japan, China and elsewhere where the patent goes 
     to the first-person-to-file the patent application.
       A firt-to-file system strongly favors big corporations, who 
     have the resources to track every aspect of an invention and 
     file boxes and boxes of materials to support their claims, 
     over small businesses, independent inventors and 
     universities, who do not.
       Equally important, this change of systems would create 
     chaos at the USPTO and greatly contribute to the slowing of 
     U.S. innovation. The USPTO would have to create numerous new 
     forms and procedures and retrain its thousands of patent 
     examiners and administrative people, even as it works down a 
     backlog of 750,000 applications. All inventors, companies, 
     patent lawyers and federal judges in the U.S. would be forced 
     to learn this new system, its procedures and rules.
       The turmoil created by this shift in the already 
     beleaguered USPTO would guarantee a logjam there--one far 
     greater than the passport backlog fiasco now underway at the 
     State Department.
       Incongruously, this legislation also proposes to solve 
     America's supposed patent ``litigation crisis'' by creating a 
     new forum for more litigation. This proposed ``post grant'' 
     opposition process provides an infringer a lowcost means to 
     challenge the very patent it is infringing and allows it to 
     do so over the entire 20 year life of the patent at a lower 
     burden of proof than required in a federal court.
       Europe has the very system that Congress is being asked to 
     copy. It is a litigation heaven for the patent bar. The 
     annual European Patent Office (EPO) challenge rate was 5.4 
     percent of granted patents in 2005. The combination of all 
     USPTO ex parte and inter partes challenges, all interference 
     cases, plus all patent lawsuits commenced calculated as per 
     the number of patents granted produces a comparable U.S. 
     challenge rate of 1.8 percent. The EOP challenge rate is 
     three times that of the United States and that does not count 
     any patent lawsuits in Europe.
       Japan dropped this system in 2004 because it created too 
     many lawsuits. Of the many

[[Page H10154]]

     bad ideas in this legislation, this post grant litigation 
     process is probably the worst.
       The principal victims of these and other Patent Reform Act 
     of 2007 proposals will be small entity inventors--small 
     businesses, individual inventors, universities and non-profit 
     research organizations. Their patents are often the greatest, 
     if not only, assets they hold. Most often, they need 
     ownership of an unchallenged patent in order to get financing 
     to actually develop it. And, when their patent secrets are 
     stolen and used by larger infringers, they are generally 
     unable to finance a lawsuit, particularly if the infringer 
     operates outside the United States.
       Yet, it is small entity inventors who file almost 30 
     percent of all U.S.-origin patent applications and receive 31 
     percent of all patents granted. Unlike the Big Tech 
     companies, most of these innovators keep their R&D and 
     production in the U.S. They are vital to America's future. 
     But they are fragile. Special consideration of their 
     situation and needs is in the nation's best interest.
       Fortunately, many U.S. groups and organizations oppose the 
     Patent Reform Act of 2007. Included are the National 
     Association of Manufacturers, the U.S. Business and 
     Industrial Council, more than 450 venture capital firms, the 
     Big Ten universities, plus dozens of other organizations. The 
     Department of Commerce and the USPTO have written Congress 
     that they do not support eliminating the 18-month opt-out 
     rule, changing to a first-to-file system, altering the 
     apportionment provision or creating a new litigation forum. 
     Unfortunately, all this opposition has mattered little so far 
     and this dangerous legislation is still moving forth in the 
     House and Senate Judiciary Committees.
       Each Member of Congress needs to closely examine the Patent 
     Reform Act of 2007 for it will deeply affect every state, 
     every community and every congressional district. We face a 
     historic economic challenge in the global economy. Now is the 
     time for Congress to strengthen U.S. patent protections 
     rather than weaken them.

  Mr. ROHRABACHER. People need to know that H.R. 1908 will be coming to 
the floor on Friday. I call it the ``Steal America's Technology Act,'' 
and we need to defeat this bill. We need to have the support of the 
public and of our colleagues, and we are asking for that support today.
  I would like to close with one story. It is a story of a statue of a 
man downstairs. If someone is going through the Capitol, he needs to 
look at the statue. There are many statues here, but it is a statue of 
a man named Philo Farnsworth. He was the personification of an 
individual inventor. He discovered, with his creative genius, the 
picture tube, the secret that created the picture tube for television. 
RCA had spent hundreds of millions of dollars trying to find that 
secret. Philo Farnsworth made the mistake of trusting David Sarnoff, 
the head of RCA, with the secret, thinking we are going to work 
together to develop this for all humankind.
  Sarnoff immediately cut off all communications with this man and 
tried to steal this invention, claiming credit for RCA itself. For 20 
years, poor Philo Farnsworth, the personification of the little guy, 
was being beaten down by David Sarnoff because he didn't want to pay 
the royalties or give the credit to this one little guy, this one lone 
American.
  That case went all the way to the Supreme Court, and the Supreme 
Court, God bless America, sided with the little guy, sided with Philo 
Farnsworth and reaffirmed that we are talking about rights that are 
guaranteed by our Constitution for all our citizens, the big guys and 
the little guys.
  This bill, H.R. 1908, is a big guys' bill designed by the big guys to 
steal from the little guys and in the long run it will hurt all 
Americans.
  I proudly stand by Marcy Kaptur and Mr. Manzullo and others who will 
be leading, helping us fight this back on Friday. We need everyone's 
support. We need all constituents to talk to their Congressman on this 
issue.
  Ms. KAPTUR. I thank the gentleman for yielding me time this evening, 
and I urge my colleagues to vote ``no'' on the patent bill coming up on 
Friday. Don't weaken U.S. patent protections that are based on our 
Constitution. Give our inventors and their creativity a chance to 
flourish for the next generation.

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