Congressional Record, Volume 157 Issue 30 (Wednesday, March 2, 2011)

[Congressional Record Volume 157, Number 30 (Wednesday, March 2, 2011)]
[Senate]
[Pages S1089-S1114]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

PATENT REFORM ACT OF 2011

The ACTING PRESIDENT pro tempore. Under the previous order, the
Senate will resume consideration of S. 23, which the clerk will report.
The assistant legislative clerk read as follows:

A bill (S. 23) to amend title 35, United States Code, to
provide for patent reform.

Pending:

Leahy amendment No. 114, to improve the bill.
Bennet amendment No. 116, to reduce the fee amounts paid by
small entities requesting prioritized examination under
Three-Track Examination.
Bennet amendment No. 117, to establish additional USPTO
satellite offices.
Lee amendment No. 115, to express the sense of the Senate
in support of a balanced budget amendment to the
Constitution.
Kirk-Pryor amendment No. 123, to provide a fast lane for
small businesses within the U.S. Patent and Trademark Office
to receive information and support regarding patent filing
issues.
Menendez amendment No. 124, to provide for prioritized
examination for technologies important to American
competitiveness.

The ACTING PRESIDENT pro tempore. The Senator from Texas.
(The remarks of Mrs. Hutchison are printed in today's Record under
``Morning Business.'')
The ACTING PRESIDENT pro tempore. The Senator from Vermont.
Mr. LEAHY. Madam President, yesterday, we were finally able to make
progress when the Senate proceeded to a vote on the managers'
amendment, the Leahy-Grassley-Kyl amendment, to the America Invents
Act. That was a very important amendment, with contributions from many
Senators from both sides of the aisle. It should ensure our moving
forward to make the changes needed to unleash American innovation and
create jobs without spending a single dollar of taxpayer money. In
fact, according to the Congressional Budget Office, enactment of the
bill will save millions of dollars.
I also thank those Senators who have stayed focused on our
legislative effort, and who joined in tabling those amendments that
have nothing to do with the subject of the America Invents Act.
Extraneous amendments that have nothing to do with the important issue
of reforming our out-of-date patent system so that American innovators
can win the global competition for the future have no place in this
important bill. They should not be used to slow its consideration and
passage. If America is to win the global economic competition, we need
the improvements in our patent system that this bill can bring.
I continue to believe, as I have said all week, that we can finish
this bill today, and show the American people that the Senate can
function in a bipartisan manner. We have not been as efficient as I
would have liked. We have been delayed for hours at a time, and forced
into extended quorum calls rather than being allowed to consider
relevant amendments to this bill. Nonetheless, we are on the brink of
disposing of the final amendments and passing this important
legislation.
Today we should be able to adopt the Bennet amendment on satellite
offices and the Kirk-Pryor amendment regarding the creation of an
ombudsman for patents relating to small businesses. I hope that we can
adopt the Menendez amendment on expediting patents for important areas
of economic growth, like energy and the environment, as well. I am
prepared to agree to short time agreements for additional debate, if
needed, and votes on those amendments.
The remaining issue for the Senate to decide will be posed by an
amendment that Senator Feinstein has filed to turn back the advancement
toward a first-inventor-to-file system.
I want to take a moment to talk about an important component of the
America Invents Act, the transition of the American patent system to a
first-inventor-to-file system. I said yesterday that the administration
strongly supports this effort. The administration's Statement of
Administration Policy notes that the reform to a first-inventor-to-file
system ``simplifies the process of acquiring rights'' and describes it
as an ``essential provision [to] reduce legal costs, improve fairness
and support U.S. innovators seeking to market their products and
services in a global marketplace.'' I agree, and believe it should help
small and independent inventors.
This reform has broad support from a diverse set of interests across
the patent community, from life science and high-tech companies to
universities and independent inventors. Despite the very recent efforts
of a vocal minority, there can be no doubt that there is wide-ranging
support for a move to a first-inventor-to-file patent system. A
transition to first-inventor-to-file is necessary to fulfill the
promises of higher quality patents and increased certainty that are the
goals of the America Invents Act.
This improvement is backed by broad-based groups such as the National
Association of Manufacturers, the American Intellectual Property Law
Association, the Intellectual Property Owners Association, the American
Bar Association, the Association for Competitive Technology, the
Business Software Alliance, and the Coalition for 21st Century Patent
Reform, among others. All of them agree that transitioning our outdated
patent system to a first-inventor-to-file system is a crucial component
to modernizing our patent system. I also commend the assistant
Republican leader for his remarks yesterday strongly in favor of the
first-inventor-to-file provisions.
A transition to a first-inventor-to-file system is needed to keep
America at the pinnacle of innovation by ensuring efficiency and
certainty in the patent system. This transition is also necessary to
better equip the Patent and Trademark Office, PTO, to work through its
current backlog of more than 700,000 unexamined patent applications
through work-sharing agreements with other patent-granting offices.
The Director of the PTO often says that the next great invention that
will drive our economic growth may be sitting in its backlog of
applications. The time consuming ``interference proceedings'' that are
commonplace in our current, outdated system are wasting valuable
resources that contribute to this delay, and unfairly advantage large
companies with greater resources.
A transition to a first-inventor-to-file system was recommended in
the 2004 Report by the National Academy of Sciences. The transition has
been a part of this bill since its introduction four Congresses ago.
This legislation is the product of eight Senate hearings and three
markups spanning weeks of consideration and many amendments. Until very
recently, first-inventor-to-file had never been the subject of even a
single amendment in committee.

[[Page S1090]]

Senator Feinstein has worked with me on this bill, has cosponsored it
in the past and has voted for it.
I urge Senators who support the goals of the America Invents Act to
vote against this amendment to strike the bill's important reform
represented by the first-inventor-to-file provision. Every
industrialized nation other than the United States uses a patent
priority system commonly referred to as a ``first-to-file'' system. In
a first-inventor-to-file system, the priority of a right to a patent is
based on the earlier filed application. This adds simplicity and
objectivity into a very complex system. By contrast, our current,
outdated method for determining the priority right to a patent is
extraordinarily complex, subjective, time-intensive, and expensive. The
old system almost always favors the larger corporation and the deep
pockets over the small, independent inventor.
The transition to a first-inventor-to-file system will benefit the
patent community in several ways. It will simplify the patent
application system and provide increased certainty to businesses that
they can commercialize a patent that has been granted. Once a patent is
granted, an inventor can rely on its filing date on the face of the
patent. This certainty is necessary to raise capital, grow businesses,
and create jobs.
The first-inventor-to-file system will also reduce costs to patent
applicants and the Patent Office. This, too, should help the small,
independent inventor. In the outdated, current system, when more than
one application claiming the same invention is filed, the priority of a
right to a patent is decided through an ``interference'' proceeding to
determine which applicant can be declared to have invented the claimed
invention first. This process is lengthy, complex, and can cost
hundreds of thousands of dollars. Small inventors rarely, if ever, win
interference proceedings. In a first-inventor-to-file system, however,
the filing date of the application is objective and easy to determine,
resulting in a streamlined and less costly process.
Importantly, a first-inventor-to-file system will increase the global
competitiveness of American companies and American inventors. As
business and competition are increasingly global in scope, inventors
must frequently file patent applications in both the United States and
other countries for protection of their inventions. Since America's
current, outdated system differs from the first-inventor-to-file system
used in other patent-issuing jurisdictions, it causes confusion and
inefficiencies for American companies and innovators. Harmonization
will benefit American inventors.
Finally, the first-inventor-to-file provisions that are included in
the America Invents Act were drafted with careful attention to needs of
universities and small inventors. That is why the bill includes a 1-
year grace period to ensure that an inventor's own publication or
disclosure cannot be used against him as prior art, but will act as
prior art against another patent application. This will encourage early
disclosure of new inventions, regardless of whether the inventor ends
up trying to patent the invention.
For these reasons among others, the transition is supported by the
overwhelming majority of the patent community and American industry, as
well as the administration and the experts at the Patent and Trademark
Office.
This past weekend, the Washington Post editorial board endorsed the
transition, calling the first-inventor-to-file standard a ``bright
line,'' and stating that it would bring ``certainty to the process.''
The editorial also recognizes the ``protections for academics who share
their ideas with outside colleagues or preview them in public
seminars'' that are included in the bill.
The Small Business & Entrepreneurship Council has expressed its
strong support for the first-inventor-to-file system, writing that
``small firms will in no way be disadvantaged, while opportunities in
the international markets will expand.''
The Intellectual Property Owners Association calls the first-
inventor-to-file system ``central to modernization and simplification
of patent law'' and ``very widely supported by U.S. companies.''
Independent inventor Louis Foreman has said the first-inventor-to-
file transition will help ``independent inventors across the country by
strengthening the current system for entrepreneurs and small
businesses.''
And, in urging the transition to the first-to-file system, the
Association for Competitive Technology, which represents small and mid-
size IT firms, has said the current first-to-invent system ``negatively
impacts entrepreneurs'' and puts American inventors ``at a disadvantage
with competitors abroad who can implement first inventor to file
standards.''
If we are to maintain our position at the forefront of the world's
economy, if we are to continue to lead the globe in innovation and
production, if we are to win the future through American ingenuity and
innovation, then we must have a patent system that is streamlined and
efficient. The America Invents Act, and a transition to a first-
inventor-to-file system in particular, are crucial to fulfilling this
promise.
Madam President, in summary, as I said, yesterday we were finally
able to make progress when the Senate proceeded to a vote on the
managers' amendment, the Leahy-Grassley-Kyl amendment, to the America
Invents Act. It was a very important amendment, with contributions from
many Senators from both sides of the aisle.
I think it was a little bit frustrating for the public to watch. They
saw us several hours in quorum calls and then having an amendment that
passed 97 to 2. I would hope we might, in doing the Nation's business,
move with a little bit more speed. But I do thank those Senators who
supported it.
The Leahy-Grassley-Kyl amendment should ensure our moving forward to
make the changes needed to unleash American innovation and create jobs
without spending a single dollar of taxpayer money. In fact, according
to the Congressional Budget Office, enactment of the bill will save
millions of dollars. These are not bumper slogan ideas of saving money.
These are actually doing the hard work necessary to save money.
I thank those Senators who have stayed focused on our legislative
effort and who joined in tabling nongermane amendments that had nothing
to do with the subject of the America Invents Act.
Extraneous amendments that have nothing to do with the important
issue of reforming our out-of-date patent system so American innovators
can win the global competition for the future have no place in this
important bill.
We are at a time when China and Europe and the rest of Asia are
moving ahead of us. We need the tools to keep up. We should not waste
time with a lot of sloganeering amendments that would stop the bill.
What we ought to focus on is making America good and making sure we can
compete with the rest of the world. We should not have amendments used
to slow this bill's consideration and passage. If America is going to
win the global economic competition, we need the improvements in our
patent system this bill can bring.
I continue to believe, as I have said all week, we can finish the
bill--we actually could have finished it yesterday, when you consider
all the time wasted in quorum calls--but I believe we can finish it
today and show the American people the Senate can function in a
bipartisan manner.
We have not been as efficient as I would have liked. We have been
delayed for hours at a time and forced into extended quorum calls
rather than being allowed to consider relevant amendments to the bill.
But we are on the brink of disposing of the final amendments and
passing this important legislation.
We should be able to adopt the Bennet amendment on satellite offices
either by a voice vote or a rollcall, I would hope in the next few
minutes, and the Kirk-Pryor amendment regarding the creation of an
ombudsman for patents relating to small businesses.
I hope we can adopt the Menendez amendment on expediting patents for
important areas of economic growth, such as energy and the environment,
as well. I am prepared to agree to very short time agreements for
additional debate, if needed. If a rollcall is called for, I am happy
to have those.
The remaining issue for the Senate to decide will be posed by an
amendment Senator Feinstein filed to turn back the advancement toward a
first-inventor-to-file system.
I wish to take a moment to talk about an important component of the

[[Page S1091]]

America Invents Act, the transition of the American patent system to a
first-inventor-to-file system. This is strongly supported by the
administration and by the managers of this package. The
administration's Statement of Administration Policy notes that the
reform to a first-inventor-to-file system ``simplifies the process of
acquiring rights,'' and it describes it as an ``essential provision
[to] reduce legal costs, improve fairness and support U.S. innovators
seeking to market their products and services in a global
marketplace.'' I agree. I also believe it should help small and
independent inventors.
This reform has broad support from a diverse set of interests across
the patent community, from life science and high-tech companies to
universities and independent inventors. Despite the very recent
efforts--and they were very recent efforts; after all, we have been
working on this bill for years--of a vocal minority, there can be no
doubt that there is wide-ranging support for a move to a first-
inventor-to-file patent system.
A transition to first-inventor-to-file system is necessary to fulfill
the promises of higher quality patents and increased certainty that are
the goals of the America Invents Act. This improvement is backed by
broad-based groups such as the National Association of Manufacturers,
the American Intellectual Property Law Association, the Intellectual
Property Owners Association, the American Bar Association, the
Association for Competitive Technology, the Business Software Alliance,
and the Coalition for 21st Century Patent Reform, among others. All of
them agree that transitioning our outdated patent system to a first-
inventor-to-file system is a crucial component to modernizing our
patent system.
I commend the assistant Republican leader for his remarks yesterday
strongly in favor of the first-inventor-to-file provisions. It actually
allows us to put America at the pinnacle of innovation by ensuring
efficiency and certainty in the patent system.
This transition is also necessary to better equip the Patent and
Trademark Office to work through its current backlog. That backlog has
more than 700,000 unexamined patent applications.
A transition to a first-inventor-to-file system will benefit the
patent community in several ways. It will simplify the patent
application system and provide increased certainty to businesses that
they can commercialize a patent that has been granted.
The first-inventor-to-file system will also reduce costs to patent
applicants and the Patent Office. Importantly, a first-inventor-to-file
system will increase the global competitiveness of American companies
and American inventors. Also, the first-inventor-to-file provisions
that are included in the America Invents Act were drafted with careful
attention to needs of universities and small inventors. For these
reasons, among others, this transition is supported by the overwhelming
majority of the patent community and American industry, as well as the
administration and experts at the Patent and Trademark Office.
At this time I wish to have printed in the Record a few letters of
support for the transition to first-to-file.
The Small Business & Entrepreneurship Council says that ``by moving
to a first-inventor-to-file system, small firms will in no way be
disadvantaged, while opportunities in international markets will
expand.''
The Intellectual Property Owners Association says the transition to
first-inventor-to-file ``is central to modernization and simplification
of patent law and is very widely supported by U.S. companies.''
BASF says the first-to-file system will ``enhance the patent system
in ways that would benefit all sectors of the U.S. economy.''
And the American Bar Association refutes claims that the first-to-
file system would disadvantage small and independent inventors, saying
that the legislation ``makes it clear that the award goes to the first
inventor to file and not merely to the first person to file.''
I ask unanimous consent that copies of these letters be printed in
the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Small Business

& Entrepreneurship Council,

Oakton, VA, February 28, 2011.
Hon. Patrick Leahy,
U.S. Senate, Russell Senate Bldg.,
Washington, DC.
Dear Senator Leahy: The Small Business & Entrepreneurship
Council (SBE Council) and its members across the nation have
been strong advocates for patent reform. We are pleased that
you have introduced the Patent Reform Act (S. 23), and we
strongly endorse this important piece of legislation.
An effective and efficient patent system is critical to
small business and our overall economy. After all, the U.S.
leads the globe in entrepreneurship, and innovation and
invention are central to our entrepreneurial successes.
Indeed, intellectual property--most certainly including
patents--is a key driver to U.S. economic growth. Patent
reform is needed to clarify and simplify the system; to
properly protect legitimate patents; and to reduce costs in
the system, including when it comes to litigation and the
international marketplace.
Make no mistake, this is especially important for small
businesses. As the Congressional Research Service has
reported: ``Several studies commissioned by U.S. federal
agencies have concluded that individuals and small entities
constitute a significant source of innovative products and
services. Studies have also indicated that entrepreneurs and
small, innovative firms rely more heavily upon the patent
system than larger enterprises.''
The Patent Reform Act works to improve the patent system in
key ways, including, for example, by lowering fees for micro-
entities, and by shortening time periods for patent reviews
by making the system more predictable.
During the debate over this legislation, it is expected
that two important areas of reform will come under attack.
First, the U.S. patent system is out of step with the rest
of the world. The U.S. grants patents on a first-to-invent
basis, rather than the first-inventor-to-file system that the
rest of the world follows. First-to-invent is inherently
ambiguous and costly, and that's bad news for small
businesses and individual inventors.
In a 2004 report from the National Research Council of the
National Academies (titled ``A Patent System for the 21st
Century''), it was pointed out: ``For those subject to
challenge under first-to-invent, the proceeding is costly and
often very protracted; frequently it moves from a USPTO
administrative proceeding to full court litigation. In both
venues it is not only evidence of who first reduced the
invention to practice that is at issue but also questions of
proof of conception, diligence, abandonment, suppression, and
concealment, some of them requiring inquiry into what an
inventor thought and when the inventor thought it.'' The
costs of this entire process fall more heavily on small
businesses and individual inventors.
As for the international marketplace, patent harmonization
among nations will make it easier, including less costly, for
small firms and inventors to gain patent protection in other
nations, which is critical to being able to compete
internationally. By moving to a first-inventor-to-file
system, small firms will in no way be disadvantaged, while
opportunities in international markets will expand.
Second, as for improving the performance of the USPTO, it
is critical that reform protect the office against being a
``profit center'' for the federal budget. That is, the USPTO
fees should not be raided to aid Congress in spending more
taxpayer dollars or to subsidize nonrelated programs.
Instead, those fees should be used to make for a quicker,
more predictable patent process.
Thank you for your leadership Senator Leahy. Please feel
free to contact SBE Council if we can be of assistance on
this important issue for small businesses.
Sincerely,
Karen Kerrigan,
President & CEO.
____

Intellectual Property

Owners Association,

Washington, DC, February 25, 2011.
Re Amendments to S. 23, the ``Patent Reform Act of 2011.''

Honorable __,
U.S. Senate,
__ Senate Office Building, Washington, DC.
Dear Senator __: Intellectual Property Owners Association
(IPO) is pleased that the Senate is planning to proceed with
consideration of S. 23, the ``Patent Reform Act of 2011.''
IPO is one of the largest and most diverse trade
associations devoted to intellectual property rights. Our 200
corporate members cover a broad spectrum of U.S. companies in
industries ranging from information technology to consumer
products to pharmaceuticals and biotechnology.
We wish to give you our advice on amendments that we
understand might be offered during consideration of S. 23:
Vote AGAINST any amendment to delete the ``first-inventor-
to-file'' and related provisions in section 2 of the bill.
First-inventor-to-file, explained in a 1-page attachment to
this letter, is central to modernization and simplification
of patent law and is very widely supported by U.S. companies.
Vote FOR any amendment guaranteeing the U.S. Patent and
Trademark Office access

[[Page S1092]]

to all user fees paid to the agency by patent and trademark
owners and applicants. Current delays in processing patent
applications are totally unacceptable and the result of an
underfunded Patent and Trademark Office.
Vote AGAINST any amendment that would interpose substantial
barriers to enforcement of validly-granted ``business
method'' patents. IPO supports business method patents that
were upheld by the U.S. Supreme Court in the recent Bilski
decision.
For more information, please call IPO at 202-507-4500.
Sincerely,
Douglas K. Norman,
President.
____

First-Inventor-to-File in S. 23, the ``Patent Reform Act of 2011''

Section 2 of S. 23 simplifies and modernizes U.S. patent
law by awarding the patent to the first of two competing
inventors to file in the U.S. Patent and Trademark Office
(PTO), a change from the traditional system of awarding the
patent, in theory, to the first inventor to invent. First-
inventor-to-file in S. 23 has these advantages:

Eliminates costly and slow patent interferences proceedings
conducted in the PTO and the courts to determine which
inventor was the first to invent.
Creates legal certainty about rights in all patents, the
vast majority of which never become entangled in interference
proceedings in the first place, but which are still subject
to the possibility under current law that another inventor
might come forward and seek to invalidate the patent on the
ground that this other inventor, who never applied for a
patent, was the first to invent.
Encourages both large and small patent applicants to file
more quickly in order to establish an early filing date.
Early filing leads to early disclosure of technology to the
public, enabling other parties to build on and improve the
technology. (Applicants who plan to file afterward in other
countries already have the incentive to file quickly in the
U.S.)
Makes feasible the introduction of post-grant opposition
proceedings to improve the quality of patents, by reducing
the issues that could be raised in a post-grant proceeding,
thereby limiting costs and delay.
Follows up on changes already made by Congress that (1)
established inexpensive and easy-to-file provisional patent
applications and, (2) in order to comply with treaty
obligations, allowed foreign inventors to participate in U.S.
patent interference proceedings.
____

BASF,

Florham Park, NJ, February 28, 2011.
Hon. Frank Lautenberg,
Hon. Bob Menendez,
U.S. Senate,
Washington, DC.
Dear Senators Lautenberg and Menendez: On behalf of BASF's
North American headquarters located in Florham Park, New
Jersey, I am writing to urge your support for S. 23, the
Patent Reform Act of 2011.
At BASF, We Create Chemistry, and we pride ourselves on
creating technological advances through innovation. We
recognize that America's patent system is crucial to
furthering this innovation and that the system is in need of
modernization and reform. The United States desperately needs
to enhance the efficiency, objectivity, predictability, and
transparency of its patent system.
BASF likes S. 23 because we feel it will preserve the
incentives necessary to sustain America's global innovation
and spur the creation of high-wage, high-value jobs in our
nation's economy. In particular, the shift to a ``first to
file'' system, an appropriate role for the court in
establishing patent damages, and improved mechanisms for
challenging granted patents enhance the patent system in ways
that would benefit all sectors of the U.S. economy.
I want to stress that BASF supports S. 23 in the form
recently passed out of the Senate Judiciary Committee via a
bipartisan 15-0 vote. This bill represents a great deal of
work and hard fought consensus. We ask that you reject
amendments on the floor that would substantively alter the
bill, including one that would reportedly strike the ``first
to file'' provision.
Please note, however, that BASF does support a planned
amendment that would end the practice of diverting funds from
the U.S. Patent and Trademark Office to other agencies. This
amendment is necessary, since the USPTO is funded entirely by
user fees and does not get any taxpayer money.
Our patent system has helped foster U.S. innovation and
protect the intellectual property rights of inventors for
more than 200 years, and it can continue to do so if it is
updated to make sure it meets the challenges facing today's
innovators, investors, and manufacturers. I urge you to work
with your colleagues in the Senate to pass S. 23 without
substantive amendment to the patent provisions and with
language that would prevent diversion of USPTO funds.
Sincerely,

Steven J. Goldberg,

Vice President,
Regulatory Law & Government Affairs
____

American Bar Association,

Chicago, IL, February 28, 2011.
Dear Senator: This week the Senate will be considering S.
23, the ``Patent Reform Act of 2011.'' I am writing to
express the support of the Section of Intellectual Property
Law of the American Bar Association for Senate approval of S.
23, and our opposition to any amendment that may be offered
to strike the ``first-inventor-to-file'' provisions of the
bill. These views have not been considered by the American
Bar Association's House of Delegates or Board of Governors
and should not be considered to be views of the American Bar
Association.
S. 23 is a bi-partisan product of six years of study and
development within the Judiciary Committee. By necessity, it
contains a number of provisions that are the result of
negotiation and compromise and it is unlikely that all of the
Judiciary Committee co-sponsors favor each and every
provision. We too would have addressed some issues
differently. However, the perfect should not be the enemy of
the good and we believe that this is a good bill. S. 23 and
S. 515, its close predecessor in the 111th Congress, are the
only bills that we have endorsed in the six years that we
have been following this legislation. The enactment of S. 23
would substantially improve the patent system of the United
States and we support that enactment.
At the same time, we want to express our strong opposition
to an amendment that may be offered to strike the provisions
of S. 23 that would switch the U.S. patent system to one that
awards a patent to the first inventor who discloses his
invention and applies for a patent (``first-inventor-to-
file''), rather than awarding a patent based on winning the
contest to show the earliest date of conception or reduction
to practice of the invention (``first-to-invent'').
The United States is alone in the world in retaining the
first-to-invent system. While a first-inventor-to-file system
encourages inventors to file for a patent and disclose their
inventions at an early date, the first-to-invent standard
increases opportunity for competing claims to the same
invention, and facilitates protracted legal battles in
administrative and court proceedings, which are extremely
costly, in both time and money.
Some have long thought that small and independent inventors
would be disadvantaged in a first-inventor-to-file
environment and that competitors with more resources might
learn of their inventions and get to the U.S. Patent Office
first with an application. This current legislation, however,
makes it clear that the award goes to the first inventor to
file and not merely to the first person to file.
Equally important, recent studies show that, under the
present U.S. patent system, small and independent inventors
who are second to file but who attempt in the U.S. Patent
Office and court proceedings to establish that they were the
first to invent, actually lose more patents than they would
obtain had the United States simply awarded patents to the
first inventor to file.
Moreover, since 1996, an inventor based in the United
States faces a much more difficult task of ever obtaining a
patent. For inventions made after 1996, the U.S. patent
system has been open to proofs of inventions made outside the
United States--creating for many U.S.-based inventors a new
and potentially even more expensive obstacle to obtaining a
patent under the current first-to-invent rule.
Finally, U.S. inventors more and more are facing the need
to file patent applications both at home and abroad to remain
competitive in our global economy. Requiring compliance with
two fundamentally different systems places undue additional
burdens on our U.S. inventors and puts them at a competitive
disadvantage in this global economy.
We urge you to support enactment of S. 23 and to oppose any
amendment to strike the ``first-inventor-to-file''
provisions.
Sincerely,

Marylee Jenkins,

Chairperson,
Section of Intellectual Property Law.

Mr. LEAHY. Madam President, we are now ready to go forward on the
Bennet and Kirk-Pryor amendments. I am prepared to call them up for a
vote in the next few minutes if we could get somebody on the floor.

Amendment No. 117, as Modified

I understand there is a modification at the desk of Bennet amendment
No. 117.
The ACTING PRESIDENT pro tempore. Without objection, the amendment is
so modified.
The amendment, as modified, is as follows:

On page 104, between lines 22 and 23, insert the following:

SEC. 18. SATELLITE OFFICES.

(a) Establishment.--Subject to available resources, the
Director may establish 3 or more satellite offices in the
United States to carry out the responsibilities of the Patent
and Trademark Office.
(b) Purpose.--The purpose of the satellite offices
established under subsection (a) are to--
(1) increase outreach activities to better connect patent
filers and innovators with the Patent and Trademark Office;
(2) enhance patent examiner retention;
(3) improve recruitment of patent examiners; and
(4) decrease the number of patent applications waiting for
examination and improve the quality of patent examination.
(c) Required Considerations.--In selecting the locale of
each satellite office to be

[[Page S1093]]

established under subsection (a), the Director--
(1) shall ensure geographic diversity among the offices,
including by ensuring that such offices are established in
different States and regions throughout the Nation; and
(2) may rely upon any previous evaluations by the Patent
and Trademark Office of potential locales for satellite
offices, including any evaluations prepared as part of the
Patent and Trademark Office's Nationwide Workforce Program
that resulted in the 2010 selection of Detroit, Michigan as
the first ever satellite office of the Patent and Trademark
Office.
(3) Nothing in the preceding paragraph shall constrain the
Patent and Trademark Office to only consider its prior work
from 2010. The process for site selection shall be open.
(d) Phase-in.--The Director shall satisfy the requirements
of subsection (a) over the 3-year period beginning on the
date of enactment of this Act.
(e) Report to Congress.--Not later than the end of the
first fiscal year that occurs after the date of the enactment
of this Act, and each fiscal year thereafter, the Director
shall submit a report to Congress on--
(1) the rationale of the Director in selecting the locale
of any satellite office required under subsection (a);
(2) the progress of the Director in establishing all such
satellite offices; and
(3) whether the operation of existing satellite offices is
achieving the purposes required under subsection (b).
(f) Definitions.--In this section, the following
definitions shall apply:
(1) Director.--The term ``Director'' means the Director of
the United States Patent and Trademark Office.
(2) Patent and trademark office.--The term ``Patent and
Trademark Office'' means the United States Patent and
Trademark Office.
On page 104, line 23, strike ``SEC. 18.'' and insert ``SEC.
19.''.

Amendments Nos. 117, as Modified, and 123

Mr. LEAHY. Madam President, I ask unanimous consent that the Senate
resume consideration of Bennet amendment No. 117, as modified, with the
changes at the desk and Kirk amendment No. 123 en bloc; further, that
the amendments be agreed to en bloc and the motions to reconsider be
considered made and laid upon the table, with no intervening action or
debate.
The ACTING PRESIDENT pro tempore. Is there objection?
Mr. GRASSLEY. Madam President, reserving the right to object, and I
will not object, I wish to say as manager of my side of the aisle that
we support this. We think both of these amendments are good amendments
and that we ought to move forward. I appreciate very much the majority
working with us to accomplish this goal.
I yield the floor.
The ACTING PRESIDENT pro tempore. Is there objection?
Without objection, it is so ordered.
The amendments, Nos. 117, as modified, and 123, were agreed to en
bloc.
Mr. LEAHY. Madam President, I am ready to go to third reading unless
there are others who are otherwise tied up who knows where, but I wish
they would take the time to drop by if they have amendments. Senator
Grassley and I spent hours on the floor yesterday just waiting for
people to bring up amendments. We went through a number of quorum
calls. We are talking about something that is going to be a tremendous
boost to businesses and inventors. Those who are watching are wondering
probably why we have spent years getting this far. So much time is
being wasted.
I just want everybody to know the two of us are ready to vote.
Yesterday we took hours of delay to vote on the Leahy-Grassley, et al.
amendment, and then it passed 97 to 2.
So I would urge Senators who have amendments to come to the floor. As
the gospel says, ``Many are called, but few are chosen.'' It may be the
same thing on some of the amendments, but ultimately we will conclude.
Before my voice is totally gone, unless the Senator from Iowa has
something to say, I yield to the Senator from Iowa.
Mr. GRASSLEY. Madam President, supporting what the chairman has just
said, outside of the fact that there might be one or two controversial
nongermane amendments to this legislation, we have to look at the
underlying product. The underlying product is very bipartisan. Most
economic interests within our country are supporting this patent reform
legislation. Everybody agrees it is something that probably should have
been passed a Congress ago.
I join my Democratic manager and the chairman of the committee in
urging Senators on my side of the aisle who have either germane
amendments or nongermane amendments to come to the floor and offer them
so the underlying piece of legislation can be passed and sent on to the
House of Representatives.
I yield the floor.
The ACTING PRESIDENT pro tempore. The Senator from Vermont.
Mr. LEAHY. Madam President, I also wish to associate myself with the
distinguished senior Senator from Iowa. He has worked very hard to help
us get to the floor. Considering the enormous amount of time that has
been spent by both sides of the aisle on this bill, the amount of time
that has been spent working out problems, I wish we could complete it.
I understand there are a couple Senators who may have amendments. I am
not sure where they are, but I am sure they will show up at some point.
In the meantime, I suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mrs. FEINSTEIN. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Udall of New Mexico). Without objection,
it is so ordered.

Amendment No. 133

Mrs. FEINSTEIN. Mr. President, I call up amendment No. 133, and I ask
unanimous consent to set aside the pending amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will report.
The assistant legislative clerk read as follows:

The Senator from California [Mrs. Feinstein], for herself,
Mr. Risch, Mr. Reid, Mr. Crapo, Mrs. Boxer, and Mr. Ensign,
proposes an amendment numbered 133.

The amendment is as follows:

On page 2, line 1, strike ``FIRST INVENTOR TO FILE.'' and
insert ``FALSE MARKING.''
On page 2, strike line 2 and all that follows through page
16, line 4.
On page 16, line 5, strike ``(1) In general.--'' and insert
``(a) In General.--'' and move 2 ems to the left.
On page 16, line 7, strike ``(A)'' and insert ``(1)'' and
move 2 ems to the left.
On page 16, line 11, strike ``(B)'' and insert ``(2)'' and
move 2 ems to the left.
On page 16, line 18, strike ``(2) Effective date.--'' and
insert ``(b) Effective Date.--'' and move 2 ems to the left.
On page 16, line 19, strike ``subsection'' and insert
``section''.
On page 16, strike line 22 and all that follows through
page 23, line 2.
On page 23, strike line 3 and all that follows through page
31, line 15, and renumber sections accordingly.
On page 64, strike line 18 and all that follows through
page 65, line 17.
On page 69, line 10, strike ``derivation'' and insert
``interference''.
On page 69, line 14, strike ``derivation'' and insert
``interference''.
On page 71, line 9, strike ``Derivation'' and insert
``Interference''.
On page 71, lines 9 and 10, strike ``derivation'' and
insert ``interference''.
On page 71, line 14, strike ``derivation'' and insert
``interference''.
On page 72, line 3, strike ``derivation'' and insert
``interference''.
On page 72, line 8, strike ``derivation'' and insert
``interference''.
On page 73, line 1, strike ``derivation'' and insert
``interference''.
On page 73, between lines 5 and 6, insert the following:
(d) Conforming Amendments.--Sections 41, 134, 145, 146,
154, 305, and 314 of title 35, United States Code, are each
amended by striking ``Board of Patent Appeals and
Interferences'' each place that term appears and inserting
``Patent Trial and Appeal Board''.
On page 73, line 6, strike ``(d)'' and insert ``(e)''.
On page 93, strike lines 6 through 8, and insert the
following: by inserting ``(other than the requirement to
disclose the best mode)'' after ``section 112 of this
title''.
On page 98, strike lines 20 and 21, and insert the
following:

``SEC. 17. EFFECTIVE DATE.

Except as otherwise provided
On page 99, strike lines 1 through 14.

Mrs. FEINSTEIN. Mr. President, I ask unanimous consent that at the
conclusion of my remarks the amendment be set aside and the Senate
return to the previously pending business.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mrs. FEINSTEIN. Thank you very much.
I rise today to offer an amendment to strike the first-to-file
provisions of this bill. I am joined in this effort by my cosponsors,
Senator Risch, Majority Leader Reid, and Senators Crapo

[[Page S1094]]

and Boxer. I also ask unanimous consent that Senator Ensign be added as
a cosponsor of the amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mrs. FEINSTEIN. I know the bill has contained these provisions for
some time now, and I acknowledge I have voted for different versions of
it that contain these provisions. However, I have heard more and more
in the past 2 years from small inventors, startup companies, small
businesses, venture capitalists, and, yes, even large companies from
all around our country, but especially in my State of California, that
this proposed transition from our first-to-invent system to a first-to-
file system would be severely harmful to innovation, and especially
burdensome on small inventors, startups, and small businesses. And I
have become convinced it is the wrong thing to do.
For the benefit of my colleagues who have not been so embroiled in
this rather technical issue, let me provide a little background. For
over a century, our country has awarded patents to the first inventor
to come up with an idea, even if somebody else beat them to the Patent
Office--a first-to-invent system. And we have done very well under the
first-to-invent system. This bill would change that, so that the first
person to file an application for a patent for a particular invention
would be entitled to that patent, even if another person actually
created the invention first. This is what is known as the first-to-file
system.
Now, the argument that is made for transitioning to first-to-file is
that the rest of the world follows first-to-file, and that will
harmonize our system with theirs. This is supported by big companies
that have already made it, that have an international presence.
Therefore, I understand their support for first-to-file. But under
first-to-invent, we have been the world's leader in innovation, and the
first-to-file countries have been playing catchup with our
technological advances. So with all due respect, I wouldn't trade
America's record of innovation for that of virtually any other country
or certainly any first-to-file country.
The genius of America is inventions in small garages and labs, in
great ideas that come from inspiration and perspiration in such
settings and then take off. So many of America's leading companies--
Hewlett Packard, Apple, Google, even AT&T arising from Alexander Graham
Bell's lab, for example--started in such settings and grew
spectacularly, creating jobs for millions of Americans and lifting our
economy and standard of living.
A coalition of affected small business groups, including the National
Small Business Association and others, recently said first-to-file
``disrupts the unique American start-up ecosystem that has led to
America's standing as the global innovation leader . . .''
I believe it is critical that we continue to protect and nurture this
culture of innovation, and preserving the first-to-invent system that
has helped foster it is essential to do this.
Moreover, this bill would not actually harmonize our patent priority
system with that of the rest of the world. Many first-to-file countries
allow more extensive use of prior art to defeat a patent application
and provide for greater prior user rights than this bill would provide.
Europe does not provide even the limited 1-year publication grace
period this bill does.
An important part of this debate is the change the bill makes to the
so-called grace period that inventors have under U.S. current law.
Presently, a person's right to their invention is also protected for 1
year from any of the following: No. 1, describing their invention in a
printed publication; No. 2, making a public use of the invention; or,
No. 3, offering the invention for sale. This is called the grace
period, and it is critical to small inventors.
Mr. President, 108 startups and small businesses wrote last year
that:

U.S. patent law has long allowed inventors a 1-year ``grace
period,'' so that they can develop, vet, and perfect their
invention, begin commercialization, advance sales, seek
inventors and business partners, and obtain sufficient funds
to prosecute the patent application. During the grace period,
many inventors learn about starting a technology-based
business for the first time. They must obtain investment
capital and must learn from outside patent counsel (at
considerable expense) about patenting and related deadlines
and how to set up confidentiality agreements. Many startups
or small businesses are in a race against insolvency during
this early stage. The grace period protects them during this
period from loss of patent rights due to any activities,
information leaks or inadvertent unprotected disclosures
prior to filing their patent applications.

S. 23 eliminates this grace period from offering an invention for
sale or making a public use of it, leaving only a grace period from
``disclosure'' of the invention.
There are two problems with this. First, ``disclosure'' is not
defined in the bill. This will generate litigation while the courts
flesh out that term's meaning. While this plays out in the courts,
there will be uncertainty about whether many inventions are patentable.
This uncertainty will, in turn, chill investment, as venture
capitalists will be reluctant to invest until they are confident that
the inventor will be able to patent and own their invention.
Secondly, because of this lack of definition, some patent lawyers
interpret ``disclosure'' to mean a disclosure that is sufficiently
detailed to enable a person of ordinary skill in the particular art to
make the invented item. In practical terms, this means a patent
application or a printed publication.
Now, this does provide some protection to universities, it is true.
They often publish about their inventions. However, it is scant
protection for the small inventor. They don't publish about their
inventions, until they file a patent application. As the 108 small
businesses put it, ``no business willingly publishes complete technical
disclosures that will tip-off all competitors to a company's
technological direction. . . . Confidentiality is crucial to small
companies.''
The grace period from offering for sale or public use is critical for
their protection; eliminating it will have the effect, in the words of
these small businesses, of ``practically gutting the American 1-year
grace period.'' The National Small Business Association wrote recently:

The American first-to-invent grace period patent system has
been a major mechanism for the dynamism of small business
innovation. . . . It is clear that the weak or (entirely
absent) [sic] grace periods used in the rest of the world's
first-to-file patent system throttles small-business
innovation and job creation.

Our amendment would preserve America's world-leading system.
I am also very concerned that first-to-file would proportionately
disadvantage small companies and startups with limited resources. I
have become convinced that this change would impede innovation and
economic growth in our country, particularly harming the small, early-
stage businesses that generate job growth.
Obviously, the process of innovation starts with the generation of
ideas. Small California companies and inventors have described to me
how most of these ideas ultimately do not pan out; either testing or
development proves they are not feasible technologically, or they prove
not to be viable economically.
Unfortunately, first-to-file incentivizes inventors to ``race to the
Patent Office,'' to protect as many of their ideas as soon as possible
so they are not beaten to the punch by a rival. Thus, first-to-file
will likely result in significant overfiling of these ``dead end''
inventions, unnecessarily burdening both the Patent and Trademark
Office and inventors. As Paul Michel, former chief judge of the Court
of Appeals for the Federal Circuit, and Gregory Junemann, president of
the International Federation of Professional and Technical Engineers,
put it in a recent letter to the committee:

As Canada recently experienced, a shift to a first-to-file
system can stimulate mass filing of premature applications as
inventors rush to beat the effective date of the shift or
later, filings by competitors.

This presents a particular hardship for independent inventors, for
startups, and for small businesses, which do not have the resources and
volume to employ in-house counsel but must instead rely on more-costly
outside counsel to file their patents. This added cost and time
directed to filing for ideas that are not productive will drain
resources away from the viable ideas that can build a patent
portfolio--and a business.
At a time when the Patent and Trademark Office has a dramatic backlog
of over 700,000 patents waiting to be examined and a pendency time of
some 3 years, Congress should be careful to

[[Page S1095]]

ensure that any legislative changes will not increase patent filings
that are unfruitful.
The counter-argument is made that a small inventor could file a cheap
``provisional patent application,'' and that is sufficient protection.
However, patent lawyers who work with small clients have said that they
advise their clients not to treat a provisional application any less
seriously than a full patent application. If there is part of an
invention that is left out of the provisional application, that will
not be protected. And the parts that are included in the provisional
application will be vulnerable too, under an attack that the inventor
failed to disclose the ``best mode'' of the invention by leaving out
necessary information.
The argument is made that first to file will establish a simple,
clear priority of competing patent applications. Proponents of first to
file argue that it will eliminate costly, burdensome proceedings to
determine who actually was the first to invent, which are known as
``interference proceedings.''
However, the reality is that this is not a significant problem under
our current system. There are only about 50 ``interference
proceedings'' a year to resolve who made an invention first. This is
out of about 480,000 patent applications that are submitted each year--
in other words, one-one hundredth of 1 percent of patent applications.
Another problem with the bill's first to file system is the
difficulty of proving that someone copied your invention.
The bill's proponents assert that it protects against one person
copying another person's invention by allowing the first inventor to
prove that ``such other patent was derived from the inventor of the
invention . . .''.
Currently, you as a first inventor can prove that you were first by
presenting evidence that is in your control--your own records
contemporaneously documenting the development of your invention. But to
prove that somebody else's patent application came from you under the
bill, was ``derived'' from you, you would have to submit documents
showing this copying. Only if there was a direct relationship between
the two parties will the first inventor have such documents.
If there was only an indirect relationship, or an intermediary--for
example, the first inventor described his invention at an angel
investor presentation where he didn't know the identities of many in
attendance--the documents that would show ``derivation''--copying--are
not going to be in the first inventor's possession; they would be in
the second party's possession. You would have to find out who they
talked to, e-mailed with, et cetera to trace it back to your original
disclosure. But the bill doesn't provide for any discovery in these
``derivation proceedings,'' so the first inventor can't prove their
claim.
For these reasons, and many others, the first to invent system, which
I believe has made our Nation the leader in the world, which our
amendment would preserve, is supported by numerous people and
businesses around the country, including the National Small Business
Association; Coalition for Patent Fairness, a coalition of large high-
tech companies; IEEE, Institute of Electrical and Electronics
Engineers, which has 395,000 members; the International Federation of
Professional and Technological Engineers, AFL-CIO; the University of
California System; the University of Kentucky; Paul Michel--Former
Chief Judge of the U.S. Court of Appeals for the Federal Circuit, which
plays the critical role of hearing appeals in patent cases; the U.S.
Business and Industry Council; American Innovators for Patent Reform;
National Association of Patent Practitioners; Professional Inventors
Alliance USA; CONNECT, a trade association for small technology and
life science businesses; and many small inventors, as represented, for
instance, in a letter signed by 108 startups and small businesses from
all over the country.
Mr. President, I ask unanimous consent that a copy of this letter be
printed in the Record following my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mrs. FEINSTEIN. Mr. President, I don't often agree with the
organization Gun Owners of America, a group that thinks the National
Rifle Association is too liberal. But I do agree with them on this
issue. They are part of a coalition of 23 conservative organizations
that wrote to the leaders about this, arguing: ``Our competitors should
have to `harmonize up' to our superior intellectual property regime,
rather than our having to weaken our patent system and `harmonize down'
to their levels.'' Other signatories on this letter include Phyllis
Schlafly of the Eagle Forum; Edwin Meese III, former Attorney General
under President Reagan; the American Conservative Union; and the
Christian Coalition.
I think this is really a battle between the small inventors beginning
in the garage, like those who developed the Apple computer that was
nowhere, and who, through the first-to-invent system, were able to
create one of the greatest companies in the world. America's great
strength is the cutting-edge of innovation. The first-to-invent system
has served us well. If it is not broke, don't fix it. I don't really
believe it is broke.
I am delighted to see that my cosponsor, the distinguished Senator
from California, is also on the floor on this matter, and I welcome her
support.
I yield the floor.

Exhibit 1

June 1, 2010.
Re Effective repeal of the one-year ``grace period'' under S.
515, the Patent Reform Act of 2010.

Hon. Harry Reid,
Majority Leader, U.S. Senate,
Washington, DC.
Hon. Mitch McConnell,
Minority Leader, U.S. Senate,
Washington, DC.
Dear Senators, on behalf of the undersigned companies and
organizations whose survival and new job creations depend on
patent protection, we are writing regarding the patent reform
legislation, S. 515. We write today to draw renewed attention
to a proposed rewrite of 35 U.S.C. Sec. 102, which
effectively eliminates the American one-year grace period
during which current law permits an inventor to test and vet
an invention, publically demonstrate it to obtain advance
sales revenue and seek investors before filing the patent
application. No representatives of small business were called
to testify during five years of Senate hearings on patent
legislation. This issue has been overshadowed by the debate
on other provisions of S. 515, but it is no less disruptive
to the technology investments fostered by the patent system.
The proposed sweeping changes in Sec. 102 is another issue
where some large, incumbent firms are seeking a change to the
detriment of small companies, new entrants, startup
innovators, independent inventors, and future businesses.
U.S. patent law has long allowed inventors a one-year
``grace period,'' so that they can develop, vet, and perfect
their invention, begin commercialization, advance sales, seek
investors and business partners, and obtain sufficient funds
to prosecute the patent application. During the grace period,
many inventors learn about starting a technology-based
business for the first time. They must obtain investment
capital and often must learn from outside patent counsel (at
considerable expense) about patenting and related deadlines
and how to set up confidentiality agreements. Many startups
or small businesses are in a race against insolvency during
this early stage. The grace period protects them during this
period from loss of patent rights due to any activities,
information leaks or inadvertent unprotected disclosures
prior to filing their patent applications.
Small businesses and startups are significantly more
exposed than large firms in this regard because they must
rely on far greater and earlier private disclosure of the
invention to outside parties. This is often required for
raising investment capital and for establishing strategic
marketing partnerships, licensing and distribution channels.
In contrast, large established firms have substantial
patenting experience, often have in-house patent attorneys
and often use internal R&D investment funds. They can also
use their own marketing, sales and distribution chains.
Therefore, they seldom need early disclosure of their
inventions to outside parties.
S. 515 amends Sec. 102 to confer the patent right to the
first-inventor-to-file as opposed to the first-to-invent as
provided under current law. This change is purportedly made
for the purpose of eliminating costly contests among near-
simultaneous inventors claiming the same subject matter,
called ``interferences.'' The goal of eliminating
interferences is achievable by simple amendment of only
Sec. 102(g) to a first-inventor-to-file criterion. However,
under the heading of First-Inventor-To-File, S. 515 does far
more, it changes all of Sec. 102, redefining the prior art
and practically gutting the American one-year grace period.

[[Page S1096]]

Without the grace period, the patent system would become
far more expensive and less effective for small companies. It
would create the need to ``race to the patent office'' more
frequently and at great expense before every new idea is
fully developed or vetted. The pressure for more filings will
affect all American inventors--not only a few that end up in
interferences under current law. Because filing decisions
must be made based on information that will be preliminary
and immature, the bill forces poor patenting decisions.
Applicants will skip patent protection for some ultimately
valuable inventions, and will bear great costs for
applications for inventions that (with the additional
information that is developed during the grace period year of
current law) prove to be useless, and subsequently abandoned.
The evidence for this high abandonment trend under systems
having no grace period is readily available from European
application statistics.
The proponents of S. 515 suggest that the harm of the weak
grace period of proposed Sec. 102(b) can be overcome if an
inventor publishes a description of the invention, allowing
filing within a year following such publication. Underlying
this suggestion are two errors. First, no business willingly
publishes complete technical disclosures that will tip off
all competitors to a company's technological direction. We
generally do not, and will not, publish our inventions right
when we make them, some 2.5 years before the 18-month
publication or 5-7 years before the patent grant.
Confidentiality is crucial to small companies.
Second, even if we were to avail ourselves of such
conditional grace period by publishing first before filing,
we would instantly forfeit all foreign patent rights because
such publication would be deemed prior art under foreign
patent law. No patent attorney will advise their client to
publish every good idea they conceive in order to gain the
grace period of S. 515. The publication-conditioned ``grace
period'' in S. 515 is a useless construct proposed by parties
intent on compelling American inventors to ``harmonize'' de
facto with national patent systems that lack grace periods.
S. 515 forces U.S. inventors to make the ``Hobson's Choice''
of losing their foreign patent rights or losing the American
grace period. It should be clear that the only way for
American inventors to continue to benefit from a grace period
and be able to obtain foreign patent rights, is to keep
intact the current secret grace period that relies on
invention date and a diligent reduction to practice.
The American grace period of current law ensures that new
inventions originating in American small companies and
startups--the sector of the economy that creates the largest
number of new jobs--receive patent protection essential for
survival and that American small businesses' access to
foreign markets is not destroyed. We urge you to amend S. 515
so that Sec. 102 remains intact in order to preserve the
American grace period in its full scope and force.
Thank you for your consideration of our views and concerns.
Sincerely,
(Signed by 108 Companies).

The PRESIDING OFFICER. The Senator from Utah.
Mr. HATCH. Mr. President, I ask unanimous consent that the Senator
from California be permitted to speak, and then I ask that the
remaining time be granted to me.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mrs. BOXER. Mr. President, will the Chair cut me off at 1 minute?
The PRESIDING OFFICER. Yes.
Mrs. BOXER. Mr. President, I thank Senator Hatch so much. I thank my
friend and colleague, Senator Feinstein, for this critical amendment.
Mr. President, I rise in support of the amendment offered by my dear
friend and colleague, Senator Feinstein.
The amendment would strike the first-to-file provision in the patent
reform bill.
I was pleased to work with my colleague, Dr. Coburn, in support of
his amendment to allow the patent office to keep its user fees, which
was accepted into the managers' amendment that passed yesterday.
To me, that was one of the most important reforms we could enact in
this legislation--giving the PTO the resources it needs to serve the
public.
I support efforts to improve our patent system. And there are some
good things in this bill, including efforts to help small businesses
navigate the PTO.
But I strongly disagree with changing the core principle of our
patent system--awarding a patent to the true inventor--for the sake of
perceived administrative ease.
Unlike other countries, our patent system is rooted in our
Constitution. We are the only country in the world whose Constitution
specifically mentions ``inventor.''
Article I, section 8 states ``The 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.''
Our system recognizes the complete process of invention--from
conception to completion.
The United States is still the heart of innovation in the world, and
its patent system is its soul.
Despite our rich history, the bill before us today seeks to erase
over 200 years of invention and achievement, and replace it with a
weaker system.
Let's talk about those changes.
Section 2 of the bill awards a patent to the first person to file,
regardless of whether that person was the true inventor--the one who
first conceived and developed the invention to completion.
That goes directly against the express language of the Constitution,
which awards patents to the inventor, not the fastest to the PTO.
Section 2 of the bill also provides a weaker grace period than
current law. This is a big change that will have a significant economic
effect on startups, entrepreneurs and individual inventors.
I believe it is a change that we cannot afford, especially in these
tough economic times when we need our small businesses to create new
jobs.
Current law allows an inventor to obtain a patent if an application
is filed within a year of a public use, sale or publication of
information about the invention.
That year is called the grace period, during which an inventor's
right to apply is protected from disclosures or applications by others
related to his invention.
The grace period is important because it allows smaller entities,
like startups or individual inventors, time to set up their businesses,
seek funding, offer their inventions for sale or license, and prepare a
thorough patent application.
Put another way, the grace period is an integral part of the
formation of a small business.
The grace period has been a part of our patent system since 1839, and
it was implemented to encourage inventors to engage in commercial
activity, such as demonstrations and sales negotiations, without fear
of being beaten to the patent office by someone with more resources.
The new grace period in the bill, however, would no longer cover
important commercial activities such as sales or licensing
negotiations.
The new provision also contains vague, undefined terms that will
inject more uncertainty into the system at a time when inventors and
investors need more certainty.
Proponents of first-to-file will argue that there have been studies
or reports that show that a first-to-file system does not harm small
entities. For example, they often mention the report of the National
Academies of Science that reached that conclusion.
However, those studies and reports only analyzed the rare cases where
two parties claimed to be the first inventor.
Do you know how rare those cases are? Last year, there were 52 cases
out of over 450,000 applications filed--.01 percent of all applications
ended up in a contest.
I do not think we should change over 170 years of protection for
small entities based on cases that happen with the frequency of a hole
in one in golf--1 out of 12,500, or .01 percent.
Listen to the conclusion of a report analyzing the business effects
of Canada's switch to a first-to-file system:

The divergence between small entities and large
corporations in patenting after the Reforms supports the idea
that a switch to a first-to-file system will result in
relatively less inventive activity being carried out by
independent inventors as well as small businesses, and more
being channeled through large corporations instead.

In closing, I believe there are things we can do to improve our
patent system.
But I also believe that the foundation of our Constitution-based
system--a patent is awarded to the inventor--has worked well for over
220 years, and we should not change that core.
It has produced inventors such as Thomas Edison, the Wright Brothers,
and George Washington Carver.
We should not change the core of our system, and I urge my colleagues
to vote for the Feinstein amendment.
Mr. President, I will conclude in this way. The Feinstein amendment
is necessary. It is necessary because the first

[[Page S1097]]

person to invent should get the protection from the Patent Office. We
believe that if this amendment does not pass, it goes against the
express language of the Constitution which awards patents to the
inventor, not the fastest one to run down to the Patent Office. Senator
Feinstein has explained why this is a matter of fairness and is better
for consumers. I am hopeful that the amendment passes.
I thank the Chair.
The PRESIDING OFFICER. The Senator from Utah.
Mr. HATCH. Mr. President, I have been following the debate on the
patent bill closely. I wish to again voice my strong support for
passage of this very important legislation.
We have been working on this bill for a number of years and it is
satisfying to finally see the full Senate consider it now. As I have
said before, the patent reform bill is about moving our Nation toward
the future. It will equip America's inventors with an improved patent
system that will enable them to better compete in today's global
economy. Toward that end, I would like to discuss some of the key
provisions of this bill and what they will do to improve and modernize
our patent system.
There are some misconceptions about the proposed first-inventor-to-
file provision. Some have questioned why we cannot maintain the current
first-to-invent system, in which priority is established by determining
which applicant actually invented the claimed invention first. Under
this system, if there is a dispute, it costs applicants an average of
$500,000 in legal fees to prove they were the first-to-invent. This
amount does not include extra expenses that can follow if the decision
is appealed. Unfortunately, many small businesses and independent
inventors do not have the resources to engage in the process we have
now.
Conversely, moving to a first-inventor-to-file system would provide
inventors a cost-effective and certain path to protect one's invention
through the filing of a provisional application, at a much more
reasonable cost of about $100.
The purpose of the proposed transition is certainly not to hurt small
businesses or independent inventors. Quite the contrary. These
innovators are too important to our Nation's economic health. But let's
consider some facts: in the past 7 years, more than 3,000,000
applications have been filed, and only 25 patents were granted to small
entities that were the second inventor to file, but later proved that
they were first to invent. Of those 25, only one patent was granted to
an individual inventor who was the second to file. Thus, in the last 7
years, only one inventor in over 3,000,000 patent filings would have
gotten a different outcome if we, like the rest of world, used a first-
inventor-to-file patent system. I assure you that I do not want to
minimize the reluctance that some have with changing to this new
system; however, the facts speak for themselves. Simply put, moving to
a first-inventor-to-file system does not appear to have the level of
risk some have feared.
Additionally, the American Bar Association's Section of Intellectual
Property Law recently confirmed the importance of the proposed
transition by stating:

For inventions made after 1996, the U.S. patent system has
been open to proofs of inventions made outside the United
States--creating for many U.S.-based inventors a new and
potentially even more expensive obstacle to obtaining a
patent under the current first-to-invent rule. Finally, U.S.
inventors more and more are facing the need to file patent
applications both at home and abroad to remain competitive in
our global economy. Requiring compliance with two
fundamentally different systems places undue additional
burdens on U.S. inventors and puts them at a competitive
disadvantage in this global economy.

Indeed, the transition to the first-inventor-to-file system is long
overdue and will help our U.S. companies and inventors out-compete
their global challengers.
The proposed legislation would also give the USPTO rulemaking
authority to set or adjust its own fees, without requiring a statutory
change every time an adjustment is needed. Providing the USPTO the
ability to adjust its own fees will give the agency greater flexibility
and control, which, in the long run, will benefit inventors and
businesses.
Speaking of greater fiscal flexibility for the USPTO, let me take a
moment to discuss the importance of ensuring full access to the fees
the agency collects.
American inventors, who create jobs and keep our economic engine
running, should not have to wait for years after they have paid their
fees to have their patent applications processed. This is tantamount to
a tax on innovation and it creates disincentives for inventors and
entrepreneurs.
A fully funded USPTO, with fiscal flexibility, would--at the very
least--mean more and better trained patent examiners, greater
deployment of modern information technologies to address the agency's
growing needs, and better access to complete libraries of prior art.
Over the years, fee diversion has forced a vicious cycle of abrupt
starts and stops in the hiring, training, and retention of qualified
office personnel. To make matters worse, under current conditions,
outdated computer systems are not keeping pace with the volume of work
before the agency. It is clear to most that the USPTO has yet to
recover from the negative impact of diverting close to a billion
dollars from its coffers, for its own use. That has not only been
wrong, it is obscene.

I agree with what has been said that there cannot be true patent
reform without full access to collected fees from the USPTO. We owe it
to our inventor community to do this. We all have a vested interest in
ensuring that our country's unique spirit of ingenuity and innovation
continues to thrive and flourish. Last night, an overwhelming majority
of the Senate voted to finally put an end to fee diversion from the
USPTO. It was a historic moment, and I hope our House colleagues will
maintain this momentum. I understand some people on the Appropriations
Committee do not like it. They do not like it because they like to be
able to play with that money. But it is disastrous to not have that
money stay with the USPTO so we can move forward faster, better and get
a lot more done and still be the leading innovative nation in the
world.
The legislation also enables patentholders to request a supplemental
examination of a patent if new information arises after the initial
examination. By establishing this new process, the USPTO would be asked
to consider, reconsider or correct information believed to be relevant
to the patent. The request must be made before litigation commences.
Therefore, supplemental examination cannot be used to remedy flaws
first brought to light in the course of litigation, nor does it
interfere with the court's ability to address inequitable conduct. That
is an important point. Further, this provision does not limit the
USPTO's authority to investigate misconduct or to sanction bad actors.
In a nutshell, the supplemental examination provision satisfies a
long-felt need in the patent community to be able to identify whether a
patent would be deemed flawed if it ever went to litigation and enables
patentees to take corrective action. This process enhances the quality
of patents, thereby promoting greater certainty for patentees and the
public.
The America Invents Act also creates a mechanism for third parties to
submit relevant information during the patent examination process. This
provision would provide the USPTO with better information about the
technology and claimed invention by leveraging the knowledge of the
public. This will also help the agency increase the efficiency of
examination and the quality of patents.
The pending legislation also provides a new postgrant review
opposition proceeding to enable early challenges to the validity of
patents. This new but time-limited postgrant review procedure will help
to enhance patent quality and restore confidence in the presumption of
validity that comes with issued patents.
Finally, this bipartisan patent bill provides many improvements to
our patent system which include, among other provisions, just some of
the following:
Changes to the best mode disclosure requirement, increased incentives
for government laboratories to commercialize inventions, restrictions
on false

[[Page S1098]]

marking claims, removal of restrictions on the residency of Federal
circuit judges, clarification of tax strategy patents, providing
assistance to small businesses through a patent ombudsman program,
establishing additional USPTO satellite offices, and creation of a
transitional postgrant proceeding specific to business method patents.
As we can see, this bipartisan bill represents significant changes to
our patent laws. They will enable our great country to more effectively
compete in the 21st century global economy. I encourage my colleagues
to take action and vote in favor of this bill. We cannot afford to
allow this opportunity to pass us by.
I yield the floor.
The PRESIDING OFFICER. The Senator from Minnesota.
Ms. KLOBUCHAR. Mr. President, I thank the Senator from Utah for his
strong statement of support for the America Invents Act, a bill that
is, at its heart, all about moving our economy forward. When we think
about the brass tacks of our country, we think about ideas, we think
about inventions. It was our inventors who developed the light bulb,
the assembly line, the Internet, the iPod, and, of course, my 15-year-
old daughter's favorite invention, Facebook. This all came from our
great country.
I wish to comment, briefly--I know Senator Rockefeller has an
important issue to talk about, the issue we have just been discussing.
First of all, we have heard from stakeholders from across the
spectrum--from high tech and life sciences to universities and small
inventors--in support of the transition to the first-to-file system.
I ask unanimous consent to have printed in the Record a list of
supporters of the transition to the first-to-file system that is
contained in the America Invents Act.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Supporters of the First-to-File Transition

AdvaMed; American Bar Association; American Council on
Education; American Intellectual Property Law Association;
Association of American Medical Colleges; Association for
Competitive Technology; Association of American Universities;
Association of Public and Land-grant Universities;
Association of University Technology Managers; BASF, the
Chemical Company; Biotechnology Industry Organization;
Business Software Alliance; Caterpillar; Coalition for 21st
Century Patent Reform; Council on Governmental Relations;
Gary Michelson, Independent Inventor; Genentech; Intellectual
Property Owners Association; Louis J. Foreman, Enventys,
independent inventor; National Association of Manufacturers;
Small Business and Entrepreneurship Council; and Software &
Information Industry Association.

Ms. KLOBUCHAR. Mr. President, we have heard also on the floor that
there is, as Senator Hatch mentioned, strong support throughout the
Senate for this change. In fact, Commerce Secretary Locke emphasizes
that support in a column appearing in the Hill newspaper today. He
states:

[P]atent reform adopts the ``first-inventor-to-file''
standard as opposed to the current ``first-to-invent''
standard. First inventor to file is used by the rest of the
world
and would be good for U.S. businesses, providing a more
transparent and cost-effective process that puts them on a
level playing field. . . .

I could not agree more. Small businesses, independent investors, and
stakeholders across the spectrum support this important transition.
I wish to mention one other aspect of this system. With the current
first-to-invent system, when two patents are filed around the same time
for the same invention, it also creates problems. It means the
applicants must go through an arduous and expensive process called an
interference to determine which applicant will be awarded the patent.
Small inventors rarely, if ever, win interference proceedings because
the rules for interferences are often stacked in favor of companies
that can spend more money. We believe this needs to change. There was a
recent article about this in the Washington Post in which David Kappos,
the Director of the Patent Office and Under Secretary for Intellectual
Property, described the current system is similar to parking your car
in a metered space and having someone else come up and say they had
priority for that space and then having your car towed. Instead, we
need a system in which, if you are the first to pull in and pay your
fee, you can park there and no one else can claim it is their space.
The America Invents Act would create that system. It transitions our
patent system from a first-to-invent system to a first-inventor-to-file
system. By simply using the file date of an application to determine
the true inventor, the bill increases the speed of a patent application
process, while also rewarding novel, cutting-edge inventions.
A first-to-file system creates more certainty for inventors looking
to see if an idea has already been patented. At the same time, the bill
still provides a safe harbor of 1 year for inventors to go out and
market their inventions before having to file for their patent. This
grace period is one of the reasons our Nation's top research
universities, such as the University of Minnesota, support the bill.
The grace period protects professors who discuss their inventions with
colleagues or publish them in journals before filing their patent
application.
Mr. President, I know Senator Rockefeller is here to discuss a very
important issue.
The PRESIDING OFFICER. The Senator from West Virginia.
Mr. ROCKEFELLER. Mr. President, I ask unanimous consent to set aside
the pending amendment so I may call up amendment No. 134.
The PRESIDING OFFICER. Is there objection?
The Senator from Utah.
Mr. HATCH. Mr. President, I have to object on behalf of the manager
of the bill who is not here right now. If the Senator can at least wait
until Senator Grassley returns to make his request.
Mr. ROCKEFELLER. I know the Senator from Utah, and I remind him he
was the lead author of the Hatch-Waxman Act, creating the 180-day
period for generics.
Mr. HATCH. I object right now, but as soon as Senator Grassley gets
back----
Mr. ROCKEFELLER. Will the Senator from Utah object if I talk about
it?
Mr. HATCH. No.
The PRESIDING OFFICER. An objection has been heard.
The Senator from West Virginia is recognized.

Amendment No. 134

Mr. ROCKEFELLER. Mr. President, my amendment is based on legislation
I introduced earlier this year, obviously quite recently. The
cosponsors of that bill, which is called the Fair Prescription Drug
Competition Act, are Senator Shaheen, Senator Leahy, who chairs the
Judiciary Committee, Senator Inouye, Senator Stabenow, and Senator
Schumer, who is on the Judiciary Committee.
I wish to acknowledge that the managers of this bill, Chairman Leahy
and Senator Grassley, have been steadfast partners in pushing the
Federal Trade Commission to investigate further consumer access to
generic drugs, which is a huge problem. We do a lot of talking about
the health care bill and a lot of other things about saving money and
saving consumers money. This is a bill which would do this, if I were
allowed to actually proceed to it.
This amendment eliminates one of the most widely abused loopholes
that brand-name drug companies use to extend their shelf life, their
monopoly, and limit consumer access to lower cost generic drugs which
are just as good and just the same, but they have a system to work on
that. It ends the marketing of so-called authorized generic drugs
during the 180-day marketing exclusivity period that Congress designed
to give real low-cost generics a major incentive to enter the market.
What was happening was the brand-name drug companies had their 18
years of exclusivity. That is a monopoly time unrivaled. Then somebody
else would come in with a cheaper way of doing the same thing, an FDA-
approved drug, but it would be a generic drug. It would be the same
drug, have the same effect, but it would be much cheaper. Since
millions of people buy these drugs, that would seem to be a good thing
in a budget-conscious era for American families, as well as for the
government.
As I say, this amendment ends the so-called authorized generic drugs
during the 180-day marketing exclusivity

[[Page S1099]]

period Congress designated to give real low-cost generics a major
incentive to enter the market. You have to be able to enter the market
to compete and to get your lower priced, equally good drugs out there.
They do that by challenging a brand-name patent. That is the only way
they can do it.
An authorized generic drug is a brand-name prescription drug produced
by the same brand manufacturer yet repackaged as a generic. That is
clever, but it is also a little devious. Many brand-name drug
manufacturers are repackaging their drugs as generics for the purpose
of extending their market shares after their patents expire. They have
a little subsidiary which produces something which they shift over to
them.
Unfortunately, this often eliminates the incentive for an independent
generic to enter the marketplace. Therefore, the price of drugs remains
much higher, and that would seem to be not in the interest of the
American people.
In 1984, Congress passed the Hatch-Waxman Act to provide consumer
access to lower cost generic drugs. Under the law which the Senator
from Utah led, if a true generic firm successfully challenges a brand-
name patent, the generic firm is provided a 180-day period for that
drug to exclusively enter the market. This is a crucial incentive for
generic drug companies to enter that market and make prescription drugs
more affordable for consumers. It would seem to me this would be a very
laudable pursuit.
Every American agrees on the need to reduce health care costs.
Generic drugs save consumers an estimated total of $8 billion to $10
billion a year--$8 billion to $10 billion-a-year savings for the same
quality of drug. Of course, they get that at the retail pharmacies
where the prescription is handed out. For working families, these
savings can make a huge difference, particularly during very tough
economic times, which we are going through.
This amendment would restore the main incentive generic drug
companies have to challenge a brand-name patent and enter the market.
We give them the incentive to challenge the brand-name prescriber.
That is what this amendment is about. It is profoundly important. It
has been before this body many times. I guess it is a question of do we
want to help people who have to take a lot of prescriptions and older
people--any kind of people. Do we want to help them pay less? I guess
it divides into if you do or if you don't. I am in the camp of, yes, I
want to have people pay less. So I would just say that.

Mr. President, I yield the floor for the time being.
The PRESIDING OFFICER. The Senator from Kansas.
Mr. ROBERTS. Mr. President, I ask unanimous consent to speak as in
morning business for approximately 20 minutes, and I probably will not
use all of that time and will yield back.
The PRESIDING OFFICER. Without objection, it is so ordered. The
Senator is recognized.
Mr. ROBERTS. I thank the Chair.

Executive Order on Regulations

Mr. President, I rise today to speak again about President Obama's
January 18 Executive order that directed all Federal agencies within
the administration to review or repeal those significant regulatory
actions that are duplicative, overly burdensome, or would have a
significant economic impact on ordinary Americans.
The President went on to say--I am paraphrasing from his words--they
are costly, they are duplicative, in many cases they aren't necessary,
we need to review them, and in some cases, actually, they are stupid.
That is a direct quote from the President. I am paraphrasing, but he
did say the word ``stupid.''
Probably ``stupid'' would be the word, or maybe ``egregious'' or
``fed up'' that almost any group or any organization back home would
use when you visit with them. I know Senators, on their past break or
our work period, if you will, probably spoke to a lot of groups. I will
tell you what happened to me.
I would walk into a group--any organization, be it farmers, ranchers,
educators, health care, whatever--and they would say: Pat, what on
Earth are you doing back there, passing all these regulations, a wave
of regulations that do not make common sense and do not fit the
yardstick, if you will, of cost and benefit? We can't even wake up any
morning without some new regulation popping up across the desk, and we
just don't have the people to do this. You are about to put us out of
business.
The first thing I say is, I am not a ``you guy,'' I am an ``us guy.''
And I am very much aware of these regulations. We have to do something
about it. I brought up the fact the President himself recognized these
problems.
But I have to say that while I applauded this decision by the
President, I noted there were some loopholes in his Executive order,
and they are roughly these--if I could sort of summarize them: No. 1,
if you are doing something for the public good--and, obviously, the
secretary of any agency is going to say: Sure, we are doing something
for the public good--well, then, you are exempt. That is a pretty big
loophole to drive the truck through.
Secondly, it was if you are an independent agency. Well, let's try
the IRS. I think more people than most would say: Yes, we have some
regulatory problems with the IRS.
Several more, and I won't go into those. Then you have this
paragraph, which I am going to read, that agencies can apply to their
decision as to whether they are going to review the regulations they
have on the books and regulations coming down the pike. They can apply
this to see if they are exempt, and this is within the Executive order.

In applying these principles, each agency is directed to
use the best available techniques to quantify anticipated
present and future benefits and costs as accurately as
possible.

I can't imagine anybody being opposed to that.

Where appropriate and permitted by law, each agency may
consider and discuss qualitatively values that are difficult
or impossible to quantify--

I don't know how you do that--

including equity, human dignity, fairness and distributive
impacts.

That is about as amorphous as any language that I could possibly put
together. If any secretary, or anybody in any agency who promulgates
all the regulations they think they are forced to under some
congressional act or perhaps an Executive order they are trying to
issue applies this language, of course, they are exempt.
So there are loopholes, again, that you can drive trucks through in
regards to the fact that this Executive order is basically not going to
be adhered to because everybody will stand up and say: We are exempt.
We are doing public good. We are doing this language--whatever that
means.
So while I applaud the decision by the President, I decided last week
I would introduce legislation to strengthen and codify his Executive
order. All that means is, when I say we codify it, we say: OK, the
Executive order stands but, sorry, no exemptions.
What a day that would bring to Washington, with all the Federal
agencies saying: Whoa, stop. We are going to take a look at all the
regulations we have out there now, and we are going to take a look at
all the ones we are promulgating--which are hundreds of them. And, I
might just note, there were 44 major regulatory decisions that cost the
American business community $27 billion just last year, according to
one study. We are finding more and more people coming to Washington who
have an agenda in regards to these regulations, but the folks out there
who are being impacted seem to be overlooked.
I have 30, 32, 35 cosponsors on this bill. I asked on both sides of
the aisle for cosponsors. I think it is a good bill. It would be a
brandnew day in Washington if every Federal agency had to stop and say:
Whoa, wait a minute. Let's apply a cost-benefit yardstick. The
Executive order sort of goes into what that would mean. They have one
individual who is supposed to be doing all of this, so they could
report to him, although that would be quite a load. My goodness, if all
the Federal agencies stopped their regulatory process, there would be a
cheer out in the hinterland in regards to every business I can think
of.
Well, as the administration moves forward with this review, I am
going to have something to say in several areas: health care, energy,
and financing, to people who are lending agencies and the effect of the
regulatory reform. But today I want to talk about agriculture.

[[Page S1100]]

Today I want to talk about the EPA and what is going on in regards to
what I think is regulatory overkill for sure.
I am privileged to be the ranking Republican and to serve with the
Senator from Michigan, our chairwoman of the committee, Senator
Stabenow. Basically, as the administration moves forward with its
review, I recommend the President and his advisers pay particularly
close attention to the activities of three specific agencies when they
are determining which proposed regulations will place the greatest
burden on agriculture--a key component of our Nation's economy and the
ability to feed this country and a troubled and hungry world--the
Environmental Protection Agency, the Department of Agriculture, and the
Commodity Futures Trading Commission.
Since fiscal year 2010, 10 new regulations promulgated--that is a
fancy word in Washington which means issued--by the EPA have accounted
for over $23 billion in new cost to the American taxpayer. Now, that is
outrageous, and they are just getting started. The EPA has several new
proposals, many of which will have immediate negative impacts on the
ability of America's farmers and ranchers to continue to produce enough
food to feed our communities, our States, our country, and, yes, the
world. Think of how valuable that is as we look down the road with
about a 9.3 billion increase in population compared to 6 billion today.
We are going to have to double agriculture production, and I will talk
about that a little later.
Why on Earth would we want to do anything to the farmer and rancher
whose job it is to do that? That is beyond me. I will highlight two
such proposals that many producers have brought to my attention. I just
addressed the Commodity Classic in Kansas, in Great Bend, of about 200
farmers. Guess what their No. 1 concern was. Overregulation, regulation
that could put them out of business. They are concerned about the farm
bill and they are concerned about lending and they are concerned about
debt. But first, in only 7 short weeks, the EPA will require farmers--
who are applying pesticide to kill pests so they can save the crop--to
obtain a permit under the Clean Water Act, even though that activity is
already highly regulated under the Federal pesticide law. The President
said we don't need regulations that are duplicative. We don't need two
agencies having a different agreement on one regulation. We probably
don't even need that regulation because we have very strong regulations
under the FIFRA act that we have right now.
Farmers and other pesticide applicators, under this regulatory
impact, would not be facing these requirements if the administration
had chosen to vigorously defend its longstanding policy that
protections under the Federal pesticide law were sufficient to protect
the environment.
Excuse me, Mr. President. That was probably a phone call from some
farmer listening to this and saying: Go ahead and give them you know
what, Pat.
Unfortunately, the administration chose a different path and now
estimates suggest this duplicative regulation will require 365,000
individuals to get a Clean Water Act permit--365,000 individuals--a
requirement that will cost $50 million and require 1 million hours per
year to implement. Bottom line, it will not add any environmental
protection.
This layer of redtape will place a huge financial burden on the
shoulders of farm families all across the country, as well as State
governments responsible for enforcement while at the same time facing
dire budget situations. Last month, John Salazar, a former Member of
the House of Representatives and newly appointed Colorado Commissioner
of Agriculture stated in his testimony before the House:

It is no secret that States across the country face dire
budget situations and many have had to close State parks,
cancel transportation projects and cut funding to higher
education. It is very difficult to justify diverting even
more resources to manage paperwork for a permit that is
duplicative of other regulatory programs and has no
appreciable environmental benefits. However, if Colorado's
estimates are reflective of the situation in other States,
the true cost to States will quickly outstrip EPA's
estimates. More than 365,000 individuals, $50 million, and 1
million hours per year to implement on the backs of our
farmers and ranchers.

Mr. President, these expenses are not just limited to the cost of
compliance and enforcement. The April 9 effective date is near. There
is still significant confusion and uncertainty about what pesticide
applications will fall under these new regulations. This means farmers
and other pesticide applicators may very well find themselves subject
to massive penalties. On top of the fact that they shouldn't be filling
out the paperwork in the first place, if they do not, they could be
held responsible for massive penalties for minor paperwork violations
to the tune of--get this--$37,500 per day per violation. Unbelievable.
Beyond agency enforcement, they will also now be exposed to the
threat of litigation under the clean water law's citizen suit
provisions. With the volatile nature of agricultural markets and
increased demand, these sort of risks and resulting costs are something
that producers and the hungry mouths who depend on them simply cannot
afford.
Next, EPA is undertaking an effort to control particulate matter--
this is a favorite of mine--otherwise known as dust. They call it rural
fugitive dust. This is a dust-off of the old 1970s effort to control
rural fugitive dust. I remember that. Somebody must have pulled it from
the file. This is part of the EPA's review of the PM standard under the
Clean Air Act.
The agency is currently considering the most stringent regulations on
farm dust that have ever been proposed. I finally reached the person
who, when they first proposed this, was in charge of promoting it, or
she was going to promulgate these regulations on rural fugitive
dust. Before I could get a word in--I finally reached the person in
charge; it took me 3 days--finally, before I could get a word in, she
said: Did you realize--at that point I was a Congressman, and she said:
Do you realize, Mr. Roberts, you have a lot of dust in your part of the
country?

I said: I think I know that. That is why we had the Great Plains
Conservation Program. Each farmer has to have a conservation program if
they are going to apply or for it to be applicable to the farm bill. We
have a Conservation Reserve Program. We are doing everything we can to
control dust, rest assured. Nobody likes that.
I said: What would you have us do to comply with rural fugitive dust
rules?
She said: You know the grain trucks at harvest go up and down gravel
roads, and they cause a lot of dust.
No kidding.
I said: What would you have us do?
She said: Why don't you send out water trucks at 10 o'clock in the
morning and 2 in the afternoon to every community in Kansas that has
those gravel roads where you harvest wheat.
I said: Great idea. That would be marvelous. Maybe we could get a
grant. Today, that would be a stimulus grant to small communities in
regard to rural areas where we are doing the wheat harvest to, No. 1,
buy the trucks and, No. 2, find the water.
That is just how ridiculous this is with rural fugitive dust. To put
it simply, this defies common sense, whether it is cattle kicking up
dust in a feedlot in Dodge City, KS, or Larned, KS, or anywhere in
Kansas during harvest on a hot afternoon on the high plains in June.
Dust is a naturally occurring event. Standards beyond the current limit
would be impossible to meet, particularly in the western portion of the
Nation where rainfall is often scarce. I don't even know why I am
taking this seriously in regard to that kind of regulation.
In a bipartisan June letter, 23 Members of this body wrote a letter
to express these concerns to Administrator Jackson stating:

Considering the Administration's focus on rural America and
rural economic development, a proposal such as this could
have a negative effect on those very goals . . . Common sense
requires the EPA to acknowledge that the wind blows and so
does dust.

As we think about EPA's actions impacting agriculture, it is critical
to recognize that no one cares more about maintaining a clean
environment than the American farmer and rancher. Producers across the
country manage their operations responsibly because of their desire to
keep farming and to one day pass along that ranch or field to their
sons, daughters and grandchildren if

[[Page S1101]]

they can. They know firsthand that clean air and water and healthy soil
go hand-in-hand with a healthy economy. Our producers deserve respect
and appreciation from the EPA, not costly and redundant and yes, even
ridiculous regulation.
Shifting departments now, the Department of Agriculture's Grain
Inspection, Packers and Stockyards Administration--GIPSA--released a
proposed rule that would dramatically increase the redtape governing
the business relationships surrounding production and marketing of
livestock in the United States. The rule was initially proposed last
summer without the benefit of a meaningful cost-benefit analysis--
something we have been trying to get and something the administration
should have included.
However, the proposal has since received significant criticism from
ranchers, industry and members of Congress alike and is now being
further evaluated by USDA officials.
As written, the proposal would dramatically reduce consumer choice
and increase costs. The proposal exposes packers to liability for use
of alternative marketing arrangements and other innovative procurement
methods, thereby ultimately depressing the prices received for
America's most efficient and successful producers while potentially
reducing the quality available to consumers.
Further, the proposed rule would actually increase concentration in
the sector as businesses are forced to change their current
organizational structure--exacerbating the very issue the rule is
allegedly designed to address. For example, in Kansas, we have a highly
successful rancher-owned company made up of individual producers who
own both cattle and shares in the company's processing infrastructure.
Under this proposal, many of the individual members of the company may
now be prohibited from selling cattle directly to other processors,
creating the need for a middleman that would then lower the price the
producer actually receives.
If implemented, the GIPSA rule poses a substantial threat to the
continued viability of the domestic livestock sector. In Kansas, this
industry contributes over $9.5 billion to our economy. With an economic
footprint of this magnitude, the GIPSA regulation is a burden that
Kansas and many other rural States and many of the livestock producers
simply cannot afford.
Another agency falling through the President's Executive order
loophole is the Commodity Futures Trading Commission. As a result of
the Dodd-Frank Act, the CFTC is charged with developing dozens of new
regulations impacting participants up and down the swaps and futures
chain.
Shouldn't these regulations be held to the same standard of cost-
effectiveness and undue burden as others? Yes--but no. I talked to
Chairman Gensler in my office just a couple of days ago. He is a very
nice man, very pleasant. He believes very strongly that the CFTC is
exempt from the President's Executive order because the President said
it was exempt. I indicated that I didn't think so, especially since the
CFTC is presently pushing 40-plus rules out the door in 1 year with
little or no priority.
We were told the intent of Dodd-Frank was to reduce systemic risk in
the financial marketplace. However, several of CFTC's proposals appear
to increase risk management costs on those who do not pose a systemic
threat. The CFTC must be mindful that increased costs through high
margin and capital requirements on certain segments of the marketplace
may decrease a user's ability to use appropriate risk management tools.
A rigorous cost-benefit analysis is tailor-made for the CFTC's
current situation: dozens of economically significant rules; the
potential to negatively impact risk management costs of American
businesses; and a simple question needing to be answered--do the
benefits of this proposed regulation--we are talking about anywhere
from 40 to 60 now--in the form of lower systemic risk in our financial
system outweigh the increased costs on businesses?
Let me say something. In talking with Chairman Gensler--again, I
really appreciate him coming by the office and talking. It became
obvious to me that with all these regulations, maybe the first one
ought to be a definition regulation. What is a swap? Who is a dealer?
It has not been done yet. So we are going to propose 39 more
regulations and we have not even defined whom the regulations will
affect and what the subject matter is that they are going to regulate.
That is really unbelievable.
We are going to have a hearing tomorrow in the Senate Agriculture
Committee. Chairman Gensler will attend and give his testimony. We are
going to be very welcoming to him in regard to the committee, but that
is something I am going to ask him. Why on Earth are you going ahead
with 40 regulations and you can't even define whom you are going to
regulate or what you are going to regulate? There is no definition.
That, to me, is pretty bad. You have the cart before the horse there.
In closing, I wish to make two points. First, in many rural areas of
Kansas and the rest of the country, agriculture is the cornerstone of
the economy. Second, in the coming decades we will be even more reliant
on America's farmers and ranchers to feed an ever-growing world
population. I said that before.
We must truly commit to a real and robust--here is a good Senate
word--robust review and revocation of any and all unduly burdensome
regulations that could inhibit American agriculture's ability to
produce the safest, most abundant, and affordable food, feed, and fiber
supply in the world. What are we talking about? We are talking about
9.3 billion people. What are we talking about? The ability for our
agriculture--for everybody in agriculture to double our production, all
the farmers and ranchers. Why on Earth would we want this whole
business of regulatory impact--most of which is highly questionable,
none of which fits the President's Executive order to take a look at
the cost-benefit--why on Earth would we do this to the very person
whose job it is to feed this country and the hungry world?
Look at the Mideast--in turmoil. I remember one interview on TV where
somebody stuck a microphone in and asked one of the protesters in
Libya: What are you protesting for? Democracy?
He said: No, a loaf of bread.
Where people are hungry and malnourished, you have no economic
opportunity. Where you have people who are hungry, they will go and
join extremist groups, even on over into terrorism groups.
I had the privilege of being the chairman of the Intelligence
Committee here in the Senate. That was one of the big considerations we
had in whole areas of the world where people do not have the ability to
feed themselves, where they are in a food-deficient area. It really
poses problems for the future of that part of the world. Yet here we
ask our farmers and ranchers to double our ag production in a couple of
decades. I don't know how we are going to do this with this regulatory
nightmare.
Let's hope we wake up soon. I hope everybody will take a look at my
bill to codify the President's Executive order--I give him credit for
doing that--but not with all these loopholes that are going to drive us
nuts out there in rural, smalltown America.
I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. BARRASSO. I ask unanimous consent that the order for the quorum
call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BARRASSO. I ask unanimous consent to speak as in morning
business.
The PRESIDING OFFICER. Without objection, it is so ordered.

Second Opinion

Mr. BARRASSO. Mr. President, I come to the floor today as someone who
has practiced medicine in Wyoming, taken care of families there for a
quarter of a century, working with people all across our great State,
as a physician who has also served in our State senate.
Both in my practice, as well as in my service in the State senate, I
have dealt with the issue of Medicaid, a program that was set up to
help low-income Americans obtain health care. So I came today with a
doctor's second

[[Page S1102]]

opinion about recent developments and findings with regard to the
health care law because, day after day, we see news reports showing
States all across the country facing extreme financial budget
pressures, even bankruptcy. One of the key factors exacerbating State
fiscal troubles is the Medicaid Program. Over the next 10 years,
Washington will spend about $4.4 trillion on Medicaid. At the State
level, Medicaid spending now consumes roughly one-quarter of the
budgets of each of the States.
Increases in Medicaid costs often force Governors and State
legislators to make drastic cuts to local priorities, such as
education, law enforcement, public safety. As I mentioned, I did serve
in the Wyoming State Legislature--5 years in the Wyoming State Senate--
and was there last week to address the legislatures, the Wyoming State
Senate and House, to talk with them, listen to them about their
concerns.
In the State of Wyoming, we are required, on an annual basis, to
balance our budget. We do it every year. So I know from a firsthand
experience that tough choices need to be made. That is why I can tell
you this current health care law, President Obama's health care law, is
not going to make it any easier for our States to close the budget gaps
they are facing, and, as a matter of fact, it is going to make the
situation worse.
The President's health care law created the biggest Medicaid
expansion in history. The law says every State must provide Medicaid
for every one of their citizens who earns up to 133 percent of the
Federal poverty limit. This does not work for the States, and it does
not work for the people who will be forced onto Medicaid.
The health care law does not provide additional resources to States
that are already strapped for cash in order to try to deal with paying
for this incredible expansion of Medicaid, and it certainly does not
give States additional financial help so they can pay health care
providers enough to participate in Medicaid--because about 40 percent
of physicians across the country refuse to see Medicaid patients. My
partners and I took care of everyone in Wyoming who would call or come
to our office, regardless of ability to pay, but across the country
about 40 percent of physicians refuse to see Medicaid patients.
So I have said, over and over throughout this health care reform
debate over the last year or so, that having a health care government
insurance card does not mean someone will automatically have access to
medical care. The President frequently talks about making sure people
have coverage, but that does not necessarily mean they will have access
to care.
So I wish to be very clear. The States, especially my home State of
Wyoming, do an incredible job of running the Medicaid programs. They do
it with limited resources. But a weak economy, combined with a high
unemployment rate, drove Medicaid enrollment to record levels. So it is
not a surprise that Medicaid is quickly consuming greater and greater
portions of State budgets, cutting into money that is being used to pay
for teachers, for police, and for firefighters.
Former Governor Phil Bredesen of Tennessee, a Democrat, said it best
when he called the health care law's Medicaid expansion ``the mother of
all unfunded mandates.'' Governor Bredesen went on to say that
``Medicaid is a poor vehicle for expanding coverage.'' Let me repeat
that. Medicaid, which the President has used as the approach to expand
coverage, the Governor, the Democratic Governor, says Medicaid is a
poor vehicle for expanding coverage. He want to say:

It's a 45-year-old system originally designed for poor
women and their children. It's not health care reform to dump
more money into Medicaid.

Well, the former Governor of Tennessee is not alone. On November 9,
2010, Governor Brian Schweitzer, of my neighboring State of Montana,
also a Democrat, met with his State's health industry leaders to talk
about Medicaid, the challenges they are facing.
What he said was: ``As the manager of Montana's budget, I am worried
because there are only three states that will increase the number of
people on Medicaid at a faster rate than Montana, thanks to the new
health care bill.''
He said: ``My job is to try and find ways to go forward that Montana
can continue to fund Medicaid and not be like 48 other States . . .
broke.''
So, in January, 33 Governors and Governors-elect sent a letter to
President Obama, to Congressional leadership, and to Health and Human
Services Secretary Sebelius. What did they say? Well, the letter asks
Federal lawmakers to lift the constraints placed on them by the health
care law's mandates. The Governors are begging Congress for help.
They each have very unique Medicaid Programs across the country, the
different States, and they want, they asked, they need the flexibility
to manage their programs, their individual programs as effectively and
efficiently as possible.
Well, they all need to make tough but necessary budget decisions, and
they cannot do it when Washington bureaucrats and the enduring wisdom
of those in Washington will not allow it. You want to add insult to
injury? This week, the President claimed, as he was addressing
Governors at the National Governors Association, that the health care
law offers States flexibility to create their own health care plans.
This was Monday in an address to the National Governors Association.
The President made an announcement. He announced: ``If your state can
create a plan that covers as many people as affordably and
comprehensively as the Affordable Care Act does--without increasing the
deficit--you can implement that plan.''
Well, that is quite a tall and almost impossible order. The American
people and certainly the Governors who were listening to him in the
audience on Monday saw right through the President's PR stunt. The
President's plan requires States to create health care plans that
imitate his health care law, rather than actually offering States true
freedom to innovate better solutions. There are better solutions out
there than what this body and the House of Representatives passed and
the President signed into law almost 1 year ago.
It seems to me the President wants to have his cake and eat it too.
He tells the States they already have the ability to craft a different
health care plan, but, of course, there is a catch. What the President
does not say, what he would not tell the Governors, is that States can
only design different health care plans if--if, and only if--they meet
the health care law's litany of Washington mandates.
States still must pass legislation mandating all its citizens buy
health insurance. States must still provide Washington-approved
insurance coverage--Washington levels, Washington approved--limiting
use of innovative health care products such as health savings accounts.
Oh, no, that is not allowed by the President. States are still locked
into the law's Medicaid expansion spending requirements. During these
tough economic times, the States need certainty, they need consistency,
not more Washington doublespeak.
Last month, I introduced, along with Senator Lindsey Graham, a bill
giving the States exactly what they need: flexibility, freedom, and
choice. The bill is called the State Health Care Choice Act. This
legislation is simple, it is straightforward, and it protects States
rights by allowing them to voluntarily opt out of portions of the
health care law.
Specifically, our bill offers States the chance to opt out of the
law's individual mandate, to opt out of the law's employer mandate and
penalties, to opt out of the Medicaid expansion, and to opt out of the
insurance benefit mandates.
Why should the Federal Government, why should Washington, force the
States to adopt a one-size-fits-all health care plan? States can decide
what works best for them. They need to be able to act on those
decisions. They do not need Washington to tell them what to do.
Well, some of the most innovative health care policy ideas truly do
originate at the State and local levels. Governors, State legislators,
State insurance commissioners, each have much greater insight into what
works for their citizens and what does not. States are feeling trapped
by the new health care law's mandates.
My bill, the one along with Senator Graham, gives the States the
sovereignty to pursue their own reform ideas and approaches. Each State
deserves the right--let me repeat that:

[[Page S1103]]

each State deserves the right--to pursue health care reforms they think
actually help the citizens of their State.
The States have always been the laboratories of democracy, the
laboratories to test good ideas. Unfortunately, this health care law
locks them into a one-size-fits-all approach. The States want their
freedom. The States deserve their freedom. Our bill gives it to them,
offering the flexibility needed to generate better health care reform
solutions, solutions that do not require the States to follow a
Washington plan that may ultimately leave them broke.
In writing the State Health Care Choice Act, I started with the
assumption that people generally can be trusted to do the right thing,
and society prospers when government has less to say about how people
run their lives. Others, many in this body, start by assuming
Washington knows best and should take more authority over everyone
else.
Well, the States, the American people are telling us they want health
care reform. But they are telling us loudly and clearly that they do
not want this health care law. So it is time to give the States the
autonomy to create health care systems that work best for them, and we
do not have to dismantle the Nation's current health care system, build
it up in the image of big government, shift costs to the States, add
billions to our national debt, and then try to sell it as reform.
There are better ideas, and I have put forward mine. I ask all
Senators to join me in cosponsoring the State Health Care Choice Act.
I yield the floor.
The PRESIDING OFFICER (Mr. Merkley). The Senator from Maryland.
Mr. CARDIN. Mr. President, I ask unanimous consent to speak as in
morning business.
The PRESIDING OFFICER. Without objection, it is so ordered.

Commission on Security and Cooperation in Europe

Mr. CARDIN. Mr. President, we have all watched in awe during the past
weeks as the unquenchable desire for liberty and human dignity has
inspired the people of the Middle East to lift themselves from
oppression and move their country toward a new dawn.
Sadly, we now also watch in horror the brutality of Colonel Qadhafi,
who murders his own people as he clings to power. I join President
Obama in calling for Colonel Qadhafi to leave Libya immediately and
support our efforts, in concert with the international community, to
help the Libyan people.
What happens next? No one knows. I certainly do not have the answer.
I pray that peace and stability comes quickly to Libya and hope the
people of Egypt and Tunisia make a swift and concrete progress in
establishing democratic institutions and the rule of law.
While each country in the region must find its own path in this
journey, I would suggest the international community currently has a
process in place that can serve as a way forward for the countries in
the Middle East and North Africa in establishing a more democratic
process, that guarantees free elections and free speech.
I am referring to the Organization for Security and Cooperation in
Europe, the OSCE. The OSCE traces its origins to the signing of the
Helsinki Accords in 1975, and for more than 35 years has helped bridge
the chasm between Eastern and Western Europe and Central Asia, by
ensuring both military security for member countries and the
inalienable human rights of its citizens.
There are three baskets in OSCE. One basket deals with human rights
because it is critically important that the countries respect the
rights of their citizens. Another basket deals with security because
you cannot have human rights unless you have a secured country that
protects the security of its people. The third basket deals with
economics and environment because you cannot have a secure country and
you cannot have human rights unless there is economic opportunity for
your citizens and you respect the environment in which we live. The
three baskets are brought together.
In the United States, the Congress passed the U.S. Helsinki
Commission that monitors and encourages compliance by the member states
in the OSCE.
I am privileged to serve as the Senate chairman of the U.S. Helsinki
Commission, and I represent our Commission on most, on these issues.
Today Egypt and Tunisia, along with Algeria, Israel, Jordan, and
Morocco, are active Mediterranean partners within the OSCE and have
made a commitment to work toward the principles of the organization.
In 1975, the Helsinki Final Act recognized that security in Europe is
closely linked with security in the Mediterranean and created this
special partnership between the signatory states and the countries in
the Mediterranean as a way to improve relations and work toward peace
in the region. Libya was an original partner in this endeavor but,
regrettably--and, in my view, to its detriment--ultimately, turned its
back on the organization.
More recently, the U.S. Helsinki Commission has made the
Mediterranean partnership a priority on our agenda. Parliamentary
assembly meetings have taken place in which all of the member states
were present, including our partners, and we have had sidebar events to
encourage the strengthening of the relationship between our
Mediterranean partners for more cooperation to deal with human rights
issues, to deal with free and fair elections, to deal with their
economic and environmental needs, including trade among the
Mediterranean partners and, yes, to deal with security issues to make
sure the countries and the people who live there are safe.
A Helsinki-like process for the Middle East could provide a pathway
for establishing human rights, peace, and stability in Egypt, Tunisia,
and other countries in the Middle East. As a member of the Helsinki
Commission since 1993, I have discussed the possibility of a Helsinki-
like process for the region with Middle Eastern leaders, a process that
could result in a more open, democratic society with a free press and
fair elections. The Helsinki process, now embodied in the Organization
for Security and Cooperation in Europe, bases relations between
countries on the core principles of security, cooperation, and respect
for human rights. These principles are implemented by procedures that
establish equality among all the member states through a consensus-
based decisionmaking process, open dialog, regular review of
commitments, and engagement with civil society.
We have seen the Helsinki process work before in a region that has
gone through generations without personal freedom or human rights.
Countries that had been repressed under the totalitarian regime of the
Soviet Union are now global leaders in democracy, human rights, and
freedom. One need only look as far as the thriving Baltic countries to
see what the Middle East could aspire to. Lithuania now chairs both the
OSCE and the Community of Democracies. Estonia has just joined the
Unified European common currency, and Latvia has shown a commitment to
shared values as a strong new member of the NATO alliance.
Enshrined among the Helskini Accord's 10 guiding principles is a
commitment to respect human rights and fundamental freedoms, including
free speech and peaceful assembly. The Helsinki process is committed to
the full participation of civil society. These aspects of the Helsinki
process--political dialog and public participation--are critical in the
Middle East, and we have watched these principles in action today in
Egypt and Tunisia.
The principles contained in the Helsinki Accords have proven their
worth over three decades. These principles take on increasing
importance as the people of the Middle East demand accountability from
their leaders. Whether the countries of the region choose to create
their own conference for security and cooperation or, as some have
suggested, the current OSCE Mediterranean partners and their neighbors
seek full membership in the OSCE, I believe such an endeavor could
offer a path for governments in the region to establish human rights,
establish a free press, and institute fair elections.
Finally, as the citizens of both Tunisia and Egypt demand more
freedom, I urge both countries to permit domestic and international
observers to participate in any electoral process. The OSCE and its
parliamentary assembly have extensive experience in assessing and
monitoring elections and could serve as an impartial observer as both
countries work to meet the demands of openness and freedom of their
citizens.

[[Page S1104]]

The election monitoring which takes place within the OSCE states is a
common occurrence. During our midterm elections, there were OSCE
observers in the United States. So they are present in most of the OSCE
states because we find this a helpful way to make sure we are doing
everything we can to have an open and fair election system. Free and
fair elections are critical, but they must be built upon the
strengthening of democratic institutions and the rule of law. I believe
the principles contained in the Helsinki Accords have a proven track
record and could help guide this process.
With that, I yield the floor.
The PRESIDING OFFICER. The Senator from Arizona.

Amendment No. 133

Mr. KYL. Mr. President, I wish to get back to the underlying patent
legislation to talk on a particular amendment. I am talking about the
America Invents Act, legislation that would modernize our patent laws,
legislation which I believe will have very strong support as soon as we
are able to bring our debate to a close and have a vote.
There is one amendment that would be very troublesome if adopted. It
is offered by my friend from California, Senator Feinstein. It would
strike the bill's first-to-file provisions. This would not be a good
idea. In fact, it would be a very bad idea. I wish to describe why.
First-to-file, which is just a concept, the filing date of the patent
dates to the time one files it, is not new. The question is whether we
would codify that. It has been a subject of debate now for about 20
years. But at this point it has been thoroughly explored by hearings
before the House and Senate Judiciary Committees. We considered this at
the outset of the drafting of our patent reform legislation, and it has
been in every version of the bill since 2005.
Importantly, this provision we have in the bill that would be taken
out by the Feinstein amendment is supported by all three of the major
patent law organizations that represent all industries across the
board. It has the support of the American Bar Association's
Intellectual Property Law section. It is supported by Intellectual
Property Owners, which is a trade group or association of companies
which own patents and cuts across all industrial sectors. And, very
importantly, our language also has the support of independent
inventors, many of whom have signed letters to the Senate in support of
the codification of the first-to-file rule embedded in the Leahy bill.
The bottom line is there is a strong consensus to finally codify what
is the practice everywhere else in the world; namely, that patents are
dated by when they were filed, which obviously makes sense.
Let me respond to a couple arguments raised in favor of the Feinstein
amendment. One argument is that the current first-to-invent system is
better for the little guy, the small independent inventor. It turns out
that is actually not only not true but the opposite is the case.
Under the first-to-invent system, if the big company tries to claim
the same innovation that a small innovator made, that innovator would
prevail if he could prove that he actually invented first, even if he
filed last. But to prove he invented first, the independent inventor
would need to prevail in what is called an interference proceeding.
These are proceedings before the Patent and Trade Office in which there
is a determination by the PTO of who actually invented first. The PTO
looks at all the parties' notebooks and other documents to determine
issues such as conception of the idea and reduction to practice, the
elements of a workable patent.
Yesterday I quoted from commentary published on Sunday, February 27,
by Mr. Gene Quinn, a patent lawyer who writes for the IP Watchdog Web
site. I quoted his commentary noting that only one independent inventor
has actually prevailed in an interference proceeding in the last 7
years. In other words, if the idea is that we need to preserve
something that is used by small inventors, by independent inventors, it
just isn't the case that first-to-invent actually does that.
In his column, Mr. Quinn does a very good job of explaining why the
interference proceeding is largely an illusory remedy for small or
independent inventors. I will quote from what he said:

[T]he independent inventors and small entities, those
typically viewed as benefiting from the current first to
invent system, realistically could never benefit from such a
system. To prevail as the first to invent and second to file,
you must prevail in an Interference proceeding, and according
to 2005 data from the AIPLA, the average cost through an
interference is over $600,000. So let's not kid ourselves,
the first to invent system cannot be used by independent
inventors in any real, logical or intellectually honest way,
as supported by the reality of the numbers above. . . .
[F]irst to invent is largely a ``feel good'' approach to
patents where the underdog at least has a chance, if they
happen to have $600,000 in disposable income to invest on the
crap-shoot that is an Interference proceeding.

Obviously, the parties that are likely to take advantage of a system
that costs more than $\1/2\ million to utilize are not likely to be
small and independent inventors. Indeed, it is typically major
corporations that invoke and prevail in interference proceedings. The
very cost of the proceeding alone effectively ensures that it is these
larger parties that can benefit from this system. In many cases, small
inventors such as startups and universities simply cannot afford to
participate in an interference, and they surrender their rights once a
well-funded party starts such a proceeding.
I think that first argument is unassailable. Since only one small
inventor in the last 7 years has prevailed in such a proceeding, it
doesn't seem it is something that favors the small or independent
inventor.
Mr. Quinn's article also responded to critics who allege that the
present bill eliminates the grace period for patent applications. The
grace period is the 1-year period prior to filing when the inventor may
disclose his invention without giving up his right to patent. Mr. Quinn
quotes the very language of the bill and draws the obvious conclusion:

Regardless of the disinformation that is widespread, the
currently proposed S. 23 does, in fact, have a grace period.
The grace period would be quite different than what we have
now and would not extend to all third party activities, but
many of the horror stories say that if someone learns of your
invention from you and beats you to the Patent Office, they
will get the patent. That is simply flat wrong.

He, of course, is referring to the bill's proposed section 102(b).
Under paragraph (1)(A) of that section, disclosures made by the
inventor or someone who got the information from the inventor less than
one year before the application is filed do not count as prior art.
Under paragraph (1)(B), during the 1-year period before the application
is filed, if the inventor publicly discloses his invention, no
subsequently disclosed prior art, regardless of whether it is derived
from the inventor, can count as prior art and invalidate the patent.
This effectively creates a first-to-publish rule that protects those
inventors who choose to disclose their invention. An inventor who
publishes his invention or discloses it at a trade show or academic
conference, for example, or otherwise makes it publicly available has
an absolute right to priority if he files an application within 1 year
of his disclosure. No application effectively filed after his
disclosure and no prior art disclosed after his disclosure can defeat
his application for the patent.
These rules are highly protective of inventors, especially those who
share their inventions with the interested public but still file a
patent application within 1 year.
These rules are also clear, objective, and transparent. That is what
we are trying to achieve with this legislation, so that there is
uniformity, clarity, and it is much easier to defend what one has done.
In effect, the rules under the legislation create unambiguous
guidelines for inventors. A return to the proposal of Senator Feinstein
would create the ambiguity we are trying to get away from.
The bottom line is, an inventor who wishes to keep his invention
secret must file an application promptly before another person
discloses the invention to the public or files a patent for it. An
inventor can also share his invention with others. If his activities
make the invention publicly available, he must file an application
within a year, but his disclosure also prevents any subsequently
disclosed prior art from taking away his right to patent.

[[Page S1105]]

The bill's proposed section 102 also creates clear guidelines for
those who practice in a technology. To figure out if a patent is valid
against prior art, all a manufacturer needs to do is look at the
patent's filing date and figure out whether the inventor publicly
disclosed the invention. If prior art disclosed the invention to the
public before the filing date, or if the inventor disclosed the
invention within a year of filing but the prior art predates that
disclosure, then the invention is invalid. If not, then the patent is
valid against a prior art challenge.
Some critics of the first-to-file system also argue that it will be
expensive for inventors because they will be forced to rush to file a
completed application rather than being able to rely on their invention
date and take their time to complete an application. But these critics
ignore the possibility of filing a provisional application which
requires only a written description of the invention and how to make
it.
Once a provisional application is filed, the inventor has a year to
file the completed application. Currently, filing a provisional
application only costs $220 for a large entity and $110 for a small
entity.
So this is easily accomplished and quite affordable.
In fact, one of Mr. Quinn's earlier columns, on November 7, 2009,
effectively rebuts the notion that relying on invention dates offers
inventors any substantial advantage over simply filing a provisional
application. Here is what he says:

If you rely on first to invent and are operating at all
responsibly you are keeping an invention notebook that will
meet evidentiary burdens if and when it is necessary to
demonstrate conception prior to the conception of the party
who was first to file . . .
[Y]our invention notebook or invention record will detail,
describe, identify and date conception so that others skilled
in the art will be able to look at the notebook/record and
understand what you did, what you knew, and come to believe
that you did in fact appreciate what you had. If you have
this, you have provable conception. If you have provable and
identifiable conception, you also have a disclosure that
informs and supports the invention. . . . [And] [i]f the
notebook provably demonstrates conception, then it can be
filed as a provisional patent application. . . .

In other words, what you would ordinarily have in any event can be
used as the provisional application.
In other words, the showing that an inventor must make in a
provisional application is effectively the same showing that he would
have to make to prove his invention date under the first-to-invent
system. A small inventor operating under the first-to-invent rules
already must keep independently validated notebooks that show when he
conceived of his invention. Under first-to-file rules, the only
additional steps the same inventor must take are writing down the same
things his notebooks are supposed to prove, filing that writing with
the Patent Office, and paying a $110 fee.
Once the possibility of filing a provisional application is
considered, along with the bill's enhanced grace period, it should be
clear that the first-to-file system will not be at all onerous for
small inventors. Once one considers the bill's clean, clear rules for
prior art and priority dates, its elimination of subjective elements in
patent law, its new proceeding to correct patents, and its elimination
of current patent-forfeiture pitfalls that trap legally unweary
inventors, it is clear this bill will benefit inventors both large and
small.
So because this issue has been considered from the inception of the
debate about the legislation, in all of the testimony and markups in
every version of the bill since 2005, is supported by all the industry
groups who believe patent reform is necessary, conforms to the rules of
all other countries in the world, and provides clear and easily
demonstrable evidence of your patent, we believe the first-to-file rule
is the best rule--date it from the date you filed your patent rather
than this rather confusing notion of first-to-invent, which has not
worked especially well, and certainly has not worked well for the small
inventor, which is the point, I gather, of the amendment proposed by
Senator Feinstein.
I urge my colleagues, if there are questions or confusion about this,
those of us who have been involved in this will be happy to try to
answer them. I will be happy to be on the Senate floor to discuss it
further. But at such time as we have a vote, I hope my colleagues would
go along with what the committee did and what all of the versions of
the bill have written in the past and support the bill as written and
not approve this amendment.
The PRESIDING OFFICER. The Senator from Minnesota.
Ms. KLOBUCHAR. Mr. President, I thank the Senator from Arizona for
his very strong comments and also for his support for this important
bill. As you know, this has come through the Judiciary Committee.
Senator Kyl is a member of that committee, as I am, as well. We
appreciate Senator Leahy's leadership on this bill, as well as all the
other Senators who have worked so hard on a difficult bill where there
are so many interests. But in the end, what guided us to get this
America Invents Act on this floor was the fact that innovation is so
important to our economy, that the protection of ideas in America is
what built our economy over the years. So I want to thank Senator Kyl.
Before we hear from Senator Bingaman, who is here on another matter,
I just want to support Senator Kyl's statements about the need to
transition to the first-inventor-to-file system. As I noted before, we
have heard from many small inventors and entrepreneurs who support this
transition. Independent inventor Louis Foreman has said the first-to-
file system will strengthen the current system for entrepreneurs and
small businesses. We have heard from nearly 50 small inventors in more
than 20 States who share Mr. Foreman's view.
I ask unanimous consent that a list of those supporters, as well as
Mr. Foreman's letter to the Judiciary Committee in support of the
America Invents Act, be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

The following independent inventors posted support for S.
23 on EdisonNation.com:
Krissie Shields, Palm Coast, Florida 32164; Sarkis
Derbedrosian, Glendale, CA 91206; Frank White, Randleman,
North Carolina; Ken Joyner, Pasadena, CA 91109; Charlie
Lumsden, Kula, HI 96790; Timothy J. Montgomery, Altoona, PA
16601; Katherine Hardt, Escanaba, MI 49829; Toni Rey,
Houston, TX 77095; Shawn Head, Delaware, OH 43015; Emily
Minix, Niceville, Florida; Betsy Kaufman, Houston, Texas;
Eric Huber, San Juan Capistrano, CA 92675; Perry Watkins,
Dunedin, FL; Jim Hacsi, Pueblo, Colorado; Brian Neil Smith,
Orlando, FL; Clint Baldwin, Roseburg, Oregon 97471; Paul
Wightman, Cedar City, Utah 84721; Shalon Cox, Beverly Hills,
CA 90209; Darwin Roth, Jacksonville, Florida 32256; Dorinda
Splant, Eatonton, GA 31024.
Don Francis, Vista, CA 92083; Greg Bruce, Galveston, Texas;
Sandra McCoy, Longwood, FL 32750; Jerry Bradley, Joliet, IL
60435; Phillip L. Avery, Bethlehem, PA 18015; Julie Brown,
Yuma, AZ 85367; Eduardo Negron, Beach Park, IL 60083; Betty
Stamps, Greensboro, NC 27407; Victor Hall, Compton, CA; Todd
Bouton, Janesville, WI 53548; Denise Sees, Canal Fulton, OH;
Kevin McCarty, Antioch, IL 60002; Jerry Vanderheiden, Aurora
NE 68818; Sherri English, Savannah, TX; Amy Oh, Portland, OR;
Mark Stark, St. Louis, MO 63123; Toni LaCava, Melbourne,
Florida 32935; Luis J. Rodriguez, South Orange, NJ 07079;
Michael Pierre, Newark, New Jersey; Patricia Herzog-
Mesrobian, Milwaukee, Wisconsin.
Derrick L. James, Beloit, WI 53511; Richard J. Yost, Newman
Lake, Washington; Ken Espenschied, Cleveland, OH; Roger
Brown, North Augusta, SC 29861; Jared Joyce, Bozeman, MT;
Jane Jenkins, Clayton, Ohio; Tammy Turner, McDonough, GA;
Diane Desilets, North Attleboro, MA; John Nauman, Hollywood,
Florida 33020.
____

February 14, 2011.
Hon. Patrick J. Leahy,
Chairman,
Hon. Chuck Grassley,
Ranking Member, U.S. Senate, Committee on the Judiciary,
Dirksen Senate Office Building, Washington, DC.
Dear Chairman Leahy and Ranking Member Grassley: First,
please accept my congratulations on the overwhelming,
bipartisan Judiciary Committee vote on compromise patent
reform legislation. I strongly urge you to continue your
efforts toward comprehensive reform by pushing for a vote on
the Senate floor at the first available opportunity.
Your bill will make independent inventors, such as myself,
more competitive in today's global marketplace. America's
economic future rests on our ability to innovate new
technologies that change the way people work, live and play.
Yet, as you know, today's patent system hinders this process,
rather than cultivating entrepreneurship and the new ideas
needed to create more jobs and foster economic growth.
As executive producer of the Emmy Award-winning series,
``Everyday Edisons,'' and

[[Page S1106]]

publisher of Inventors Digest, a long-standing publication
serving the independent-inventor community, I am continually
in contact with individuals across the country dedicating
their lives in search of the next big idea. Some of these
efforts bear fruit, while others falter. However, what
ensures the continuity of their efforts, are the legal
protections afforded under U.S. patent law.
I started my first business as a sophomore in college and
twenty years later, I can point to 8 successful start-ups,
along with being an integral part of twenty additional
ventures. As a result, I have registered ten U.S. patents and
my firm has helped develop and file another 400 patents.
These experiences have shaped my views on how the current
system functions at a practical level for those attempting to
translate their inventions into a profitable business
endeavor. Let me begin by commending the USPTO for its
tireless efforts to make the current system work in an
efficient manner. Unfortunately, the USPTO is hampered by a
system that is in dire need of reform.
From my perspective, the Judiciary Committee-passed bill
helps independent inventors across the country by
strengthening the current system for entrepreneurs and small
businesses by including the following:
Lower fees for micro-entities;
Shorter times for patent prosecution creating a more
predictable system;
First-Inventor-to-File protections to harmonize U.S. law
with our competitors abroad while providing independent
inventors with certainty;
Stronger patent quality and reliability by incorporating
``best practices'' into patent application examination and
review, making it easier for independent inventors to attract
start-up capital; and
Resources for the USPTO to reduce the current patent
backlog of 700,000 patents.
Your efforts in the Committee represent a critical
milestone for passage of comprehensive reform and highlight
an opportunity for progress. I also hope that Committee
action paves the way for vigorous bicameral discussions on
enacting legislation in the near future.
We cannot afford to wait. The need for these types of
common sense reforms dates back to 1966 when the President's
Commission to the Patent System issued thirty-five
recommendations to improve the system. Some of these measures
have been enacted over the years, but the economic challenges
inherent in today's global market necessitate a broader
modernization of the patent system. The 2004 National
Research Council of the National Academy of Sciences report
echoed this sentiment pointing to how economic and legal
changes were putting new strains on the system.
America's economic strength has always rested on our
ability to innovate. While a number of positive economic
indicators provide hope for the future, the environment for
small businesses remains mixed. Patent modernization is a
tangible way to help America's small entrepreneurs in a
fledgling economy. Not only will these reforms help create
new jobs and industries, but they will help ensure our
economic leadership for years to come.
Please do not hesitate to contact me if I can be of any
assistance in helping expedite passage of this critical
legislation.
Sincerely,
Louis J. Foreman,
Chief Executive Officer.

Ms. KLOBUCHAR. Mr. President, I know Senator Bingaman is here to
speak.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. BINGAMAN. I appreciate the chance to speak as in morning
business.

World Oil Supplies

Mr. President, I want to take a few minutes to discuss the increasing
oil prices that we are observing each day and the evolving situation in
the Middle East and North Africa.
From an oil market perspective, the turmoil in the Middle East
changed course just over a week ago, and it changed course when Libya
joined the group of countries that are witnessing historic popular
uprisings. Libya is the first major energy exporter in the region to
experience such an uprising.
At the moment, as much as 1 million barrels per day of Libya's total
1.8 million barrels per day of oil production is offline, with
continued political turbulence threatening to take even more oil
offline before order is restored.
It appears that international oil companies, which are responsible
for over 40 percent of Libyan oil production, have removed their
personnel from the country, and that has led to shutdowns of most
fields operated by those international companies.
For the moment, it appears that the Libyan national oil companies
themselves are mostly continuing to produce and export oil, although
there might be some limited production losses in national oil company
production as well.
There is reason to be concerned that the situation in Libya and
throughout the region could become worse before it improves. I do not
know that it is useful to try to predict the most likely outcome for
what is occurring in the country, but the reality is that many of the
potential scenarios that have been thought of are not good for the
stability of world oil flows.
Fortunately, Saudi Arabia is widely believed to have enough spare oil
production capacity to offset any losses in Libyan oil production. The
Saudis have already publicly committed to compensating for any Libyan
shortfall and very likely have already ramped up production to make
good on that promise.
However, the additional Saudi crude oil will not be of the same
quality as the lost Libyan barrels of oil, which are light sweet crude.
About three-quarters of Libyan exports go to Western Europe, and the
refineries in Western Europe generally cannot manage the heavier and
sour crudes that come out of the Persian Gulf region. There will be
some crude oil dislocation, as higher quality crudes are rerouted to
Europe, and incremental Saudi barrels of oil head for refineries that
are able to handle the lower grade oil they produce.
Between the lost production in Libya, the crude oil dislocation
associated with additional Saudi production, and the prospect of
further turmoil in the region, we are now unquestionably facing a
physical oil supply disruption that is at risk of getting worse before
it gets better.
For this reason, I believe it would be appropriate for the President
to be ready to consider a release of oil from our Strategic Petroleum
Reserve if the situation in Libya deteriorates further. Any additional
oil market disturbance--such as turmoil spreading from Libya to
Algeria, or from Bahrain to Saudi Arabia--would clearly put us into a
situation where there would be a very strong argument in favor of a
sale from the Strategic Petroleum Reserve.
While I do not think high oil prices alone are sufficient
justification for tapping the Strategic Petroleum Reserve, I do believe
the announcement of a Strategic Petroleum Reserve sale would help to
moderate escalating prices.
My recommendation that we stand ready to release oil from the SPR is
squarely in the traditional policy we have had in our government for
SPR use, going back to the Reagan administration in the 1980s. In
testimony before the Committee on Energy and Natural Resources on
January 30, 1984, President Reagan's Secretary of Energy Donald Hodel
stated that the administration's SPR policy in the event of an oil
supply disruption was to ``go for an early and immediate drawdown.''
The SPR would be used to send a signal, a strong signal, to oil markets
that the United States would not allow a physical oil shortage to
develop.
The SPR policy carried out during the 1990-1991 Desert Storm
operation offers an example of this ``early and in large volumes''
policy in action.
On January 16, 1991, President George H.W. Bush announced that the
allied military attack against Iraq had begun. Simultaneously, he
announced that the United States would begin releasing SPR stocks as
part of an international effort to minimize world oil market
disruptions. Less than 12 hours after President Bush's authorization,
the Department of Energy released an SPR crude oil sales notice, and on
January 28, 1991, 26 companies submitted offers.
Then-Secretary of Energy Watkins noted:

We have sent an important message to the American people
that their $20 billion investment in an emergency supply of
crude oil has produced a system that can respond rapidly and
effectively to the threat of an energy disruption.

According to an analysis posted on the Department of Energy's Web
site during the George W. Bush administration:

The rapid decision to release crude oil from government-
controlled stocks in the United States and other OECD
countries helped calm the global oil market, and prices began
to moderate. . . . World oil markets remained remarkably calm
throughout most of the war, due largely to the swift release
of the Strategic Petroleum Reserve oil.

In recent years, the policy signals surrounding SPR use have not been
as clear. Some SPR sales were criticized as efforts to manipulate oil
prices. The SPR was then ignored during other oil supply disruptions--
including simultaneous oil supply disruptions due to a

[[Page S1107]]

strike in Venezuela, political turmoil in Nigeria, and the initiation
of the current war in Iraq.
I believe the Reagan administration set the correct course for SPR
decisionmaking. The current administration would be well served in
considering that example and should be ready, in my view, to make a
decision to calm world oil markets should the threat to world oil
supplies increase in the coming days and weeks.
Mr. President, I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. GRASSLEY. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GRASSLEY. Mr. President, I ask unanimous consent to address the
Senate as in morning business.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Iowa is recognized.
Mr. GRASSLEY. I thank the Chair.
(The remarks of Mr. Grassley pertaining to the introduction of S. 454
are printed in today's Record under ``Statements on Introduced Bills
and Joint Resolutions.'')
Mr. LEE. Madam President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mrs. Hagan). Without objection, it is so
ordered.

Amendment No. 115

Mr. LEE. Madam President, I am on the floor to speak again in support
of amendment No. 115, which I propose in connection with the patent
reform bill, a bill I support and a bill I intend to vote for and a
bill that is going to be used as a vehicle for this amendment that
calls for the sense of the Senate on support for the need of a balanced
budget amendment. I am grateful to have the support of my good friend,
the former Governor of West Virginia, now the junior Senator from West
Virginia, Joe Manchin, who is cosponsoring this amendment with me.
Here is what it does. It calls on us as Senators to come forward and
vote on whether we think we should amend the Constitution and submit
that to the States for ratification to restrict our power to engage in
perpetual deficit spending.
We, as Members of Congress, are authorized, pursuant to article I,
section 8, clause 2 to incur debt in the name of the United States.
This power has been abused over time to such a degree that we are now
almost $15 trillion in debt. By the end of the decade, we will have
amassed annual interest payments that will be approaching $1 trillion.
This threatens every government program under the Sun. Whether you most
want to protect Social Security or national defense or any other
government program, you should be concerned about this practice that
will threaten the livelihood of so many Americans who depend on these
programs one way or another, whether it is to fund their day-to-day
existence or fund programs that provide for our safety and security as
a nation.
We do have an increased reason to be optimistic about this for a few
reasons. First, we have recent polling data showing Americans
overwhelmingly support the idea of a balanced budget amendment.
Secondly, a recent GAO report shows we could find at least $100 billion
annually in wasteful government spending. This is the type of wasteful
Washington spending we ought to have eliminated a long time ago, that
we could eliminate and would be forced to eliminate if we, in fact, had
a balanced budget amendment.
It would also require us to address issues that will confront our
children and grandchildren. As a proud and happy father of three, I can
tell you, as difficult as the choices we will have to make may be, I am
unwilling, as a father, to pass these problems on to my children and my
grandchildren who are yet unborn. I am unwilling to pass along to them
a system that mortgages the future of coming generations for the simple
purpose of perpetuating government largess and wasteful Washington
spending.
All this amendment does is call on Members of the Senate to come
forward and say they support the idea. By voting in favor of this
amendment, they do not have to embrace any particular balanced budget
amendment proposal. But what they do say is that they want the wasteful
Washington spending to stop, they want the perpetual deficit spending
practice to stop, and they want us to stop the practice of mortgaging
the future of coming generations. This is immoral, it is unwise, and it
ought to be illegal. Soon it will be. With this amendment, we will set
in motion a sequence of events that will lead to just that.
I yield the floor.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. TOOMEY. Madam President, I rise this afternoon to express my very
strong support for Senator Lee's amendment and the underlying
constitutional amendment I hope this body will take up at some point
soon. I commend Senator Lee for his leadership on this issue, for
offering this amendment now.
I feel a tremendous sense of urgency. I do not think we have time to
waste, time to wait, time to kick this can down the road anymore. We
have done that too long.
The fact is, a balanced budget amendment to our Constitution would
provide the kind of fiscal straitjacket this government clearly needs.
If we operated the way many States did, if we operated the way all
businesses did, if we operated the way families did and we lived within
our means, then maybe this would not be necessary. But it has become
obvious to anybody that we are not living within our means--not even
close.
We are running a budget deficit this year of $1.6 trillion. That is
10 percent of the size of our entire economy--just this year alone.
Last year, it was $1.5 trillion. If we do not do something very serious
about this now--not soon, not in the next few years but now--if we do
not do something about this now, this is already at unsustainable
levels.
In 1988, the total debt as a percentage of our economy was about 40
percent. In 2008, the total debt as a percentage of our economy was
about 40 percent. Today it is at about 63 percent, and by October it
will be 72 percent. These numbers are staggering, and they are not
sustainable. It is already costing us jobs because this huge level of
debt and the ever-increasing debt from the ongoing deficits raise real
doubts in the minds of investors and entrepreneurs and small business
owners what kind of financial future is in store for us. The threat of
serious inflation, high interest rates, even a financial disruption
grows dramatically as we keep piling on this debt. This is not just
speculation or theory. We have seen this with other countries that have
gone down this road.
The good news is it is not quite too late; we can do this; we can get
our spending under control. And I am absolutely convinced we can have
tremendous prosperity and a tremendously robust recovery and the job
creation we need if we follow some basic fundamental principles that
have always led to prosperity wherever they have been tried.
There are several--I will not go through all of them--but one of the
fundamental ones is a government that lives within its means. I would
define ``means'' as keeping a budget that is balanced. This amendment
today, of course, only expresses the will of the Senate that we ought
to do this. I strongly hope all our colleagues will join Senator Lee in
this very constructive amendment.
I yield the floor.
Mr. GRASSLEY. Madam President, I suggest the absence of a quorum.
The PRESIDING OFFICER. Without objection, it is so ordered. The clerk
will call the roll.
The assistant bill clerk proceeded to call the roll.
Mr. DURBIN. Madam President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DURBIN. Madam President, I know personally the extraordinary
efforts made by the chairman of the Senate Judiciary Committee to bring
this patent reform bill to the floor. I have worked with him in the
past, and it has not been an easy task. I know that many times he felt
he was close to having the right bill at the right moment, and then it
slipped away. But his determination and his capacity to bring people
together has resulted in this moment where the bill is before us. And
it

[[Page S1108]]

is important that it is, not just because of his hard work but because
of what it means for this country.
I don't know whether it has formally been done, but this bill is
being recharacterized as the America Invents Act instead of the Patent
Reform Act because those few words tell a much bigger story. We are
talking about the kind of innovation and research in America that will
create successful companies and good American jobs, and that is why
this bill is important.
It has been a long time--going back to our origins as a nation--since
we recognized the right for those who invent things to have some
proprietary personal interest in those inventions, and we set up the
Patent and Trademark Office for that purpose. Unfortunately, that
office of the Federal Government isn't keeping pace with the creativity
of our country, and that is why Senator Leahy has brought this bill to
the floor.
This is bipartisan legislation. I commend him for his work on it, and
I commend my Republican colleagues for joining him. Senators Grassley,
Kyl, Sessions, and Hatch have also worked diligently on this.
This may not be the simplest area of the law. I can remember that
when I was in law school here in town, there was one student--he was
the only African-American student in my class, and that goes back to
the days of Georgetown Law, Senator Leahy, when there were few
minorities and few women. He was African American. He wore a white
shirt and tie to class every day.
I went up to him one day and said: So tell me your background.
He said: Well, I am an engineer, and I want to be a patent lawyer.
And I quickly moved to another table because I realized there wasn't
anything we could talk about. I knew nothing about his world. But it is
a specialized world, and one in which I am sure he was very successful.
Patent law is something that is very hard to explain, and I think that
is part of the reason this bill has taken some time to come here.
But economic growth is driven by innovation, and if you have a good
idea for a new product in America, you can get a patent and turn that
idea into a business. Millions of good American jobs are created this
way. The list is endless.
Patents have been the source of great American stories. Joseph
Glidden, a farmer from DeKalb, IL, patented barbed wire fence in 1874.
It dramatically changed the way ranchers and cattlemen and others were
able to do their business as they settled the frontier in America. I
might add that the DeKalb High School nickname is ``The Barbs'' as a
consequence of this one discovery. Glidden's invention made him a
wealthy man, but his legacy included granting the land for what became
Northern Illinois University in DeKalb. Ives McGaffey of Chicago
invented and patented one of the first vacuum cleaners in 1869.
Josephine Cochran of Shelbyville, IL, once said, ``If nobody else is
going to invent a dishwashing machine, I'll do it myself.'' In 1886,
she did it and got a patent for it. The company she created is now
known as Whirlpool.
Our patent laws set the rules of the road for American innovation. By
giving inventors exclusive rights over their inventions for a term of
20 years, patents provide great incentive for investment. Patents
enable inventions to be shared with the public so new innovations can
be based upon them.
It has been a long time since we have looked at our patent laws and
really updated them. Just think about this, putting it into
perspective. It has been over 50 years. And I commend Senator Leahy for
tackling this. It has not been easy. The pace and volume of innovation
has quickened a great deal since we looked at this law over 50 years
ago, and the Patent and Trademark Office has struggled to keep up.
Over the last few years, Congress has debated how best to modernize
our patent law. It has been a tough issue. We have one set of patent
laws governing the incredibly diverse range of inventions and
industries. In trying to update our laws, we have to be careful not to
make changes that benefit some industries but undermine innovation in
others. The bill before us strikes the right balance. That is why I
voted for it in Committee and support it. It is a product of years of
bipartisan negotiation. It is a good compromise. It is consensus
legislation passed out of the Judiciary Committee a few weeks ago with
a unanimous 15-to-0 vote.
The bill is supported by the Obama administration and his Cabinet
officers and a broad and diverse group of stakeholders, all the way
from the American Bar Association, to the AFL-CIO, to the Biotechnology
Industry Organization. The list is very long.
In my own home State, I went to the major manufacturing companies and
said: You look at it because these inventions are your future. You have
to be confident that what we do to the law is consistent with new
inventions, new innovations, and new jobs not just at your company but
at other places.
I am happy to say that those supporting it include the Illinois Tool
Works, Caterpillar--the largest manufacturer in my State--Motorola,
Monsanto, Abbott, IBM, and PepsiCo.
The bill will improve the ability of the Patent and Trademark Office
to award high-quality patents. Right now, there is a backlog of over
700,000 patent applications, which they are struggling to clear. Think
about that--700,000 inventions and ideas that are waiting to be legally
recognized so that they can go forward in production. This bill will
streamline the operations and adjust the user fees to make sure the
agency clears the backlog.
The bill takes steps to improve submission of information to the PTO
about pending patent applications. I would note that it keeps user fees
low for small startups and individual investors.
In past years, there were some parts of the bill that generated
controversy, including provisions relating to damages and venue in
patent infringement lawsuits. The good efforts in this bill that have
been negotiated have resulted in these provisions no longer being a
subject of controversy.
I know we will have some amendments offered on the bill, and I expect
we will have a good debate on them. At the end of the day, I expect we
will have a strong bipartisan vote in passing this bill. Senator Leahy
is now trying to get this train into the station. There are a lot of
people bringing cars here who want to hook on because they know this is
an important bill and likely to pass.
There are some areas, I might add, which we did not discuss in
committee and which I considered raising in an amendment on the floor
but held back. One of them relates to the controversial issue of gene
patenting, which I have been learning about recently. It is my
considered opinion this is now working its way through the courts and
to try to intervene on the floor here would be premature. The courts
have to decide whether people can patent genes.
There was a recent story I saw on ``60 Minutes'' where a company
known as Myriad had patented the gene for breast cancer. They have now
created a test, incidentally, to determine whether a woman has this
gene. The test is in the range of $4,000 to $5,000. The actual cost of
the test should be much lower, and the obvious question the courts are
deciding is, How can you claim ownership of a gene that occurs in
nature in human bodies you didn't create? That is the question before
the courts. We could have debated it here for a long time and maybe
never resolved it, but depending on how the courts come out on the
issue, we may visit it again.
I hope the House will take this bill up quickly. I know they want to
look it over from their perspective, but we need to pass this. If we
are talking about creating jobs in successful, thriving businesses in
America, this bill needs to pass.
I thank Chairman Leahy for his leadership and for his hard work on
this issue. I am honored to serve with him on the Senate Judiciary
Committee.
I yield the floor.
The PRESIDING OFFICER. The Senator from Vermont.
Mr. LEAHY. I thank the distinguished senior Senator from Illinois,
who has been an invaluable member of the Judiciary Committee all the
time I have been there. This has been very helpful. I appreciate what
he said. I found interesting the list of patents from his home State of
Illinois, and I think each one of us can point to some of those with
pride. If we are going to stay competitive with the rest of the world,
we have to get this bill passed.

[[Page S1109]]

It has been more than 60 years since we updated our patent law. We are
way behind the rest of the world. We have to be able to compete, so I
thank the Senator.

Further Modification to Amendment 121, as Modified

Madam President, I have cleared this with the Senator from Iowa.
Notwithstanding the adoption of the Leahy-Grassley amendment No. 121,
as modified, I ask unanimous consent the amendment be modified further
with the changes that are at the desk.
The PRESIDING OFFICER. Without objection, it is so ordered.
The further modification is as follows:
On page 3 of the amendment, delete lines 8 through 17.

Mr. LEAHY. Madam President, we are down to very few things. I hate to
put in another quorum call and then hear from Senators calling they
want some time to speak about amendments. I know sometimes we follow
the ``Dracula'' rule, being that we do not legislate until it is dark
and Dracula comes out. Maybe, since the days are getting longer, we
could do some things during daytime hours. I send out a call, a
pleading call: If people want their amendments, come forward, let's
have a vote up or down on them and be done with it.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant bill clerk proceeded to call the roll.
Mr. VITTER. Madam President, I ask unanimous consent the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.

Amendment No. 115

Mr. VITTER. Madam President, I rise in strong support of the Lee
amendment, which is a sense of the Senate that this body and the House
should pass a constitutional amendment requiring a balanced budget.
Clearly, I think in the mind of every American, our top domestic
challenge is to get hold of our fiscal situation to move us to a
sustainable path, to tighten the belt of the Federal Government just
like every American family has been doing for many years in this
recession.
We are making a start, a real but modest start, in terms of this
year's budget. I was happy the Senate followed the lead of the House
and passed a 2-week CR today that has substantial cuts, the exact level
of cuts as the House passed for the rest of the fiscal year. I support
that important start in terms of this year's budget. Of course, we need
to finish the job by passing a spending bill for the entire rest of the
fiscal year with that level of cuts or more.
That is a start, but it is only a start. The other thing I think we
need to do is create reform, a structure that demands that Congress
stay on that path to a balanced budget until we get there. I believe
the most important thing we can create to demand that is a straitjacket
for Congress, if you will, a balanced budget constitutional amendment.
Unfortunately, I think Congress, time and time again over years and
decades, has proved we need to put Congress in that straitjacket if we
are ever going to get to a sustainable fiscal situation, a balanced
budget.
This is not some academic debate. This is about the future of our
kids, our grandkids, and our immediate future because we could be put
into economic chaos at any time because of our untenable fiscal
situation. Forty cents of every $1 the Federal Government is spending
is borrowed money--so much of that money borrowed from the Chinese.
This is about whether we are going to remain the most free, most
prosperous country in human history. This is about if we are going to
remain our own masters or if we are going to have to look to the folks
who are lending us all this money, including the Chinese, for consent
in terms of how we map our future.
Is that the future we want to hand to our kids? It is certainly not
the future I want to hand to my kids. That is what it is all about.
Again, it is not far off in the distance. This is an immediate
challenge.
This could lead to an immediate economic crisis unless we get
ourselves on the path to a balanced budget quickly. Again, step 1 is
cuts this year, a budget that is going back to 2008 levels,
prestimulus, pre-Obama budget, this year. That is step 1.
But step 2 is some sort of important structural reform such as a
balanced budget constitutional amendment that puts a straitjacket on
Congress, that demands that we get there in a reasonable period of
time.
The huge majority of States operate under exactly this type of
constitutional amendment. The huge majority of municipalities, towns,
cities, other jurisdictions, operate under this sort of constraint. It
is hard sometimes. It demands tough choices. In times such as these, in
a recession, it demands real cuts.
But guess what. Just like a family does sitting around their kitchen
table making their family budget fit reality, States do that, cities do
that, towns do that, and Congress should have to do that for the
Federal Government. Congress should have to tighten its belt, like
families do reacting to their budget reality sitting around the kitchen
table.
I think it is perfectly clear we are not going to get there, unless
and until we are made to through some sort of mechanism such as the
balanced budget constitutional amendment.
Even beyond the deadline imposed by the expiration of the current or
any other CR spending bill, we have another looming deadline, which is,
whenever the United States Federal Government hits up on the current
debt ceiling. That is going to happen sometime between late March and
May is the projection.
I firmly believe it would be enormously irresponsible to address that
issue until and unless we put ourselves on this road to reform, until
and unless we pass something like a meaningful balanced budget
constitutional amendment. So this sense of the Senate is meant as a
first step. I applaud Senator Lee for putting it before us as that
first step. Let's say yes. Let's say we are going to do it.
Then, of course, most important, let's do it. Let's do it now. The
clock is ticking. Let's do it now, well before we reach any crisis
point such as coming up on the debt limit I spoke about.
Let's act responsibly, which means acting now. Let's take up the
Nation's important business, which is spending and debt. Let's avoid
the economic calamity that is threatened if we stay on the current
path, which is completely, utterly unsustainable. It is not just me
saying that, it is everybody knowing it, including Ben Bernanke,
Chairman of the Federal Reserve Board. He testified before us at the
Banking Committee yesterday and said exactly the same thing.
Ben Bernanke is not some ideologue. He is not some tea party
conservative. But he said yesterday, very clearly, three important
things. First of all, the greatest medium and long-term challenge we
face as a country is our fiscal posture. Secondly, the fiscal path we
are on is completely and utterly unsustainable. Third, while that is a
long-term challenge, it poses short-term, immediate consequences.
If we do not get on a sustainable path now, immediately in the short
term, we could have immediate short-term consequences, even economic
crisis. Let's avoid that. Let's do right by our children. Let's tighten
our belt, as American families have been for several years in this
recession, and let's demand that we keep on that path with a balanced
budget constitutional amendment.
I yield the floor.
The PRESIDING OFFICER (Mr. Whitehouse.) The Senator from Vermont.
Mr. LEAHY. I ask unanimous consent that an article written for The
Hill by the distinguished Secretary of Commerce Gary Locke, dated March
2 of this year, be printed in the Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. LEAHY. Mr. President, it is interesting, I do not want to
embarrass the person whom I wanted to speak about at all, but I was
interested in listening to my dear friend, Senator Durbin, speak about
his time at Georgetown Law School. Both he and I graduated from the
Georgetown Law School. He talked about a classmate of his who was in
patent law, and he realized this was a complex subject, one that is not
the sort of law that he, Senator Durbin, was going to go into, any more
than I would have.

[[Page S1110]]

But I also think of another graduate of Georgetown Law Center who was
an engineer, had a degree in engineering, studied patent law, and
became one of the most distinguished patent lawyers, litigators in this
country, and is now a member of the Federal circuit court of appeals
and that is Judge Richard Linn.
It was interesting hearing the Senator from Illinois, himself one of
the finest lawyers in this body. My wife Marcella and I had the honor
of being out in Chicago with Judge Linn and his wife Patty for a
meeting of the Richard Linn American Inn of Court in Chicago. He serves
with great distinction. In fact, a major part of this legislation
reflects an opinion he wrote.
But I digress. I ask unanimous consent the Senate resume
consideration of the Lee amendment No. 115, with the time until 5:15
equally divided between the two leaders or their designees; that upon
the use or yielding back of time, the Senate proceed to vote in
relation to the Lee amendment No. 115; that the Lee amendment be
subject to a 60-vote threshold; that upon disposition of the Lee
amendment, the Senate resume consideration of the Menendez amendment
No. 124; that Senator Menendez be recognized to modify his amendment
with the changes at the desk and the amendment, as modified, be agreed
to; that the motions to reconsider be considered made and laid upon the
table, with no intervening action or debate; and there be no amendments
in order to the amendments prior to the vote.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. LEAHY. I thank the superb staff for writing that out because I am
not quite sure I could have done that on my own.
I had hoped as we began debate on this important bill to modernize
America's patent system that the Senate would focus specifically on
this measure designed to help create jobs, energize the economy and
encourage innovation.
I had hoped that we would consider relevant amendments, and pass the
bill. The America Invents Act is a key part of any jobs agenda. We can
help unleash innovation and promote American invention, all without
adding a penny to the deficit.
This is commonsense, bipartisan legislation. I said at the outset
that I hoped the Senate would come together to pass this needed
legislation and do so in the finest tradition of the Senate. I thank
the Republican manager of the bill and the assistant Republican leader
for their support and efforts on this bill.
Unfortunately, we have become bogged down with nongermane,
nonrelevant, extraneous discussions and amendments.
Earlier this week, Senators who were focused on our legislative
effort and responsibilities joined in tabling an amendment that has
nothing to do with the subject matter of the America Invents Act.
Extraneous amendments that have nothing to do with the important
issues of reforming our out-of-date patent system so that American
innovators can win the global competition for the future have no place
on this important bill. They should not be slowing its consideration
and passage.
If America is to win the global economic competition, we need the
improvements in our patent system that this bill can bring.
We must now dispose of another such amendment so that we may proceed
to final passage of the America Invents Act and help inventors,
American businesses and our economic recovery.
I take proposals to amend the Constitution of the United States
seriously. I take seriously my oath as a Senator to support and defend
the Constitution and to bear true faith and allegiance to it.
Over the years I have become more and more skeptical of recent
efforts to amend the design that established the fundamental liberties
and protections for all Americans. I believe the Founders did a pretty
good job designing our fundamental charter.
I likewise take seriously the standard set in article V of the
Constitution that the Congress propose amendments only when a
supermajority of the Congress deem it ``necessary.'' While there have
been hundreds of constitutional amendments proposed during my service
in the Senate, and a number voted upon during the last 20 years, I have
been steadfast in my defense of the Constitution.
The matter of a so-called balanced budget amendment to the
Constitution is not new to the Senate. Indeed, I believe the first
matter Senator Hatch moved through the Judiciary Committee when he
chaired it and I served as the ranking member was his proposed
constitutional amendment to balance the budget.
I strongly opposed it, but I cooperated with him in his effort to
have the committee consider it promptly and vote.
I wish others would show the managers of this bill that courtesy and
cooperation and not seek to use this bill as a vehicle for messages on
other matters.
The Judiciary Committee has considered so-called balanced budget
amendments to the Constitution at least nine times over the last 20
years. The Senate has been called upon to debate those amendments
several times, as well, in 1982, 1986, 1992, 1994, 1995 and 1997.
Despite the persistent and extraordinary efforts of the senior Senator
from Utah, they have not been adopted by the Congress.
The only time the Senate agreed to the proposed constitutional
amendment was in 1982. On that occasion, the House of Representatives
thought the better of it. On the subsequent five occasions, as Senators
came to understand how the proposed amendment undercut the
Constitution, it was defeated.
Now another Senator has adopted this cause.
He has proposed a different, even more complicated proposed
constitutional amendment. That will require study in order to be
understood. It will require working with the chairman of the Judiciary
Committee Subcommittee on the Constitution, Civil Rights and Human
Rights.
While the new Senator from Utah is a member of the Judiciary
Committee and a member of the Constitution subcommittee, he has not
consulted with me about his proposal, nor, as far as I know, with the
chairman of the subcommittee, the senior Senator from Illinois.
Instead, he preemptively seeks to raise the matter on this important
bill, which is designed to create jobs, encourage American innovation
and strengthen our economy.
For the last 20 years, the so-called balanced budget amendment has
been a favorite slogan for some. For some others of us, we have done
the hard work to actually produce a balanced budget and, indeed, a
surplus.
Rather than defile the Constitution, we have worked and voted to
create a balanced budget and a budget surplus. In 1993, without a
single Republican vote to help us, Democrats in the Congress passed a
budget that led to a balanced budget and, indeed, to a budget surplus
of billions of dollars by the end of the Clinton administration.
That surplus was squandered by the next administration on tax breaks
for the wealthy and an unnecessary war that cost trillions but went
unpaid for. Those misjudgments were compounded by financial fraud and
greed that led to the worst economic recession since the Great
Depression. That is what we have been seeking to dig out from under
since 2008.
At this time, I ask unanimous consent to have printed in the Record a
letter received from American Federation of State, County and Municipal
Employees, AFSCME, in opposition to the Lee amendment.
There being no objection, the material was ordered to be printed in
the Record, as follows:

AFSCME,

Washington, DC, March 2, 2011.
Dear Senator: On behalf of the 1.6 million members of the
American Federation of State, County and Municipal Employees,
I am writing to urge you to oppose Senator Lee's amendment to
S. 23, providing that it is the sense of the Senate that
Congress should pass and the states should agree to an
amendment to the Constitution requiring a Federal balanced
budget.
A constitutional balanced budget amendment is a simplistic
answer to a complicated issue and would serve only to further
weaken our economy and move us away from fiscal
responsibility at a time of much economic uncertainty. It
would require large, indiscriminate spending cuts during
economic downturns, precisely the opposite of what is needed
to stabilize the economy and avert recessions.

[[Page S1111]]

The immediate result of a balanced budget amendment would
be devastating cuts in education, homeland security, public
safety, health care and research, transportation and other
vital services. Any cuts made to accommodate a mandated
balanced budget would fall most heavily on domestic
discretionary programs, but ultimately, there would be no way
to achieve a balanced budget without cuts in Social Security
and other entitlement programs as well. A balanced budget
amendment would likely disproportionately affect unemployed
and low-income Americans.
There are also serious concerns about the implementation of
such an amendment and how it would involve the courts in
matters more appropriately resolved by the legislative and
executive branches of government. Budgetary decisions should
be made by officials elected by the people, not by unelected
court officials with no economic or budget expertise.
I urge you to oppose the Lee amendment and to oppose any
effort to adopt an amendment to the Constitution requiring a
balanced budget.
Sincerely,
Charles M. Loveless,
Director of Legislation.

Mr. LEAHY. We have stabilized the economic freefall and begun to
revive the economy.
Everyone knows that economic growth is the path toward budget
balance. Economic growth and winning the future through American
innovation is what the bipartisan American Invents Act is all about.
Accordingly, for all these reasons as well as the reasons for which I
opposed the efforts to amend the Constitution in 1982, 1986, 1992,
1994, 1995 and 1997, I oppose amendment No. 115.

Exhibit 1

[From the Hill, Mar. 2, 2011]

Delivering Innovation and Jobs Through Patent Reform

(By Commerce Secretary, Gary Locke)

Today, there are more than 700,000 unexamined patent
applications log-jammed at the U.S. Patent and Trademark
Office (USPTO).Many of them represent inventions that will
come to market and launch new businesses and create new,
high-paying jobs.
But without a patent, securing the funds needed to get a
business or innovation off the ground is nearly impossible,
for both small and large inventors alike.
Patent reform legislation the Senate is considering this
week can change that.
And it can build on the progress USPTO Director David
Kappos has already made in reducing the time it takes to
process the average patent--currently nearly 3 years.
New programs have been introduced to fast-track promising
technologies, reforms have been made to help examiners more
quickly process applications, and the Patent Office recently
announced a plan to give inventors more control over when
their patent is examined.
The result? The backlog of patents is decreasing for the
first time in years, even as new applications have actually
increased 7 percent.
But if the USPTO is to speed the movement of job-creating
ideas to the marketplace, it will take more than internal,
administrative reforms alone. That's where the patent reform
legislation comes in.
Here's what it promises to do: First, it allows the USPTO
to set its own fees--a major part of ensuring that the agency
has reliable funding. This will enable the USPTO to hire more
examiners and bring its IT system into the 21st century so it
can process applications more quickly and produce better
patents that are less likely to be subject to a court
challenge.
Second, it decreases the likelihood of expensive litigation
because it creates a less costly, in-house administrative
alternative to review patent validity claims.
Also, the pending legislation would add certainty to court
damages awards, helping to avoid excessive awards in minor
infringement cases, a phenomenon that essentially serves as a
tax on innovation and an impediment to business development.
Finally, patent reform adopts the ``first-inventor-to-
file'' standard as opposed to the current ``first-to-invent''
standard. First inventor to file is used by the rest of the
world, and would be good for U.S. businesses, providing a
more transparent and cost-effective process that puts them on
a level playing field with their competitors around the
world.
There is some concern among some small, independent
inventors, who feel like the current system is better for
them, but it's our strong opinion that the opposite is true.
Here's why: The cost of proving that one was first to
invent is prohibitive and requires detailed and complex
documentation of the invention process. In cases where
there's a dispute about who the actual inventor is, it
typically costs at least $400,000 in legal fees, and even
more if the case is appealed. By comparison, establishing a
filing date through a provisional application and
establishing priority of invention costs just $110. The
125,000 provisional applications currently filed each year
prove that early filing dates protect the rights of small
inventors.
In the past seven years, of almost 3 million applications
filed, only 2 patents were granted to small entities that
were the second inventor to file but were able to prove they
were first to invent. Of those 25, only one patent was
granted to an individual inventor who was the second to file.
Thus, in the last seven years, only one independent inventor
in nearly 3 million patent filings would have gotten a
different outcome under the ``first-inventor-to-file''
system.
Many proposals in this legislation have been debated for a
decade, but we now have core provisions with broad support
that will undoubtedly add more certainty around the validity
of patents; enable greater work sharing between the USPTO and
other countries; and help the agency continue with
operational changes needed to accelerate innovation, support
entrepreneurship and business development, and drive job
creation and economic prosperity.
And thanks to the leadership of Senate and House Judiciary
Committee Chairmen, Patrick Leahy1 and Lamar Smith, getting
this bipartisan jobs legislation passed is a top priority.
There's a clear case for it. As President Obama said in his
State of the Union address, ``The first step in winning the
future is encouraging American innovation.''
Reforming our patent system is a critical part of that
first step.
Speeding the transformation of an idea into a market-making
product will drive the jobs and industries of the future and
strengthen America's economic competitiveness.

The PRESIDING OFFICER. Under the previous order, all time has now
expired.
The question is on agreeing to the Lee amendment No. 115.
Mr. LEAHY. Mr. President, even though I oppose this amendment and
would simply allow it to go for a voice vote because the proponent of
the amendment is not even on the floor, I will, to protect his right
and notwithstanding his not following the normal policy, ask for the
yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The question is on agreeing to the amendment.
The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. DURBIN. I announce that the Senator from North Dakota (Mr.
Conrad), and the Senator from Louisiana (Ms. Landrieu) are necessarily
absent.
I further announce that, if present and voting, the Senator from
Louisiana (Ms. Landrieu) would vote ``no.''
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 58, nays 40, as follows:

[Rollcall Vote No. 30 Leg.]

YEAS--58

Alexander
Ayotte
Barrasso
Begich
Bennet
Blunt
Boozman
Brown (MA)
Brown (OH)
Burr
Carper
Chambliss
Coats
Coburn
Cochran
Collins
Corker
Cornyn
Crapo
DeMint
Ensign
Enzi
Graham
Grassley
Hatch
Hoeven
Hutchison
Inhofe
Isakson
Johanns
Johnson (WI)
Kirk
Kohl
Kyl
Lee
Lieberman
Lugar
Manchin
McCain
McCaskill
McConnell
Moran
Murkowski
Nelson (NE)
Nelson (FL)
Paul
Portman
Risch
Roberts
Rubio
Sessions
Shelby
Snowe
Thune
Toomey
Udall (CO)
Vitter
Wicker

NAYS--40

Akaka
Baucus
Bingaman
Blumenthal
Boxer
Cantwell
Cardin
Casey
Coons
Durbin
Feinstein
Franken
Gillibrand
Hagan
Harkin
Inouye
Johnson (SD)
Kerry
Klobuchar
Lautenberg
Leahy
Levin
Menendez
Merkley
Mikulski
Murray
Pryor
Reed
Reid
Rockefeller
Sanders
Schumer
Shaheen
Stabenow
Tester
Udall (NM)
Warner
Webb
Whitehouse
Wyden

NOT VOTING--2

Conrad
Landrieu
The PRESIDING OFFICER. On this vote, the yeas are 58, the nays are
40. Under the previous order requiring 60 votes for the adoption of
this amendment, the amendment is rejected.
Under the previous order, the Senator from New Jersey is recognized.

Amendment No. 124, as Modified

Mr. MENENDEZ. Mr. President, pursuant to the previous order, I ask
that my amendment be modified with the changes that are at the desk.
The PRESIDING OFFICER. Under the previous order, the amendment is so
modified.
The amendment, as modified, is as follows:

[[Page S1112]]

On page 104, strike line 23, and insert the following:

SEC. 18. PRIORITY EXAMINATION FOR TECHNOLOGIES IMPORTANT TO
AMERICAN COMPETITIVENESS.

Section 2(b)(2) of title 35, United States Code, is
amended--
(1) in subparagraph (E), by striking ``; and'' and
inserting a semicolon;
(2) in subparagraph (F), by striking the semicolon and
inserting ``; and''; and
(3) by adding at the end the following:
``(G) may, subject to any conditions prescribed by the
Director and at the request of the patent applicant, provide
for prioritization of examination of applications for
products, processes, or technologies that are important to
the national economy or national competitiveness without
recovering the aggregate extra cost of providing such
prioritization, notwithstanding section 41 or any other
provision of law;''.

SEC. 19. EFFECTIVE DATE.

Mr. MENENDEZ. Mr. President, this modified amendment, cosponsored by
Senator Bennet, would allow the Patent Office Director to prioritize
patents that are important to the national economy or national
competitiveness. The amendment will ensure that patents that are vital
to our national interests do not languish in any backlog at the Patent
Office and that they ultimately promote the national economy and
national competitiveness.
My understanding is that by previous agreement the amendment, as
modified, is agreed to.
The PRESIDING OFFICER. That is correct. Under the previous order, the
amendment, as modified, is agreed to.
Mr. MENENDEZ. Thank you, Mr. President.
With that, I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant editor of the Daily Digest proceeded to call the roll.
The PRESIDING OFFICER. The Senator from Colorado.
Mr. BENNET. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Without objection, the motions to reconsider on the two previous
amendments are laid upon the table.
Ms. MIKULSKI. Mr. President, I rise to explain my vote against the
managers' amendment to S. 23, the America Invents Act.
I agree wholeheartedly with the chairman of the Judiciary Committee
that we must enable our inventors to out innovate and produce the
products and jobs of the future.
However, a provision in the managers' amendment would take the Patent
and Trademark Office, PTO, off-budget. I cannot support this provision
for three reasons.
First, the provision is unnecessary. Proponents argue that it will
prevent the diversion of PTO's fees. However, since fiscal year 2005,
the Appropriations Committee has rejected the practice of diverting PTO
fees for other purposes and instead has consistently recommended that
PTO retain every dollar it collects from inventors. In fact, the
Appropriations Committee has on several occasions approved bills to
allow PTO to spend up to $100 million in excess of PTO's appropriation
if fee revenue is higher than the appropriations level.
Second, the amendment would reduce oversight. Rather than being
subject to the annual appropriations process, this agency--with a
budget of more than $2 billion--would be on autopilot. The underlying
bill seeks to reduce the backlog of pending patent applications.
Currently, it takes PTO nearly 3 years to process a patent application.
The backlog of applications stands at over 700,000. Some progress has
been made in this area, thanks to the annual oversight provided in
appropriations bills which has succeeded in forcing management reforms
that have slowed the growth of PTO's backlog.
The amendment requires PTO to submit annual budget requests and
spending plans to Congress. However, this approach eliminates the
requirement for an annual legislative vehicle to closely examine and
approve expenditures of taxpayer dollars and fee revenue. Instead the
amendment would restrict accountability for an agency that struggles to
keep up. While our inventors are standing in line for patents, their
ideas can be stolen to fuel another country's economy. I am very
encouraged by Director Kappos' new leadership at PTO, but much more
progress and greater management oversight are still necessary to give
American inventors the protections they deserve.
Finally, the amendment may hamper PTO operations in the future. PTO
has adequate fee revenue now, but that has not always been the case. As
recently as fiscal year 2009, PTO experienced a revenue shortfall due
to lower than expected fee collections. To keep PTO's operations whole
and to help tackle the patent backlog, we gave PTO a direct
appropriation to bridge their financial gap when fees weren't enough.
In fact, PTO fee collections have fallen short of appropriations levels
by more than $250 million since fiscal year 2005. Unfortunately, should
such a gap occur in future years, the Appropriations Committee would
not be poised to step in if PTO's fee collections are not adequate to
cover operations.
Again, I applaud the Judiciary Committee, under Chairman Leahy's
leadership, for pushing PTO to continue its progress as part of our
Nation's innovation engine. Unfortunately, this amendment will only
send PTO drifting on autopilot with little congressional
accountability.

Amendment no. 133

Mr. REID. Mr. President, I support Senator Feinstein's amendment to
restore the grace period under current law and eliminate the so-called
first-inventor-to-file provisions of the legislation. This is the No. 1
outstanding issue of concern my constituents have raised with me,
particularly small and independent inventors. It is a technical and
complex issue, one about which experts in patent law have strong
disagreements. But I think the bill would be much better without these
provisions.
For shorthand, a lot of people talk about this issue as first-
inventor-to-file versus ``first-to-invent.'' But, in my view, this
terminology just confuses the issue. My constituents are most concerned
about the loss of the unconditional 1-year grace period under current
law. Both a first-to-invent and a first-inventor-to-file system could
have the grace period; there is no inherent inconsistency. I am not
sure why the two issues have been merged. Frankly, people who talk
about priority fights and interferences are completely missing the
point. The concerns are all about the grace period.
My constituents tell me that the current law grace period is crucial
to small and independent inventors, for numerous reasons. First, it
comports with the reality of the inventive process. An idea goes
through many trials, errors, and iterations before it becomes a patent-
worthy invention. Small inventors in Nevada tell me that sometimes they
may have conceived an idea as an improvement to the apple; and it turns
out to be a new type of orange. The grace period allows inventors the
time to refine their inventions, test them, talk issues through with
others, all without worry of losing their rights if these activities
result in an accidental disclosure or the development of new ``prior
art.''
Second, the grace period comports with the reality of small entity
financing through friends, family, possible patent licensees, and
venture capitalists. The grace period allows small inventors to have
conversations about their invention and to line up funding, before
going to the considerable expense of filing a patent application.
In fact, in many ways, the 1-year grace period helps improve patent
quality--inventors find out which ideas can attract capital, and focus
their efforts on those ideas, dropping along the way other ideas and
inventions that don't attract similar interest and may not therefore be
commercially meaningful.
These inventors therefore believe that the effective elimination of
the grace period in the law is therefore a serious blow. They tell me
that now they will have to try to file many more applications, earlier
in the process. They tell me that the balm of ``cheap provisionals'' is
snake oil, because a provisional still has to meet certain legal
standards, meaning that you still have to spend a lot for patent
counsel, which is the biggest single expense of filing an application.
Because they can't afford to file that many applications, regular or
provisional, they will have to give up on some inventions altogether.
If that is so, it wouldn't just be bad for them, it would be bad for
the creation of innovation in America.

[[Page S1113]]

They also are concerned that it will be harder to get VC funding
because they will have filed applications on inventions that weren't
quite the right ones. The added risk about whether they can ensure that
the provisional application will be adequate to provide protection to
this slightly modified but commercially more meaningful invention will
be enough to scare off already difficult to obtain venture capital
funding.
The legislation doesn't turn a blind eye to these problems. It
provides a type of grace period, triggered by inventor disclosures.
Will this new, significantly more scaled back grace period work? Maybe.
I don't know. I can tell you that the independent inventors in Nevada
swear by a code of secrecy and nondisclosure until they are far enough
along to get patent protection. It would require a sea change in
culture to be able to benefit from this very limited inventor's
disclosure-triggered grace period.
Further, there are legitimate questions about how this new disclosure
provision would work--for instance, what happens when an invention that
is disclosed leads to other, different ideas and disclosures that
update the state of the art before the application has been filed? How
is an inventor going to be able to prove that changes in an ``ecosystem
of technology'' were necessarily derived from her disclosure?
I would also note that I appreciate that PTO Director Kappos has been
doing great work in terms of reaching out to small inventors, trying to
make things cheaper and more efficient for them; trying to demystify
the PTO for them. If any PTO Director could make this work, I feel
confident he is the one who can do it.
But, you know what, if it ain't broke, don't fix it. Our current
system has helped make America the most innovative country in the
world; I will venture to say the most innovative society in world
history. Our innovation system is the envy of the world. We don't need
to harmonize with them; they are trying to figure out how we do it.
This is one area where nothing is broken, and I am very worried about
unintended consequence, especially when a lot of the folks arguing
about this issue are not even talking about the thing that matters--the
grace period.
Accordingly, I support the Feinstein amendment. And I encourage my
colleagues to support it too. I am not making this argument as the
Senate majority leader, but as the Senator from Nevada--if the current
grace period isn't broke, then we absolutely shouldn't fix it with
something that my constituents tell me, with alarm, may make it harder
for them to patent their innovations.
Mr. ISAKSON. Mr. President, I ask unanimous consent to be recognized
as in morning business.
The PRESIDING OFFICER (Mr. Bennet). Without objection, it is so
ordered.

Risk Retention

Mr. ISAKSON. Mr. President, I come at the end of a long day for all
of us to talk about a subject that is off the subject from the bill on
the floor but is one of tremendous importance to the United States and
the recovery of our economy.
I want to also point out for the record--and hopefully also for the
right people--that we are at a critical point in terms of housing in
America, with Dodd-Frank having been passed and newly promulgated
rules. It is essential that we don't make the mistakes that led us to
the last collapse that caused the tragedy in the housing market in
2007, 2008, and 2009.
In the Dodd-Frank bill, there was an amendment called the qualified
residential mortgage, which was offered by Senators Landrieu, Hagan,
and myself to ensure that the risk retention provisions of Dodd-Frank
would not apply to a well-underwritten, well-qualified loan. Risk
retention, as the Chair remembers, is the 5-percent retention
requirement of any lender who made a residential mortgage that was not
qualified, but they were not specific in their definition of what a
qualified mortgage would be. So we took the point to take the
historical underwriting standards that have proven to work so well in
this country and write them into the Dodd-Frank bill, which were that a
mortgage that may be exempted from a risk retention would have to have
20 percent down, and if there was more than 80 percent loan to value,
that amount above 80 percent would have to be covered by private
mortgage insurance. We required third-party verification of bank
deposits, third-party verification of employment, third-party
verification of an individual's ability to make the payments and
service the debt, credit records, and all the underwriting standards.
As the Chair remembers, what got us into so much trouble from 2000 to
2007 is that we made subprime loans, used stated income, didn't do debt
checks or anything else we should have done. We made bad mortgages.
My point is this. There is a committee that has been formed--made up
of very distinguished Americans--that is promulgating the rules to
carry out the intent of Dodd-Frank. That committee includes Sean
Donovan from HUD; Ben Bernanke; Edward DeMarco, Acting Director of the
Federal Housing Finance Agency; John Walsh, Acting Comptroller of the
Currency; Mary Shapiro, head of the SEC; and Sheila Bair, head of FDIC.
That is a very august group. They are in the process of promulgating
rules to carry out the intent of Dodd-Frank. The rumors coming out of
those negotiations--and I say rumors because I cannot verify it because
I am not there. But I know the articles I have read in the papers in
the last couple of days send a troubling signal to me.
Just for a few minutes, I wish to make the points that I think are so
critical.
No. 1, it is my understanding they are considering memorializing 80
percent as the maximum amount of loan to value for a loan that would
fall as a qualified residential mortgage and do not address private
mortgage insurance for coverage above 80 percent.
Without getting technical, what that would mean is the only qualified
residential mortgage that could be made and not require risk retention
would have to have a minimum of a 20-percent downpayment. In the olden
days of standard lending in the eighties, seventies, and sixties, when
you borrowed more than 80 percent but not over 95 percent, you had
private mortgage insurance to insure the top 30 percent of the loan
made so the investors had the insurance of knowing, if there was a
default, the top portion of that loan, which was the most in terms of
loan to value, would be insured and would be paid.
If it is, in fact, correct that this committee is going to recommend
a qualified residential mortgage require a 20-percent downpayment and
not make provisions for PMI, we will be making a serious mistake
because two things will happen. One, very few people will be able to
get a home loan in the entry-level market or even in the move-up market
because a 20-percent downpayment is significant. Second, by not
utilizing PMI, we will be turning our back on 50 years of history in
America, where PMI has been used to satisfactorily insure risk and
insure qualified lending.
We must remember what happened in terms of the collapse of Freddie
Mac and Fannie Mae. What happened was Congress directed they buy a
certain percentage of their portfolio in what were called affordable
loans, which became subprime securities, which became 13 percent of
their portfolio, which brought them down when subprime securities
collapsed. If we all of a sudden, through fiat, decide to pass
regulations to define a qualified residential mortgage that is so
prohibitive we run everybody to FHA, which is exempt, then we will be
putting a burden on FHA that is unsustainable and create a situation of
another collapse or another inability of the United States to meet
housing needs through the private sector and through well underwritten
loans.
My reason for coming to the floor tonight is, hopefully, to send a
message, before the decisions are made, to be thoughtful in determining
what the parameters will be on a qualified residential mortgage. Yes, I
do think an 80-percent or less loan should be qualified and avoid risk
retention. But a well-paid, well-verified, well-credit-evaluated
individual who borrows more than 80 percent but less than 75 should be
able to do so and be excluded from the risk retention as long as they
have private mortgage insurance covering that top 30 percent of the
debt created by that loan.
If you do that, you protect the equity provisions, you protect the
investor,

[[Page S1114]]

you make the qualified loan, you do not put the country at risk, but
most important of all, you do not force everybody to FHA. That is what
we are about to do because FHA is, by definition under Dodd-Frank,
exempt from risk retention. All other loans are not, except those that
will fall under the QRM, qualified residential mortgage. It would be a
disaster for the recovery of American housing to force Americans to
only one source of money to finance their home and put so much stress
on the Federal Housing Administration that it collapses under the
burden.
We need to be pragmatic when we look at issues facing housing. We
need to be practical in taking Dodd-Frank and making it work for the
American people. We need to recognize the value of private mortgage
insurance, the value of good, solid underwriting and not put a risk
retention in that is so high that we take most American mortgage
lenders out of the business, isolated only for a few who dictate and
write the parameters they want to write for housing. We are at a
critical time in our recovery. Housing has hit the bottom, and it has
bounced along the bottom, but it is showing some signs of coming back.
Now would be the worst time to send a signal that mortgage money is
going to be harder to get, the banks are going to have to hold 5
percent risk retention on even the best of loans and, worst of all, it
would give the American people only one alternative for lending; that
is, the Federal Housing Administration which, in and of itself, is
already under a burden and stressed.
I appreciate the time tonight to bring this message to the floor that
as we write the rules to promulgate the intent of the Dodd-Frank bill
in terms of residential housing and finance, we be sure we do so in
such a way that we meet the demands of a vibrant marketplace rather
than restricting it, putting a burden on FHA, and protracting what has
already been a long and difficult housing recession.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. REID. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.

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